Uncle Sam needs you to help unload 250,000 distressed properties

Federal agencies are scrambling to come up with ways to get rid of 250,000 properties in various stages of distress and are leaning heavily toward making many of them rentals through investors and previous owners.

by Broderick Perkins
© 2011 DeadlineNews.Com

Unauthorized use of this story is a copyright violation -- a federal crime

Deadline Newsroom - Federal agencies are scrambling to come up with ways to get rid of 250,000 properties in various stages of distress and are leaning heavily toward making many of them rentals.

The Federal Housing Finance Agency (FHFA), in conjunction with the U.S. Department of the Treasury and U.S. Department of Housing and Urban Development (HUD), has announced a "Request for Information: Enterprise/FHA REO Asset Disposition", seeking input from both the public and private sectors on options for moving off the books residential real estate owned (REO) properties held by Fannie Mae, Freddie Mac (GSE's or "Government Sponsored Enterprises") and the Federal Housing Administration(FHA).

Federal agencies own a quarter million properties with only about 70,000 of them currently listed for sale. Buyers have made offers on another 22,000 of them, but the bulk, about 158,000, are in limbo.

The Feds want to reduce agencies' carrying costs, including loan losses, and address repair and rehabilitation needs (taxpayers foot the bill) in a manner that recognizes economic and real estate conditions and needs in specific locations, while helping stabilize falling pricesexacerbated by the glut of distressed properties.

"While the Enterprises will continue to market individual REO properties for sale, FHFA and the Enterprises seek input on possible pooling of REO properties in situations where such pooling, combined with private management, may reduce Enterprise credit losses and help stabilize neighborhoods and home values," said FHFA Acting Director Edward J. DeMarco.

"Partnerships involving Enterprise properties may reduce taxpayer losses and meet the Enterprises’ responsibility to bring stability and liquidity to housing markets. We seek input on these important questions," DeMarco added.

Federal agencies are looking hard at selling off pools of properties to investors who will turn the REOs into rental units. It's a strategy that could help ease tight rental markets.

The tactic is hard at work in places like Las Vegas and Florida where a glut of distressed properties have squeezed million dollar homes until they are worth only a quarter million dollars.

While some groups are purchasing distressed properties in bulk to flip and resell, others are renting them out if they can get adequate cash flow to make the deals pencil.

"It's going to be a cold winter. There's nothing we are seeing in jobs or the economy or housing to make us believe there is any more good news for this year. It's making it easy for investors to pick up homes and banks are thinking about that," said Jon Sterling, Director of Marketing at Mountain View-based Altos Research.

However, Feds aren't likely to put all their eggs in one basket.

Another idea includes allowing previous homeowners to rent properties and perhaps even buy them back under a rent-to-own deal.

Current renters could also participate in rent-to-own deals, and the homes could be put up for sale as reduced-price affordable housing.

"As we continue moving forward on housing finance reform, it's critical that we support the process of repair and recovery in the housing market," said Treasury Secretary Tim Geithner.

"Exploring new options for selling these foreclosed properties will help expand access to affordable rental housing, promote private investment in local housing markets, and support neighborhood and home price stability," Geithner added.

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Broderick Perkins, an award-winning consumer journalist, parlayed 30 years of old-school journalism into a digital real estate news service, the San Jose, CA-based DeadlineNews Group, including DeadlineNews.Com, a real estate news and consulting service and Web site, and the Deadline Newsroom, DeadlineNews.Com's news back shop.

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More banks spanked for foreclosure failures

Homeowners facing foreclosure don't get extra months to stave off a foreclosure, but banks now have three months to conduct a self-assessment of their foreclosure management procedures, according to a new order from the Office of the Comptroller of the Currency.

by Broderick Perkins
© 2011 DeadlineNews.Com

Unauthorized use of this story is a copyright violation -- a federal crime

Deadline Newsroom - Remember that bank-spanking federal agencies doled out to eight mortgage servicers for fouling foreclosures with robo-signing shenanigans, dual tracking tricks and other foreclosure head-fakes?

All national banks are going to have to hold out their wrists for a similar ruler whack, but they are likely laughing their assets off at what appears to be impotent government regulation.

A reprimand -- and that's what this order amounts to -- is the least mortgage servicers should endure given the real lashings homeowners and mortgage banking consumers have had to endure because of lender and servicer failures since before the onset of the Great Recession.

Homeowners facing foreclosure don't get extra months to stave off a foreclosure, but banks now have three months to conduct a self-assessment of their foreclosure management procedures, according to a new order from the Office of the Comptroller of the Currency.

Mortgage servicers have been using questionable foreclosure procedures for nearly a half decade and OCC's order is just getting around to busting banks' chops -- if you can even call it chop busting.

The OCC said on June 30, banks that determine problems in their foreclosure processes must take "immediate" corrective action, but they have until September 30 to take that "immediate" action.

