A Slap on the Wrist:
Banks May Face Fines for Flaws in Foreclosure Documents
by Alan Zibel, of Dow Jones Newswires, December 2, 2010
U.S. banks under examination for questionable foreclosure practices could face fines or criminal prosecution, a bank regulator said Thursday.
Julie Williams, chief counsel of the Office of the Comptroller of the Currency, said the agency is directing banks "to take immediate corrective action" to fix the problems.
Several major lenders, including Bank of America Corp, Wells Fargo & Co.and J.P. Morgan Chase & Co. have been reviewing thousands of foreclosure cases after revelations that they used so-called robosigners to file large numbers of foreclosure documents without reviewing their contents. Bank regulators and attorneys general in 50 states are investigating.
"We will not hesitate to take an enforcement action or impose civil money penalties, removals from banking and criminal referrals, if warranted," Williams said at a House Judiciary Committee hearing.Williams said examiners at the OCC, which supervises nationally chartered banks, are looking at foreclosed borrowers' loan files to review whether the documents were handled properly.
The agency's examiners, she said, are also looking for abuses such as excess fees and any improper use of force-placed insurance, which typically is used to protect lenders when borrowers allow their homeowner's coverage to lapse.
Williams said the agency expects to complete its examination by the end of this month and determine what action to take by late January.
Stealing a house worth several hundred thousand dollars and ruining someone's life forever, let alone thousands of people's homes and lives, is a huge crime. If, instead, a burglar robbed the house, he/she would get a lot of jail time. And if he/she robbed the bank, the burglar would get even more jail time. Why do the bankers just get a fine? They ought to be forced to return the house or otherwise compensate their victims, PLUS jail time. They need to understand the enormity of their crimes.
-- Editor
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Does This Mean They've Finally Taken The Hint?
BofA Moving 2,500 Origination Jobs to Modifications
Mortgage Daily, December 2, 2010
Mortgage Daily says that Bank of America Home Loans is moving 2,500 mortgage loan originators and other production staff to its loan modification department.
"We have transferred, from time to time, people who are involved on the origination side of the business … over to our servicing staff to handle the loan modifications," the spokesman stated.
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Freddie Mac Suspends Evictions December 20- January 3, 2011
Freddie Mac, December 1, 2020
Freddie Mac announced it has ordered all evictions involving foreclosed occupied single family and 2-4 unit properties that had Freddie Mac mortgages to be suspended from December 20, 2010 to January 3, 2011.
"If the property is occupied, our foreclosure attorneys will suspend the eviction to provide a greater measure of certainty to families during the holidays," said Anthony Renzi, Executive Vice President of Single Family Portfolio Management at Freddie Mac.
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Realtors Suggest Amending Credit Ratings to Help Borrowers Who Have Suffered in the Mortgage Crisis
The National Assn. of Realtors has asked Fair Isaac to help out with the nationwide foreclosure crisis by revising its model to recognize lender codings on credit file accounts indicating that homeowners had received loan modifications approved under federally backed programs. Rather than treating borrowers’ reduced post-modification payments as ongoing evidence that the mortgage was “not paid as originally agreed,” which depresses scores sharply, the association said FICO scores should reflect the reality that the lender agreed to lower payments and borrowers are making payments “as agreed.”
Thursday, December 2, 2010
Georgia's New AG Olens Wants Power to Investigate Foreclosures
by J. Scott Trubey, The Atlanta Journal-Constitution, December 1, 2010
And an expert in property law predicts that Olens' proposal will be just one measure among several related to tightening up the state's foreclosure laws...
...The attorney general has the power to prosecute mortgage fraud, but apparently not foreclosure fraud. Olens said he wants to change that, and he also said he might ask the State Bar of Georgia, which licenses lawyers, to look into allegations of misconduct by real estate attorneys in the mortgage origination as well as foreclosure process.
... Baker's office lacks the jurisdiction to pursue many of the criminal claims alleged by struggling borrowers. These allegations instead would fall to local district attorneys to investigate.
Read the article HERE.
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New Class Action in the Works: Seeks Class Members
Ohio Law Firm Investigating HSBC Bank & Citi Mortgage for HAMP Violations, Robosigning
Globe News Wire, December 1, 2010
The Cincininati law firm of Strauss & Troy announced today that it is investigating HSBC Bank and Citi Mortgage for potential violations of state and federal law with regard to foreclosures initiated against homeowners participating in the Home Affordable Modification Program (HAMP) and/or robo-signers who initiated foreclosure actions without adequately reviewing the filings. Strauss & Troy represents homeowners in a pending action against a bank for alleged violations of HAMP.
Individuals who have lost their homes in a foreclosure action or are currently in foreclosure initiated by HSBC or Citi Mortgage: (i) after making payments pursuant to a trial HAMP payment plan that was not made permanent, or (ii) as a result of robo-signers who initiated foreclosure actions without adequately reviewing the filings, [you] may have a claim and are encouraged to contact attorneys Richard Wayne, William Flynn, or John Levy at (513) 621-2120, or by email at:
rswayne@strausstroy.com, wkflynn@strausstroy.com or jmlevy@strausstroy.com for further information without any obligation or cost to you.
Richard Wayne, Esq.
William Flynn, Esq.
John Levy, Esq.
Strauss & Troy
Cincinnati, Ohio 45202
(513) 621-2120
1-800-669-9341[Georgia's] newly elected state Attorney General Sam Olens said Wednesday he will push the General Assembly for the authority to launch criminal investigations of improper foreclosure.
Wednesday, December 1, 2010
Foreclosure Foul-up: Tracking Down Those "Lost" Mortgages
By Stephen Gandel, Time Magazine, Nov. 29, 2010
Trevor Douglas, 54, may soon lose his Orlando house. Sure, Douglas hasn't paid his mortgage in more than two years, which is what a Bank of America spokesperson tells me "is important to remember." It is. Still, if it happens, I will feel partially responsible. I helped push Douglas closer to eviction.
Like many other home loans, Douglas' IOU was bought and sold numerous times and finally packed into a bond. So when his foreclosure notice finally arrived, the entity trying to kick him out was one he had never heard of, something called GSAMP. Worse, GSAMP said it had lost the original ... promissory note ... to prove they owned his loan. Douglas hired a lawyer, who got the foreclosure put on hold. And that's when I showed up...
,,, Just how bad is the problem? TIME dug into the mortgage of one troubled borrower. What we found suggests that many promissory notes are not lost. In an effort to rush homeowners to foreclosure, and hide damaging information, bankers' have needlessly created a huge legal mess that once again questions the financial industry's credibility and ethics. "They [banks] don't comply with the law when they're taking people's homes," says Michael Olenick, who owns Legalprise, a legal research firm.
Douglas' mortgage broker got him a loan from subprime lender Fremont General, which before it went bankrupt in 2008, was based in Brea, California. In mid-2005, Fremont sold the loan to New York-based Goldman Sachs, which packaged it up with other loans and sold it off to investors. In June, Iris Owens, an official in the servicing arm of Bank of Amerca, signed an affidavit attesting that after a "diligent search," Douglas' original note could not be recovered. But even without the bank's internal record it took me about four hours to find Douglas' loan.
Where is it? About five miles east of downtown Minneapolis, in a warehouse owned by Wells Fargo. A simple search of public documents on the Securities and Exchange Commissions website was able to produce the address and telephone number of the building it was in. Bank of America now concedes it made a mistake. Instead of calling Wells Fargo, an associate in Bank of America's mortgage-servicing division requested Douglas' note from Deutsche Bank, which runs the mortgage trust Douglas' loan is in, but is not the document custodian. Wells, as the SEC documents say, has that job. What's less clear is why Deutsche didn't tell the associate to call Wells or why someone at Bank of America didn't look up the same SEC filing I did. Instead, Owens, based on the information from her associate and doing no checking of her own, signed the lost-note affidavit. Douglas' loan had officially disappeared.
In early November, based on my research, Bank of America retrieved Douglas' original promissory note from Wells Fargo. The bank spokeswoman says it plans to soon file the note with the court. Bank of America says it is reviewing Douglas for a loan modification. But if he doesn't qualify, now that Bank of America has the original note, Douglas is sure to lose his house. If Douglas' mortgage is any indication of what's out there, while embarrassing for the banks, it suggests the cleanup will be less costly than feared. Still, it's not going to end soon. Multiply the four hours it took me to find Douglas' loan by 400,000 — one professor's estimate of the number of missing notes. Banks will be at this for a while
Read the entire article HERE.
By Stephen Gandel, Time Magazine, Nov. 29, 2010
Trevor Douglas, 54, may soon lose his Orlando house. Sure, Douglas hasn't paid his mortgage in more than two years, which is what a Bank of America spokesperson tells me "is important to remember." It is. Still, if it happens, I will feel partially responsible. I helped push Douglas closer to eviction.
Like many other home loans, Douglas' IOU was bought and sold numerous times and finally packed into a bond. So when his foreclosure notice finally arrived, the entity trying to kick him out was one he had never heard of, something called GSAMP. Worse, GSAMP said it had lost the original ... promissory note ... to prove they owned his loan. Douglas hired a lawyer, who got the foreclosure put on hold. And that's when I showed up...
,,, Just how bad is the problem? TIME dug into the mortgage of one troubled borrower. What we found suggests that many promissory notes are not lost. In an effort to rush homeowners to foreclosure, and hide damaging information, bankers' have needlessly created a huge legal mess that once again questions the financial industry's credibility and ethics. "They [banks] don't comply with the law when they're taking people's homes," says Michael Olenick, who owns Legalprise, a legal research firm.
Douglas' mortgage broker got him a loan from subprime lender Fremont General, which before it went bankrupt in 2008, was based in Brea, California. In mid-2005, Fremont sold the loan to New York-based Goldman Sachs, which packaged it up with other loans and sold it off to investors. In June, Iris Owens, an official in the servicing arm of Bank of Amerca, signed an affidavit attesting that after a "diligent search," Douglas' original note could not be recovered. But even without the bank's internal record it took me about four hours to find Douglas' loan.
Where is it? About five miles east of downtown Minneapolis, in a warehouse owned by Wells Fargo. A simple search of public documents on the Securities and Exchange Commissions website was able to produce the address and telephone number of the building it was in. Bank of America now concedes it made a mistake. Instead of calling Wells Fargo, an associate in Bank of America's mortgage-servicing division requested Douglas' note from Deutsche Bank, which runs the mortgage trust Douglas' loan is in, but is not the document custodian. Wells, as the SEC documents say, has that job. What's less clear is why Deutsche didn't tell the associate to call Wells or why someone at Bank of America didn't look up the same SEC filing I did. Instead, Owens, based on the information from her associate and doing no checking of her own, signed the lost-note affidavit. Douglas' loan had officially disappeared.
In early November, based on my research, Bank of America retrieved Douglas' original promissory note from Wells Fargo. The bank spokeswoman says it plans to soon file the note with the court. Bank of America says it is reviewing Douglas for a loan modification. But if he doesn't qualify, now that Bank of America has the original note, Douglas is sure to lose his house. If Douglas' mortgage is any indication of what's out there, while embarrassing for the banks, it suggests the cleanup will be less costly than feared. Still, it's not going to end soon. Multiply the four hours it took me to find Douglas' loan by 400,000 — one professor's estimate of the number of missing notes. Banks will be at this for a while
Read the entire article HERE.
Senate Hearing Tomorrow:
Part II of Senate Banking Committee Hearings on Problems in Mortgage Servicing From Modification to Foreclosure Will be Held Tomorrow
Wednesday, December 1, 2010
09:30 AM - 01:00 PM
538 Dirksen Senate Office Building
The witnesses for Panel I will be: Ms. Phyllis Caldwell, Chief, Homeownership Preservation Office, United States Department of the Treasury; The Honorable Sheila C. Bair, Chairman, Federal Deposit Insurance Corporation; The Honorable Daniel K. Tarullo, Governor, Board of Governors of the Federal Reserve System; Mr. John Walsh, Acting Comptroller of the Currency, Office of the Comptroller of the Currency; and Mr. Edward DeMarco, Acting Director, Federal Housing Finance Agency. The witnesses for Panel II will be: Mr. Terry Edwards, Executive Vice President, Credit Portfolio Management, Fannie Mae; Mr. Donald Bisenius, Executive Vice President, Freddie Mac; Mr. Tom Deutsch, Executive Director, American Securitization Forum; and Professor Kurt Eggert, Professor of Law, Chapman University School of Law.
