Matt's Take On The News

Short sales increase in Tampa Bay area

By Mark Puente, Times Staff WriterTampa Bay Times

A spike in the number of homes sold through short sales in the Tampa Bay area is driving down prices — and that may be good news.

Short sales — when a bank takes less than what is owed on a home — have climbed nearly 25 percent in the last five months when compared to the same period in 2010. Median prices on those deals fell 24 percent.

Those numbers hardly sound like reasons to jump for joy. But experts say the housing market cannot recover until thousands of local homeowners get rid of their underwater mortgages, clearing a big backlog of distressed properties.

"This is good for the economy," said University of Central Florida economist Sean Snaith. "It helps get us to the other side. These houses have to go through this process."

Of course, there are downsides to all this. In the short run, falling values put downward pressure on asking prices as sellers compete for buyers. In the longer run, though, buyers might actually find it harder to afford their dream home. As short sales move more houses, the best of them will get more offers, forcing buyers to pay more. Ultimately, the very definition of a recovered housing market is higher prices.

From July 2010 through November 2010, Tampa Bay lenders recorded 2,971 short sales with a median price of $112,000. In the same period this year, banks recorded 3,700 short sales with a median price of $89,900 in Pinellas, Hillsborough and parts of Pasco and Hernando counties, according to My Florida Regional Multiple Listing Service data.

"We're seeing enough positive growth (in the economy) that we'd expect to see these gains," said Scott Brown, chief economist with Raymond James in St. Petersburg. "It's still going to be a long recovery, but we'll take anything we can get at this point."

There's another sliver of good news from the rise in short sales. It shows banks increasingly are turning away from the more time-consuming process of paying thousands of dollars in legal fees to evict people through foreclosure. Critics have slammed lenders all year for not working faster to clear the backlog.

"This make more sense," said Chris Hounchell, a short sale specialist with Keller Williams Realty in St. Petersburg. "Banks are realizing that economic benefit to short sales. It's a quicker resolution than foreclosures."

Foreclosures in the Sunshine State must be approved by judges and take about two years.

"In Florida, foreclosures end up being big losers for banks because of the judicial process," Snaith said. "This is an evolution in the banks' thinking. It's a good thing."

Experts have been predicting that a tsunami of houses from the ''shadow inventory'' would decimate the market. That inventory includes homes with mortgages 90 days late and nearing foreclosure or homes already seized by a lender but not listed for sale .

Increasing short sales decrease the inventory.

While short sales have risen, foreclosure sales in the bay area plummeted from their peak of 1,549 in March to 505 last month, a 67 percent drop. The 505 sales last month is 23 percent lower than November 2010.

Hungry investors are now entering bidding wars on short sales because the supply of bank-owned homes is so low.

"The investors are all over these," said Craig Beggins, owner of Century 21 Beggins Enterprises in Apollo Beach. "They have no choice. This is going to cause the average prices to go up. The cheap houses are going away."

And short sales, experts say, are better for neighborhoods. Houses listed as short sales tend to remain occupied until sold and hold higher values than those sold as a bank-owned foreclosures. Short-sale owners typically leave houses in better shape than people who are evicted. That helps maintain the value of neighboring properties.

Beggins, whose agents close 20 to 25 short sales a month, said the deals help homeowner associations clear delinquencies when the properties sell.

It's better for the housing recovery and the banks' bottom line if lenders don't flood the market with foreclosed homes, Beggins said, adding: "The lenders really have the control."

Lower prices could force home­owners who are not financially distressed to not list their homes for sale until the market improves. Currently, the region has about a six-month supply of homes. The lower the supply, the stronger the market.

Peter Murphy, president of Tampa's Home Encounter, a full-service real estate firm, said the short-sale increase is a double-edged sword for sellers.

"This sounds like a good idea for the banks," he said. "If they want to sell, they have to drop their price. Short sales are good for banks, but they're not really good for the housing market."

Brian Lamb, Fifth Third Bank's Tampa Bay president, said his bank would rather sell houses in short sales than seize them in foreclosure. "Our goal is to be fair to our customers," he said. "We absolutely want to work with our borrowers."

Although short sales are a more favorable option to foreclosure, lenders must approve them for hardship reasons and they typically take longer to complete than conventional sales. Agents says some lenders are starting to close in 45 to 60 days instead of a year or longer. Some offer cash to homeowners for moving expenses and waive the unpaid balances on their loans.

And not every owner has to be in default. Many lenders are allowing homeowners to be current on their payments while being approved for a short sale. Bank of America recently rolled out a program in Florida that offers between $5,000 and $20,000 to sellers who dump their houses in short sales.

For borrowers, the damage to a credit score is less severe with a short sale than a foreclosure. Borrowers can usually buy a new home within two or three years after a short sale whereas it can be longer with foreclosure, said Andy Wood of American Mortgage Services in Tampa.

He added: "A short sale sends a message that the owner worked with the lender to mitigate the loss to the bank."

Foreclosures and evictions on hold for the holidays

The Atlanta Journal-Constitution By Christopher Quinn

Families in foreclosed homes are getting a holiday reprieve again this year, as government sponsored mortgage giants Fannie Mae and Freddie Mac, along with major banks such as Wells Fargo are holding off on foreclosures and evictions until 2012.

Like last year, the Thanksgiving and Christmas moratorium dropped metro Atlanta foreclosure notices in December to one of the lowest monthly totals for the year with 7,454. Only June 2011 was lower at 7,374. That is still more than twice the number of monthly foreclosure notices in the years leading up to the housing crisis.

The total for notices in 2011 dropped to the lowest level since 2008 -- 109,548 in metro Atlanta. There were 127,140 notices last year and 117,107 in 2009.

A notice does not always end up in foreclosure, as the homeowner can work out a deal with the bank, sell the home or find a few other escapes.

Many factors are helping depress the total in 2011 -- from federal regulators requiring more careful paperwork to a push by banks and nonprofits for refinancings, and the effects of the "robo-signing crisis," where lenders stopped foreclosures because forged or illegal real-estate documents were found in many cases.

Still, no U.S. housing market has ever experienced the many pressures and changes like those of today, local experts say, That makes it difficult to interpret what the shifting numbers mean.

"We had this ridiculous amount of foreclosures for all of 2009 and 2010 and it carried into the first quarter of 2011," said Barry Bramlett, the CEO of Equity Depot's Foreclosure Report.

"We are definitely going to be down in the number of properties advertised for foreclosure this year. If the only criteria is that less foreclosures are good, then that is a good thing," he said.

But the dropping number in 2011 means homeowners in shaky situations and ripe for eviction are just being put off to another day, it will slow the process by which the market is clearing itself of bad loans, Bramlett said.

"If your criteria is we are just going to continue stagnant because we won't allow the situation to weed itself out, then it is bad," Bramlett said.

"And all these influences which are influencing us downward are still there. It makes you think it is not going to change quickly.

Surprise: Credit union can take car, boat, RV if you walk out on unsecured loans

By Mark Puente, Times Staff Writer

Using a little known tactic, credit unions are repossessing customers' cars after they default on credit card payments or other unsecured loans.

With their customers battling declining wages and unemployment, credit unions increasingly employ the perfectly legal maneuver to stem financial losses.

"It's happening more than we know," lawyer Shawn Yesner said. "I don't see banks doing this, but credit unions do it a lot."

The tactic is called cross-collateralization. Clauses in loan agreements transform secured loans, like cars, boats or recreational vehicles, into collateral for unsecured loans like credit cards.

Credit unions can even block customers from selling a paid-off vehicle if the client has other outstanding debts with the institution.

The cross-collateralization clauses are disclosed in loan contracts, but the language is buried in the documents.

"Nobody ever reads that fine print," said Sami Thalji, a lawyer.

Some consumers first hear of the agreements in bankruptcy proceedings. A person who declares bankruptcy but wants to keep a car is surprised when the credit union adds the balance of an unpaid credit card or other credit lines to the auto loan from that credit union.

Suncoast Schools Federal Credit Union is the largest credit union in Florida and the 13th largest in the country. Jim Simon, senior vice president of loss and risk mitigation for Suncoast, said the lender is obligated to enforce the agreements and will freeze or seize accounts to cover losses.

"It's our members' money," Simon said. "Every member is an owner. Sometimes we have to do unpopular things."

Unlike banks, credit unions are member owned and return profits to members, not investors. The institutions have built a reputation on customer service and by charging lower interest rates on loans.

Suncoast is one the top automotive financiers in Tampa Bay. After taking a car or money from an account, Suncoast will likely return them when the default is cleared, Simon said.