After reviewing 14 large mortgage servicers in the fourth quarter of 2010, the OCC, Federal Reserve, Federal Deposit Insurance Corporation (FDIC), and the Office of Thrift Supervision (OTS) found what the regulators described a "pattern of misconduct and negligence related to deficient practices in residential mortgage loan servicing and foreclosure processing."

In the earlier April 2011 report "Interagency Review of Foreclosure Policies and Practices" regulators also found "unsafe and unsound practices and violations of applicable federal and state laws."

Enforcement actions against eight national bank mortgage servicers consisted largely of telling mortgage servicers to clean up their act, but did not "preclude determinations regarding assessment of civil money penalties, which the OCC is holding in abeyance."

Like that's going to happen.

Now, two months later, federal agencies are concerned "that similar weaknesses may exist in other servicing operations."

You think?

"National banks engaged in mortgage servicing, whether for their own book or others, must ensure compliance with foreclosure laws, conduct foreclosure processing in a safe and sound manner, and establish responsible business practices that provide accountability and appropriate treatment of borrowers in the foreclosure process," the OCC's statement says.

In the latest OCC report, the federal regulator again reminded mortgage servicers to stop, among other practices.

• The practice of "dual tracking" simultaneously engaging a homeowner in a loan modification, while foreclosing on the property.

• Using robo-signing to finalize foreclosures. Robo-signing is the practice of employees, dubbed "robo-signers," who vouched for the accuracy of foreclosure documents without reading them.

• Losing and misplacing documents, not keeping records of contact with homeowners, and asking homeowners to repeatedly submit the same documents.

Good luck with that.

Federal regulators can't even regulate themselves.

In a June 21, 2011 report, "Audit of the Federal Housing Finance Agency's (FHFA) Consumer Complaints Process" by the FHFA's own Office of Inspector General (OIG), the FHFA OIG found that the FHFA has let complaints alleging fraud, abuse, and waste -- many involving possible improper foreclosure actions -- slip through the cracks with no oversight of their resolution. The inspector general says FHFA also failed to refer criminal allegations to law enforcement authorities.

The FHFA, in part, oversees Fannie Mae and Freddie Mac, government sponsored enterprises (GSEs) that hold or guarantee about half the nation's outstanding mortgages.

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Broderick Perkins, an award-winning consumer journalist, parlayed 30 years of old-school journalism into a digital real estate news service, the San Jose, CA-based DeadlineNews Group, including DeadlineNews.Com, a real estate news and consulting service and Web site, and the Deadline Newsroom, DeadlineNews.Com's news back shop.

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Fannie Mae hones assistance for homeowners facing foreclosure

Click on my big head!

In a detailed set of new standards, Fannie Mae declares servicers must take a more consistent, time conscious and customer-centric approach to homeowners facing foreclosure. Fines put teeth in the new standards.

by Broderick Perkins
© 2011 DeadlineNews.Com

Unauthorized use of this story is a copyright violation -- a federal crime

Deadline Newsroom - If only the growing reams of new mortgage regulations, disclosures, standards and legal settlements would actually reach and aid the teeming throngs of financially struggling homeowners.

One of the latest attempts to get mortgage servicers (often lenders) to behave like they have customers' best interests at heart comes on the heels of a recent settlement that was supposed to cure some of the same ills.

In a detailed set of new standards, Fannie Mae declares servicers must take a more consistent, time conscious and customer-centric approach to homeowners facing foreclosure.

"We want homeowners to be able to understand their options when facing foreclosure, and we want servicers to reach homeowners early in the process, communicate frequently and clearly, and help homeowners avoid foreclosure," said Jeff Hayward, Senior Vice President of Fannie Mae's National Servicing Organization.

Read the full story: "Fannie Mae Hones Assistance for Homeowners Facing Foreclosure"

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Broderick Perkins, an award-winning consumer journalist, parlayed 30 years of old-school journalism into a digital real estate news service, the San Jose, CA-based DeadlineNews Group, including DeadlineNews.Com, a real estate news and consulting service and Web site, and the Deadline Newsroom, DeadlineNews.Com's news back shop.

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Mortgage lending banks spanked for foreclosure gaffs

Uncle Sam has ordered mortgage lenders to pay back former homeowners who suffered questionable foreclosures, but not many former homeowners are likely to benefit.

by Broderick Perkins
© 2010 DeadlineNews.Com

Unauthorized use of this story is a copyright violation -- a federal crime

Deadline Newsroom - Uncle Sam has ordered mortgage lenders to pay back former homeowners who suffered questionable foreclosures, but not many former homeowners are likely to benefit.

In a settlement that reveals recession-spawning risky business in the mortgage industry is far from over, federal bank regulators recently ordered the nation's largest mortgage servicers to put an end to dirty tricks in the foreclosure business.

Among the practices still springing up years after the mortgage industry helped topple the economy include "dual tracking" lenders effectively scuttling their own efforts to keep homeowners out of foreclosure.

The settlement comes, typically, without the companies admitting to any wrong doing. It requires servicers to correct problems in foreclosure processing, loan modification programs and corporate governance, among other areas.