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Senate Panel's Focus Tomorrow: Foreclosures Resulting from Mortgage Servicers' Advice
by Ariana Eunjung Cha and Zachary A. Goldfarb, Washington Post, November 30, 2010; 8:39 PM
Mortgage industry executives have argued for weeks that they are foreclosing only on borrowers who deserve it for missing their monthly payments.
But consumer groups and attorneys contend that many homeowners are being pushed into foreclosure because of errors or bad advice by the companies managing their loans - an issue that will be a core focus of a Senate banking committee hearing Wednesday...
... The hearing follows a similar one last month..
.
Lawmakers plan to probe the cause of such "servicer-driven foreclosures" - and question regulators over whether they are adequately watching the activities of mortgage servicers...
... "The problems currently in the news may be just the tip of the iceberg," said Sen. Christopher J. Dodd (D-Conn), the committee chairman. "The mortgage servicing industry may be plagued throughout with more systemic failures."
These "are problems that may result in homeowners being put at unnecessary risk of default and foreclosure," ...
Read the Washington Post article HERE.
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MA Deed Recorder Says MERS' Claim that Homeowners Would be Responsible for Paying Assignment Fees If Not for MERS is Ridiculous
by John Carney, CNBC, November 30, 2010
The gigantic mortgage database owned by the nations largest banks may have run afoul of Massachusetts strict property recordation filing laws, according to the elected Recorder of Deeds for the South Essex district of the state.
In an exclusive interview with CNBC, John O’Brien explained why he sent a letter to Massachusetts Attorney General Martha Coakley requesting an investigation into Mortgage Electronic Registrations Systems, Inc.
“It’s a basic issue of fairness. MERS says that if you are a member of their club, you can avoid fees on assignments of mortgages forever. Those are fees that everyone else pays,” O’Brien said. “I’ve never before heard of a private company that has attempted to unilaterally take over such a public function as property recordation. Imagine if someone tried to do this with drivers licenses."
MERS argues that it is saving recordation offices and homebuyers money by reducing paperwork and fees. It says that homeowners would be “directly or indirectly” responsible for paying the assignment fees if not for MERS.
“Nonsense. There’s no way homebuyers would be responsible for the fees from assigning a mortgage 15 times,” O’Brien said.
“I intend to pursue this as vigorously as the banks pursue a consumer who doesn’t pay a fee. If you don’t pay them, they’ll pursue you to the gates of Hell,” he said.
“Massachusetts has very clear cut rules. Recordation is not optional. It’s mandatory. It cannot be avoided,” he said.
He also indicated that his office would be glad to handle the work that MERS says it is doing on his behalf...
Part II of Senate Banking Committee Hearings on Problems in Mortgage Servicing From Modification to Foreclosure Will be Held Tomorrow
Wednesday, December 1, 2010
09:30 AM - 01:00 PM
538 Dirksen Senate Office Building
The witnesses for Panel I will be: Ms. Phyllis Caldwell, Chief, Homeownership Preservation Office, United States Department of the Treasury; The Honorable Sheila C. Bair, Chairman, Federal Deposit Insurance Corporation; The Honorable Daniel K. Tarullo, Governor, Board of Governors of the Federal Reserve System; Mr. John Walsh, Acting Comptroller of the Currency, Office of the Comptroller of the Currency; and Mr. Edward DeMarco, Acting Director, Federal Housing Finance Agency. The witnesses for Panel II will be: Mr. Terry Edwards, Executive Vice President, Credit Portfolio Management, Fannie Mae; Mr. Donald Bisenius, Executive Vice President, Freddie Mac; Mr. Tom Deutsch, Executive Director, American Securitization Forum; and Professor Kurt Eggert, Professor of Law, Chapman University School of Law.
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Senate Panel's Focus Tomorrow: Foreclosures Resulting from Mortgage Servicers' Advice
by Ariana Eunjung Cha and Zachary A. Goldfarb, Washington Post, November 30, 2010; 8:39 PM
Mortgage industry executives have argued for weeks that they are foreclosing only on borrowers who deserve it for missing their monthly payments.
But consumer groups and attorneys contend that many homeowners are being pushed into foreclosure because of errors or bad advice by the companies managing their loans - an issue that will be a core focus of a Senate banking committee hearing Wednesday...
... The hearing follows a similar one last month..
.
Lawmakers plan to probe the cause of such "servicer-driven foreclosures" - and question regulators over whether they are adequately watching the activities of mortgage servicers...
... "The problems currently in the news may be just the tip of the iceberg," said Sen. Christopher J. Dodd (D-Conn), the committee chairman. "The mortgage servicing industry may be plagued throughout with more systemic failures."
These "are problems that may result in homeowners being put at unnecessary risk of default and foreclosure," ...
Read the Washington Post article HERE.
------------------------------------------------------
MA Deed Recorder Says MERS' Claim that Homeowners Would be Responsible for Paying Assignment Fees If Not for MERS is Ridiculous
by John Carney, CNBC, November 30, 2010
The gigantic mortgage database owned by the nations largest banks may have run afoul of Massachusetts strict property recordation filing laws, according to the elected Recorder of Deeds for the South Essex district of the state.
In an exclusive interview with CNBC, John O’Brien explained why he sent a letter to Massachusetts Attorney General Martha Coakley requesting an investigation into Mortgage Electronic Registrations Systems, Inc.
“It’s a basic issue of fairness. MERS says that if you are a member of their club, you can avoid fees on assignments of mortgages forever. Those are fees that everyone else pays,” O’Brien said. “I’ve never before heard of a private company that has attempted to unilaterally take over such a public function as property recordation. Imagine if someone tried to do this with drivers licenses."
MERS argues that it is saving recordation offices and homebuyers money by reducing paperwork and fees. It says that homeowners would be “directly or indirectly” responsible for paying the assignment fees if not for MERS.
“Nonsense. There’s no way homebuyers would be responsible for the fees from assigning a mortgage 15 times,” O’Brien said.
“I intend to pursue this as vigorously as the banks pursue a consumer who doesn’t pay a fee. If you don’t pay them, they’ll pursue you to the gates of Hell,” he said.
“Massachusetts has very clear cut rules. Recordation is not optional. It’s mandatory. It cannot be avoided,” he said.
He also indicated that his office would be glad to handle the work that MERS says it is doing on his behalf...
Tuesday, November 30, 2010
The Latest Numbers
Obama Administration Will Spend Just $12 Billion Of The $50 Billion Promised To Help Homeowners Avoid Foreclosure, CBO Says
by Shahien Nasiripour, Huffington Post, November 29, 2010
... Through October, about 483,000 distressed homeowners were making reduced monthly payments thanks to the administration's [Making Home Affordable] plan -- barely 16 percent of Obama's most conservative estimate. More than 755,000 borrowers have been tossed, due either to failure to keep up with the reduced payments, issues with documentation, such as proof of income, or bank blunders. The Treasury Department, which is overseeing the program, has not punished a single mortgage company for failing to comply with its directives, despite anecdotal evidence that homeowners are routinely misled or taken advantage of by their mortgage servicers. Treasury has spent just $710 million of that $50 billion through the end of last month...
... home prices, which had stabilized, have begun to fall. The Federal Housing Finance Agency, a government watchdog, said last week that house prices have declined 3.2 percent nationwide during the past year. Moody's Investors Service forecasts home prices to fall an additional 5 percent from their current values. FHFA predicts that home values won't reach their June 2010 level until December 2013.
The Federal Reserve expects 6.5 million home foreclosure filings this year through 2012, Fed Governor Elizabeth Duke said Nov. 18 in testimony to the House Financial Services Committee. Nearly one-quarter of homeowners with a mortgage owe more on that debt than their home is worth, putting them "underwater," according to CoreLogic, a Santa Ana, Calif.-based data provider.
Read the entire article HERE.
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Foreclosure Watch: Report from The Field
North Carolina
Housing Predictor, a real estate web site, reports that foreclosures and short-sales account for nearly half of all homes sales in the Charlotte area, the state’s largest metro market. Sales are projected to remain sluggish in Charlotte in most of 2011 as the banking industry adapts to a new sort of environment. Housing prices are forecast to decline an average of 8.9% in Charlotte as the community becomes accustom to a new sort of economy.
The Triangle housing market suffered through a tough end to 2010, nearly coming to a standstill as foreclosures pressured home prices more than most had ever thought would occur. After the federal buyer tax credit expired record low interest rates seemed to do little to help the Raleigh market or neighboring Chapel Hill.
The burst of home sales produced by the credit failed to have any sort of lasting impact, but at least prices shot upward slightly. In Raleigh, Durham and neighboring Chapel Hill home sales dropped more than a third after the credit expired, sending the markets into a sort of painful fall. As more businesses lay-off workers, the community at least is anchored to some extent in its vast academic structure of universities.
The Triangle area is home to more than 1.5 million residents, most of whom will be able to wait out the tough real estate market. In Raleigh the market will take a clearing of foreclosures before stabilization can be found. However, a more diversified job base should help propel Raleigh into a recovery sooner than the rest of the state. Raleigh is forecast to sustain lower 4.3% deflation in 2011 on its way to appreciation towards the latter half of the year.
Unemployment hovering near 10% in North Carolina is hurting the economy and triggering foreclosures. But no other area in the state is suffering from record high unemployment as much as Wilmington, where homeowners have walked away from their homes in equally discouraging record numbers. Home prices are a bargain in Wilmington, where investors have been flocking to find rock bottom priced deals.
Wilmington is sustaining one of the hardest hits in the nation’s foreclosure crisis ... The average home is forecast to sustain a loss of 9.2% in 2011.
Home sales were like a diver rapidly crashing into the water of a pool at an Olympic diving venue in Greensboro after the federal tax credit expired. The market saw sales decline more than a third from year ago figures and prices came slamming down. In Greensboro, and neighboring Winston-Salem the markets will take some time to adjust ... Average home prices are forecast to decline another 8.3% in 2011 on sluggish sales...
Read the entire article HERE.
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Just Released GAO Report on Foreclosures Says Mortgage Banking Remains Totally Free of Oversight
by Zach Carter, Alternet, November 30, 2010
... Bank regulators in the United States were not even looking at foreclosure practices before the media latched onto the foreclosure fraud outbreak. The Office of the Comptroller of the Currency and the Federal Reserve acknowledged this in hearings two weeks ago, but it’s still harrowing to see the degree to which mortgage banking remains totally free of oversight, even after it drove the global economy off a cliff.
The rest of the report is about banks abandoning properties instead of proceeding with a foreclosure sale. Kind of sick– throw a family out, then just abandon the house altogether. The GAO says it’s not happening too much ... A simple loan modification would cut everybody’s losses here, but the banks can’t be bothered with that. And nobody is bothering the banks about it.
Read the GAO report HERE.
Obama Administration Will Spend Just $12 Billion Of The $50 Billion Promised To Help Homeowners Avoid Foreclosure, CBO Says
by Shahien Nasiripour, Huffington Post, November 29, 2010
... Through October, about 483,000 distressed homeowners were making reduced monthly payments thanks to the administration's [Making Home Affordable] plan -- barely 16 percent of Obama's most conservative estimate. More than 755,000 borrowers have been tossed, due either to failure to keep up with the reduced payments, issues with documentation, such as proof of income, or bank blunders. The Treasury Department, which is overseeing the program, has not punished a single mortgage company for failing to comply with its directives, despite anecdotal evidence that homeowners are routinely misled or taken advantage of by their mortgage servicers. Treasury has spent just $710 million of that $50 billion through the end of last month...
... home prices, which had stabilized, have begun to fall. The Federal Housing Finance Agency, a government watchdog, said last week that house prices have declined 3.2 percent nationwide during the past year. Moody's Investors Service forecasts home prices to fall an additional 5 percent from their current values. FHFA predicts that home values won't reach their June 2010 level until December 2013.
The Federal Reserve expects 6.5 million home foreclosure filings this year through 2012, Fed Governor Elizabeth Duke said Nov. 18 in testimony to the House Financial Services Committee. Nearly one-quarter of homeowners with a mortgage owe more on that debt than their home is worth, putting them "underwater," according to CoreLogic, a Santa Ana, Calif.-based data provider.
Read the entire article HERE.
------------------------------------------------------------
Foreclosure Watch: Report from The Field
North Carolina
Housing Predictor, a real estate web site, reports that foreclosures and short-sales account for nearly half of all homes sales in the Charlotte area, the state’s largest metro market. Sales are projected to remain sluggish in Charlotte in most of 2011 as the banking industry adapts to a new sort of environment. Housing prices are forecast to decline an average of 8.9% in Charlotte as the community becomes accustom to a new sort of economy.
