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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.

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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.

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.

California Returns to the Negotiation Table

February 6, 2012 Leave a comment

According the Los Angeles Times, California has resumed negotiations on the multibillion-dollar, multi-state mortgage settlement with the nation’s largest banks. Friday’s deadline for individual states to either reject or accept the deal has been pushed to today.

California Atty. Gen. Kamala Harris walked away from negotiations last year and had originally held out on agreeing to the settlement, seeking tougher terms for banks. In a statement Sunday night, Harris said the door still remained open for California to join.

“For the past 13 months we have been working for a resolution that brings real relief to the hardest-hit homeowners, is transparent about who benefits and will ensure accountability,” Harris said. “We are closer now than we’ve been before, but we’re not there yet.”

If California agrees to the settlement the pot for mortgage relief nationwide would increase to $25 billion from $19 billion. Another important potential backer, Attorney General Eric T. Schneiderman of New York, has also signaled that he sees progress on provisions that prevented him from supporting it in the past. Support from both states would be a significant accomplishment for the administration, which in recent weeks has been trying to step up its aid for the failing U.S. housing market.

Under the proposed settlement, banks would be forced to provide financial assistance for homeowners who experienced foreclosure or are in danger of losing their homes. If approved, the settlement would require banks to overhaul their mortgage servicing and foreclosure practices and include a component for principal write-downs which has been recognized as the best way to help underwater homeowners and stabilize the housing market.

Friday Foreclosure Story: San Bernardino Homeowner Wins Back Her Home

February 3, 2012 Leave a comment

San Bernardino homeowner Karen Mena is proof that foreclosure doesn’t have to mean the end.

Mena was foreclosed on but was able to stop eviction proceedings and cancel the foreclosure by fighting Bank of America for a loan modification that would make her home more affordable.

Los Angeles Times reports that consumer attorneys say foreclosure reversals like Mena’s could become more common as they learn to better exploit foreclosure errors.

Karen and her husband, a self-employed contractor, bought their house in 1996 and rode the upward wave of her home investment for nearly 12 years. In 2008, her husband lost his business as many contractors did during the housing bust and their two-income household was forced to survive on one income. She fell behind on payments and applied for a loan modification through her mortgage servicer, Bank of America and was granted a trial modification. She faced some unexpected expenses in February 2009 and missed a mortgage payment, breaching the terms of her agreement with Bank of America, voiding the trial modification.

Unable to make full payments on her mortgage, the Los Angeles Times reports a familiar story:

“Mena submitted her first application through the Home Affordable Modification Program in June 2009 and then again in July after she was told her paperwork was never received. A frustrating process ensued: She would fax financial documents to the bank and wait for weeks or months for word back, only to be told to send the information again because the papers were incomplete, missing or outdated. Mena kept some of her correspondence with Bank of America, a journal of letdowns and false hopes.

In August 2010, the bank began formal foreclosure proceedings against Mena. She reapplied for a loan modification. Her home was scheduled for sale at auction Dec. 6, 2010. The bank asked her for more documents.

She was caught in the gears of the bank’s dual-track process, where a lender continues to foreclose on a home even as it works with a borrower on modifying the home’s mortgage — akin to lining up the mortician as the patient checks into the hospital.”

Karen was soon informed by Fannie Mae – the investor behind Bank of America’s loan – that she no longer owned her home and was given the option to rent her home or accept a “cash for keys” agreement. Unsatisfied with either option, Karen remained in her home and weeks later she was informed by Bank of America that her trial loan modification had been approved.

“She faced a choice: Start making the trial payments or save her money in case she was evicted. Mena decided to begin making the payments, telling herself, “Let’s see what happens. This validates everything I have been trying to do.”

Still, Fannie Mae pressed on, taking Mena to court to get her out of the house. Mena replied with her own lawsuit, written with the help of a paralegal because she did not have enough money for an attorney.

The lawsuit makes a series of arguments accusing Bank of America and Fannie Mae of deception as well as questioning their authority to foreclose. A key contention is that she was accepted into a trial loan modification program even after she was foreclosed on.

But before that lawsuit could be resolved, Fannie Mae won the eviction case. She appealed and lost.”

The next day, an attorney with Bank of America informed Karen that the eviction never happened and BofA repurchased the loan from Fannie Mae and the foreclosure was eventually retracted

Karen is still working with Bank of America on an affordable mortgage modification through HAMP but as of now remains in her home.

Check out the Los Angeles Times for the full story.

 

 

Homes lost to foreclosure top 4 million

January 16, 2012 Leave a comment

While foreclosure filings and repossessions fell to their lowest level since 2007 last year, more than 4 million homes have been lost to foreclosure over the past five years, according to RealtyTrac, the online marketer of foreclosed properties.

One in every 69 homes had at least one foreclosure filing during the year, while 804,000 homes were repossessed, as reported by CNN Money.

The Los Angeles Times is reporting that in California, 3.2% of homes logged at least one foreclosure filing last year, down from 4.1% a year earlier. Specifically, 2.7% received notices in Los Angeles County and 2.5% in Orange County, compared with nearly 5% in San Bernardino County and 5.3% in Riverside County.

Last year’s declines are due, in large, to processing delays caused by fall-out from the “robo-signing” scandal that broke in late 2010. Banks spent more time making sure paperwork was legal and proper, creating a backlog in the foreclosure pipeline. However, California and other states are likely to see an enormous wave of long-delayed foreclosure action in the coming year as banks deal more aggressively with 3.5 million seriously delinquent mortgages.

While several factors worked against homeowners last year, including the continued erosion in home prices, government foreclosure prevention programs, like HAMP and HARP, helped ease the crises although neither have lived up to their expectations.

Friday Foreclosure Story: Merry Christmas, Charlie Brown

December 16, 2011 Leave a comment

For 44 years, the Jordan family crafted an elaborate Charlie Brown-themed Christmas display outside their Costa Mesa home which was recently foreclosed on.

According to the Los Angeles Times, Jim Jordan, who uses the home as a rental property and is challenging the Nov. 24 foreclosure, is worried not only about keeping his home but also about continuing one of Costa Mesa’s most treasured holiday traditions.

As a tradition everyone has come to expect, the community has rallied together to preserve the Charlie Brown Christmas. Costa Mesa City Hall agreed to take over the display and a group of community volunteers is going to set up the “Peanuts” gang, Santa and other cutouts at the civic center across from the Orange County Fairgrounds.

There’s a “Save the Snoopy House” Facebook page and Twitter account. One person even set up a tent on the home’s front lawn, a mini Occupy the Snoopy House movement. Even a nearby Chick-fil-A restaurant in Santa Ana offered to set up the “Peanuts” gang outside.

It’s a sign of the times when Snoopy’s most iconic dog house gets foreclosed on during the holidays but while we’re happy to hear the family is fighting to keep their home, we’re most touched by this show of community strength to save the decade’s-old tradition and not let the distress of the foreclosure crisis put a damper on the holiday spirit.

See yesterday’s Associated Press article for more on Jim’s foreclosure story.