Servicers must also identify and compensate borrowers who suffered unnecessary financial harm during foreclosures over the two year period between January 1, 2009, and December 31, 2010, due to "deficiencies in residential mortgage loan servicing and foreclosure practices."

The eight mortgage servicing (lenders) culprits named in the settlement are Bank of America, Citibank, HSBC, JPMorgan Chase, MetLife Bank, PNC, U.S. Bank, and Wells Fargo. Two service providers were also named; Lender Processing Services (LPS) and its subsidiaries DocX, LLC, and LPD Default Solutions, Inc.; and MERSCORP and its wholly owned subsidiary, Mortgage Electronic Registration Systems, Inc. (MERS).

The Office of the Comptroller of the Currency (OCC) based its enforcement actions on the findings of an interagency investigation detailed in "Interagency Review of Foreclosure Policies and Practices", produced by the OCC, the Board of Governors of the Federal Reserve System, and the Office of Thrift Supervision.

The latest scathing report about mortgage lending, servicing and foreclosure practices, the interagency review identifies "significant weaknesses in mortgage servicing and foreclosure governance that resulted in unsafe and unsound practices."

Among the problems investigated, were:

• The practice of "dual tracking" simultaneously engaging a homeowner in a loan modification, while foreclosing on the property.

• Using robo-signing to finalize foreclosures. Robo-signing is the practice of employees, dubbed "robo-signers," who vouched for the accuracy of foreclosure documents without reading them.

• Losing and misplacing documents, not keeping records of contact with homeowners, and asking homeowners to repeatedly submit the same documents.

The report lambastes mortgage lenders for what amounts to a shoddy foreclosure business practice, a practice of deception and bungled governance that virtually mirror the kind of risky business that brought the economy to its knees.

Problems included underdeveloped foreclosure governance processes (for oversight, auditing and quality control); inadequate and under-trained staffing; insufficient affidavit and notarization practices (including claiming documents were executed under oath when no oath was taken).

Lies and damn lies and more damn lies.

The report does say that most borrowers in its investigative sample pool were seriously delinquent and probably due for foreclosure anyway, but "a limited number of mortgages should not have proceeded to foreclosure."

Despite the limited number of foreclosures that shouldn't have been, the report says the foreclosure process is a mess.

"The failures and deficiencies identified...must be remedied swiftly and comprehensively," because the problems found "present significant risk to the safety and soundness of mortgage activities."

Among other provisions, the settlement's enforcement rules say:

• Servicers must not pursue foreclosures once a mortgage has been approved for modification. Duh!

• Services must establish a single point of contact for borrowers throughout the loan modification and foreclosure processes. Der.

• Servicers must establish robust oversight and control for third-party vendors, including outside legal counsel providing default management or foreclosure services. Hello?

"These comprehensive enforcement actions, coordinated among the federal banking regulators, require major reforms in mortgage servicing operations. Our enforcement actions are intended to fix what is broken, identify and compensate borrowers who suffered financial harm, and ensure a fair and orderly mortgage servicing process going forward," said acting Comptroller of the Currency John Walsh.

We can only hope.

States' attorneys general remain on the case pursuing legal action against mortgage lending rogues.


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Broderick Perkins, an award-winning consumer journalist, parlayed 30 years of old-school journalism into a digital real estate news service, the San Jose, CA-based DeadlineNews Group, including DeadlineNews.Com, a real estate news and consulting service and Web site, and the Deadline Newsroom, DeadlineNews.Com's news back shop.

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Perkins is managing editor of HomeAway.com's Gulf Coast Response Center.

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California gets $700 million slice of special $1.5 billion homeowner bailout pie

Spontaneous orgasms real

Earlier this year, President Obama announced a $1.5 billion infusion for state housing agencies in Arizona, California, Florida, Michigan and Nevada. The Golden State scored $700 million of it.

by Broderick Perkins
© 2010 DeadlineNews.Com


Unauthorized use of this story is a copyright violation -- a federal crime


Deadline Newsroom - California struck gold, receiving the biggest chunk of a special $1.5 billion federal fund pie for programs that target struggling homeowners in states hardest hit by the housing crash.

California Housing Finance Agency (CalHFA) recently announced the fat $700 million slice would go toward four different programs ultimately assisting 40,000 homeowners.

Earlier this year President Obama announced the $1.5 billion infusion for state housing agencies in Arizona, California, Florida, Michigan and Nevada, where home values have fallen more than 20 percent from peak 2006 and 2007 markets.

The $1.5 billion will be withdrawn from funds set aside for housing under the Emergency Economic Stabilization Act of 2008 (EESA).

The money is earmarked for state agency programs that reduce so-called "preventable" foreclosures faced by unemployed home owners, so-called "underwater" home owners and home owners struggling with second mortgages.

In addition to California's $699.6 million stake, Florida gets $418 million; Michigan, $154.5 million, Arizona, $125.1 million and Nevada, $102.8 million.