The Triangle housing market suffered through a tough end to 2010, nearly coming to a standstill as foreclosures pressured home prices more than most had ever thought would occur. After the federal buyer tax credit expired record low interest rates seemed to do little to help the Raleigh market or neighboring Chapel Hill.
The burst of home sales produced by the credit failed to have any sort of lasting impact, but at least prices shot upward slightly. In Raleigh, Durham and neighboring Chapel Hill home sales dropped more than a third after the credit expired, sending the markets into a sort of painful fall. As more businesses lay-off workers, the community at least is anchored to some extent in its vast academic structure of universities.
The Triangle area is home to more than 1.5 million residents, most of whom will be able to wait out the tough real estate market. In Raleigh the market will take a clearing of foreclosures before stabilization can be found. However, a more diversified job base should help propel Raleigh into a recovery sooner than the rest of the state. Raleigh is forecast to sustain lower 4.3% deflation in 2011 on its way to appreciation towards the latter half of the year.
Unemployment hovering near 10% in North Carolina is hurting the economy and triggering foreclosures. But no other area in the state is suffering from record high unemployment as much as Wilmington, where homeowners have walked away from their homes in equally discouraging record numbers. Home prices are a bargain in Wilmington, where investors have been flocking to find rock bottom priced deals.
Wilmington is sustaining one of the hardest hits in the nation’s foreclosure crisis ... The average home is forecast to sustain a loss of 9.2% in 2011.
Home sales were like a diver rapidly crashing into the water of a pool at an Olympic diving venue in Greensboro after the federal tax credit expired. The market saw sales decline more than a third from year ago figures and prices came slamming down. In Greensboro, and neighboring Winston-Salem the markets will take some time to adjust ... Average home prices are forecast to decline another 8.3% in 2011 on sluggish sales...
Read the entire article HERE.
------------------------------------------------
Just Released GAO Report on Foreclosures Says Mortgage Banking Remains Totally Free of Oversight
by Zach Carter, Alternet, November 30, 2010
... Bank regulators in the United States were not even looking at foreclosure practices before the media latched onto the foreclosure fraud outbreak. The Office of the Comptroller of the Currency and the Federal Reserve acknowledged this in hearings two weeks ago, but it’s still harrowing to see the degree to which mortgage banking remains totally free of oversight, even after it drove the global economy off a cliff.
The rest of the report is about banks abandoning properties instead of proceeding with a foreclosure sale. Kind of sick– throw a family out, then just abandon the house altogether. The GAO says it’s not happening too much ... A simple loan modification would cut everybody’s losses here, but the banks can’t be bothered with that. And nobody is bothering the banks about it.
Read the GAO report HERE.
D.C. Government Issues Emergency Law Requiring Lenders to Go Through 6 Months of Mediation With Homeowners Before Foreclosing
RealEstateRama, November 20, 2010
The District of Columbia Department of Insurance, Securities and Banking (DISB) [has] issued a bulletin to inform licensed residential mortgage lenders and mortgage borrowers of the enactment of a new emergency law requiring mortgage lenders to go through six months of mediation with a homeowner before proceeding with a foreclosure...
... The bill, which was signed by Mayor Adrian M. Fenty on Nov. 17, 2010, requires lenders to send homeowners a form to opt in or out of mediation when the homeowners receive foreclosure notices from the lenders. If borrowers choose to opt in, they will enter mediation with their lender and have 90 days, in addition to the 30 days they had prior to deciding whether to opt in or out, to work out a deal. Mediation allows the borrower and the lender’s representative to negotiate, with the guidance of foreclosure mediators, impartial go-betweens hired by the agency to preside over mediation sessions geared to facilitate alternatives to foreclosures, such as loan modifications...
... The emergency legislation will expire Feb. 15, 2011. The permanent version, Bill 18-691, is pending ...
-----------------------------------------------------------
Banks Resisting Calls to Repurchase Fannie Mae, Freddie Mac Loans
by Nov 30, 2010 12:00
Fannie Mae and Freddie Mac ... are facing growing resistance as they attempt to push failed home loans off their books and onto the balance sheets of banks...
The two government-owned mortgage companies are enforcing contracts that require lenders to buy back loans that didn’t meet underwriting standards. At the end of September, the companies reported banks hadn’t responded to $13 billion in buyback requests. A third of those were at least four months old and Freddie Mac has begun to assess penalties for the delays.
Lenders say they are resisting buybacks because ... Freddie and ... Fannie are unfairly second-guessing old appraisals, accusing originators of failing to verify income, or pinning failed loans on minor technical errors. Larger banks say they can handle the potential losses. Some smaller lenders say the strain could sink them..
.
Fannie ... and Freddie ... have been operating under U.S. conservatorship since 2008. They have tightened credit standards and cut spending as they prepare for a government reorganization of mortgage finance that the administration of President Barack Obama could propose as soon as next year. They say the mounting buyback demands are the result of growing delinquencies, not new enforcement...
Overall, 33 percent to 39 percent of loans questioned by [Fannie and Freddie] are leading to buybacks, which could result in $20 billion to $33 billion in losses by the banks, analysts at FBR Capital Markets reported on Nov. 29...
... A bigger risk to large banks could be the private mortgage- backed securities issued by investment banks when subprime lending was at its peak, analysts say.
Chris Gamaitoni, a Compass Point Research and Trading LLC analyst, said in August that private-label buybacks and related legal expenses could cost banks as much as $179.2 billion.
Of the 30 million mortgages that Fannie ... and Freddie ... currently own or guarantee, 1.3 million are more than 90 days past due, the Federal Housing Finance Agency ... reported Nov. 18.
Fannie Mae and Freddie Mac say they have always sampled new loans for errors, which leads to some buyback demands. The vast majority, however, are the result of scrutiny that comes after borrowers fall behind...
... Lenders say that while Fannie Mae and Freddie Mac are asserting that loans went bad because of faulty underwriting, the leading cause of default is actually unemployment.
“If a loan paid for five years, then the client lost their job and somebody goes back and says, ‘You didn’t dot that I or cross that T,’ technically the originator has to buy that loan back,” William C. Emerson, chief executive officer of Detroit- based Quicken Loans, said in an interview. “Loans are being put back for very vague, gray reasons.” ...
... In Washington, the government role in the mortgage market remains under debate. The Obama administration is scheduled to release a plan for overhauling [Fanny and Freddie] in January, while some Republican leaders are calling for Fannie Mae and Freddie Mac to be dismantled entirely.
Get more details HERE.
RealEstateRama, November 20, 2010
The District of Columbia Department of Insurance, Securities and Banking (DISB) [has] issued a bulletin to inform licensed residential mortgage lenders and mortgage borrowers of the enactment of a new emergency law requiring mortgage lenders to go through six months of mediation with a homeowner before proceeding with a foreclosure...
... The bill, which was signed by Mayor Adrian M. Fenty on Nov. 17, 2010, requires lenders to send homeowners a form to opt in or out of mediation when the homeowners receive foreclosure notices from the lenders. If borrowers choose to opt in, they will enter mediation with their lender and have 90 days, in addition to the 30 days they had prior to deciding whether to opt in or out, to work out a deal. Mediation allows the borrower and the lender’s representative to negotiate, with the guidance of foreclosure mediators, impartial go-betweens hired by the agency to preside over mediation sessions geared to facilitate alternatives to foreclosures, such as loan modifications...
... The emergency legislation will expire Feb. 15, 2011. The permanent version, Bill 18-691, is pending ...
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Banks Resisting Calls to Repurchase Fannie Mae, Freddie Mac Loans
by Nov 30, 2010 12:00
Fannie Mae and Freddie Mac ... are facing growing resistance as they attempt to push failed home loans off their books and onto the balance sheets of banks...
The two government-owned mortgage companies are enforcing contracts that require lenders to buy back loans that didn’t meet underwriting standards. At the end of September, the companies reported banks hadn’t responded to $13 billion in buyback requests. A third of those were at least four months old and Freddie Mac has begun to assess penalties for the delays.
Lenders say they are resisting buybacks because ... Freddie and ... Fannie are unfairly second-guessing old appraisals, accusing originators of failing to verify income, or pinning failed loans on minor technical errors. Larger banks say they can handle the potential losses. Some smaller lenders say the strain could sink them..
.
Fannie ... and Freddie ... have been operating under U.S. conservatorship since 2008. They have tightened credit standards and cut spending as they prepare for a government reorganization of mortgage finance that the administration of President Barack Obama could propose as soon as next year. They say the mounting buyback demands are the result of growing delinquencies, not new enforcement...
Overall, 33 percent to 39 percent of loans questioned by [Fannie and Freddie] are leading to buybacks, which could result in $20 billion to $33 billion in losses by the banks, analysts at FBR Capital Markets reported on Nov. 29...
... A bigger risk to large banks could be the private mortgage- backed securities issued by investment banks when subprime lending was at its peak, analysts say.
Chris Gamaitoni, a Compass Point Research and Trading LLC analyst, said in August that private-label buybacks and related legal expenses could cost banks as much as $179.2 billion.
Of the 30 million mortgages that Fannie ... and Freddie ... currently own or guarantee, 1.3 million are more than 90 days past due, the Federal Housing Finance Agency ... reported Nov. 18.
Fannie Mae and Freddie Mac say they have always sampled new loans for errors, which leads to some buyback demands. The vast majority, however, are the result of scrutiny that comes after borrowers fall behind...
... Lenders say that while Fannie Mae and Freddie Mac are asserting that loans went bad because of faulty underwriting, the leading cause of default is actually unemployment.
“If a loan paid for five years, then the client lost their job and somebody goes back and says, ‘You didn’t dot that I or cross that T,’ technically the originator has to buy that loan back,” William C. Emerson, chief executive officer of Detroit- based Quicken Loans, said in an interview. “Loans are being put back for very vague, gray reasons.” ...
... In Washington, the government role in the mortgage market remains under debate. The Obama administration is scheduled to release a plan for overhauling [Fanny and Freddie] in January, while some Republican leaders are calling for Fannie Mae and Freddie Mac to be dismantled entirely.
Get more details HERE.
Caught in the Cookie Jar:
A Salem Trial for MERS?
by: John Carney, CNBC, November 30, 2010
The register for deeds in the Southern part of Essex County, Massachusetts, has asked the state’s attorney general to investigate whether the Mortgage Electronic Registration system has failed to pay recording fees required when mortgages are transferred...
... John O’Brien, the Salem based register for deeds in Southern Essex County, said in the letter to Coakley that it had come to his attention that a number of states have alleged in court filings that MERS intentionally failed to pay recording fees, and failed to disclose the transfer and assignments of interest in property, solely to avoid and decrease the recordation fees owed to the counties and the state....
... Perhaps more seriously, MERS may have wrongfully bypassed strict Massachusetts recording requirements. Unlike some states which allow for opt-outs or voluntary recordation, the Massachusetts recording requirements are mandatory...
.. MERS is taking the charge seriously enough to respond. It denies any wrong-doing and promises to “fully cooperate with any inquiries from proper authorities.”
MERS also lays out its theory of why it doesn’t need to pay new recording taxes when mortgages are passed between members. The basic idea is that MERS becomes the mortgage owner, holding legal title to the mortgage lien. What’s more, MERS argues that transfers of mortgage notes are not recordable events—only the lien transfer is a conveyance.
Here’s MERS full statement
It is not the case that recording fees are somehow owed or outstanding. MERS pays recording fees when the mortgage is recorded. Fees are paid for a service performed, and if a document is eliminated because it is no longer necessary, no fee is due because there is nothing to record. In fact, MERS greatly reduces the workload of county recorders, resulting in lower operating expenses for the county recorder’s office. Moreover, it would be the borrower, and not the lender, who ultimately pays the costs of recording assignments, either directly or indirectly.
When servicing rights or promissory notes are sold for loans where MERS is not the mortgagee, the usual practice is for the seller to execute and record an instrument assigning the mortgage lien to the purchaser (commonly referred to as an “assignment”). In general, the primary reason assignments are recorded (in cases where MERS is not the mortgagee), stems from the need of servicers to be in the land records to fully administer the loan on behalf of the mortgage loan owner. In which case, the servicer will be assigned the mortgage lien (thus becoming the mortgagee) in order to receive the service of process related to that mortgage loan. When Mortgage Electronic Registration Systems, Inc. is the mortgagee (i.e., holds the legal title to the mortgage lien), there is no need for an assignment of the mortgage lien between its members because MERS remains the mortgagee holding legal title to the mortgage as the common agent for them. It is not the case that the assignments are now being done electronically through the MERS® System instead of being recorded in the land records. The need for an assignment is eliminated because title to the mortgage lien has been grounded in MERS. Moreover, transfers of mortgage notes and servicing rights are not recordable transactions (and have never been reflected in the land records) because they are not a conveyance of an interest in real property that is entitled to be recorded; only the transfer of the lien is a conveyance. The only reason servicers needed to appear in the county land records before MERS was so they could receive legal notices pertaining to the property. Now, MERS as their common agent receives the legal notices. The chain of title starts and stops with Mortgage Electronic Registration Systems, Inc. as the mortgagee. MERS, as the agent for the note-owner, holds legal title for the note-owner in the land records.