Suncoast has repossessed only about 2 percent of cars in its portfolio of 70,000 car loans this year, Simon said. That would amount to about 1,400 repossessions. Freezing accounts, seizing money or repossessions is the last option, he added, stressing that the worst thing a consumer can do is avoid calling his lender when financial troubles arise.

"Your financial institution is here to help," Simon said. "We don't know what is going on in their lives. At the end of the day, it's best to communicate with the financial institution."

Officials with Grow Financial Federal Credit Union and GTE Federal Credit Union did not return calls for comment.

Keith Leggett, vice president and senior economist at the American Bankers Association, estimates that more than 70 percent of all credit unions use cross-collateral clauses in loan documents. He urges the institutions to be more transparent to customers.

"It's a rude awakening," he said. "Consumers need to understand this."

As a convenience to customers, lenders typically dangle lower interest rates to those who open checking and savings accounts and then take on mortgages, credit cards and car loans.

Lawyers warn that consumers shouldn't give one lender all their business. Holding multiple accounts with one credit union is not good since the lender has control over everything, Thalji said.

"Don't bank where you borrow," he said. "When credit unions freeze the accounts, bad things happen. Checks bounce; people can go into financial turmoil overnight."

Residents encouraged to participate in foreclosure review

Easton Courier

Attorney General George Jepsen and state Banking Commissioner Howard F. Pitkin are encouraging Connecticut borrowers who believe they suffered financial injury because of harmful mortgage loan servicing and foreclosure practices to participate in an Independent Foreclosure Review and claims process.

"This presents an opportunity for Connecticut borrowers to receive some compensation for damages they suffered as a result of harmful practices by the loan servicing companies during foreclosure," Mr. Jepsen said. "I would encourage them to take advantage of this program."

Mr. Pitkin added, "This is an important program and I encourage anyone who was involved in the foreclosure process and is eligible to participate in this review."

Eligibility

To be eligible for review and financial remediation, borrowers must have had a mortgage in the foreclosure process between Jan. 1, 2009, and Dec. 31, 2010. In addition, the property securing the loan must have been the borrower's primary residence, and the loan must have been serviced by one of the following loan servicers:

America's Servicing Company

Aurora Loan Services

Bank of America

Beneficial

Chase

Citibank

CitiFinancial

CitiMortgage

Countrywide

EMC

Everbank/Everhome

GMAC Mortgage

HFC

HSBC

IndyMac Mortgage Services

Metlife Bank

National City

PNC

Sovereign Bank

SunTrust Mortgage

U.S. Bank

Wachovia

Washington Mutual

Wells Fargo

The Independent Foreclosure Review and claims process was ordered by the Office of the Comptroller of the Currency and the Board of Governors of the Federal Reserve System — the federal agencies with responsibility and authority to regulate and supervise the loan servicers.

The federal agencies have ordered independent firms to evaluate whether individual borrowers suffered financial injury as a result of their loan servicer's errors, misrepresentations, or other deficient foreclosure practices; and to determine the appropriate amount of financial remediation that the loan servicer must provide to individual borrowers.

Many Connecticut borrowers have already received letters from the independent firms approved by the federal regulators. Those and other eligible borrowers are advised to complete the forms and mail them to the address provided by the April 30, 2012, deadline. Borrowers who have questions regarding the Independent Foreclosure Review and claims process should call the program administrator at 888-952-9105 or visit independentforeclosurereview.com.

Connecticut homeowners experiencing difficulty making their mortgage loan payments currently should contact the state Department of Banking's Foreclosure Assistance Hotline (877-472-8313). The department assists homeowners who are attempting to achieve loan modifications and prevent foreclosure.

Occupy’s next frontier: Foreclosed homes

A campaign to defend families from evictions and protest foreclosure fraud launches next week

Occupy Wall Street is promising a “big day of action” Dec. 6 that will focus on the foreclosure crisis and protest “fraudulent lending practices,” “corrupt securitization,” and illegal evictions by banks.

The day will mark the beginning of an Occupy Our Homes campaign that organizers hope will energize the movement as it moves indoors as well as bring the injustices of the economic crisis into sharp relief.

Many of the details aren’t yet public, but protesters in 20 cities are expected to take part in the day of action next Tuesday. We’ve already seen eviction defenses at foreclosed properties around the country as well as takeovers of vacant properties for homeless families. Occupy Our Homes organizer Abby Clark tells me protesters are planning to “mic-check” (i.e., disrupt) foreclosure auctions as well as launch some new home occupations.

“This is a shift from protesting Wall Street fraud to taking action on behalf of people who were harmed by it. It brings the movement into the neighborhoods and gives people a sense of what’s really at stake,” said Max Berger, one of the Occupy Our Homes organizers and a member of Occupy Wall Street’s movement-building working group.

The backdrop for all this is a new study suggesting the foreclosure crisis is only half over, with 4 million homes in some stage of foreclosure. Meanwhile, reports of illegal or questionable behavior by banks and mortgage lenders continue to stream in.

Like many of the Occupy actions that have focused on specific policy questions, this one is being organized by established progressive and labor-affiliated groups along with their allies in the movement. Among the allied groups listed on Occupy Our Homes’ website, for example, are the New Bottom Line and New York Communities for Change. On the Occupy Wall Street side of things, members of the direct action working group and the movement-building group in New York have been involved in the project.

Occupy Our Homes’ website (which was registered by a former SEIU official staffer) has the trappings of a slick professional campaign, with videos featuring the stories of families facing foreclosures and a pledge visitors are encouraged to sign stating:

… that until the banks do their part to help homeowners and to fix the economy, by writing down mortgage principal to current home values, I will:

I will support homeowners resisting wrongful foreclosure evictions.

I will resist any attempt by the bank to take my home.

If they come to foreclose, I will not go.

A network of groups organized as Take Back the Land has been doing eviction defenses and related actions around the country for five years, according to organizer Max Rameau.

“Now with this Occupy movement ramping up, I think we have a significant chance to keep large numbers of people in their home,” Rameau told Democracy Now earlier this month. “[The goal is to] not only force the banks to allow the family to stay in the home. But also then force policy changes that would help thousands of other people for whom we’re not doing eviction defenses.”

We saw a similar dynamic in the preexisting campaign to extend the millionaire’s tax in New York, which has benefited from new energy and a new banner offered by the Occupy movement.

Will the new Occupy push on foreclosures pick up any steam? I’ll be covering whatever happens on Dec. 6, so stay tuned to find out.

Foreclosure fraud whistleblower found dead

By msnbc.com staff

A notary public who signed tens of thousands of false documents in a massive foreclosure scam before blowing the whistle on the scandal has been found dead in her Las Vegas home.

NBC station KSNV of Las Vegas reported that the woman, Tracy Lawrence, 43, was scheduled to be sentenced Monday morning after she pleaded guilty this month to notarizing the signature of an individual not in her presence. She failed to show up for her hearing, and police found her body at her home later in the day.

It could not immediately be determined whether Lawrence, who faced up to one year in jail and a fine of up to $2,000, died of suicide or of natural causes, KSNV reported. Detectives said they had ruled out homicide.

Lawrence came forward earlier this month and blew the whistle on the operation, in which title officers Gary Trafford, 49, of Irvine, Calif., and Geraldine Sheppard, 62, of Santa Ana, Calif. — who worked for a Florida processing company used by most major banks to process repossessions — allegedly forged signatures on tens of thousands of default notices from 2005 to 2008.

Trafford and Sheppard were charged two weeks ago with 606 counts of offering false instruments for recording, false certification on certain instruments and notarization of the signature of a person not in the presence of a notary public. You can read a .pdf version of their indictment here.

Police said at the time that the alleged scam had thrown into question the legality of most Las Vegas home foreclosures in the past few years, leaving many people living in foreclosed-upon homes that they unknowingly don’t actually own.

“I would suggest you review your documents and bring them to an expert and an attorney,” said John Kelleher, chief deputy attorney general for Nevada’s fraud unit.

Hundreds attend home foreclosure prevention workshop

Amanda Mole, Hernando County Independent Examiner

Drivers jockeyed for a parking space in Central High School’s parking lot. Hundreds of people carrying pencils and notebooks flooded the hallways. Nervous chatter permeated the air. One would think it was the first day of school.

But it was not the first day of school. It was an early Saturday morning, and the people crowding the hallways were desperate homeowners, not high school teenagers. Over 300 people pre-registered for this morning’s home foreclosure prevention workshop sponsored by Congressman Rich Nugent. Hundreds more arrived and registered on-site.

