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Federal Housing Chief Supports California Bill of Rights

The series of bills backed Attorney General Kamala Harris to help avoid future foreclosure abuses have found a new supporter in federal housing chief, Shaun Donovan.

The so-called California Bill of Rights “would restrict practices such as foreclosing on homeowners as they try to negotiate a loan modification and mandate that banks designate a single person to work with troubled borrowers,” as reported by the Los Angeles Times.

The financial-industry and business trade groups have opposed the bills, arguing that while the national mortgage settlement’s terms are temporary and apply to only five banks, the bills’ changes would be permanent and universal. In fact, the proposed California Bill of Rights provides longer term protection for homeowners where the national mortgage settlement expires.

Those who oppose the bills also object to giving borrowers the right to sue to block foreclosures or recover losses when banks violate the law in more than just a trivial way. We feel strongly that banks should not be able to take advantage of distressed homeowners and ignore their rights in any way during the foreclosure process. The national mortgage settlement does not acknowledge individual borrowers whose lenders violate the new safeguards but the proposed California Bill of Rights provides a remedy to that.

Foreclosures hold steady

The imminent wave of foreclosures has still yet to strike with new numbers out from Lender Processing Services, Inc. showing that March foreclosures have stayed steady. The new data from LPS also shows that are still down from March 2011.

69,000 foreclosures were completed in March, compared to 85,000 in March 2011 and 66,000 foreclosures in February 2012.

The Los Angeles Times reports: “About 1.4 million homes, or 3.4% of all homes with a mortgage, were at some stage in the foreclosure process last month, the same as in February but down slightly compared with 1.5 million in March 2011, Santa Ana research firm CoreLogic said.”

The rate of foreclosures has slowed since last year during accusations of faulty practices and improper paperwork by lenders. Experts have predicted that foreclosures are expected to rise again since the  national settlement was reached in February. However, there has been little uptick in the number of foreclosures which could be a result of the national mortgage settlement that pushes lenders to work with troubled borrowers to avoid foreclosure.

Short Sales Surpass Foreclosures

April 18, 2012 Leave a comment

For the first time, the number of short sales has surpassed foreclosures according to Lender Processing Services Inc. (LPS).Specifically, short sales outnumbered foreclosures in states with some of the largest shares of homes facing foreclosure, including California.

LPS reports that as of January 2012, short sales accounted for 23.9 of home purchases, compared with 19.7 percent for sales of foreclosed homes. This in comparison to January 2011 data that shows only 16.3 percent of transactions were short sales and 24.9 percent involved foreclosures.

According to Bloomberg, short sale transactions typically fetch a higher price for banks than sales of homes that have gone through foreclosure which is major reason why banks have become more agreeable to selling houses for less than the amount owed on their mortgages

This rise in short sales is likely a result of several new government initiatives.

For example, the Federal Housing Finance Agency ordered loan servicers to respond to all short-sale offers within 30 days, and approve or reject them within 60 days – an effort to short the process that can typically take months longer.

Additionally, banks including Wells Fargo & Co. (WFC) and JPMorgan Chase & Co. (JPM) have started providing incentives for homeowners to short sell in an effort to avoid foreclosure.

If you are interested in learning more about short sales check out this blog post for 5 Things You Should Know About Short Sales.

California Foreclosures Decrease

April 6, 2012 1 comment

CoreLogic reports that California had the third biggest decrease among U.S. states in the number of homes at some stage in the foreclosure process, according to the Orange County Register.

The report also states that in February, 2.4 percent of the California homeowners with a mortgage faced the possibility of foreclosure – which equals about 160,000 households.

The Orange County Register reports that CoreLogic’s February numbers showed:

  • 6.7 percent of the state’s mortgaged homes, or about 458,000 households, were 90 days or more late on their house payments. That’s down from 9 percent in February of last year.
  • Banks seized 154,212 homes through foreclosure in the 12 months ending in February.
  • Nationwide, banks seized 3.4 million homes through foreclosure during the past 3 ½ years – more than 860,000 of them in the past year.
  • An additional 1.4 million U.S. homes, or 3.4 percent of all homes with a mortgage, were in the foreclosure process.
  • That’s down from 3.6 percent in February of last year, when 1.5 million U.S. households were in the foreclosure process.

Foreclosures still down in February – The Calm before the storm

April 5, 2012 1 comment

According to Lender Processing Services, the number of newly initiated foreclosures fell in February from January and from one year ago by around 15%. In fact, this marks the 11th straight month in which the level of foreclosure “starts” has fallen, month over month. Is this a sign of recovery?

Not likely, according to some analysts who say that banks are likely to jumpstart their foreclosures again once the $25 billion Attorney’s General settlement is finalized. However, The Wall Street Journal reports that the settlement could delay the inevitable uptick in foreclosure activity because banks still have a laundry list of requirements in the settlement.

According to the Wall Street Journal:

“Banks started the foreclosure process on 172,500 loans in February, which is the third lowest level of the past four years. Only November and December of 2011 saw lower levels of foreclosure starts.

Tuesday’s report from LPS shows that mortgage delinquencies fell to 7.6% in February, the lowest level since August 2008. Delinquencies tend to fall at the beginning of the year. Still, about 4.1% of all loans were in the foreclosure process, near the highest levels of the crisis.”

CNBC.com reports however that if the sudden stall in foreclosures is prolonged, it could lead to an overall drop in home sales, given that foreclosures are such a large share of the market. According to the National Association of Realtors, distressed sales, which include foreclosures and short sales, now make up just over one third of all existing home sales nationally, and more than half of all sales in California and other states hardest hit by the housing crash.

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.

Study Finds 84% of Foreclosures in SF Erroneous

February 24, 2012 Leave a comment

An audit commissioned by the San Francisco city assessor found that of almost 400 foreclosures conducted in San Francisco, 84% appeared to have missing documents or signatures or otherwise violate the law. An attorney at the National Consumer Law Center told Reuters that the San Francisco audit is the most detailed and comprehensive to-date but its numbers are likely to comparable nationally.

A majority of the foreclosures in question showed signature irregularities, in-line with the illegal practice of “robosigning” documents.

The study examined properties subject to foreclosure sales between January 2009 to November 2011, of which, 45 percent were sold to entities improperly claiming to be the owner of the loan.

According the Reuters, the report states “It is not impossible that there are homeowners who are alleged to have defaulted on loans to which they never fully agreed to and, further, are being foreclosed upon by lenders that might not even own such loans.”

The San Francisco Assessor-Recorder, Phil Ting, commented that while many of the errors were technical, the number of fraudulent forecloses demonstrates the need for the state to change its antiquated real estate regulation.