The use of MERS is in compliance with the statutory intent of the state recording acts. When MERS is the mortgagee, the mortgage is recorded at the county land records, thereby putting the public on notice that there is a lien on the property. The MERS® System also complements the county land records by providing additional information that was never intended to be recorded at the county level, namely the information about the mortgage loan servicer, and now, with the addition of MERS® InvestorID, the name of the investor.
Read the letter to Massachusetts Attorney General
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Banks Accused of Stoking Foreclosure Crisis for Profit
by Kevin Killeen, CBS News, Nobember 29, 2010
ST. LOUIS–(KMOX)–A local attorney who helps homeowners fight foreclosure says he suspects banks are to blame for the rising number of homes seized.
Rusty Reinoehl spoke at a sidewalk rally in support of an 89-year old St. Louis County man fighting to hang onto his home.
Repeating a theme heard from many homeowners, Reinoehl says banks are telling people facing foreclosure to fax in their paperwork — their loan modification application — but it often seems to get “lost.”
“I suspect that in many cases there is some sort of either fraud or negligence on behalf of the banks,” Reinoehl said.
Locally, Reinoehl says he’s seeing about 800 to 1,000 foreclosures every week to ten days in the region.
Another attorney representing homeowners, Mark Moran, says he believes banks are purposely trying to wear down people who are facing foreclosure, rather than help them stay in their house.
“These banks are being underwritten for the full amount, and not just the exposure that they have,” Moran said, “So, there’s some wild profits that these banks are making. And you can see why the banks, being profit motivated,would want to foreclose, because the government is making them very wealthy by doing it.”
Meanwhile, the man at the center of the rally, homeowner Jay Jenson, held a protest sign and let others do most of the talking. The 89-year old veteran says he missed several payments on his mortgage during the market crash, and has been trying to get new loan terms, but keeps getting the run around...
His son Jim, who moved in with his father to help out, says the bank foreclosed on their property November 16th, but they have since received a letter saying it might not be too late to work something out...
... Attorneys attending the rally advised homeowners facing foreclosure to work with a lawyer from the start. Also, they say homeowners facing foreclosure should conduct all correspondence with their lender via certified mail — not by fax or e-mail – and demand a full line of title to determine who actually owns your loan.
A Salem Trial for MERS?
by: John Carney, CNBC, November 30, 2010
The register for deeds in the Southern part of Essex County, Massachusetts, has asked the state’s attorney general to investigate whether the Mortgage Electronic Registration system has failed to pay recording fees required when mortgages are transferred...
... John O’Brien, the Salem based register for deeds in Southern Essex County, said in the letter to Coakley that it had come to his attention that a number of states have alleged in court filings that MERS intentionally failed to pay recording fees, and failed to disclose the transfer and assignments of interest in property, solely to avoid and decrease the recordation fees owed to the counties and the state....
... Perhaps more seriously, MERS may have wrongfully bypassed strict Massachusetts recording requirements. Unlike some states which allow for opt-outs or voluntary recordation, the Massachusetts recording requirements are mandatory...
.. MERS is taking the charge seriously enough to respond. It denies any wrong-doing and promises to “fully cooperate with any inquiries from proper authorities.”
MERS also lays out its theory of why it doesn’t need to pay new recording taxes when mortgages are passed between members. The basic idea is that MERS becomes the mortgage owner, holding legal title to the mortgage lien. What’s more, MERS argues that transfers of mortgage notes are not recordable events—only the lien transfer is a conveyance.
Here’s MERS full statement
It is not the case that recording fees are somehow owed or outstanding. MERS pays recording fees when the mortgage is recorded. Fees are paid for a service performed, and if a document is eliminated because it is no longer necessary, no fee is due because there is nothing to record. In fact, MERS greatly reduces the workload of county recorders, resulting in lower operating expenses for the county recorder’s office. Moreover, it would be the borrower, and not the lender, who ultimately pays the costs of recording assignments, either directly or indirectly.
When servicing rights or promissory notes are sold for loans where MERS is not the mortgagee, the usual practice is for the seller to execute and record an instrument assigning the mortgage lien to the purchaser (commonly referred to as an “assignment”). In general, the primary reason assignments are recorded (in cases where MERS is not the mortgagee), stems from the need of servicers to be in the land records to fully administer the loan on behalf of the mortgage loan owner. In which case, the servicer will be assigned the mortgage lien (thus becoming the mortgagee) in order to receive the service of process related to that mortgage loan. When Mortgage Electronic Registration Systems, Inc. is the mortgagee (i.e., holds the legal title to the mortgage lien), there is no need for an assignment of the mortgage lien between its members because MERS remains the mortgagee holding legal title to the mortgage as the common agent for them. It is not the case that the assignments are now being done electronically through the MERS® System instead of being recorded in the land records. The need for an assignment is eliminated because title to the mortgage lien has been grounded in MERS. Moreover, transfers of mortgage notes and servicing rights are not recordable transactions (and have never been reflected in the land records) because they are not a conveyance of an interest in real property that is entitled to be recorded; only the transfer of the lien is a conveyance. The only reason servicers needed to appear in the county land records before MERS was so they could receive legal notices pertaining to the property. Now, MERS as their common agent receives the legal notices. The chain of title starts and stops with Mortgage Electronic Registration Systems, Inc. as the mortgagee. MERS, as the agent for the note-owner, holds legal title for the note-owner in the land records.
The use of MERS is in compliance with the statutory intent of the state recording acts. When MERS is the mortgagee, the mortgage is recorded at the county land records, thereby putting the public on notice that there is a lien on the property. The MERS® System also complements the county land records by providing additional information that was never intended to be recorded at the county level, namely the information about the mortgage loan servicer, and now, with the addition of MERS® InvestorID, the name of the investor.
Read the letter to Massachusetts Attorney General
------------------------------------------------------------
Banks Accused of Stoking Foreclosure Crisis for Profit
by Kevin Killeen, CBS News, Nobember 29, 2010
ST. LOUIS–(KMOX)–A local attorney who helps homeowners fight foreclosure says he suspects banks are to blame for the rising number of homes seized.
Rusty Reinoehl spoke at a sidewalk rally in support of an 89-year old St. Louis County man fighting to hang onto his home.
Repeating a theme heard from many homeowners, Reinoehl says banks are telling people facing foreclosure to fax in their paperwork — their loan modification application — but it often seems to get “lost.”
“I suspect that in many cases there is some sort of either fraud or negligence on behalf of the banks,” Reinoehl said.
Locally, Reinoehl says he’s seeing about 800 to 1,000 foreclosures every week to ten days in the region.
Another attorney representing homeowners, Mark Moran, says he believes banks are purposely trying to wear down people who are facing foreclosure, rather than help them stay in their house.
“These banks are being underwritten for the full amount, and not just the exposure that they have,” Moran said, “So, there’s some wild profits that these banks are making. And you can see why the banks, being profit motivated,would want to foreclose, because the government is making them very wealthy by doing it.”
Meanwhile, the man at the center of the rally, homeowner Jay Jenson, held a protest sign and let others do most of the talking. The 89-year old veteran says he missed several payments on his mortgage during the market crash, and has been trying to get new loan terms, but keeps getting the run around...
His son Jim, who moved in with his father to help out, says the bank foreclosed on their property November 16th, but they have since received a letter saying it might not be too late to work something out...
... Attorneys attending the rally advised homeowners facing foreclosure to work with a lawyer from the start. Also, they say homeowners facing foreclosure should conduct all correspondence with their lender via certified mail — not by fax or e-mail – and demand a full line of title to determine who actually owns your loan.
Monday, November 29, 2010
WikiLeaks to Unveil Major Bank Scandal
by Forbes Magazine, November 29, 2010
First WikiLeaks spilled the guts of government. Next up: The private sector, starting with one major American bank.
In an exclusive interview earlier this month, WikiLeaks founder Julian Assange told Forbes that his whistleblower site will release tens of thousands of documents from a major U.S. financial firm in early 2011. Assange wouldn’t say exactly what date, what bank, or what documents, but he compared the coming release to the emails that emerged in the Enron trial, a comprehensive look at a corporation’s bad behavior.
“It will give a true and representative insight into how banks behave at the executive level in a way that will stimulate investigations and reforms, I presume,” he told me.
Read Forbes’ full interview with Assange and our cover story on what he and WikiLeaks means for business here.
“You could call it the ecosystem of corruption,” Assange added. “But it’s also all the regular decision making that turns a blind eye to and supports unethical practices: the oversight that’s not done, the priorities of executives, how they think they’re fulfilling their own self-interest.” ...
... Since October, WikiLeaks has closed its submissions channel; Assange says the site was receiving more documents than it could find resources to publish. And half those unpublished submissions, Assange says, relate to the private sector. He confirmed that WikiLeaks has damaging, unpublished material from pharmaceutical companies, finance firms (aside from the upcoming bank release), and energy companies, just to name a few industries.
Whether and when those secrets come out is solely a matter of Assange’s discretion. “We’re in a position where we have to prioritize our resources so that the biggest impact stuff gets released first.” ...
Read more of this article HERE.
-----------------------------------------------------------
Case Study
Yet Another Borrower is Told to Go Into Arrears by Her Bank
The signs are down and the battle is over with the mortgage company.
Tiffany and Mike Miller of Oakwood signed papers for a new modified loan with Chase last week, and the couple has pulled signs - including a 25-foot banner draped across the roof of their home - declaring the company was trying to "steal" their Railroad Street home.
"People are starting to stand up to (lenders) and (saying), ‘Hey, stop, you're not doing what is best for your consumers,' " Tiffany said Sunday afternoon. "I would love to see more people stand up for their homes and not walk away from them, like so many people we know who have."
The Millers, facing a Dec. 7 foreclosure, began trying to get a modification loan nearly two years ago, after Tiffany was struck by a severe central nervous system disorder and eventually had to quit work. At the same time, the recession took its toll on Mike, self-employed in the flooring business...
... Concerned about making future house payments, they contacted Chase, which told them they needed to be at least three months behind on payments before the company could help them.
The Millers went into default and ended up making a temporary payment for the next 18 months. Chase finally offered a modified loan, but the payment was higher than the original one they were making.
On Nov. 2, the couple learned their house - where they have lived for 10 years - was in foreclosure and would be sold on Dec. 7.
In a rarely seen act, even as foreclosures are way up, the Millers posted their signs.
"Why is the sign on the house? Because we have raised our children not to tolerate bullying and to always stand up for themselves, and that is what we are doing," Tiffany said in an earlier interview.
When contacted about the matter, Nancy Norris, a Chase spokeswoman who covers Georgia, said the company's executive office would look into the case to make sure that everything was "being done properly."
"We want to avoid foreclosure any possible way we can," she said...
... The Millers are planning a new sign to post at their house - this one carrying a much happier message.
"I'm going to put up something to the effect that (the battle) is over and ‘thank you' to everyone who helped save our home," Tiffany said.
Read more HERE.
-----------------------------------------------------------
Foreclosure Watch: Reports from the Field
Sturgis, Michigan
Mark Heydlauff reports in the Sturgis Journal:
... According to the St. Joseph County Register of Deeds Office, 2009 saw 339 Sherriff’s Sale Deeds. They have issued 303 already in 2010 through the beginning of November. A Sheriff’s Sale Deed indicates a homeowner is in foreclosure .... The homeowner generally has six months after the issuance of the deed to reclaim the home through payment.
Another indicator of the local housing problem is the increase in delinquent property taxes. St. Joseph County Treasurer Phyllis Bainbridge saw a significant increase for 2009 delinquent taxes compared with 2008...
... “We have $5.1 million in delinquent taxes from 2009,” said Bainbridge, “that’s compared to $4.7 million in 2007 and $4.6 million in 2008.”
Property values decreased in the past couple of years meaning tax bills for individual property owners should actually be going down. The dramatic increase in delinquencies means more property owners are struggling to make ends meet even with slightly smaller bills...
... For the homeowner having trouble making ends meet, [St. Joseph County Treasurer Phyllis] Bainbridge advises the homeowner to consider applying for an extension or a poverty exemption.