Congressman Nugent, clearly moved, welcomed participants in the auditorium. “One person told me he was afraid that he’d register and be the only one here,” he told the crowd. “What’s important is that we understand that no one is alone in this, and that we talk to each other and come up with ideas and solutions.”

The event, which took place from 9:00am to 1:00pm, included three panel discussions with advice on consumer protection, legal process, and credit management and debt reduction. Additionally, 30 vendors, including banks, legal service providers, and debt counselors, were available on-site to provide assistance to the attendees free of charge. Dozens of people waited in long lines to take advantage of the opportunity.

Chai Mookdasanit, a self-employed small business owner facing home foreclosure, expressed appreciation for Congressman Nugent’s efforts. “Things like this need to take place more often,” he stated. “The county needs to be more aware of resident issues besides just enforcing the law… and giving out traffic violations,” he added with a laugh. “All of us are people. We all want to take care of our children. We all want to give them food, clothes, good education, you know? We all want the same thing.”

Are you facing home foreclosure? If so, here are some tips to protect yourself:

Beware of foreclosure rescue scams. Remember that if it sounds too good to be true, it probably is. Never send your mortgage payment to anyone other than your financial service provider. Any service that demands an up-front payment is in violation of the law.

Always have a written contract, and always know what you are signing.

BE PERSISTENT when communicating with your bank or mortgage lender. When you fail to connect with someone via phone or email, request an in-person meeting.

Contact reputable non-profit housing or financial counselors, such as the U.S. Department of Housing and Urban Development or the Homeownership Preservation Foundation.

If you think you are stuck in a foreclosure scam, consider contacting the following agencies immediately:

Federal Trade Commission

State Attorney General

State, County, and City Protection Offices

Fannie Mae, Freddie Mac Ban Steven Baum Law Firm From New Foreclosures

By Thom Weidlich

Bloomberg

Fannie Mae and Freddie Mac, the mortgage-finance companies operating under U.S. conservatorship, dropped Steven J. Baum PC from their list of law firms eligible to handle foreclosures.

“After Nov. 15, 2011, servicers may not refer any new Fannie Mae foreclosure or bankruptcy cases in New York to Steven J. Baum PC,” Fannie Mae said in servicing notice that day.

Freddie Mac announced its ban Nov. 10. Both companies said the Baum firm would continue to work on matters referred before the effective dates. Neither said why the firm was being suspended.

Last month, Steven J. Baum PC, one of the largest foreclosure law firms in New York state, agreed to pay the U.S. $2 million and change its practices to resolve a probe of its foreclosure filings. The agreement concluded an investigation into whether the firm filed misleading pleadings, affidavits and mortgage assignments in courts, according to a statement by U.S. Attorney Preet Bharara in Manhattan. The settlement didn’t constitute a finding of wrongdoing.

Earl Wells, a spokesman for Baum, didn’t immediately return a call seeking comment on Fannie Mae and Freddie Mac’s actions.

Brad German, a spokesman for McLean, Virginia-based Freddie Mac, said the company doesn’t comment on why it drops law firms from its list.

“We add and subtract designated counsel all the time,” he said in a phone interview today.

Amy Bonitatibus, a spokeswoman for Washington-based Fannie Mae, said that, beyond the servicing notice, she could only say that “Fannie Mae has permitted servicers to transfer existing cases from the Baum firm to new counsel.”

State attorneys general and federal regulators are negotiating with banks including JPMorgan and Bank of America to try to reach a settlement over faulty foreclosure practices.

Accusations

Steven J. Baum PC, located in Amherst, New York, just north of Buffalo, has attracted lawsuits and fines for its actions during the housing crisis. It has been accused of overcharging, filing false documents and representing parties on both sides of a mortgage transfer. On Oct. 28, a New York Times column reported that the Baum firm held a Halloween party last year during which employees dressed as foreclosed-upon homeowners.

New York Attorney General Eric Schneiderman is investigating the Baum firm, two people familiar with the matter said in May. Danny Kanner, a spokesman for Schneiderman, declined to comment on the investigation.

Home Seizures

Earlier this year, Florida foreclosure firm Law Offices of David J. Stern ceased processing home-seizure cases after Fannie Mae, Freddie Mac and home-loan servicers, including the largest U.S. banks, dropped it.

“GMAC Mortgage no longer uses the Steve Baum law firm and began suspending its activity with that firm in September,” Gina Proia, an Ally Financial Inc. spokeswoman, said in an e- mail.

Thomas Kelly, a JPMorgan Chase & Co. (JPM) spokesman, said the bank doesn’t comment on vendor relationships and wouldn’t say whether it continues to use the Baum firm.

“We have terminated that relationship,” Lawrence Grayson, a Bank of America Corp. (BAC) spokesman, said in a phone interview. That occurred before Fannie Mae’s and Freddie Mac’s announcements, Grayson said.

“We are evaluating and monitoring the firm and we will respond in the best interest of our customers and investors,” Vickee Adams, a Wells Fargo & Co. spokeswoman, said of the Baum firm in an e-mailed statement.

Mark Rodgers, a Citigroup Inc. spokesman, declined to comment on the Baum firm.

Foreclosed Homes Are Now Being Used As College Dorms And Pot Farms

By: Eric Goldshein

The Business Insider

There's no reason to be happy about the housing market nowadays — unless you're a college student in California, or a pot farmer.

These two demographics are taking advantage of high foreclosure rates, with varying levels of success.

University of California students are renting foreclosed homes in the city of Merced, which has the third-highest foreclosure rate in the country, for around $250-$300 a month per student, according to the NY Times (via Curbed).

Living alongside neighbors who are paying $3,000 a month on their mortgages, Merced students are living a lifestyle most college kids could only dream about, complete with granite counter tops and marble baths.

Meanwhile, Nevada's pot growers are turning foreclosed homes into greenhouses, according to the LA Times (also via Curbed). Entire houses have been turned into grow rooms, which can help farmers turn a massive profit (the DEA puts a pound of hydroponically grown marijuana at about $3,000).

This year alone, authorities have busted 130 indoor sites in Nevada, up from 18 in 2005. That's still a way to go to catch California's numbers, but in both cases a trend has certainly developed.

Investors Raising Cash to Buy Government Foreclosures

By: Diana Olick

CNBC Real Estate Reporter

If only all the confidence swirling around the stock market todaycould find its way to potential home buyers across the nation; unfortunately it will take more than a little Greek bounce to right what's wrong in housing.

Contracts to buy existing homes fell in September, according to a new report from the National Association of Realtors, and the culprit is confidence. More Americans are staying where they are more than ever before, and even Baby Boomers, once expected to fuel an active adult market, are stagnant.

What's weighing on confidence are still-falling home prices, and what's pushing those home prices down are foreclosures. That's why the Obama Administration is pushing a potential plant to auction off foreclosed properties in bulk to investors, specifically the quarter of a million properties currently on the books of Fannie Mae, Freddie Mac and the FHA. As demand for single family rental properties rises, so too do potential investor returns.

"There is a hope that we'll be able to do a pilot in the near future, perhaps by the end of 2011 or early 2012. However, there hasn't been any decision on timing yet," according to an administration source.

The hope is there, and apparently the cash is there as well.

"Many investors are out there raising billions of dollars to buy these properties," says Jaret Seiberg of MF Global. "It's a great idea, and it's one of the few things that we've heard in several years now that could really help housing in a meaningful way."

Seiberg likens it to the Resolution Trust Corporation, which liquidated assets (primarily real estate assets) during the Savings and Loan crisis in the 1980's.

"The idea is not just to reduce supply but to reduce the fear that there's going to be this massive flood of foreclosed homes into many markets, and it's that fear of this foreclosure inventory that's really keeping prices down," adds Seiberg.

There were takers back then, and will likely be many takers now.

"The beginning of the rentership society is upon us," say analysts at Morgan Stanley. "Singe family rental total returns offer lower volatility and outsized returns vs. other major asset classes, even when accounting for the housing bubble and subsequent declines."

Investors would need some incentives, however, like perhaps a tax break or low-interest-rate loans. Currently Fannie Mae caps the number of loans it makes to investors in single family properties at 10. Any program would of course have to go through Fannie and Freddie's regulator, the Federal Housing Finance Agency (FHFA), which is still, shall we say, mulling:

"Before moving forward with individual asset sales, we're working hard to ensure that we have engaged appropriate private sector financial expertise. For any given locality, market conditions may dictate one or another type of transaction," says an FHFA spokesperson.

Well I guess that's a start.

A Deal That Wouldn’t Sting

The New York Times

Published: October 29, 2011

By GRETCHEN MORGENSON

After months of back and forth, a deal that is supposed to punish large financial institutions for foreclosure misconduct may be nigh.

