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Archive for March, 2012

Housing Recovery Back to Normal by Late 2015

March 30, 2012 Leave a comment

New data from the real estate website Trulia suggests that the housing market is at about 33 percent or one-third of the way back to “normal”.

In a recent guest blog post on Forbes.com, Trulia examined three key monthly indicators of housing recovery: new construction starts (Census), existing-home sales (NAR), and the delinquency-plus-foreclosure rate (LPS). In their analysis, they checked the lowest numbers, then stacked them against the numbers before the bubble to get an idea of “normal”.

As reported on Forbes.com, here’s what they came up with for February:

  • Construction starts: 22% of the way back from their low in Apr 2009 toward their normal level.
  • Existing home sales: 47% of the way back from their low in Nov 2008 toward normal.
  • Delinquency + foreclosure rate: 32% of the way back from their high in Jan 2010 toward normal.

“To get to a single number that’s easy to remember and track over time, we just average these three percentages together. If all three indicators were at their worst, the barometer would be at 0%; if all were back to normal, the barometer would be at 100%.”

Based on their numbers, Trulia predicts that we’ll be back to “normal” by late 2015.

Check out the post and accompanying infographic.

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BofA offers Mortgage to Lease Program

March 28, 2012 Leave a comment

In a new effort to help distressed homeowners, Bank of America has announced that it will be offering a Mortgage to Lease program that allows homeowners to stay as renters in their home.

The pilot program will launch in Arizona, Nevada and New York and will help up to 1,000 homeowners selected by the bank. If the program is successful, it may expand to other markets to help more at-risk homeowners in other states.

CNNMoney.com reports that homeowners cannot apply to be a part of the program. The bank will select homeowners that are more than 60 days delinquent on their home loans, have high loan balances in relation to their current property value, have no other liens on their property, and have an income level high enough to afford the rent.

According to CNNMoney.co, upon selection into the program, “the homeowner will transfer title to their property to Bank of America and have their outstanding mortgage debt forgiven. In exchange, they may lease their home for up to three years at or below the current market rental rate.”

The Mortgage Brokers Association estimates approximately 200,000 homeowners in Arizona, Nevada and New York who are 60 days delinquent on their loans but that includes all lenders, not just Bank of America, and it does not include homes in those states that are already in the foreclosure process.

Friday Foreclosure Story: Actor Sues to Fight Foreclosure

March 23, 2012 Leave a comment

Former CSI: Crime Scene Investigation star, Gary Dourdan, is suing his bank, alleging constructive fraud and seeking to avoid the foreclosure of his Los Angeles home after claiming bank representatives were slow in offering mortgage help, in violation of state law.

TMZ reports a familiar story to millions of homeowners, the actor was laid off from his gig on the national TV show in 2010 which made it difficult to pay the $5,000 per month payment on his $922,000 mortgage loan. Dourdan contacted his lender, Union Bank, for relief. After six months of dealing with the bank, Dourdan was finally granted a relief package.

However, Dourdan’s attorney alleges that by waiting so long, the bank “manipulated and caused [him] to fall further behind” in his payments and failed to then honor the forbearance agreement, especially through “negligent obfuscation” when it sent confusing mortgage statements out saying “Do not remit any payments.”

According to E! Online, Dourdan is seeking a court order to prevent the foreclosure sale of his property and is demanding compensatory and punitive damages as well as attorney’s fees and costs.

Homeowners fight and win against the banks to avoid foreclosure

March 20, 2012 Leave a comment

Fed up with bank procedures, more homeowners are turning to legal action in court to get the mortgage debt relief they need.

In 2008, Jewel Miser and her husband Jack began trying to get Bank of America to modify their mortgage. Jack had lost his job and the couple was a month behind in their mortgage payments. Fed up with getting the run around by the bank and running into dead ends, the couple sought legal aid to help them in their quest to get a loan modification and avoid foreclosure.

As MSNBC reports, more and more homeowners are finding success taking their case to court to get new loan terms as the Misers did. Their lawyer successfully challenged the shaky paper trail on which the lender relied on to prove it owned the Miser’s note. In the resulting settlement, the bank agreed to new loan terms that cut the Miser’s monthly payments by roughly 15 percent, paid their legal fees and stopped the foreclosure.

According to MSNBC:

“When these homeowners get to court, they find a laundry list of shoddy practices that undercut lenders’ legal claim to foreclose, say consumer attorneys who have pursued these cases. Many cases are tainted by “robo-signers” who failed to properly review files, despite swearing under oath they had done so. Other title claims are undone by improper accounting, including unwarranted fees, and payments that were not credited.

Consumer attorneys also are attacking lenders’ effort to paper over missing links in the chain of documents required to prove that a bank owns a loan and has the right to foreclose. Some of those defective paper trails date to the sloppy underwriting that accompanied the frenzy of mortgage lending in the 2000s, when hundreds of now-defunct lenders churned out a blizzard of notes that were instantly offloaded to investors.

Lenders’ disregard for the law is still rampant, according to consumer advocates and regulators. Last month, a survey of 260 consumer attorneys in 45 states by the NCLC found that thousands of homeowners were improperly foreclosed on in just the past year. In more than 80 percent of the cases, the lender scheduled a foreclosure sale while processing a loan modification. In four out of five cases, the attorneys reported, lenders failed to properly credit payments or wrongly claimed homeowners owed bogus fees.”

While it’s not a new practice for borrowers to take their disputes with lenders to court, rising frustration with other means of trying to get a loan modified is a major deciding factor in the current housing crisis. Banks encourage homeowners to work directly with lenders through government-sponsored programs, aimed at providing mortgage relief to millions of borrowers which have fallen far short of promises.