“If a tax becomes delinquent, the homeowner can apply for an extension,” said
Bainbridge, “the extension requires a definite payment plan. We see how they do, if they keep up, they can be given up to two years to pay.”
Bainbridge said homeowners might also consider filing for a poverty exemption with the Board of Review for their city or township. This will reduce the property tax owed by those homeowners found to be at or below the federal poverty line...
... “I think it’s going to be difficult for a while,” said Bainbridge, “and I don’t know how long ‘a while’ is. There is no precedent for any of this. Everybody’s trying to guess when things will improve but nobody can really tell.”
Read more HERE.
by Forbes Magazine, November 29, 2010
First WikiLeaks spilled the guts of government. Next up: The private sector, starting with one major American bank.
In an exclusive interview earlier this month, WikiLeaks founder Julian Assange told Forbes that his whistleblower site will release tens of thousands of documents from a major U.S. financial firm in early 2011. Assange wouldn’t say exactly what date, what bank, or what documents, but he compared the coming release to the emails that emerged in the Enron trial, a comprehensive look at a corporation’s bad behavior.
“It will give a true and representative insight into how banks behave at the executive level in a way that will stimulate investigations and reforms, I presume,” he told me.
Read Forbes’ full interview with Assange and our cover story on what he and WikiLeaks means for business here.
“You could call it the ecosystem of corruption,” Assange added. “But it’s also all the regular decision making that turns a blind eye to and supports unethical practices: the oversight that’s not done, the priorities of executives, how they think they’re fulfilling their own self-interest.” ...
... Since October, WikiLeaks has closed its submissions channel; Assange says the site was receiving more documents than it could find resources to publish. And half those unpublished submissions, Assange says, relate to the private sector. He confirmed that WikiLeaks has damaging, unpublished material from pharmaceutical companies, finance firms (aside from the upcoming bank release), and energy companies, just to name a few industries.
Whether and when those secrets come out is solely a matter of Assange’s discretion. “We’re in a position where we have to prioritize our resources so that the biggest impact stuff gets released first.” ...
Read more of this article HERE.
-----------------------------------------------------------
Case Study
Yet Another Borrower is Told to Go Into Arrears by Her Bank
The signs are down and the battle is over with the mortgage company.
Tiffany and Mike Miller of Oakwood signed papers for a new modified loan with Chase last week, and the couple has pulled signs - including a 25-foot banner draped across the roof of their home - declaring the company was trying to "steal" their Railroad Street home.
"People are starting to stand up to (lenders) and (saying), ‘Hey, stop, you're not doing what is best for your consumers,' " Tiffany said Sunday afternoon. "I would love to see more people stand up for their homes and not walk away from them, like so many people we know who have."
The Millers, facing a Dec. 7 foreclosure, began trying to get a modification loan nearly two years ago, after Tiffany was struck by a severe central nervous system disorder and eventually had to quit work. At the same time, the recession took its toll on Mike, self-employed in the flooring business...
... Concerned about making future house payments, they contacted Chase, which told them they needed to be at least three months behind on payments before the company could help them.
The Millers went into default and ended up making a temporary payment for the next 18 months. Chase finally offered a modified loan, but the payment was higher than the original one they were making.
On Nov. 2, the couple learned their house - where they have lived for 10 years - was in foreclosure and would be sold on Dec. 7.
In a rarely seen act, even as foreclosures are way up, the Millers posted their signs.
"Why is the sign on the house? Because we have raised our children not to tolerate bullying and to always stand up for themselves, and that is what we are doing," Tiffany said in an earlier interview.
When contacted about the matter, Nancy Norris, a Chase spokeswoman who covers Georgia, said the company's executive office would look into the case to make sure that everything was "being done properly."
"We want to avoid foreclosure any possible way we can," she said...
... The Millers are planning a new sign to post at their house - this one carrying a much happier message.
"I'm going to put up something to the effect that (the battle) is over and ‘thank you' to everyone who helped save our home," Tiffany said.
Read more HERE.
-----------------------------------------------------------
Foreclosure Watch: Reports from the Field
Sturgis, Michigan
Mark Heydlauff reports in the Sturgis Journal:
... According to the St. Joseph County Register of Deeds Office, 2009 saw 339 Sherriff’s Sale Deeds. They have issued 303 already in 2010 through the beginning of November. A Sheriff’s Sale Deed indicates a homeowner is in foreclosure .... The homeowner generally has six months after the issuance of the deed to reclaim the home through payment.
Another indicator of the local housing problem is the increase in delinquent property taxes. St. Joseph County Treasurer Phyllis Bainbridge saw a significant increase for 2009 delinquent taxes compared with 2008...
... “We have $5.1 million in delinquent taxes from 2009,” said Bainbridge, “that’s compared to $4.7 million in 2007 and $4.6 million in 2008.”
Property values decreased in the past couple of years meaning tax bills for individual property owners should actually be going down. The dramatic increase in delinquencies means more property owners are struggling to make ends meet even with slightly smaller bills...
... For the homeowner having trouble making ends meet, [St. Joseph County Treasurer Phyllis] Bainbridge advises the homeowner to consider applying for an extension or a poverty exemption.
“If a tax becomes delinquent, the homeowner can apply for an extension,” said
Bainbridge, “the extension requires a definite payment plan. We see how they do, if they keep up, they can be given up to two years to pay.”
Bainbridge said homeowners might also consider filing for a poverty exemption with the Board of Review for their city or township. This will reduce the property tax owed by those homeowners found to be at or below the federal poverty line...
... “I think it’s going to be difficult for a while,” said Bainbridge, “and I don’t know how long ‘a while’ is. There is no precedent for any of this. Everybody’s trying to guess when things will improve but nobody can really tell.”
Read more HERE.
Foreclosure Foul-Ups
Banks have made the turmoil in the housing market worse.
by Chris O'Meara, AP, Orlando Sentinal, November 17, 2010
... This week the Sentinel reported on the story of Clare Sheaffer, a former St. Cloud City Council member who applied to her bank, Chase Home Lending, to modify the terms of her home loan after she was laid off. The relief she was promised didn't come through, she said, because of mistakes by Chase's call center.
Ms. Sheaffer wound up being threatened with foreclosure and harassed by bill collectors. Her original modification application has expired, forcing her to reapply and keep bill collectors at bay while she works two jobs.
Housing advocates say problems with call centers are not unusual for homeowners seeking to ease their payment burdens. Whatever the reasons, fewer than 10 percent of homeowners with mortgage problems have received loan modifications, according to the Boston-based National Consumer Law Center.
This fall, several major national banks temporarily suspended foreclosures after the robo-signers scandal broke. In Florida, Attorney General Bill McCollum launched an investigation into four large law firms representing lenders that may have presented "false or misleading documents" in foreclosures to speed up the process and ramp up their profits.
Florida's 9th Judicial Circuit, which comprises Orange and Osceola counties, has been given additional state funding to pay retired senior judges to work through a backlog of foreclosure filings that had swollen to nearly 40,000 cases this summer. The program got off to a promising start, but it is intended for uncontested cases. Now the doubts surrounding paperwork could bog it down. One of the law firms targeted in the attorney general's investigation has submitted thousands of foreclosure filings in the 9th Circuit.
... the problems have prolonged the uncertainty that has destabilized the housing market and pulled down prices.
Last month the head of the Federal Housing Administration said the mortgage industry was facing "an enormous trust deficit" in the wake of the documents scandal. He called on lenders to make up the deficit by doing more to help struggling borrowers avoid losing their homes. We would echo that call...
But we would also urge the industry to exercise far more care and judgment in the foreclosure process — and regulators to hold them to that higher standard. Dealing legally and fairly with people behind on their mortgage payments is far too serious an undertaking to risk fouling up through sloppiness.
Read the entire article HERE.
-----------------------------------------------------------
Some Attorneys May be Refiling the Same Bogus Papers That Led to the Mortgage Mess
Editorial, Palm Beach Post, 7:22 p.m., November 29, 2010... Despite an investigation by the 50 state attorneys general into the phenomenon that became known as "robo-signing," many law firms have refiled court documents that were pulled weeks ago, claiming that the flaws have been fixed and that there was no intent to defraud. The Post's Kimberly Miller reported last week that foreclosure defense attorneys say judges shouldn't allow lenders' attorneys to refile the same questionable documents.
The problem is that proving intent to defraud is difficult, and it is not the job of judges, who must be impartial arbiters, to investigate. In order for the Florida Bar to investigate, someone must file a complaint alleging fraud against an individual attorney. In most cases, that someone would be a homeowner or his or her attorney. In Palm Beach County, however, 80 percent of foreclosure cases are uncontested. Many people facing foreclosure give up, and others simply can't afford attorneys. So if there were fraud in any of those cases, the guilty would get away with it.
"If the defendant doesn't bring it to the court's attention, then how would the judge know?" said Salome Zikakis, a real estate lawyer who chairs the Florida Bar committee that deals with mortgages and real property. "It's not obvious from the face of the documents most of the time. If the defendant doesn't hire counsel or doesn't defend themselves then it's not the judge's job to be the defendant's attorney."
Class-action lawsuits seeking damages for homeowners who lost their properties through fraud have been filed in Florida, Maryland, New Jersey, Massachusetts and Maine. Banks negotiating with the state attorneys general are considering a compensation fund for people who went through foreclosure proceedings based on faulty documents...
Read the entire editorial HERE.
Banks have made the turmoil in the housing market worse.
by Chris O'Meara, AP, Orlando Sentinal, November 17, 2010
... This week the Sentinel reported on the story of Clare Sheaffer, a former St. Cloud City Council member who applied to her bank, Chase Home Lending, to modify the terms of her home loan after she was laid off. The relief she was promised didn't come through, she said, because of mistakes by Chase's call center.
Ms. Sheaffer wound up being threatened with foreclosure and harassed by bill collectors. Her original modification application has expired, forcing her to reapply and keep bill collectors at bay while she works two jobs.
Housing advocates say problems with call centers are not unusual for homeowners seeking to ease their payment burdens. Whatever the reasons, fewer than 10 percent of homeowners with mortgage problems have received loan modifications, according to the Boston-based National Consumer Law Center.
This fall, several major national banks temporarily suspended foreclosures after the robo-signers scandal broke. In Florida, Attorney General Bill McCollum launched an investigation into four large law firms representing lenders that may have presented "false or misleading documents" in foreclosures to speed up the process and ramp up their profits.
Florida's 9th Judicial Circuit, which comprises Orange and Osceola counties, has been given additional state funding to pay retired senior judges to work through a backlog of foreclosure filings that had swollen to nearly 40,000 cases this summer. The program got off to a promising start, but it is intended for uncontested cases. Now the doubts surrounding paperwork could bog it down. One of the law firms targeted in the attorney general's investigation has submitted thousands of foreclosure filings in the 9th Circuit.
... the problems have prolonged the uncertainty that has destabilized the housing market and pulled down prices.
Last month the head of the Federal Housing Administration said the mortgage industry was facing "an enormous trust deficit" in the wake of the documents scandal. He called on lenders to make up the deficit by doing more to help struggling borrowers avoid losing their homes. We would echo that call...
But we would also urge the industry to exercise far more care and judgment in the foreclosure process — and regulators to hold them to that higher standard. Dealing legally and fairly with people behind on their mortgage payments is far too serious an undertaking to risk fouling up through sloppiness.
Read the entire article HERE.
-----------------------------------------------------------
Some Attorneys May be Refiling the Same Bogus Papers That Led to the Mortgage Mess
Editorial, Palm Beach Post, 7:22 p.m., November 29, 2010... Despite an investigation by the 50 state attorneys general into the phenomenon that became known as "robo-signing," many law firms have refiled court documents that were pulled weeks ago, claiming that the flaws have been fixed and that there was no intent to defraud. The Post's Kimberly Miller reported last week that foreclosure defense attorneys say judges shouldn't allow lenders' attorneys to refile the same questionable documents.
The problem is that proving intent to defraud is difficult, and it is not the job of judges, who must be impartial arbiters, to investigate. In order for the Florida Bar to investigate, someone must file a complaint alleging fraud against an individual attorney. In most cases, that someone would be a homeowner or his or her attorney. In Palm Beach County, however, 80 percent of foreclosure cases are uncontested. Many people facing foreclosure give up, and others simply can't afford attorneys. So if there were fraud in any of those cases, the guilty would get away with it.
"If the defendant doesn't bring it to the court's attention, then how would the judge know?" said Salome Zikakis, a real estate lawyer who chairs the Florida Bar committee that deals with mortgages and real property. "It's not obvious from the face of the documents most of the time. If the defendant doesn't hire counsel or doesn't defend themselves then it's not the judge's job to be the defendant's attorney."