"We are very grateful that the Obama Administration recognizes that California and several other states have been severely impacted by the twin problems of unemployment and home price depreciation," said Steven Spears, executive director of CalHFA

The details aren't finalized and homeowners, who needn't be CalHFA loan holders, must otherwise quality before approval. CalHFA's federally approved "Keep Your Home" programs are:

• Mortgage payment assistance for jobless. Up to six months of mortgage payment assistance, with a $1,500 cap for homeowners who have lost their jobs.

• Mortgage payment assistance for past-due homeowners. Up to $15,000 each, with a mandated match from the mortgage lender, the help those with past-due payments.

• Mortgage principal reduction. Underwater borrowers, who owe significantly more on their loans than their homes are worth, get a mortgage principal reduction to "market levels."

• Transition assistance. For those who can't afford to stay in their homes and are completing a short sale or handing over the deed in lieu of a foreclosure, financial assistance for the transition will be provided.

For more details contact CalHFA's Keep Your Home program online or by phone (916) 373-2585.


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Perkins was the first Examiner to cover three beats for the Examiner.com news service:
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Even home owners choose renting over owning

"Footlong?" Okay. "Sub?" I wish.

In a recent survey about renting versus owning, homeowners made up the majority of the respondents -- by a factor of more than 2-to-1 -- and yet 76 percent of all those surveyed deemed renting a better deal than owning a home in today's housing market.

by Broderick Perkins
© 2010 DeadlineNews.Com


Unauthorized use of this story is a copyright violation -- a federal crime


Deadline Newsroom - With the chances of home value appreciation looking dim, the continued risk of foreclosure and the cost of maintenance growing as a home ages, maybe owning a home isn't such a good idea right now.

That's what U.S. homeowners seem to be concluding. In a recent survey about renting versus owning, homeowners made up the majority of the respondents -- by a factor of more than 2-to-1 -- and yet 76 percent of all those surveyed deemed renting a better deal than owning a home in today's housing market.

As a homeowner, it's simply tough to shell out maintenance and upkeep cash on a property that offers little if any equity to tap for the expense. And with so much uncertainty in the job market, homeowners aren't sure they can hold on to what they've got.

Even if ownership comes with the promise of appreciation over the long haul, renters just don't want to risk what homeowners are already suffering in the current economic environment.

A Harris Interactive Survey for the National Apartment Association (NAA) said the number of people who believe renting is better than owning right now is up 5 percent over the 2008 survey for several reasons.

• You've got news! News that really hits home. Right here: Survey: Even Homeowners Say Renting Is Best Move

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Broderick Perkins, an award-winning consumer journalist, parlayed 30 years of old-school journalism into a digital real estate news service, the San Jose, CA-based DeadlineNews Group, including DeadlineNews.Com, a real estate news and consulting service and Web site, and the Deadline Newsroom, DeadlineNews.Com's news back shop.

Perkins was the first Examiner to cover three beats for the Examiner.com news service:
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Consumers shy from foreclosure bargains due to risks

Flunking credit scores

Buying a foreclosure property provides an opportunity for dramatic savings on a home, but the time and effort involved in executing, bidding against others, and the need to do renovations may be issues for buyers.

by Broderick Perkins
© 2010 DeadlineNews.Com


Unauthorized use of this story is a copyright violation -- a federal crime


Deadline Newsroom - Many home buyers expect big bargains from foreclosures, but because they believe certain risks outweigh the potential savings, a growing number of them are shying away from the deals.

And there's a further disconnect -- despite that growing reluctance to buy foreclosures, some experts expect foreclosure sales to increase.

"Buying a foreclosure property still provides an opportunity for dramatic savings on a home, but the time and effort involved in executing a short sale, bidding against other buyers for a bank owned property, or the need to do renovations may be issues for buyers," said Rick Sharga, senior vice president for RealtyTrac.

Ninety-five percent of surveyed U.S. adults age 18 and above generally expect to pay less for a foreclosed home than they would for a similar property for sale that is not a foreclosure, according to a recently released Harris Interactive survey commissioned by real estate information and search engine Trulia.com and online foreclosure marketplace, RealtyTrac.com.

However, fewer home buyers say they are actually digging for gold in the distressed housing sector. The survey found that only 45 percent of U.S. adults age 18 and above are at least somewhat likely to consider purchasing a foreclosed home in the future. That's down from 55 percent last year at this time.

You've got news!...News that really his home! Here: "Homebuyers Wary of Taking on Foreclosed Properties"

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Perkins was the first Examiner to cover three beats for the Examiner.com news service:
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Residential real estate's big investment spenders making a come back

Sunday is fun day for laughter

More than 17.2 percent of all potential home buyers today say they plan to purchase a home in the near future as an investment compared to just 5.6 percent a year ago.

by Broderick Perkins
© 2010 DeadlineNews.Com



Unauthorized use of this story is a copyright violation -- a federal crime

Deadline Newsroom - Residential real estate's big spenders are back.