While the exact terms remain under wraps, some aspects of this agreement — between banks on one side, and the federal government and a raft of state attorneys general on the other — are coming into focus.

Things could change, of course, and the deal could go by the boards. But here’s the state of play, according to people who have been briefed on the negotiations but were not authorized to discuss them publicly.

Cutting to the chase: if you thought this was the deal that would hold banks accountable for filing phony documents in courts, foreclosing without showing they had the legal right to do so and generally running roughshod over anyone who opposed them, you are likely to be disappointed.

This may not qualify as a shock. Accountability has been mostly A.W.O.L. in the aftermath of the 2008 financial crisis. A handful of state attorneys general became so troubled by the direction this deal was taking that they dropped out of the talks. Officials from Delaware, New York, Massachusetts and Nevada feared that the settlement would preclude further investigations, and would wind up being a gift to the banks.

It looks as if they were right to worry. As things stand, the settlement, said to total about $25 billion, would cost banks very little in actual cash — $3.5 billion to $5 billion. A dozen or so financial companies would contribute that money.

The rest — an estimated $20 billion — would consist of credits to banks that agree to reduce a predetermined dollar amount of principal owed on mortgages that they own or service for private investors. How many credits would accrue to a bank is unclear, but the amount would be based on a formula agreed to by the negotiators. A bank that writes down a second lien, for example, would receive a different amount from one that writes down a first lien.

Sure, $5 billion in cash isn’t nada. But government officials have held out this deal as the penalty for years of what they saw as unlawful foreclosure practices. A few billion spread among a dozen or so institutions wouldn’t seem a heavy burden, especially when considering the harm that was done.

The banks contend that they have seen no evidence that they evicted homeowners who were paying their mortgages. Then again, state and federal officials conducted few, if any, in-depth investigations before sitting down to cut a deal.

Shaun Donovan, secretary of Housing and Urban Development, said the settlement, which is still being worked out, would hold banks accountable. “We continue to make progress toward the key goals of the settlement, which are to establish strong protections for homeowners in the way their loans are serviced across every type of loan and to ensure real relief for homeowners, including the most substantial principal writedown that has occurred throughout this crisis.”

Still, a mountain of troubled mortgages would not be covered by this deal. Borrowers with loans held by Fannie Mae and Freddie Mac would be excluded, for example. Only loans that the banks hold on their books or that they service for investors would be involved.

One of the oddest terms is that the banks would give $1,500 to any borrower who lost his or her home to foreclosure since September 2008. For people whose foreclosures were done properly, this would be a windfall. For those wrongfully evicted, it would be pathetic. Roughly $1.5 billion in cash is expected to go into this pot.

The rest of the cash that would be paid by the banks is expected to be split this way: the federal government would get about $750 million, state bank regulators about $90 million. Participating states would share about $2.7 billion. That money is expected to finance legal aid programs, housing counselors and other borrower support. If 45 states participated, that would work out to about $60 million apiece.

OBVIOUSLY, the loan modifications would make up a majority of the deal. And this is where real questions arise. For example, how can we be sure this plan won’t reward banks for modifications that they would have agreed to or should already have done absent the deal?

Perhaps most important, will the banks change the terms of loans enough to ensure that borrowers can actually meet their obligations over time? Or will these modifications default again, as is often the case? If so, the banks will have received a lucrative credit, even though borrowers fall back into trouble.

Such concerns are justified because past settlements promising big help to borrowers have failed to live up to their hype. An example is the 2008 settlement with Countrywide Financial that was struck by Illinois and California. Characterized as providing $8.7 billion in relief to troubled borrowers, it turned out to generate nowhere near that benefit.

The deal being discussed now may also release the big banks that are members of MERS, the electronic mortgage registry, from the threat of some future legal liability for actions involving that organization. MERS, which wreaked havoc with land records across the country, was sued last week by Beau Biden, Delaware’s attorney general, on accusations of deceptive trade practices.

The MERS registry was also subpoenaed last week by Eric Schneiderman, the attorney general of New York, as part of his investigation into the fun-while-it-lasted mortgage securitization fest. If he were to sign on to the settlement, his investigation into MERS could not move forward.

“Rules matter,” Mr. Biden said in announcing his suit. “A homeowner has the obligation to pay the mortgage on time and lenders must follow the rules if they are seeking to take away someone’s house through foreclosure.”

Abiding by the rules has not been the modus operandi in the foreclosure arena. That’s why any settlement must be tough, truly beneficial to borrowers and monitored for compliance. Otherwise, the deal would be another case where our government let the big banks win while Main Street loses.

Waiver OK'd on flipping houses

Monday, January 18, 2010
By LESLIE BERKMAN
The Press-Enterprise

In a move that could make foreclosed properties more attractive to investors and increase the number of homes available to first-time buyers, the federal government is temporarily lifting a prohibition against providing FHA mortgage insurance for homes that are resold within 90 days.

The Department of Housing and Urban Development designed the regulation to discourage the flipping of houses by investors that drove up prices during the housing market boom of a few years ago. But critics say its unintended effect has been to reduce the options of first-time buyers who already are competing for a shrunken supply of homes for sale.

Last year banks slowed the flow of properties headed to foreclosure, possibly in an effort to modify troubled mortgages to make them more affordable or to avoid posting losses when the homes are sold.

The waiver on the purchase of flipped houses with FHA mortgages, which begins Feb. 1 and is effective for one year, "will give FHA borrowers access to a broader array of recently foreclosed properties," HUD said Friday in announcing the change.

Conditions attached to the waiver are expected to prevent what HUD called "predatory practices" by investors. For instance, when a house is resold within 90 days of purchase at a price that is 20 percent higher, the seller would have to justify the increase, such as by showing how much was spent on repairs and renovation.

Some real estate experts complain that investors who come into the foreclosure market with cash have an unfair advantage over first-time buyers who are less attractive to the banks because they frequently can afford only minimum down payments.

Other experts argue that investors perform a community service by buying and fixing up the most distressed and vandalized foreclosed houses that otherwise would be uninhabitable and ineligible for FHA financing. But they add that in many cases investors have not been able to sell the refurbished houses to FHA buyers because they could not wait 90 days to recoup their purchase, rehabilitation and holding costs.

So instead of first-time buyers with FHA mortgages getting such houses, they often have been sold to investors who have converted them to rentals or to people who could afford the larger down payments required for conventional financing.

Rich Cosner, president of Prudential California Realty with nine offices in Orange, Riverside and San Bernardino counties, said because of the FHA restriction against insuring loans on houses bought from flippers, many first-time buyers "were locked out of some of the best houses."

Investor-owned houses that are "flipped" represent "a small but growing percentage of the resale market," said Andrew LePage, a spokesman for DataQuick Information Systems, which tracks housing sales and prices. LePage said absentee buyers, most of whom are investors, in December accounted for 24 percent of sales in Riverside County and 28 percent in San Bernardino County.

In November homes resold after being owned no more than 180 days represented 3 percent of sales in Riverside County and 4 percent in San Bernardino County, LePage said.

More investors

Nicholas Manfredi, president of the Corona-based Inland Empire Investors Forum, said HUD's waiver was greeted with joy by his investor colleagues.

"They were high-fiving me in the gym this morning," he said Monday.

Manfredi said he is certain the change will attract more investors who will buy houses in neighborhoods dominated by FHA buyers. He said previously some investors shied away from these lower-price neighborhoods, which he said had the effect of perpetuating community blight.

However, Manfredi said the future of the Inland foreclosure market is too murky for him to recommend that investors dive into flipping. His biggest worry, he said, is that the change in federal policy may mean that the government expects banks to start allowing their backlog of delinquent loans to rush to foreclosure. If that happens, he said, home prices will fall and harm anyone needing to quickly sell investment properties.

Several local real estate agents, including Joyce Aragon, a sales agent for All National Realty in Ontario and president of the Inland Valley Association of Realtors, say in recent weeks they have seen an uptick in the volume of repossessed homes coming to market.

Pete Nyiri, owner of Top Producers Realty in Corona, a major broker of repossessed houses, said the number of foreclosures that banks assigned to him last month increased 40 percent and many of those have yet to be listed.

Barclay Expects 'Triple-Dip' With Another 7% Drop in Home Prices

By: Carrie Bay

The analysts at Barclays Capital say a “triple-dip” in home prices will likely materialize by early next year.

The term “triple-dip” emerged in a Clear Capital report a couple of weeks ago, and Barclays says its analysis corroborates the idea.