Class-action lawsuits seeking damages for homeowners who lost their properties through fraud have been filed in Florida, Maryland, New Jersey, Massachusetts and Maine. Banks negotiating with the state attorneys general are considering a compensation fund for people who went through foreclosure proceedings based on faulty documents...
Read the entire editorial HERE.
What Happened to the Government’s Short Sales Program?
by Nick Timiraos, Wall Street Journal, November 29, 2010
In April, the Obama administration formally rolled out a new program, called Home Affordable Foreclosure Alternatives, that was designed to spur more short sales, where banks allow homeowners to sell their homes for less than the mortgage debt outstanding.
Like other foreclosure-prevention initiatives, this one appears to be off to a slow start — just 342 sales have been completed through September...
... HAFA was ... designed to help reduce wait times by streamlining the short sale process through standardized documents and approaches for short sales. Under the program, the government offers incentive payments to mortgage-servicing companies, investors and even the borrowers that accept a short sale under prescribed guidelines.
For example, second-lien mortgages receive 6% of the unpaid loan balance in a short sale, up to a maximum of $6,000, but they must agree to relinquish all claims against a borrower ... The program also provides $3,000 in “move-out assistance” to borrowers.
Many real-estate agents say banks have largely ignored the program and that they are applying it unevenly. “Banks are initiating the HAFA transaction and then after three weeks they say, ‘Naw, sorry, you didn’t qualify,’” says Greg Markov, a Phoenix real-estate agent. “That three weeks is a huge pain. You wasted all this time.”
Industry officials, meanwhile, say that HAFA has been hindered by extensive documentation requirements and restrictive qualification guidelines. A homeowner that’s already relocated isn’t HAFA eligible, for example, and neither are borrowers that apply within 60 days of a foreclosure date.
The program is also voluntary, which may limit participation from second-lien holders and mortgage insurance companies that see a financial reason to avoid a short sale that requires them to forgo the opportunity to seek deficiencies against borrowers.
“It looks good on paper, but you can’t make anyone participate,” says Kevin Kauffman, a Phoenix real-estate agent who says he’s closed 150 short sales but has yet to complete one through HAFA.
Read more HERE.
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GMAC Joins Bank of America in Temporarily Halting Maine Foreclosures; AG Also Concerned About Their Handling of Making Home Affordable Program
by Joy Leopold, DSNews Daily, November 29, 2010
Maine attorney general Janet T. Mills announced last week that negotiations with GMAC Mortgage LLC and Bank of America had resulted in a temporary halt in foreclosure sales in the state.
The agreement came after the attorney general expressed concern about the foreclosure procedures used by the two companies, both of which have been involved in recent “robo-signing” issues.
Mills also expressed concern with Bank of America’s Home Affordable Modification Program, which has experienced some slow-downs due to paperwork overload.
“My office is receiving calls every day from homeowners who complain that the bank lost the paperwork and they are unable to speak with the same person twice about their loan,” Mills said in a statement.
She continued, “My office will continue to insist that the banks devote more resources to loan modifications and to streamlining their modification processes. I advise consumers to be persistent, to contact a HUD certified counselor and to document attempted contacts with their lender.”
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4 Ways to Fight Foreclosure in Court
Go Fight Foreclosure Blog
... Here are the four most common ways lenders often carry out wrongful foreclosures:
1. Not offering or approving a loan modification even if all guideline requirements are acceptable.
This is probably why 66% percent of the homeowners who need assistance don’t get assistance from HAMP. One big reason behind this is that lenders lose money by offering loan modifications and are not very motivated to approve them...
... Challenging lenders for these types of unethical business practices is a foreclosure defense and solution to force lenders to modify loan payments to make them affordable.
2. Truth and Lending Act Violations and Predatory Lending Practices
All loans including mortgage loans fall under the Truth and Lending Act guidelines. These guidelines were first put in place back in 1968 to require that lenders provide full disclosure on key lending arrangements and costs associated with loans.
If these violations are challenged homeowners can arm themselves with foreclosure defenses backed by federal statute.
3. Foreclosing Without Showing (Proofing) Ownership Of The Mortgage Note
Under the Uniform Commercial Code, the lender must provide proof that they own the original note and have it in their possession. However, many lenders have actually managed to foreclose anyway by providing a “certified copy of the note.” They can easily get away with this if the homeowner does not contest by demanding that the original mortgage note be produced and undergo forensic tests to prove it is the original. When a mortgage note has been transferred from different loan servicing companies and mortgage lenders and is kept in a securitized trust, rarely can the original mortgage note be produced! Without the original mortgage note a lender CAN NOT foreclose on a property both in judicial or non judicial states....
4. Foreclosing Without Due Course
Another very important statue under the Uniform Commercial Code requires that lenders must have acquired the mortgage note in due course. This requires that lenders show how they took possession of the mortgage note and from whom ... When mortgage notes are transferred from one lender to the next lender an assignment of the mortgage must be recorded. Numerous times lenders carry out foreclosures without being in due course and no assignments ever being recorded. Lenders can not legally carryout foreclosures if they are not in due course.
Read more HERE.
FED Proposes Rule That Would Disable the Most Effective Legal Tool Borrowers Have to Fight Foreclosure
New York Times Editorial, November 28, 2010
... Despite mounting evidence of borrower mistreatment, the Federal Reserve has proposed a rule that would disable the most effective legal tool that borrowers have to fight foreclosures.
First, some background: The Truth in Lending Act from 1968 gives borrowers the “right of rescission,” the ability to undo a home refinancing or home equity loan within three years of the closing if the lender did not make proper disclosures — generally of the loan amount, interest rate and repayment terms. The law makes allowances for mere mistakes by the lender, but otherwise requires strict compliance...
... disclosure violations are not uncommon in the loans of the bubble years, so rescissions have become a valuable defense against foreclosure. That’s because when a loan is rescinded, the lender must give up its security interest in the home — and without a security interest, the lender cannot foreclose. The borrower must still repay the loan principal, minus payments already made. Essentially, a lender that has not complied with required disclosures can get its money back, but not interest and other fees
In practice, one of the ways that rescissions have worked is that lenders faced with rescission have instead modified the loans, by reducing principal and setting new repayment terms.
The Fed proposal would change all that. Citing concern over banks’ compliance costs, it would require a borrower to pay off the remaining principal before the lender gives up its security interest. That would be clearly impossible for troubled borrowers. So the Fed’s proposal would benefit the creditor who violated the law rather than the borrower, paving the way for foreclosures that otherwise could be avoided.
The Fed failed to protect consumers before the financial crisis, and is failing again. Hundreds of consumer and civil rights organizations, state and local legal aid programs, and homeowners’ lawyers have signed a letter asking that the proposal be withdrawn. The Fed should comply.
Americans for Financial Reform letter to the FED is HERE.
Read the entire editorial HERE.
New York Times Editorial, November 28, 2010
... Despite mounting evidence of borrower mistreatment, the Federal Reserve has proposed a rule that would disable the most effective legal tool that borrowers have to fight foreclosures.
First, some background: The Truth in Lending Act from 1968 gives borrowers the “right of rescission,” the ability to undo a home refinancing or home equity loan within three years of the closing if the lender did not make proper disclosures — generally of the loan amount, interest rate and repayment terms. The law makes allowances for mere mistakes by the lender, but otherwise requires strict compliance...
... disclosure violations are not uncommon in the loans of the bubble years, so rescissions have become a valuable defense against foreclosure. That’s because when a loan is rescinded, the lender must give up its security interest in the home — and without a security interest, the lender cannot foreclose. The borrower must still repay the loan principal, minus payments already made. Essentially, a lender that has not complied with required disclosures can get its money back, but not interest and other fees
In practice, one of the ways that rescissions have worked is that lenders faced with rescission have instead modified the loans, by reducing principal and setting new repayment terms.
The Fed proposal would change all that. Citing concern over banks’ compliance costs, it would require a borrower to pay off the remaining principal before the lender gives up its security interest. That would be clearly impossible for troubled borrowers. So the Fed’s proposal would benefit the creditor who violated the law rather than the borrower, paving the way for foreclosures that otherwise could be avoided.
The Fed failed to protect consumers before the financial crisis, and is failing again. Hundreds of consumer and civil rights organizations, state and local legal aid programs, and homeowners’ lawyers have signed a letter asking that the proposal be withdrawn. The Fed should comply.
Americans for Financial Reform letter to the FED is HERE.
Read the entire editorial HERE.
The Mortgage Foreclosure Legislation Congress Won’t Touch
by Peter G. Miller, OurBroker.com, November 29, 2010
Stashed away in a draw somewhere on Capitol Hill is a simple piece of legislation that would have done much to stop the mortgage mess, robo-signing, unfair foreclosures, and the growing claims against lenders. But Congress has not touched the Produce the Note Act since it was first introduced in February 2009 — nearly two years ago.
Now, with this session of Congress drawing to an end, the chance of a hearing, consideration or a vote has dropped to just about zero.
Sponsored by Rep. Marcy Kaptur (D-OH), the legislation would require lenders in a foreclosure situation to identify the actual owner of the mortgage note, the originating mortgage lender and all subsequent loan owners...
... This should not be a big deal. After all, we plainly know who originated the mortgage — that would be the lender who sat with you at closing and collected a fee for their work.
And if the loan was sold then surely someone, somewhere has a record showing the date of sale and the purchase price each time the loan was sold and re-sold. After all, we know who owns 100 shares of IBM no matter how many times it has been traded.
The misrepresentation requirement is important because huge numbers of subprime borrowers — the borrowers with the steepest foreclosure rates — in fact qualified for conventional, FHA and VA financing...
Kaptur — a Democrat who swam against the Tea Party tidal wave and won re-election with 59 percent of the vote — can try again in the 112th Congress, which starts next year.
Read the complete article HERE.
by Peter G. Miller, OurBroker.com, November 29, 2010
Stashed away in a draw somewhere on Capitol Hill is a simple piece of legislation that would have done much to stop the mortgage mess, robo-signing, unfair foreclosures, and the growing claims against lenders. But Congress has not touched the Produce the Note Act since it was first introduced in February 2009 — nearly two years ago.
Now, with this session of Congress drawing to an end, the chance of a hearing, consideration or a vote has dropped to just about zero.
Sponsored by Rep. Marcy Kaptur (D-OH), the legislation would require lenders in a foreclosure situation to identify the actual owner of the mortgage note, the originating mortgage lender and all subsequent loan owners...
... This should not be a big deal. After all, we plainly know who originated the mortgage — that would be the lender who sat with you at closing and collected a fee for their work.
And if the loan was sold then surely someone, somewhere has a record showing the date of sale and the purchase price each time the loan was sold and re-sold. After all, we know who owns 100 shares of IBM no matter how many times it has been traded.
The misrepresentation requirement is important because huge numbers of subprime borrowers — the borrowers with the steepest foreclosure rates — in fact qualified for conventional, FHA and VA financing...
Kaptur — a Democrat who swam against the Tea Party tidal wave and won re-election with 59 percent of the vote — can try again in the 112th Congress, which starts next year.
Read the complete article HERE.
Florida Judge Admits Apathy in Foreclosure Cases
by By Matt Taibbi, Rolling Stone, November 28, 2010
... A [Florida] circuit court judge named Lee Haworth essentially admits that judges do not look at the paperwork of the foreclosure cases they process. In other words, he is admitting that he accepts the arguments of the plaintiffs (i.e. the banks) reflexively and that the burden is on the homeowner to defend himself.
... Judges do not question the documents unless homeowners question them first, so they continue to rule in favor of lenders. Twelfth Circuit Chief Judge Lee Haworth said judges must remain neutral in court, and cannot raise possible defenses -- such as bad paperwork -- on behalf of homeowners who choose not to fight, or don't know how to fight, their foreclosure.
"The judges will accept, as they do in every case, pleadings that are represented by counsel as legitimate," said Haworth. "It's the defendant's case. ... If they don't want to hire an attorney, that's their business." ...
... The judge's point here is that it's not up to him to mount a defense strategy for homeowners in default...
Read the entire story HERE.
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492: The number of days since the average borrower in foreclosure last made a mortgage payment...
... banks are taking progressively longer to foreclose. The average borrower in the foreclosure process hadn’t made a payment in 492 days as of the end of October,.. That compares to 382 days a year ago and a low of 244 days in August 2007.
In other words, people who default on their mortgages can reasonably expect, on average, to stay in their homes rent-free more than 16 months. In some states such as New York and Florida, the number is closer to 20 months.
Read the entire story HERE.