While some experts predict the full housing recovery is still nearly a generation away, a growing number of deep-pocket investors are buying like happy days are already here again.

A new Move, Inc. survey said interest in residential real estate investment has more than tripled in the past year.

That's good news. Up ticks in residential real estate investment is often a precursor to housing recovery.

More than 17.2 percent of all potential home buyers today say they plan to purchase a home in the near future as an investment compared to just 5.6 percent a year ago, according to Move, Inc., a network of real estate data and information web sites that include the National Association of Realtors' Realtor.com.

More than ten percent (12.3 percent) of Americans planning to purchase investment property in the near future say they will pay for the property using 100 percent cash, and 12.8 percent will use cash for more than 50 percent of the purchase price and finance the rest, according to Move, Inc.

You've got news! News that really hits home!

The full story is here: "Residential Real Estate Investment Makes a Comeback"


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Full housing recovery at least a decade away

SJSU prof foils bank robbery

'As much as we want to believe otherwise, values peaked so much and then dropped so much, the laws of appreciation and common sense will tell you that it will be 12-15 years before people see the peak values that they saw in 2006-2007.'

by Broderick Perkins
© 2010 DeadlineNews.Com



Unauthorized use of this story is a copyright violation -- a federal crime


Deadline Newsroom - There's a growing litany of reasons the housing market remains in deep doo doo -- and as many as 10 years away from the kind of solid ground enjoyed during the last peak market.

• The Federal Reserve no longer purchases mortgage backed securities. While it hasn't happened yet, that could cause mortgage interest rates to rise.

• Subprime replacement loans from the Federal Housing Administration are tougher to get. Consumers were already struggling with tough underwriting standards from private lenders.

• The federal home buyer tax credit ends this month. The tax credit has been one saving grace for the housing market.

• Federal programs have only helped a fraction of the estimated 3 to 4 million homeowners targeted. That's largely because lenders just don't cooperate with fast help necessary based just on the sheer number of people in trouble.

• First American Core Logic says more than 11.3 million home owners are underwater on their mortgages. These are potential foreclosures, a shadow market of depressed priced homes due to flood the market.

• In February, for the 12th straight month, RealtyTrac reported more than 300,000 foreclosures per month -- that's nearly a million mortgages every quarter. See?

• Unemployment remains in double digits in many hard hit housing markets.

See where this is going?

"As much as we want to believe otherwise, values peaked so much and then dropped so much, the laws of appreciation and common sense will tell you that it will be 12-15 years before people see the peak values that they saw in 2006-2007," said Robert Aldana, a real estate agent with Intero Real Estate Services in San Jose, CA who is not afraid of peer chiding to tell it like it is.

"Our economy is not exactly booming and more and more people are losing their homes. It may not be a stretch to think that it could take even longer than 15 years if we continue to come down in prices. For every year that we see declining values means it will take two years to catch-up," says Aldana who works the Silicon Valley tech-mecca housing market.

As dire as they sound, Aldana's comments are inline with an instantly controversial analysis of home price trends for more than 375 U.S. markets.

From Fiserv Case-Shiller a financial information analyst, the grim study says the housing crash won't correct to boom-time levels of 2006-20007 until 2025 in major metro areas of some of the nation's worst hit housing markets -- Arizona, California, Florida, and Nevada.

Sacramento, CA and Orlando, FL won't be back until 2039, the report says. It'll be 2023 for San Jose, CA and 2020 for Jacksonville, FL and Tucson, AZ, to name just a few.

Even urban centers in the Northeast and industrial Midwest will be on the ropes for a decade.

"Nationally, Fiserv Case-Shiller data points to a further seven percent decline in home prices through the end of this year, with a prolonged recovery beginning early in 2011. In many markets, the emphasis is on the word 'prolonged,'" said David Stiff, Fiserv's chief economist.

That's because when home prices crashed, so did the economy -- into the deepest recession since the Great Depression. Now the economy is hung over with lingering high levels of unemployment.

Home prices crashed, largely because of easy money that allowed home buying even by the barely employed, even unemployed. Predatory lending and subprime loans swamped urban neighborhoods.

It all pumped up a lust for what became known as the "psychological equivalent of gold" which caused home values to skyrocket to unsustainable levels.

Poof!

"The higher you go, the further you fall," says Aldana.

The housing market never promised you a rose garden.

Like most investments, it can be a thorny, risk-based investment.

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Broderick Perkins, an award-winning consumer journalist, parlayed 30 years of old-school journalism into a digital real estate news service, the San Jose, CA-based DeadlineNews Group, including DeadlineNews.Com, a real estate news and consulting service and Web site, and the Deadline Newsroom, DeadlineNews.Com's news back shop.