The research firm warns that home prices will likely slip another 6 to 7 percent over the coming winter months. That would put median prices at a new low for this cycle, in fact about 3 percent below the double-dip measurement of last spring.

Following the probable “triple-dip” in the first quarter of next year, Barclays says home prices will “rise very gradually.”

“While the likelihood of a negative tail scenario in housing has increased, the probability of a 15-20 percent decline from current levels is still low, in our view,” Barclays’ residential credit analysts said in their report.

“Long-run home price measures suggest that prices are close to equilibrium,” they added.

Barclays notes that delays associated with foreclosures have, for the moment, prevented an overcorrection in home prices by limiting the amount of REO inventory on the market.

Still, REO inventory levels have remained elevated, and Barclays says close to 4 million homes are seriously delinquent or in foreclosure and will eventually need to be sold.

“We expect 90+ to foreclosure and foreclosure to REO roll rates to improve in the coming quarters. That said, the timelines of defaulting loans should continue to ramp up,” Barclays said.

As foreclosure to REO roll rates improve, the number of distressed homes placed on the market will increase.

Barclays says although REO supply and demand are currently evenly matched, the glut of foreclosed homes in the pipeline should eventually cause REO supply to far exceed REO demand.

This supply-demand imbalance could remain well into 2013 and 2014, according to the research firm.

Barclays says price gains will be constrained by the amount of REO supply that will be placed on the market in the next few years. At the same time demand for these homes will be “highly dependent” on the state of the economy, the firm stressed.

Bank of America Offers Short-Sale Program Through End Of November

By Mark Puente

ST. Petersburg Times

The clock is ticking on homeowners who want to take advantage of Bank of America's recently announced short-sale incentive program.

To collect up to $20,000, qualified sellers must get their homes listed for sale by the end of November.

The bank, which services 1.1 million Florida mortgages, says it is not limiting the offer to delinquent borrowers. Homeowners with good payment histories could also qualify, said Christina Beyer Toth, a Tampa-based Bank of America spokeswoman.

When the nation's largest lender announced the program offer last week, it didn't specify which homeowners would qualify or whether the bank wanted to only dump toxic loans it acquired from Countrywide Financial in 2008.

The program will save the bank attorney fees, court costs and property taxes by avoiding foreclosure. It also speeds the process of getting bad loans off its books and gets the properties back on the market faster.

Here's what else Bank of America mortgage holders need to know about the program:

Q. How will homeowners know if they qualify?

A. Bank of America will send them a solicitation mailer. Home­owners can also call the bank to see if they qualify, and real estate agents will notify eligible homeowners already listed for short sale. Either the homeowner or agent can call the short-sale specialists for further information and to determine eligibility. Government-backed loans and lot loans are excluded.

When do the homes have to be listed for sale?

Between Sept. 26 and Nov. 30. The deal must close by Aug. 31, 2012. Sales already under contract are not eligible for the cash assistance.

Q. Can homeowners with good payment histories qualify if their loans are under water?

A. Yes. Bank of America selected Florida for the test-and-learn program to determine whether the additional incentive increases the use of short sales instead of other more expensive, and perhaps less dignified, transitions like foreclosure. If it works in Florida, the bank might roll it out in other parts of the country.

Q. How will the payouts be determined?

A. Qualified homeowners will get 5 percent of the unpaid balance as of August 2011, with a minimum payout of $5,000, Bank of America says. For instance, a homeowner who owes $100,000 as of August would get $5,000 (5 percent of $100,000). A homeowner who owes $200,000 would get $10,000. And so on up to a maximum of $20,000. The sales price does not impact the payout.

To sweeten the deal further, Bank of America will consider waiving the deficiency on the loan, which allows homeowners to sell the house for less then they owe without having to make up the difference to the bank. That can save homeowners thousands of dollars and enable them to buy another home quicker.

Q. Will the program impact a homeowner's credit rating?

A. It depends on whether the loan is delinquent or current when the home is sold. The short sale will be reported as any other short sale is reported, in line with national credit reporting standards, Bank of America says. If "short sale" is listed on a credit report, the score will drop by at least 100 points, experts said. But some short sales are being listed as " paid in full," which wouldn't have the same detrimental impact on a credit rating.

Q. Are the cash payouts government funded?

A. No. Bank of America will pay all incentives.

Q. How much money does Bank of America plan to spend on the cash assistance?

A. "We cannot provide an answer," Toth said.

Short sale specialist Steve Capen of Keller Williams Realty in St. Petersburg cautioned that homeowners shouldn't get overly excited because many of these plans have restrictions.

Two of his clients applied for the program, and each learned immediately that they qualify for more than $12,000 if the homes sold. Both clients have been delinquent on their mortgages for more than a year, Capen said.

On the other hand, the banks told two other clients, who are current on their loans, to apply for the offer but did not specify if they would get any money, he said.

"They're not giving any answers on the payout," he said.

The Long Sale...

By Greta Guest

Buyers and Sellers Find Short-Sale Process Frustrating

DETROIT | Short sales are among the most arduous real estate transactions, often taking six months or more to close — if they get done at all.

Facts

CONSIDER THIS

Most experts agree that it is wise to hire a Realtor who is experienced in short sale transactions and a lawyer, if possible.

A short sale is less onerous to one's credit than a foreclosure. For instance, Fannie Mae allows people with a short sale on their record to get another mortgage after two years while those with a foreclosure have to wait seven years.

Once the seller has negotiated a deal with the bank about how much, if any, money to bring to the closing table, the bank usually issues a deficiency waiver that would protect the seller from being sued later on for the balance.

Keep the lines of communication open with lenders/servicers.

Keep detailed records.

Send everything to the lender/servicer by certified mail.

Source: Free Press research

They can be a life raft for distressed homeowners who owe more on their houses than what they're worth, but the experience depends on a variety of factors, such as the number of lenders involved and whether there's a hardship, mortgage insurance attached or whether the buyer has the patience to stay with the process.

A short sale occurs when a lender agrees to accept less than what the homeowner owes. The transaction requires that the homeowner has a financial hardship.

Homes with more than one mortgage and mortgage insurance tend to take the longest, said Ellen Mahoney, president of Complete Title Services' loss mitigation division in Birmingham, Mich. A growing reason short-sale deals fall through or take longer is because of mortgage insurance purchased after the homeowner closes on the deal and the loan is later sold to other lenders and investors.

Unlike private mortgage insurance required for sellers who put less than 20 percent down, these lenders and investors buy insurance to minimize risk. It is known in the real estate industry as pool insurance because it covers a group of loans that have been purchased.

Premiums are paid by the lender or investor, and the homeowner isn't aware of it.

When the loan defaults, such as in a short sale, the mortgage company may demand that the seller pay part of what is owed to minimize its losses.

"That's a mess. They are the worst," Mahoney said. "It is usually the lender mortgage insurance that nobody knew about, and it is usually on the second mortgage. It is real disruptive."

Often, the bank holding the first mortgage isn't made aware that the second mortgage had been insured until the end of the process, even if both loans are with the same lender. If the mortgage insurance company doesn't sign off on the deal, the process starts over again.

These kinds of delays mean buyers walk away because of the time and frustration involved.

Brian Pannebecker, 52, of Shelby Township, Mich., made an offer on a home in his neighborhood only to have the bank reject it.

"I would never, ever look at a short sale," he said. "I would go right to a foreclosure, which I eventually did. It was much, much easier."

Instead of buying in Michigan, Pannebecker bought a two-bedroom condo in Fort Myers, near where his father retired. He made an offer that was accepted within 24 hours during the holidays. The whole deal closed in six weeks.

Buyers don't typically ask to see short sales unless they have the luxury of waiting for an undetermined length of time to move, said Renee Reyer, a Realtor with Clients First Realtors in Canton, Mich.

Reyer does her homework on short sales. She checks the property history and finds how many mortgages the seller has to determine how difficult the deal might be to close. Based on that information, she works out the percentage of risk that the property won't close and presents that to her clients.

Banks say they've been working harder to make the short-sale process easier, but they acknowledge the delays.

At Chase, the average response is 30 days from request to approval, said spokeswoman Mary Kay Bean in Detroit. Chase has completed 120,000 short sales using its own process nationwide since June 2009 and is now averaging 5,000 a month.

Klorinda Hibbert, a real estate agent at Michigan brokerage Re/Max in the Hills, spends most of her day working on short sales and has 14 in progress now. She's noticed changes in the past year — and they aren't for the better.

She said lenders and servicers are requesting more than one broker's price opinion. The lender works with real estate brokers who put together a valuation on the property based on what similar properties are selling for. They're also requesting formal appraisals. They are good for only 90 days.