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Class Action Against BoA for Not Following HAMP's Mandated Rules
by Frank Donnelly, Staten Island Advance, November 28, 2010
... Facing a burdensome mortgage and state foreclosure proceedings, a New Brighton woman believed a federal loan modification program was the answer to her prayers.
But in a class-action suit recently filed in Brooklyn federal court, Ms. Freeman and others allege the Bank of America turned the tables on them.
Despite making the appropriate trial payments, the bank's subsidiary denied her a permanent loan modification, Ms. Freeman contends. That violated HAMP rules and put her back at square one.
At least 12 class-action cases making similar allegations have been filed against Bank of America nationwide, said Adam H. Cohen, a lawyer for the non-profit MFY Legal Services Inc., which also is representing Ms. Freeman.
Citing a February U.S. Treasury Department report, Ms. Freeman's court filings said Bank of America and its loan-servicing subsidiaries had provided permanent loan modifications to only 1.2 percent -- or 12,761 -- of the more than 1 million HAMP-eligible loans in their servicing portfolio. At the time of the report, trial periods had been started on less than 238,000 of the 1.07 million HAMP-eligible loans.
Those documents said servicers receive $1,000 for each HAMP modification; however, it typically is more profitable for them to foreclose rather than modify loans...
... Ms. Freeman's suit alleges breach of contract and state Business Law violations and seeks to force the bank's subsidiaries to play by the government-mandated rules, Cohen said. He could not immediately say how many people on Staten Island or in the state would be eligible to participate in the suit.
Court papers say that more than $5 million is in dispute ...
... Ms. Freeman ... bought her home in 2000...
... Six years later, she refinanced her mortgage for $418,000 with a California-based company. The servicing of her mortgage was transferred to Wilshire Credit Corporation. That company was bought by Merrill Lynch & Co. Inc., which, in turn, was acquired by Bank of America.
In 2009, Ms. Freeman, struggling financially, appealed to Wilshire to lower her monthly payments. In the meantime, Citibank, which actually holds the mortgage, began foreclosure proceedings against her in state Supreme Court, St. George. That action is pending.
In October 2009, Wilshire, then a Bank of America subsidiary, offered Ms. Freeman a trial period plan under HAMP. Under the program, the homeowner makes modified payments for three months ... Ms. Freeman contends she made the on-time payments for the period of November 2009 through January of this year.
... in February ... [she] received a notice advising that servicing of her loan would be transferred the next month to BAC Home Loans Servicing, another Bank of America subsidiary.
BAC accepted the payment for March, but rejected further payments, deeming them insufficient to reinstate the loan and claiming they were not certified. She was then sent a bill exceeding her adjusted monthly payment.
Later, in July, BAC allegedly informed Ms. Freeman she was ineligible for the HAMP program because she had not made all the required payments before the end of the trial period.
Ms. Freeman's lawyers maintain the bank and its servicing companies are trying to full a fast one -- and have done so many times before.
Bank of America is making a mockery of the federal HAMP program, which was designed to help homeowners keep their homes," said Cohen. "The banks collect hefty payments from homeowners, then turn around and initiate foreclosure proceedings. Homeowners lose, investors lose, and taxpayers, who own many of the mortgage-backed securities lose, but the banks make money."...
Read the whole story HERE.
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U.S Trustee Program is Reviewing Mortgage Servicers' Filings in Bankruptcy Cases to See If They Have the Right to Foreclose
by Gretchen Morgenson, New York Times, November 27, 2010
... the United States Trustee Program, the unit of the Justice Department charged with overseeing the integrity of the nation’s bankruptcy courts ... is stepping up its scrutiny of the veracity of banks’ claims against borrowers, and its approach is evident in two cases in federal bankruptcy court in Atlanta.
In both cases, Donald F. Walton, the United States trustee for the region, has intervened, filing motions contending that the banks trying to foreclose have not shown they have the right to do so.
The matters involve borrowers operating under Chapter 13 bankruptcy plans overseen by the court in the Northern District of Georgia. In both cases, the banks have filed motions with the bankruptcy court to remove the automatic foreclosure stay that results when a court confirms a debtor’s Chapter 13 repayment plan. If the stay is removed, the banks can foreclose.
In one case, the borrower had her Chapter 13 plan confirmed by the court early last month. About two weeks later, Wells Fargo asked the court for relief from the stay so that it could foreclose.
Responding on Nov. 16, Mr. Walton asked the court to deny the bank’s request because it had failed to produce any facts showing that it was entitled to foreclose — either as the holder of the underlying note or as the agent for the holder.
The other case involves a couple who had their Chapter 13 plan confirmed by the court in March 2009. A month ago, Chase Home Finance, a unit of JPMorgan Chase, asked the court for relief from the automatic stay so that it could start foreclosure proceedings.
Again, Mr. Walton objected, asking the court to deny the request on the same grounds as argued in the Wells Fargo matter — in this case, that Chase hadn’t proved that it controlled the note on the property.
Jane Limprecht, a spokeswoman for the trustee program, confirmed that it was ratcheting up its scrutiny on banks’ foreclosure practices.
“The United States Trustee Program is engaged in an enhanced review of mortgage servicer filings in bankruptcy cases to help ensure the accuracy of the claim to repayment,” she said ...
... A Chase spokesman said the bank is the holder of the note in the Georgia case, giving it standing to file the motion.
A spokeswoman for Wells Fargo said that in its case, it is the trustee of a mortgage security that contains the loan, not the servicer. In its capacity as the trustee for mortgage loans serviced by others, it says it expects those servicers to abide by all required laws, processes and procedures.
Howard D. Rothbloom, a lawyer in Atlanta who represents borrowers in bankruptcy ...said he believes [the trustee's efforts] show a sea change in the United States trustee’s thinking on the foreclosure mess...
... the trustee’s intervention in these matters indicates that it wants banks to show the courts that they have the right to foreclose, rather than simply telling them they do... Mr. Walton’s motions may serve as a warning to banks that they need to be better prepared if they want to foreclose on a borrower.
“For years, the trustee would always take the creditors’ side,” Mr. Rothbloom said. “My strong opinion is the U.S. trustee’s perspective is that they exist to stop borrowers from cheating banks. Perhaps they are coming to the realization that banks can also cheat borrowers.”
Fedderal trustees in other parts of the country have also intervened in borrower cases, but many of these actions have been related to questionable foreclosure fees or to dubious legal or documentation practices. The shift to a broader focus on the issue of standing suggests that the courts may no longer accept at face value the banks’ arguments that they have the right to foreclose or represent the institution that does.
David Shaev, a lawyer in New York who works with troubled borrowers, says the United States trustee there has also intervened in one of his cases, taking up the issue of a bank’s right to foreclose.
In his experience, Mr. Shaev said: “The attorneys who represent the banks invariably state that they will get the collateral file for us and prove that the banks had possession of the documents at the appropriate time. But then when we review the file it doesn’t show that at all.” ...
Read the entire story HERE.
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Is the Mortgage Mess Really All the Banks' Fault?
by E. Thomas McClanahan, Kansas City Star, November 27, 2010
One of the topics likely to come before the next Congress is what to do about the crippled mortgage giants Fannie Mae and Freddie Mac, whose reckless behavior contributed so much to the meltdown of 2008.
The financial hole dug by these two “government-sponsored enterprises” is so deep many experts aren’t sure how much filling it in it will cost. Estimates run in the hundreds of billions...
... [In] a meeting in late October between The Star’s Editorial Board and U.S. Rep. Emanuel Cleaver, a Missouri Democrat ... I asked whether Cleaver thought housing policy, and Fannie and Freddie in particular, had gone too far in pushing home ownership ...
“There’s no evidence that anyone told Fannie and Freddie to make bad loans,” he said...
... while some people, like Cleaver, commonly talk about Fan and Fred “making loans,” the two agencies don’t do that...
They borrow at cheap rates, which they can do because of their government connection. Then they use the proceeds to buy mortgages made by others, which they guarantee against default. They keep those mortgages on their own accounts or package them into bonds for sale into the market.
As for Cleaver’s ... notion that “no one” told Fan and Fred to “make” bad loans, the agencies were pressured from all sides to do just that.
In 1999, to take one example, The New York Times reported on a Fannie Mae pilot program to extend home mortgages to “individuals whose credit is generally not good enough to qualify for conventional loans.”
Fannie, The Times noted, was responding to pressure from the Clinton administration to make the change. Banks, thrifts and mortgage companies had all urged Fannie Mae to “make more loans to so-called subprime borrowers,” as The Times put it.
As former Fannie Mae chief credit officer Ed Pinto wrote in a lengthy study published in August, “Government policies forced a systematic industry-wide loosening of underwriting standards in an effort to promote affordable housing ... These policies were legislated by Congress, promoted by HUD and other regulators responsible for their enforcement, and broadly adopted by Fannie and Freddie Mac … and much of the rest of the mortgage industry by the early 2000s.”
Down payment requirements plummeted to 3 percent. The subprime purchases by Fan and Fred edged the agencies farther out on the risk curve. With their cheap financing and gargantuan purchasing power, they vastly expanded this once-small sector. Fan and Fred could pick the low-hanging fruit in the dubious-loan categories, forcing private lenders in that sector to assume even more risk.
By the end of the 1990s, the Department of Housing and Urban Development required that low-income loans make up at least half of Fannie and Freddie’s portfolios. The Bush administration saw that and raised it to 56 percent.
After the Editorial Board meeting, Cleaver’s office sent me a five-page memo defending the CRA, even though it hadn’t been the main focus of the discussion. Basically the memo argued that CRA wasn’t culpable in the meltdown. It pointed out that some of the worst actors, like subprime champ Countrywide, weren’t even covered by the CRA.
But the CRA can’t be so easily absolved. As Pinto, the former Fannie Mae official, explained in a telephone interview, Fannie and Freddie were required to “affirmatively” support bank CRA lending. Countrywide was among lenders participating in a CRA-like program that pledged hundreds of billions in such loans.
Tens of thousands of families have been financially ruined because of this debacle, much of it fostered by government policy...
Read more HERE.
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Are Mortgage Modifications Endangered by the Current Documentation Crisis?
by Tim Fernholz, The American Prospect, November 17, 2010
... Treasury maintains that the foreclosure fiasco won't affect HAMP or the government's efforts to maintain financial stability, but independent experts, government oversight committees, and the experience of borrowers on the ground suggest that the administration needs to ramp up its response.,,"Our client did everything by the book, only to have her modification improperly denied after her file was transferred from one Bank of America [loan] servicing subsidiary to another," said Stephen Rodd, a private lawyer, working pro bono for Ms. Freeman...
by By Matt Taibbi, Rolling Stone, November 28, 2010
... A [Florida] circuit court judge named Lee Haworth essentially admits that judges do not look at the paperwork of the foreclosure cases they process. In other words, he is admitting that he accepts the arguments of the plaintiffs (i.e. the banks) reflexively and that the burden is on the homeowner to defend himself.
... Judges do not question the documents unless homeowners question them first, so they continue to rule in favor of lenders. Twelfth Circuit Chief Judge Lee Haworth said judges must remain neutral in court, and cannot raise possible defenses -- such as bad paperwork -- on behalf of homeowners who choose not to fight, or don't know how to fight, their foreclosure.
"The judges will accept, as they do in every case, pleadings that are represented by counsel as legitimate," said Haworth. "It's the defendant's case. ... If they don't want to hire an attorney, that's their business." ...
... The judge's point here is that it's not up to him to mount a defense strategy for homeowners in default...
Read the entire story HERE.
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Number of the Week: 492 Days From Default to Foreclosure
by Mark Whitehouse, Wall Street Journal, November 27, 2010492: The number of days since the average borrower in foreclosure last made a mortgage payment...
... banks are taking progressively longer to foreclose. The average borrower in the foreclosure process hadn’t made a payment in 492 days as of the end of October,.. That compares to 382 days a year ago and a low of 244 days in August 2007.
In other words, people who default on their mortgages can reasonably expect, on average, to stay in their homes rent-free more than 16 months. In some states such as New York and Florida, the number is closer to 20 months.
Read the entire story HERE.
---------------------------------------------
Class Action Against BoA for Not Following HAMP's Mandated Rules
by Frank Donnelly, Staten Island Advance, November 28, 2010
... Facing a burdensome mortgage and state foreclosure proceedings, a New Brighton woman believed a federal loan modification program was the answer to her prayers.
But in a class-action suit recently filed in Brooklyn federal court, Ms. Freeman and others allege the Bank of America turned the tables on them.
Despite making the appropriate trial payments, the bank's subsidiary denied her a permanent loan modification, Ms. Freeman contends. That violated HAMP rules and put her back at square one.