Perkins was the first Examiner to cover three beats for the Examiner.com news service:
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BofA announces enhanced mortgage modification plan

Even critics of the mortgage-lending industry's efforts to help struggling homeowners keep their homes are lauding Bank of America's reduced-principal approach to mortgage modifications for some 45,000 of its customers.

by Broderick Perkins
© 2010 DeadlineNews.Com



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Deadline Newsroom - Beginning in May, BofA will forgive up to 30 percent of the loan principal of homeowners who are severely "underwater," those who owe approximately 20 percent more than their homes are worth and have missed at least two payments.

The plan harkens back to the so-called "Mod in a Box" reduced-principal modification plan the Federal Deposit Insurance Corp., under Chairwoman Sheila Bair, used on many mortgages in the 2008 federal takeover of IndyMac.

Bair has continued to encourage reduced-principal modifications because the federal Home Affordable Modification Program has come up short without them, managing fewer than 200,000 permanent modifications out of a potential 3 million to 4 million eligible homeowners.

Even critics of the mortgage-lending industry's efforts to help struggling homeowners keep their homes are lauding Bank of America's reduced-principal approach to mortgage modifications for some 45,000 of its customers.

The much-encouraged but little-used reduced-principal approach to mortgage modifications has long been championed by federal officials and consumer advocates as the most effective type of modification.

You've got news...news that really hits home!The full story is here: "Praise for BofA's Mortgage Modification Plan"

Also: Struggling home owners awarded another $14 billion

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Minority Realtors converge on Capital as AIG settles $6.1 million discrimination suit

More teeth for Credit CARD Act

Typical in such settlements, without acknowledging any wrongdoing, the now defunct AIG Federal Savings Bank and Wilmington Finance, Inc. settled with the U.S. Justice Department to pay $6.1 million to resolve allegations the wholesale lenders illegally allowed wholesale mortgage brokers to charge higher direct broker fees to 2,500 black borrowers.

by Broderick Perkins
© 2010 DeadlineNews.Com



Unauthorized use of this story is a copyright violation -- a federal crime


Deadline Newsroom - Just as realty professionals descended on the nation's capital to heighten awareness about the housing crisis' disparate impact on minority communities, their cause was underscored by the Justice Department's largest ever settlement to compensate victims of lending discrimination.

The 2010 Multicultural Real Estate & Policy Conference "The Color of the Housing Recovery," convened in Washington, D.C. March 4-5 to introduce "Five-Point Plan: Creating A Sustainable Path to Minority Homeownership," an appeal to lawmakers to take actions that stabilize the market, expand consumer protections, preserve liquidity and especially stop the spiral of losses in minority communities.

The day members of the National Association of Hispanic Real Estate Professionals (NAHREP); the Asian Real Estate Association of America (AREAA); and the African American-led National Association of Real Estate Brokers (NAREB) arrived in Washington, a landmark federal court settlement in New York City was setting the tone for the conference.

Typical in such settlements, without acknowledging any wrongdoing, the now defunct AIG Federal Savings Bank and Wilmington Finance, Inc. settled with the U.S. Justice Department to pay $6.1 million to resolve allegations the wholesale lenders illegally allowed wholesale mortgage brokers to charge higher direct broker fees to 2,500 black borrowers.

Get the full story here: Minority Realtors converge on Capital as AIG settles $6.1 million discrimination suit

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Broderick Perkins, an award-winning consumer journalist, parlayed 30 years of old-school journalism into a digital real estate news service, the San Jose, CA-based DeadlineNews Group, including DeadlineNews.Com, a real estate news and consulting service and Web site, and the Deadline Newsroom, DeadlineNews.Com's news back shop.

Perkins is also the first Examiner to cover three beats for the Examiner.com news service:
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Feds crackdown on FHA lenders with high foreclosure rates

Tiger Tart does Maxim video

The Feds are being applauded for going after mortgage lenders who may have contributed to the housing crisis by writing bad loans, but they are also criticized for not examining their own underwriting standards, which some say could prolong housing's woes.

by Broderick Perkins
© 2009 DeadlineNews.Com



Unauthorized use of this story is a copyright violation -- a federal crime


Deadline Newsroom - The Feds are going after mortgage companies with questionably high rates of foreclosures on homes they finance.

This week, U.S. Department of Housing and Urban Development (HUD) Inspector General Kenneth M. Donohue and Federal Housing Administration (FHA) Commissioner David H. Stevens announced an initiative to target mortgage companies with significant claim rates against the Federal Housing Administration mortgage insurance program.

Mortgage insurance is paid by borrowers, but protects lenders with cash benefits should the borrower default. When lenders foreclose against homeowners with the coverage, it triggers mortgage insurance benefits for lenders to help them bail out.

The investigation was initiated after FHA Commissioner, David Stevens, became alarmed by the incidence of claims against the FHA insurance fund by a number of poor performing companies who had also reached out for federal assistance.

HUD's Office of Inspector General (OIG) served subpoenas to the corporate offices of 15 mortgage companies across the country demanding documents and data related to failed loans which resulted in claims paid out by the FHA mortgage insurance fund.