"The banks are willing to go into foreclosure rather than do a short sale," Hibbert said. "They want to get paid in full."

Even the federal government's program to streamline short sales — known as the Home Affordable Foreclosure Alternatives Program — has yet to gain traction because it doesn't allow the lender to collect on the home's deficiency.

Bank of America Lawyer, Consultant Gave Foreclosure Probe Chief $15,000

By MASSIMO CALABRESI

Iowa’s Democratic Attorney General Tom Miller is known for taking on big business. Elected to eight four-year terms, he led a multi-state anti-trust case against Microsoft in 2001 and filed a suit against 79 drug companies in 2007, alleging they illegally profited by inflating prices for drugs purchased through Medicaid. Most recently, Miller took the lead on the investigation by all 50 state attorneys general into the “robo-signing” foreclosure scandal, where several big banks allegedly approved taking away people’s homes without adequately verifying the facts in court, as required by law in some states. Last fall, just after he made the announcement that he would look into the foreclosure mess, contributions to Miller’s campaign coffers for November’s election soared, thanks in large part to out-of-state lawyers who make a living representing big banks, a new report from the National Institute for Money in State Politics finds. “Nearly half of the money Miller raised in 2010,” NIMSP reports, “was donated after the October 13 announcement that he would be coordinating the 50-state attorneys general investigation.” Two Miller contributors have become directly involved in defending the banks in the probe. One, Meyer Koplow of Wachtell Lipton in New York, gave Miller $5,000 and is representing Bank of America in direct negotiations with Miller, the attorney general tells TIME. Another, Elizabeth McCaul of Promontory Financial Group, gave Miller $10,000 and is consulting Bank of America in the negotiations, Miller says. Bank of America was one of the first and most prominent institutions accused in the foreclosure investigation. It gave more than $80,000 to the Democratic Attorney Generals Association, which spent more than $200,000 on Miller’s campaign, Miller says. Miller says Kaplow and McCaul are old friends and professional associates, and that they were not working for Bank of America before election day. He says neither has discussed the campaign contributions with him since they began work for the bank. The NIMSP report and revelations of campaign contributions by those working for Bank of America come at a sensitive moment, as Miller is in the thick of far-reaching negotiations with the banks. Though the case started as an investigation into robo-signing, it has broadened. The talks are aimed at a settlement that could set the terms by which banks service current and future home loans, and determine how they foreclose on properties. That could complement, or supercede, a settlement between banks and federal regulators reached earlier this year. Talks over monetary aspects of a potential settlement between the AGs and the banks are just getting under way. New rules for banks writing down mortgage principal and the establishment of a bank-paid fund to help with loan modification are on the table. Some reports have potential bank payments reaching $20 billion but sources on both sides suggest that number is high. The breadth of the negotiations has caused seven Republican attorneys general to split with the 43 other AGs. In early March, American Banker published a 27-page term sheet that Miller and the other attorneys general had presented to the banks in the talks. “We’ve had negotiations and have agreement on some of the terms but no overall agreement,” Miller says. Miller objects strongly to the NIMSP report. “It is extremely false and misleading,” Miller says. He disputes the report’s assertion that many of his campaign contributors have a “vested interest in the final terms of the settlement.” Other than Koplow and McCaul, none of the other lawyers named as campaign contributors in the report are involved in the case and none has an interest in the settlement, Miller says. Miller also says the report commits “an omission of material fact” in its description of his fundraising by comparing 2010 fundraising to prior races. “This race was unlike any race I’d been in before,” Miller says. “It was a race where the other side had $2.2 million. The most any of us ever spent in this race before was $300,000 or $350,000,” he says. Miller says he didn’t have a competitor in 2006 and that in 2010 he and his supporters eventually raised and spent around $1 million. Kevin McNellis, the author of the report, says the fact that he compared 2010 to 2006 without mentioning that there was no competitor in that race was “an oversight on my part.” Though the report argues that the campaign contributors’ interest in the outcome of the settlement of the foreclosure investigation is “vested,” which means “guaranteed” or “unconditional,” McNellis says he does not know which individuals or firms are directly involved in negotiations. But McNellis asserts that, “When they were contributing last fall, I’m sure that it was something they were very keenly aware of, that Miller was leading the investigation.” They would have an interest in the outcome, McNellis says, “even if they weren’t directly involved in the negotiations.” Neither McCaul nor Koplow would comment for this story.

Freddie Mac Military Foreclosure Prevention Programs–Service Members Get Nine Month Foreclosure Delay

By Lee McFarland

Freddie Mac recently offered the opportunity for military service members to delay foreclosure for nine months as many military personnel returning from active duty are struggling to make their mortgage payments, which has been common among homeowners across the nation. In a recent press release, Freddie Mac stated that servicers will not initiate foreclosure for at least nine months for financially troubled service members as this should give these financial institutions opportunities to find mortgage solutions for military homeowners suffering from financial difficulties in their personal life.

Obviously, there are home loan modification programs which maybe available to homeowners in the military, but it’s hoped that these efforts to suspend foreclosures by Freddie Mac can offer particular service members more opportunities to find the affordability they need in their monthly mortgage payment. There have been many cases both with military homeowners and nonmilitary homeowners where traditional modifications have simply been unhelpful in delaying or preventing foreclosure for their personal situation.

While there are also VA loan modification opportunities for those who qualify, this effort by Freddie Mac is hoped to, again, offer an extension on the time a servicer has to find an affordable solution to a homeowner’s predicament when these individuals who are returning from active service duty. This assistance opportunity which is provided to homeowners in a Freddie Mac mortgage will run through the end of 2011, which again, should offer foreclosure prevention options for military personnel in a troubling mortgage predicament.

Understandably, not all military personnel who are offered the opportunity to delay foreclosure on their home loan will benefit even if their servicer seeks out an assistance plan which may help them avoid foreclosure, but additional time to find modification programs, alternative mortgage payment assistance, or even a foreclosure alternative option through short sales or deed in lieu of foreclosure opportunities could be beneficial for military personnel in need of immediate mortgage assistance.

Short Sale And Deed In Lieu Of Foreclosure Plans After Mortgage Assistance Denials See Increase For Distressed Homeowners

Homeowners who are in a situation where they have attempted to find lower payments on their mortgage may find that some options for mortgage assistance is not available, as we have seen in monthly Treasury Department reports showing that there are homeowners who are denied assistance through the federal modification program, but in cases where homeowners may be facing negative equity as well, or may simply not qualify for these modifications, short sale and deed in lieu of foreclosure plans have been offered after a denial. Yet, questions have arisen over how beneficial these alternatives to foreclosure may be, despite the fact that there are some homeowners seeking out these options for their situation.

However, according to reports from the federal modification program, the program total for the top servicers within HAMP saw an increase in the deed in lieu of foreclosure plans and short sell options between May and June as homeowners whose trial modification was canceled saw an increase of almost 3,000 of these offers made available, while homeowners not accepted for a trial modification saw an increase of almost 10,000 in terms of the totals being tracked in this area.

Understandably, some homeowners feel that these options are more beneficial than resigning themselves to foreclosure, simply because it could help some families transition from a situation that is unaffordable, in terms of their home loan obligation, and by selling their home at a loss will be free and clear of any money owed to their lender. This can be helpful during times where distress like negative equity or even unemployment had arisen, but some arguments are still being made that homeowners should avoid turning to these options primarily, as there are still ways to avoid the loss of one’s home entirely.

Homeowners do need to be aware that there could be adverse effects on their credit score as well simply because this may be seen in a similar light as someone who settles the debt for less than they had originally owed. While there are some servicers who are working with homeowners to help them complete options like short sales, homeowners do need to keep in mind this could negatively impact their credit.

It has been the case though, some homeowners are simply not in a position where they are primarily concerned about their financial life, in terms of their credit score, as some men and women are simply trying to make ends meet, payoff multiple debt obligations, or overcome joblessness and may feel that getting an opportunity to participate in a short sale or a deed in lieu program will be best for their current situation. Yet, homeowners do need to understand that there are resources available to help them look at their financial situation, as housing counselors and similar assistance resources are still being stressed to homeowners in the hopes that troubled homeowners will use this assistance opportunity to look at how they may not only benefit from mortgage aid currently available but potentially find debt relief in other areas and avoid the loss of their home.

9 arrested in Pasadena protest over home foreclosure

By:Nicole Santa Cruz /Los Angeles Times

Nine people were arrested Wednesday afternoon in Pasadena after protesting the foreclosure of a La Puente woman’s home.