At least 12 class-action cases making similar allegations have been filed against Bank of America nationwide, said Adam H. Cohen, a lawyer for the non-profit MFY Legal Services Inc., which also is representing Ms. Freeman.
Citing a February U.S. Treasury Department report, Ms. Freeman's court filings said Bank of America and its loan-servicing subsidiaries had provided permanent loan modifications to only 1.2 percent -- or 12,761 -- of the more than 1 million HAMP-eligible loans in their servicing portfolio. At the time of the report, trial periods had been started on less than 238,000 of the 1.07 million HAMP-eligible loans.
Those documents said servicers receive $1,000 for each HAMP modification; however, it typically is more profitable for them to foreclose rather than modify loans...
... Ms. Freeman's suit alleges breach of contract and state Business Law violations and seeks to force the bank's subsidiaries to play by the government-mandated rules, Cohen said. He could not immediately say how many people on Staten Island or in the state would be eligible to participate in the suit.
Court papers say that more than $5 million is in dispute ...
... Ms. Freeman ... bought her home in 2000...
... Six years later, she refinanced her mortgage for $418,000 with a California-based company. The servicing of her mortgage was transferred to Wilshire Credit Corporation. That company was bought by Merrill Lynch & Co. Inc., which, in turn, was acquired by Bank of America.
In 2009, Ms. Freeman, struggling financially, appealed to Wilshire to lower her monthly payments. In the meantime, Citibank, which actually holds the mortgage, began foreclosure proceedings against her in state Supreme Court, St. George. That action is pending.
In October 2009, Wilshire, then a Bank of America subsidiary, offered Ms. Freeman a trial period plan under HAMP. Under the program, the homeowner makes modified payments for three months ... Ms. Freeman contends she made the on-time payments for the period of November 2009 through January of this year.
... in February ... [she] received a notice advising that servicing of her loan would be transferred the next month to BAC Home Loans Servicing, another Bank of America subsidiary.
BAC accepted the payment for March, but rejected further payments, deeming them insufficient to reinstate the loan and claiming they were not certified. She was then sent a bill exceeding her adjusted monthly payment.
Later, in July, BAC allegedly informed Ms. Freeman she was ineligible for the HAMP program because she had not made all the required payments before the end of the trial period.
Ms. Freeman's lawyers maintain the bank and its servicing companies are trying to full a fast one -- and have done so many times before.
Bank of America is making a mockery of the federal HAMP program, which was designed to help homeowners keep their homes," said Cohen. "The banks collect hefty payments from homeowners, then turn around and initiate foreclosure proceedings. Homeowners lose, investors lose, and taxpayers, who own many of the mortgage-backed securities lose, but the banks make money."...
Read the whole story HERE.
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U.S Trustee Program is Reviewing Mortgage Servicers' Filings in Bankruptcy Cases to See If They Have the Right to Foreclose
by Gretchen Morgenson, New York Times, November 27, 2010
... the United States Trustee Program, the unit of the Justice Department charged with overseeing the integrity of the nation’s bankruptcy courts ... is stepping up its scrutiny of the veracity of banks’ claims against borrowers, and its approach is evident in two cases in federal bankruptcy court in Atlanta.
In both cases, Donald F. Walton, the United States trustee for the region, has intervened, filing motions contending that the banks trying to foreclose have not shown they have the right to do so.
The matters involve borrowers operating under Chapter 13 bankruptcy plans overseen by the court in the Northern District of Georgia. In both cases, the banks have filed motions with the bankruptcy court to remove the automatic foreclosure stay that results when a court confirms a debtor’s Chapter 13 repayment plan. If the stay is removed, the banks can foreclose.
In one case, the borrower had her Chapter 13 plan confirmed by the court early last month. About two weeks later, Wells Fargo asked the court for relief from the stay so that it could foreclose.
Responding on Nov. 16, Mr. Walton asked the court to deny the bank’s request because it had failed to produce any facts showing that it was entitled to foreclose — either as the holder of the underlying note or as the agent for the holder.
The other case involves a couple who had their Chapter 13 plan confirmed by the court in March 2009. A month ago, Chase Home Finance, a unit of JPMorgan Chase, asked the court for relief from the automatic stay so that it could start foreclosure proceedings.
Again, Mr. Walton objected, asking the court to deny the request on the same grounds as argued in the Wells Fargo matter — in this case, that Chase hadn’t proved that it controlled the note on the property.
Jane Limprecht, a spokeswoman for the trustee program, confirmed that it was ratcheting up its scrutiny on banks’ foreclosure practices.
“The United States Trustee Program is engaged in an enhanced review of mortgage servicer filings in bankruptcy cases to help ensure the accuracy of the claim to repayment,” she said ...
... A Chase spokesman said the bank is the holder of the note in the Georgia case, giving it standing to file the motion.
A spokeswoman for Wells Fargo said that in its case, it is the trustee of a mortgage security that contains the loan, not the servicer. In its capacity as the trustee for mortgage loans serviced by others, it says it expects those servicers to abide by all required laws, processes and procedures.
Howard D. Rothbloom, a lawyer in Atlanta who represents borrowers in bankruptcy ...said he believes [the trustee's efforts] show a sea change in the United States trustee’s thinking on the foreclosure mess...
... the trustee’s intervention in these matters indicates that it wants banks to show the courts that they have the right to foreclose, rather than simply telling them they do... Mr. Walton’s motions may serve as a warning to banks that they need to be better prepared if they want to foreclose on a borrower.
“For years, the trustee would always take the creditors’ side,” Mr. Rothbloom said. “My strong opinion is the U.S. trustee’s perspective is that they exist to stop borrowers from cheating banks. Perhaps they are coming to the realization that banks can also cheat borrowers.”
Fedderal trustees in other parts of the country have also intervened in borrower cases, but many of these actions have been related to questionable foreclosure fees or to dubious legal or documentation practices. The shift to a broader focus on the issue of standing suggests that the courts may no longer accept at face value the banks’ arguments that they have the right to foreclose or represent the institution that does.
David Shaev, a lawyer in New York who works with troubled borrowers, says the United States trustee there has also intervened in one of his cases, taking up the issue of a bank’s right to foreclose.
In his experience, Mr. Shaev said: “The attorneys who represent the banks invariably state that they will get the collateral file for us and prove that the banks had possession of the documents at the appropriate time. But then when we review the file it doesn’t show that at all.” ...
Read the entire story HERE.
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Is the Mortgage Mess Really All the Banks' Fault?
by E. Thomas McClanahan, Kansas City Star, November 27, 2010
One of the topics likely to come before the next Congress is what to do about the crippled mortgage giants Fannie Mae and Freddie Mac, whose reckless behavior contributed so much to the meltdown of 2008.
The financial hole dug by these two “government-sponsored enterprises” is so deep many experts aren’t sure how much filling it in it will cost. Estimates run in the hundreds of billions...
... [In] a meeting in late October between The Star’s Editorial Board and U.S. Rep. Emanuel Cleaver, a Missouri Democrat ... I asked whether Cleaver thought housing policy, and Fannie and Freddie in particular, had gone too far in pushing home ownership ...
“There’s no evidence that anyone told Fannie and Freddie to make bad loans,” he said...
... while some people, like Cleaver, commonly talk about Fan and Fred “making loans,” the two agencies don’t do that...
They borrow at cheap rates, which they can do because of their government connection. Then they use the proceeds to buy mortgages made by others, which they guarantee against default. They keep those mortgages on their own accounts or package them into bonds for sale into the market.
As for Cleaver’s ... notion that “no one” told Fan and Fred to “make” bad loans, the agencies were pressured from all sides to do just that.
In 1999, to take one example, The New York Times reported on a Fannie Mae pilot program to extend home mortgages to “individuals whose credit is generally not good enough to qualify for conventional loans.”
Fannie, The Times noted, was responding to pressure from the Clinton administration to make the change. Banks, thrifts and mortgage companies had all urged Fannie Mae to “make more loans to so-called subprime borrowers,” as The Times put it.
As former Fannie Mae chief credit officer Ed Pinto wrote in a lengthy study published in August, “Government policies forced a systematic industry-wide loosening of underwriting standards in an effort to promote affordable housing ... These policies were legislated by Congress, promoted by HUD and other regulators responsible for their enforcement, and broadly adopted by Fannie and Freddie Mac … and much of the rest of the mortgage industry by the early 2000s.”
Down payment requirements plummeted to 3 percent. The subprime purchases by Fan and Fred edged the agencies farther out on the risk curve. With their cheap financing and gargantuan purchasing power, they vastly expanded this once-small sector. Fan and Fred could pick the low-hanging fruit in the dubious-loan categories, forcing private lenders in that sector to assume even more risk.
By the end of the 1990s, the Department of Housing and Urban Development required that low-income loans make up at least half of Fannie and Freddie’s portfolios. The Bush administration saw that and raised it to 56 percent.
After the Editorial Board meeting, Cleaver’s office sent me a five-page memo defending the CRA, even though it hadn’t been the main focus of the discussion. Basically the memo argued that CRA wasn’t culpable in the meltdown. It pointed out that some of the worst actors, like subprime champ Countrywide, weren’t even covered by the CRA.
But the CRA can’t be so easily absolved. As Pinto, the former Fannie Mae official, explained in a telephone interview, Fannie and Freddie were required to “affirmatively” support bank CRA lending. Countrywide was among lenders participating in a CRA-like program that pledged hundreds of billions in such loans.
Tens of thousands of families have been financially ruined because of this debacle, much of it fostered by government policy...
Read more HERE.
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Are Mortgage Modifications Endangered by the Current Documentation Crisis?
by Tim Fernholz, The American Prospect, November 17, 2010
... Treasury maintains that the foreclosure fiasco won't affect HAMP or the government's efforts to maintain financial stability, but independent experts, government oversight committees, and the experience of borrowers on the ground suggest that the administration needs to ramp up its response.,,"Our client did everything by the book, only to have her modification improperly denied after her file was transferred from one Bank of America [loan] servicing subsidiary to another," said Stephen Rodd, a private lawyer, working pro bono for Ms. Freeman...
... The response to HAMP's early troubles was not a shift in policy but an effort to hold servicers accountable. Last fall, Assistant Treasury Secretary Michael Barr told reporters that "servicers to date have not done a good enough job of bringing people a permanent modification solution. ... Servicers who don't meet their obligations under the program are going to suffer consequences." Treasury prevailed on banks to hire more employees, but problems persisted...
...HAMP ... also has been plagued with problems of lost documentation and bad customer assistance -- initially the owners of mortgage-backed securities simply set up servicers to collect payments from a large groups of borrowers, rather than negotiating with individuals about their specific circumstance.
HAMP forced servicers to offer eligible borrowers modifications before foreclosing on loans, and for that reason, Treasury maintains the position that the burgeoning problems in mortgage documentation will have no impact on HAMP. According to Phyllis Caldwell, chief of Treasury's Homeownership Preservation Office, the program "is not directly affected by 'robo-signers' or false affidavits filed with state courts. ... To modify a mortgage, there is not a need to have clear title."
Independent experts disagree ...
"There have in fact been cases in which homeowners have made modification agreements with one servicer that were then disavowed by another servicer, and the same has happened when there was an error about ownership of the loan," Valparaiso University law professor Alan White told the Prospect. "As a basic legal matter, the servicer acts as an agent of its principal, the investor. If the servicer's principal does not own the loan, the servicer has no authority to modify the loan."
If it turns out a modified loan is owned by a third party, then modification efforts could be meaningless. The COP report highlights several problematic interactions between the HAMP program and the mortgage mess. For one, if servicers without the legal standing to foreclose are accepting payments to modify loans, Treasury is essentially paying them taxpayer funds to do something they are legally forbidden to do. More subtly, if cutting corners in the foreclosure process leads servicers to underestimate the cost of seizing a home, servicers will be less likely to consider the incentives offered by the government to modify loans.
All this may be compounded by the fact that Treasury, as part of its standard HAMP procedures, does not require participants in the program to verify that they have legal ownership of the loan, as several jurisdictions, including Washington, D.C., are now requiring before any foreclosure.
However, despite the likely problems HAMP will suffer from the mortgage mess, the program isn't the right vehicle to address it. "They already have such a low success rate, they should be streamlining paperwork, not increasing it," White says. "The mortgage ownership issues will need to be resolved through some other process, probably at the state level."...
... Depending on how judges rule, troubled borrowers could see their debt erased or their loans modified over the objection of servicers. Fifty state attorneys general involved in a lawsuit against the servicers are trying to negotiate an omnibus settlement with Treasury's support.
Read more HERE.
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