Served were:

First Tennessee Bank N.A., Memphis, TN
Alethes LLC, Lakeway, TX
Security Atlantic Mortgage Co., Edison, NJ
Pine State Mortgage Corporation, Atlanta, GA
Birmingham Bancorp Mortgage Corporation, West Bloomfield, MI
Alacrity Financial Services, LLC, Southlake, TX
Assurity Financial Services, LLC, Englewood, CO
D and R Mortgage Corporation, Farmington, MI
Webster Bank, Cheshire, CT
Mac-Clair Mortgage Corporation, Flint, MI
Americare Investment Group, Inc., Arlington, TX
1st Advantage Mortgage, Lombard, IL
American Sterling Bank, Independence, MO
Sterling National Mortgage Company Inc., Great Neck, NY
Dell Franklin Financial LLC, Columbia, MD

The Feds are being applauded for going after mortgage lenders who may have contributed to the housing crisis by writing bad loans, but they are also criticized for not examining their own underwriting standards which some say could prolong housing's woes.

"While the FHA should be commended for its vigilance in trying to detect patterns of fraudulent origination and underwriting practices, it is also critical to the risk management process that the actual underwriting guidelines, set in place by FHA, be thoroughly examined as well," said Nancy Osborne, chief operating officer of Erate.com, a Santa Clara, CA-based financial information publisher and interest rate tracker.

"Taxpayers are backing (federally insured) mortgages that have been referred to as "the new sub-prime," with good reason, because they have taken on the role of insuring these risky low down payment loans where a borrower has far too little "skin in the game,' " Osborne added.

The probe comes at a time when the FHA mortgage insurance program represents a significant percentage of mortgages written in the nation.

"That the FHA continues to require such a small down payment, of only 3.5 percent, certainly flies in the face of sound risk management practices in light of everything we've learned in the past few years," Osborne said.

Options available to the HUD OIG are audits, investigations, inspections and evaluations. HUD can also levy administrative sanctions such as suspensions, limited denial of participation, debarment, and civil monetary penalties. The U.S. Department of Justice (DOJ), state and local law enforcers can pursue civil and criminal legal actions against any wrongdoers.

"The FHA market share has skyrocketed," said Donohue.

"Our job is oversight. We work for the American taxpayer. Each loan on this list will be thoroughly examined and we will track down the reasons why it failed. Once we determine the causes, we will look to see whether there is a need for further review or remedial action. We want to send a message to the industry that as the mortgage landscape has shifted we are watching very carefully and that we are poised to take action against bad performers," he added.

Stevens said additional policy steps, to be announced later this month, are underway to hold FHA lenders accountable for high rates of default

"The HUD OIG identified these direct endorsement companies from an analysis of loan data focusing on companies with a significant number of claims, a certain loan underwriting volume, a high ratio of defaults and claims compared to the national average, and claims that occurred earlier in the life of the mortgage. These are key indicators of problems at the origination or underwriting stages. The HUD OIG wants to see why these loans failed," Stevens said.

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Perkins is also the first Examiner to cover three beats for the Examiner.com news service:
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Prime, fixed-rate mortgage foreclosures undercutting housing recovery

Black Friday Report: Regifting becoming endangered

Higher foreclosure rates among homeowners with prime, fixed-rate home loans are replacing sub-prime loan failures at an alarming rate, and unemployment is the primary culprit.

Prime fixed-rate loans, those held by homeowners with the best credit, accounted for nearly 33 percent of new foreclosures in the third quarter, compared to only 21 percent a year ago.

An unknown number of foreclosed homes yet to enter the pipeline.

by Broderick Perkins
© 2009 DeadlineNews.Com

Unauthorized use of this story is a copyright violation -- a federal crime

Deadline Newsroom - Rising unemployment is undoing home ownership, unraveling the housing rebound and extending the foreclosure crisis at least until very late next year.

Higher foreclosure rates among homeowners with prime, fixed-rate mortgages (FRMs) are replacing sub-prime loan failures at an alarming rate, according to a third quarter mortgage delinquency survey.

Nationwide, 14.41 percent of mortgage paying homeowners were either behind on payments or in foreclosure at the end of September, with unemployment as the primary culprit, according to the Mortgage Bankers Association's (MBA) latest National Delinquency Survey.

The 14.41 percent was another record high for the ninth consecutive quarter, even as home prices began to show increases amid demand spurred by tax credits and low interest rates.

Prime fixed-rate loans, those held by homeowners with the best credit, accounted for nearly 33 percent of new foreclosures in the third quarter, compared to only 21 percent a year ago.

Those prime FRM failures also accounted for 44 percent of the quarterly increase in foreclosures and that number is due to grow. Prime fixed-rate loans represented 54 percent of the quarterly increase in loans 90 days or more past due, but not yet in foreclosure, according to the MBA.

"Job losses continue to increase and drive up delinquencies and foreclosures because mortgages are paid with paychecks, not percentage point increases in the GDP (gross domestic product)," said Jay Brinkmann, MBA's chief economist.