A group of about 70 people supporting Rose Gudiel and her disabled mother began protesting outside Pasadena City Hall, then moved to a Fannie Mae building nearby. Fannie Mae owns the loan on Gudiel’s house.

The building’s management determined that the protesters were being disruptive to business. After several warnings, the crowd dispersed and after a third warning nine people were arrested, said Lt. Pete Hettema of the city’s Police Department.

“Everyone was pretty cooperative,” Hettema said. “Obviously, the people in there were attempting to make a statement.”

Protesters held signs and chanted phrases such as “Shame, Shame Fannie Mae.” The group was associated with the Alliance of Californians for Community Empowerment and the Service Employees International Union.

Amy Schur of Los Angeles attended the protest. She called Gudiel’s actions courageous and said the woman’s situation is an “unfair, wrongful foreclosure.”

“This is about families across the city and across the country who are having their homes wrongfully taken away from them,” she said. “There are a lot of preventable foreclosures out there.”

Gudiel, 34, said she just wants to sit down and talk with representatives who might be willing to negotiate instead of foreclose.

“Every corner of that house is part of my American Dream,” she said.

A court date on the arrests is set for Dec. 7.

Robo-signed mortgage docs date back to late 1990s

By PALLAVI GOGOI

NEW YORK (AP) — Counties across the United States are discovering that illegal or questionable mortgage paperwork is far more widespread than thought, tainting the deeds of tens of thousands of homes dating to the late 1990s.

Already, mortgage papers are being invalidated by courts, insurers are hesitant to write policies, and judges are blocking banks from foreclosing on homes. The findings by various county registers of deeds have also hindered a settlement between the 50 state attorneys general who are investigating big banks and other mortgage lenders over controversial mortgage practices.

The problem of shoddy mortgage paperwork, which comprises several shortcuts known collectively as “robo-signing,” led the nation’s largest banks, including Bank of America Corp., JPMorgan Chase & Co., Wells Fargo & Co., and other lenders to temporarily halt foreclosures nationwide last fall.

At the time, “robo-signing” was thought to be contained to the affidavits that banks file when a mortgage is issued and somebody buys a house. The documents are used to prove they have the right foreclosure if the homeowner isn’t making mortgage payments. Companies that process mortgages said they were so overwhelmed with paperwork that they cut corners.

The suspect documents could create legal trouble for homeowners for years.

But now, as county officials review years’ worth of mortgage paperwork, in some cases combing through one page at a time, they are finding suspect signatures — either signed with the same name by dozens of different people, improperly notarized or signed without a review of the facts in the paperwork — on all sorts of mortgage documents, dating as far back as 1998, The Associated Press has found.

“Because of these bad titles, property owners can’t prove they own the properties they think they bought, and banks can’t prove they had the right to sell them,” says Jeff Thigpen, the registrar of deeds in Guilford County, N.C.

In Guilford County, where Greensboro is located, a sample of 6,100 mortgage documents filed since 2006 turned up 74 percent with questionable signatures. Thigpen says his office received 456 more documents with suspect signatures from Oct. 1 through June 30.

The suspect signatures found by Thigpen and other registrars around the country were on documents from the banks involved in the temporary foreclosure halt and others.

Widespread robo-signing that stretches back a decade or more could create problems for homeowners. Regulators have so far not asked lenders to clean up the potentially millions of suspect documents filed in the past decade or earlier. That troubles some banking experts, including Sheila Bair, who until early July was chairwoman of the Federal Deposit Insurance Corp.

“We do not yet really know the full extent of the problem,” Bair said in written remarks to the Senate Banking Committee. She and others have called for a comprehensive study on the extent of the fraudulent signatures in mortgage documents.

If documents with robo-signed signatures are challenged in court, judges could question the ownership of the properties, says Katherine Porter, a professor at University of California Irvine School of Law and an expert on consumer credit law. The consequences extend to homeowners in good standing when they try to sell.

If invalid documents are discovered in the chain of ownership, it could delay the sale or make it difficult for buyers to get a mortgage because title insurers won’t write a policy for the property, says Justin Ailes, vice president of government affairs of the American Land Title Association, a trade association representing the title insurance industry. Banks and other mortgage lenders won’t write a home loan without title insurance.

Among the findings shared with The Associated Press by county officials from several states:

— An investigation of mortgage documents in the county that includes Salem, Mass., found that more than 25,000 had suspect signatures. The earliest date to 1998, says John O’Brien, the registrar of deeds there.

— In Michigan, the state attorney general has sent criminal subpoenas to three companies that processed mortgage paperwork after 24 local recorders of deeds looked through their files and found rampant robo-signing.

— An Illinois county, Kankakee, pulled a sample of 60 documents filed since 2007 to look for suspect signatures. All 60 were “signed” by people who have been identified as robo-signers. At least 12 county officials in Illinois have sent their findings to the state attorney general.

The results of these reviews are troubling to the registers of deeds in counties across the country. It’s the job of these officials to record documents on property transfers, and they say, they need to be able to trust that notarized paperwork is legitimate.

“I want papers that come into our office to be clean,” says Lori Gadbois, the recorder of deeds in Kankakee County, whose office handles more than 15,000 mortgage documents in a typical month.

Many banks began outsourcing paperwork at the beginning of the housing boom around 1998. That’s when an increasing number of home loans were being packaged into securities on Wall Street and sold off to global investors. As demand skyrocketed, lenders and mortgage processing firms hired entry-level employees to sign hundreds of mortgage documents a day.

Sometimes they forged the signatures of executives who were qualified to sign. Other times, actual executives signed the documents without verifying their accuracy. Many of the documents were stamped by notaries even though the people who had signed the documents weren’t present when the papers were notarized, a requirement by law. All are instances of robo-signing, and are potentially illegal.

Meanwhile, federal bank regulators have focused on getting banks to clean up their act in the future, not on fixing the potentially millions of tainted documents that have been filed in land record offices in counties across the country.

Robo-signing came to light last fall, when the largest banks halted foreclosures for several months to clean up their paperwork problem. The lenders promised last fall to stop the practice. But The Associated Press reported in July that robo-signing has continued. Officials in at least four states say mortgage documents with suspect signatures have been filed with counties in recent months. The revelation led to calls for Congressional hearings.

On Thursday, the mortgage unit of Goldman Sachs Group Inc. agreed to stop robo-signing and other controversial mortgage practices under an agreement with New York state’s banking regulator. The Federal Reserve, meanwhile, launched a formal enforcement action against the unit, Litton Loan Servicing, ordering it to review foreclosure proceedings from 2009 and 2010.

“The banks are playing with the integrity of the land record system,” says John O’Brien, the recorder of deeds from Salem, Mass.

The documents that are filed in county deed offices are legal affidavits that transfer loans from one bank to another in a sale, refinancing, or foreclosure and certify if a loan has been paid off. They verify that there are no claims against the property.

Robo-signing could ultimately invalidate tens of thousands of home ownership documents, say legal experts.

In addition to delaying regular sales, banks could be blocked from foreclosing even if the homeowner falls behind on mortgage payments for the same reasons.

That’s already happening.

Judges who handle foreclosures in Maine, California, Arizona, New York and other states have thrown out foreclosure cases if documents contain signatures of known robo-signers.

On July 1, a state judge in Brooklyn ruled that HSBC lacked the legal authority to foreclose on homeowner Ellen Taher because the mortgage documents that accompanied the filing were signed by at least three known robo-signers.

In May, a Maine judge dismissed another foreclosure involving HSBC, calling mortgage documents presented in a case untrustworthy because they contained signatures of one person posing as three different people. HSBC spokesman Neil Brazil says another company handled the mortgage paperwork in the New York case, and the bank is working with regulators to address and resolve issues related to robo-signing.

Registrars like Thigpen in North Carolina and O’Brien in Massachusetts say they have taken their findings to federal authorities. Except for a call from the North Carolina attorney general’s office, though, Thigpen says he has been ignored for months.

Deed offices in North Carolina and Massachusetts have stopped recording documents if they contain signatures of names known to be part of the robo-signing scandal. Such actions could delay new sales. O’Brien, the recorder of deeds from Massachusetts, says he’s only responsible for one county out of more than 3,000 in the U.S.

“Federal regulators with a lot more authority than me have to step up to the plate and help correct this,” he says.

The 50 state attorneys general have been negotiating a settlement with major lenders over robo-signing and other bad mortgage practices. Analysts say it could top $20 billion. But the attorneys general of some states, including New York, Massachusetts, Illinois, Delaware and California, have balked because banks have demanded a release from all future liability on past mortgage practices or the mortgage-backed securities they sold to investors.