One program that has severely underperformed expectations is the government’s Home Affordable Modification Program (HAMP) which leaves the final decision to modify a loan entirely with the lender. Because the government does not enforce HAMP on lenders, homeowners are being denied modifications that should have been made under government guidelines, forcing homeowners to take legal action.

MSNBC reports:

“That often means a trip to bankruptcy court for a Chapter 13 proceeding, which allows people with a regular income to adjust their debt. Once in court, a foreclosure is typically halted automatically, placing the burden on the lender to have the process re-instated. That forces the lender to prove it owns the mortgage and to account fully for any disputed back payments. When the lender is unable to do so, consumer lawyers say, it is more likely to agree to settle by modifying the loan terms, often by simply lowering the interest charged to current market rates.

Lenders rarely forgive principal, even on homes that are deep underwater, say consumer attorneys. But while bankruptcy law prevents a judge from writing down the primary mortgage on residential property, other loans don’t enjoy that protection.”


Mortgage Settlement Filed in Court This Week Still Leaves Homeowners Outraged

March 13, 2012 Leave a comment

The details of the multi-billion dollar mortgage settlement between 49 state attorneys general and the nation’s five largest banks were filed this week in court. However millions of homeowners will still be left without aid.

Proponents of the settlement estimate that roughly 1 million underwater homeowners will receive aid in the form of principal reductions and another 750,000 homeowners will be able to refinance their loans to lower interest rates. CoreLogic, however, states that this is just a fraction of the 11 million homeowners who are currently underwater.

CNNMoney.com reports:

“Principal reductions will also only apply to certain borrowers who have mortgages still held by the five major lenders: Bank of America, CitiBank, Wells Fargo, J.P. Morgan Chase and Ally Financial.

Borrowers who have a mortgage held by Fannie Mae or Freddie Mac — roughly half the market — are out of luck. Loans insured by the Federal Housing Administration are also ineligible.”

Unfortunately for many homeowners most loans are not retained by the original lenders. So if a borrower enters into a mortgage agreement with a bank, their loans are often sold to Fannie or Freddie and borrowers aren’t given a choice when their loans are sold.

Distressed homeowners throughout the country are outraged at the inequality the settlement offers. For the homeowners who bought responsibly and made their payments faithfully, the unfairness comes in the fact that their tax dollars are paying for government-funded programs to prevent foreclosures while irresponsible borrowers accrue the benefits like the ones offered in the settlement.

Additionally, some borrowers may qualify for much larger reductions than others, as well.

CNNMoney.com states:

“Bank of America, for example, said it will slash mortgage balances by an average of $100,000 or more for roughly 200,000 homeowners. The goal, according to BofA, is to reduce the amount owed on the home to 100% match the current market value. Meanwhile, the other four major mortgage lenders, CitiBank, Wells Fargo, JPMorgan Chase and Ally Financial, are expected to reduce qualified borrowers’ principal to between 115% and 125% of the value of their homes — an amount that the Department of Housing and Urban Development said should average about $20,000.”

Obama Makes Mortgage Refis Easier and Cheaper to Obtain

March 12, 2012 Leave a comment

President Obama has announced that the Federal Housing Administration will lower mortgage insurance premiums for borrowers who refinance their loans under a new plan to improve the housing market.

Borrowers who refinance their existing FHA loans will pay an upfront insurance premium equal to 0.1%, the lowest allowable rate, of the mortgage amount, plus an annual fee of 0.55%. The new program is available to all borrowers who are current on their payments even if they owe more than their homes are worth, and loans that were issued before June 1, 2009 are eligible for the new fees – which equals to an estimated 2 to 3 million borrowers. CNNMoney.com reports that these cuts, which take effect April 9, could reduce mortgage payments for the typical FHA borrower by about a thousand dollars a year, according to the administration.

According to CNNMoney.com, “the new policy will also make it easier for the banks to refinance loans because it directs the FHA not to count the loans toward the lender’s “compare ratio.” That calculates the performance of loans issued by the lenders and compares it to the performance of other lenders.”

President Obama also announced also announced steps to provide relief to service members who were wrongfully foreclosed on.

CNNMoney.com reports:

“As part of the plan, mortgage lenders and servicers will be required to review the case of every service member who was foreclosed on since 2006. Any member of the military who wrongfully lost their home to foreclosure during that period will be repaid for their lost equity, plus interest. They will also receive a flat fee of $116,785.

Service members who were denied the opportunity to refinance at the 6% interest rate required under the Relief Act will also be refunded anything they were charged over the 6% rate, plus interest.

In addition, military members who bought their homes between July 1, 2006 and December 31, 2008 and were forced to sell them at a loss due to a permanent change in station may be compensated for the loss in their home’s value.”

AG Harris Proposes California Homeowner Bill of Rights

Atty. Gen. Kamala D. Harris is proposing a California Homeowner Bill of Rights which, she says, is aimed at fixing some of the most serious flaws in the system.

The proposed legislation would, if approved, stop banks from pursuing foreclosures against troubled borrowers they negotiate loan modifications. The proposed bill would also ensure that borrowers work with a single point of contact at the banks instead of being passed from one department to another as traditionally the case.

The Los Angeles Times reports on Harris’s statement regarding the legislation:

“California communities and families are being devastated by the mortgage and foreclosure crisis. We must ensure the deceptive practices that caused it never happen again,” Harris said. “The California Homeowner Bill of Rights will provide basic fairness and transparency for homeowners, and improve the mortgage process for everyone.”

In addition, the proposed bill would also give local governments tools to force banks and property owners to maintain blighted, foreclosed homes and to give new owners incentives to improve their properties; allow renters more time to stay in foreclosed residences; collect fees from banks to pay for enhanced law enforcement actions to defend homeowners and create a statewide grand jury to investigate alleged financial and real estate foreclosure crimes.

The new legislation now sits before the state Senate and Assembly for approval.