In October, the unemployment rate rose to 10.2 percent, the highest since April 1983, with the largest job losses in construction, manufacturing, and retail trade, according to the U.S. Labor Department.

In October alone, the number of unemployed people increased by 558,000 to 15.7
million. Since the start of the recession in December 2007, the number of jobless people has risen by 8.2 million, and the unemployment rate has grown by 5.3 percentage points.

"Over the last year, we have seen the ranks of the unemployed increase by about 5.5 million people, increasing the number of seriously delinquent loans by almost 2 million loans and increasing the rate of new foreclosures from 1.07 percent to 1.42 percent," Brinkmann added.

The housing market received some welcomed jolts from the first-time home buyer tax credit, the tax credit's extension and expansion this year, other government programs and mortgage rates sliding below 5 percent.

The S&P/Case-Shiller Home Price Index today said home prices rose for the second consecutive quarter, but remained nearly 9 percent lower than a year earlier.

Prices nationwide rose 3.1 percent in the three months ending on September 30, following a similar rise during the second quarter of the year.

Unfortunately, experts say there is an unknown number of foreclosed homes yet to enter the pipeline -- strategic defaults and foreclosure forbearances.

Those problematic properties will keep prices from returning to anything near boom time levels and may even cause prices to plunge.

Strategic defaults occur when homeowners refuse to pay mortgages that exceed the value of their home. Foreclosure forbearance stems from lenders delaying foreclosure proceedings on mortgages that 90 days or more late.

"I see growing anecdotal evidence of forbearance of lenders. The logic for it is if they can't sell it anyway, the lender is better off with the original homeowner still in place and caring for the asset in most cases, than forcing them out and having some of them tear the place up on the way out," said Bruce Hahn, president of the American Homeowners Foundation.


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Perkins is also the first Examiner to cover three beats for the Examiner.com news service:
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Foreclosures down month-to-month thrice, remain ahead of 2009, potential defaults loom

Senate gets health care bill

October foreclosure filings declined 3 percent from the previous month, but remained ahead of last October's tally by 19 percent. Foreclosure action came on 332,292 U.S. properties, or one in every 385 U.S. housing units.

by Broderick Perkins
© 2008 DeadlineNews.Com

Unauthorized use of this story is a copyright violation -- a federal crime

Deadline Newsroom - October foreclosure filings -- default notices, scheduled foreclosure auctions and bank repossessions -- declined 3 percent from the previous month, but remained ahead of last year's October tally by 19 percent.

RealtlyTrac today reported foreclosure action on 332,292 U.S. properties, revealing one in every 385 U.S. housing units were slapped with a foreclosure filing in October.

"Three consecutive monthly declines is unprecedented for our report, and on first blush an indication that the foreclosure tide may be turning," said James J. Saccacio, chief executive officer of RealtyTrac.

"However, the fundamental forces driving foreclosure activity in this housing downturn — high-risk mortgages, negative equity, and unemployment — continue to loom over any nascent recovery," he added.

Also a growing number of studies reveal a "phantom" or "shadow" inventory of potential listings, stem not from bank-held REO properties, but from a "record number of delinquencies and delayed foreclosures in the pipeline," according to
Sean O'Toole, CEO of ForeclosureRadar.com.

O'Toole says, however, many of those cases can be easily verified and identified because, even if lenders are delaying foreclosures, the homeowners are still listed as delinquent.

In recent months, in select markets, many lenders are getting rid of more repossessed properties than they are taking in REOs, according to ForeclosureRadar.com.

"We know exactly which properties are in trouble and where they are in the process. They’re not moving at all because we as a society lack the political will to foreclose. Because the national focus is targeted on keeping homeowners in their homes, the drain is bigger than the spigot – REO properties are selling faster than distressed properties are being foreclosed on," O'Toole says in "Shadow Inventory – Confusion Reigns."

However, homeowners not paying underwater mortgages, but not yet suffering the consequences of default or foreclosures may not all be showing up in the foreclosure numbers, according to Bruce Hahn President of the American Homeowners Grassroots Alliance/American Homeowners Foundation .

"These trends are contributing to a rapid buildup of nonperforming mortgages that ultimately threatens the recovery of housing values and the viability of financial services firms with large mortgage portfolios," Hahn says.

Meanwhile four states -- California, Florida, Illinois and Michigan -- accounted for 52 percent of the nation's total foreclosure activity in sheer numbers in October, RealtyTrac said.

When it came to foreclosure rates, the number of foreclosures per housing units, Nevada, California, Florida again were at the top of the list.

Other states with high foreclosure rates were Arizona, Idaho, Illinois, Michigan, Georgia, Maryland and Utah.


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Broderick Perkins, an award-winning consumer journalist, parlayed 30 years of old-school journalism into a digital real estate news service, the San Jose, CA-based DeadlineNews Group, including DeadlineNews.Com, a real estate news and consulting service and Web site, and the Deadline Newsroom, DeadlineNews.Com's news back shop.

Perkins is also the first Examiner to cover three beats for the Examiner.com news service:
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