Floridians facing foreclosure could lose their homes faster under plan making rounds in Tallahassee

By: Kathleen Haughney

Floridians facing foreclosure could be stripped of their homes faster and have routine access to the courts limited under a proposal likely to come before Gov. Rick Scott and the Legislature in the coming months.

Bankers see it as a speedy and efficient way to manage foreclosure cases and get tens of thousands of Florida properties in ownership limbo back on the market, helping pull the state out of its economic doldrums.

In contrast, foreclosure defense lawyers and consumer activists see the plan as removing judicial oversight from a system that has proven to be riddled with fraud and abuse, and leaving ordinary homeowners defenseless before some of the state’s most powerful financial interests.

“Obviously there’s a lot of fraud being perpetrated by the banks in these cases,” said Michael Redman, a Palm Beach County resident who founded the Website 4closurefraud.org to chronicle Florida’s ongoing foreclosure crisis. “At this point in the game, it’s almost ridiculous to take it out of the court system.”

But the Florida Bankers Association, which has pushed the plan over the past few years, has key allies. Scott voiced support for the proposal at a Florida Bar convention this summer and told reporters Wednesday he is still interested in it. Some lawmakers have already jumped on board.

“Well, I want to make sure that we have an efficient process, so we don’t create a reason for banks or whoever lends money not to lend money in Florida,” Scott said. “When you talk to people that are in the system now they say it’s 600 days to get through foreclosure. All that does is create another incentive for people to not lend money when we want people to lend money to our state.

“I don’t know the answer yet, but I want to look at the process,” Scott said. “I want to get more information before I make a decision.”

According to RealtyTrac, a foreclosure tracking firm, Florida had the third highest foreclosure rate in the nation and was second in the number of foreclosure cases filed in 2010. On average, the firm said, the foreclosure process takes 676 days.

Usually the lender reclaims possession; other times, homeowners get to keep their property.

Currently, Florida is one of only 20 states to handle the foreclosure process through the courts. In California and Nevada, which have also been plagued by high foreclosure rates, foreclosure proceedings are primarily conducted outside court in about four months, though a judge can get involved if one of the parties deems it necessary.

Typically in states using a non-judicial system, the mortgage contract is based on a deed that includes a clause allowing banks to begin foreclosure proceedings without going to court. The bank gives notice to the homeowner and if the homeowner did not respond, the bank can reclaim the property.

Lawmakers and the Florida Bankers Association have pushed in the past for Florida to become a non-judicial foreclosure state but have come up short, with concerns about rampant fraud by some lending institutions trumping other arguments.

Legislation has not been filed yet this year on the issue, but legislative leaders inTallahassee seem interested. Legislative economist Amy Baker gave a presentation on the issue this week to the House Civil Justice Subcommittee and Katie Betta, a spokeswoman for House Speaker Dean Cannon, said that Cannon, R-Winter Park, has said he is open to it, but cautioned that the “devil is in the details.”

“That’s going to be a big issue this year. It’s already shaping up to be,” said state Rep. Darren Soto, D-Orlando, a member of the civil justice subcommittee who is opposed to taking judges out of routine foreclosure proceedings. “When we’re talking about the property right being paramount, we need to make sure due process is exhibited,” Soto said.

Anthony DiMarco, a lobbyist for the Florida Bankers Association, which represents more than 300 banks and financial institutions, said the association has not finalized its legislative agenda for 2012, but that it has generally supported the change in the past because it believes the faster homes can be repossessed by lenders, the better off the economy will be.

New buyers will move into the houses and apartments and start paying taxes, plus condo or homeowners association fees, he said.

“We have to get to the bottom to get out of this recession and the sooner we can do this the better,” DiMarco said.

But defense attorneys say the existing system needs more oversight by the courts, not less. Lawyers in the past few years have reported numerous cases where documents used to support foreclosures were missing or forged. The result has been a process that is not always fair to the homeowner, they say.

“Anything that takes away oversight isn’t necessarily a good thing, not necessarily for homeowners in foreclosure or the market in general,” said Chris Immel, a foreclosure lawyer in Palm Beach County. “We routinely see documents that just don’t add up.”

DiMarco argues, however, that with reputable financial institutions, that shouldn’t be a problem. Most cases, even when going through the courts, result in foreclosure, he said, but a non-judicial route would get to that end result quicker.

In states that already settle matters outside of the courts, homeowners are still given notice and time by lenders to settle the issue. If there is a mistake, they should be able to notify their bank and straighten out the problem, DiMarco said.

But if the bank is acting irresponsibly, DiMarco added, lawyers and judges should become involved.

“I think the end result is going to be the same and it will just be done a little quicker,” he said. “Other states have not seemed to have had a problem.”

Slow sales of bank-owned houses helps stabilize prices
BY COURTENAY EDELHART Californian staff writer

Bakersfield's disproportionate number of lender-owned houses may be helping insulate the local real estate market from price fluctuation.
That was the assessment of two California Association of Realtors economists, who on Tuesday issued the group's annual California housing market forecast.
Banks have been selling off their considerable inventory of foreclosed homes slowly in Kern County and other areas with high foreclosure rates, and that has helped to stabilize prices in regions hardest hit by the real estate crash, said deputy chief economist Robert Kleinhenz.
"You're probably going to see more price stability in those areas than some of the other areas with more equity sales," he said.
In Kern County, more than half of sales are distressed in some way, with the bulk leaning toward short sales, Kleinhenz said.
A short sale is an agreement between a seller and a lender to sell a property for less than the balance of the mortgage.
If a short sale can't be worked out, often the house goes into foreclosure. At that point, the home is defined as a real estate owned, or REO, property.
In the Bakersfield area, 41 percent of existing single-family home sales in August were REOs, and 19.1 percent were short sales, according to the Crabtree Report, a monthly report on the local housing market produced by Affiliated Appraisers.
That's an improvement over August of 2009, the year local home prices bottomed out. Back then, 60 percent of local home sales were REOs and 14 percent were short sales.
It's a good sign that short sales are increasing and sales of lender-owned properties are falling, Kleinhenz said.
"When you see more short sales than REOs, that is indicative of a market that is further along in the healing process than some areas of the state," he said.
Crabtree Report author Gary Crabtree cautioned that there is a large disparity between the number of short sales on the market compared with the number of short sales that have actually closed, however.
Even after a buyer and seller have reached an agreement, the bank has to sign off, and many lenders are either rejecting offers or taking a very long time to respond, he said.
"I've seen properties that have two to three buyers before they finally get an offer accepted by the bank," Crabtree said.
In a Lender Satisfaction Survey the California Association of Realtors conducted over the summer, more than half of Central Valley Realtors characterized short sale transactions as "difficult" or "extremely difficult" to close.
"Despite assurances by lenders in recent months that they would improve their short sale processes, clearly, not enough is being done," association treasurer Don Faught said in a statement.
In spite of that, the California Association of Realtors is forecasting that the state's median home price next year will be $296,000, up less than 2 percent over this year and well below the 2010 median price of $303,100.
Sales should grow about 1 percent to 496,200 next year, the association predicted.
"We have a market that is moving forward very sluggishly, bouncing along the bottom with the understanding that there's a whole closet full of wild cards that could change things," said the association's chief economist, Leslie Appleton-Young.
One of the biggest factors is the unemployment rate, which is holding back the entire state but is especially pronounced in the Central Valley, where so much job growth was tied to real estate and construction.
That situation isn't likely to change any time soon, Appleton-Young said.
Kern County's unemployment rate was 14.4 percent in August, compared with 11.9 percent statewide and 9.1 percent nationally.

Phony Audits: A New Twist on Foreclosure Rescue Scams

May 10, 2010by FTC

WASHINGTON, D.C. - May 10, 2010 - (RealEstateRama) — If you are facing default on your mortgage or foreclosure on your home, watch out for the latest scam:  phony “forensic mortgage loan audits.”  Con artists claim that for an upfront fee, their audits can help you hold onto your home.  Don’t believe them.

In a new consumer alert, Forensic Mortgage Loan Audit Scams:  A New Twist on Foreclosure Rescue Fraud, the Federal Trade Commission provides consumers with information and legitimate resources to help save their homes.

To read the alert and learn more about how to spot and avoid forensic mortgage loan audit scams, go to:  http://www.ftc.gov/bcp/edu/pubs/consumer/alerts/alt177.shtm.

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them.  To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357).  The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 1,800 civil and criminal law enforcement agencies in the U.S. and abroad.  The FTC’s Web site provides free information on a variety of consumer topics.

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