Friday, December 9, 2011

BofA developing foreclosure rental programs to deal with distressed properties

BofA developing foreclosure rental programs to deal with distressed properties.

Posted By JON PRIOR On December 9, 2011 @ 3:35 pm

Bank of America (BAC [1]: 5.72 +2.33%) is looking at a new program to rent a home back to the borrower after foreclosure.

"There are programs that we are quite interested in," said Ron Sturzenegger, who leads the bank's legacy asset servicing division, in an interview with HousingWire. "We are talking with investors that would come in and buy these houses and would lease them back to the now tenant."

In February, BofA formed [2] the division to handle the servicing for delinquent mortgages, loans no longer being written, and to sort out outstanding representation and warranty claims. Currently, more than 35,000 employees at the bank are sorting through 1.1 million loans 60 days delinquent or worse, according to its third-quarter financial statement.

The Federal Housing Finance Agency is working [3] on an REO rental program for Fannie Mae and Freddie Mac. It received more than 4,000 ideas on how to do it.
But private banks own [4] $50.4 billion worth of REO properties, too, according to the Federal Deposit Insurance Corp., and millions of these homes are sitting vacant.

Sturzenegger described how their idea would work.
"We and Fannie Mae are looking at programs where you can capture somebody before the REO process and offer a deed-for-lease. We would go to the customer and say, 'We'll do a short sale. Will you be interested in leasing your property back? We're still going to sell the property. You will no longer be the owner. But you can be a tenant now in that same property and save you from moving on,'" he said.

Sturzenegger stressed the bank would still sell the REO as before in areas where there is a market for them and they can still get reasonable bids. But some areas are so saturated with inventory, there isn't enough investor or homebuyer demand and properties can sit for years uninhabited.

Rick Sharga, the executive vice president at Carrington Mortgage Holdings, said in an interview that many firms, including Carrington are preparing to participate.
"We already have the infrastructure and assets in place to participate effectively," he said. "Everyone is waiting on final direction from the FHFA."

Sturzenegger stressed the private program at BofA is in its infancy.
"It's in the very early stages," he said.

Jacob Gaffney contributed to this report.
Follow him on Twitter @JonAPrior [6].

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Wednesday, December 7, 2011

Housingwire:Treasury warns Chase of permanent HAMP witholdings

Treasury warns Chase of permanent HAMP witholdings
Wednesday, December 7th, 2011, 2:00 pm

The Treasury Department will withhold Home Affordable Modification Program payments from JPMorgan Chase (JPM: 34.00 +2.32%) and Bank of America (BAC: 5.89 +1.90%) for the third straight quarter.

According to a third-quarter assessment of the mortgage servicers participating in HAMP, the Treasury found Chase was the only firm "in need of substantial improvement under the program" and has not yet addressed problems the Treasury found in previous quarters.

The Treasury said it would "permanently reduce" payments owed to Chase unless its problems are fixed in time for the first quarter of 2012. According to the results, Chase was found to regularly miscalculate the income of homeowners. Furthermore, the lender failed to contact borrowers effectively and committed numerous errors in delivering HAMP progress reports to the Treasury.
"We are disappointed with our rating, and will continue to work hard to improve our processes and controls," a Chase spokesman said.

BofA was moved from needing substantial improvement to moderate improvement needed, but the Treasury said it will still withhold payments to BofA. The Treasury said the servicer "has made progress in addressing a number of items."

The Treasury launched HAMP in March 2009. Participating servicers started 883,076 permanent modifications since, including 26,100 in October, which is in line with the monthly average. But it is far short of the 3 million to 4 million initially projected. Congressional panels and oversight committees have continually pressed Treasury to crack down on servicers that are not doing enough.

Both Chase and BofA combined to start 315,000 permanent HAMP modifications and extended more than 800,000 three-month HAMP trials.
The Treasury uses Troubled Asset Relief Program funds to pay servicers $1,000 for every permanent modification and another $1,000 every year the new loan is current.

According to Treasury data, more than $87 million in HAMP payments went to Chase so far, and another $80 million went to BofA. Beginning in first quarter of 2011, the Treasury began assessing the 10 largest servicers for contacting borrowers, how evaluations are conducted and results reported.

BofA and Chase have yet to receive any funds this year as a result. The Treasury also withheld funds from Wells Fargo (WFC: 27.05 +1.50%) in the first quarter, but it made enough improvements to get the money back after the second quarter reviews.

"The mortgage servicing industry lacked accountability and transparency when this crisis started," said Treasury Assistant Secretary for Financial Stability Tim Massad. "Publishing these servicer assessments is key to our efforts to hold servicers publicly accountable for their performance and keep necessary pressure on them to improve.  We've seen movement in the right direction, and we will keep this up so that the industry continues to change its ways."

Sunday, December 4, 2011

Atlanta Sheriffs refuse to enforce bank’s order to evict 103 year old woman

Atlanta Sheriffs refuse to enforce bank’s order to evict 103 year old woman

Tara Steele | 2011/11/30  | 58 Comments

No eviction today

Elvinia Lee heard a knock on her door yesterday, just a few weeks shy of her 104th birthday. It was the Sheriff’s department and moving company with a crew prepared to clear out her house, with an order from Deutsche Bank through loan servicer Chase Bank ordering the eviction of the Atlanta native and her 83 year old daughter who had lived in the home together for 53 years.

The movers and Sheriffs “took one look at” Lee and left, opting not to go through with the eviction and as seen in the video above, Lee was confident she would not be removed.

According to WSB TV, at some point in years past, a family member who was not living in the home took out a second mortgage and then never paid for it, making the home subject to eviction. The issue has been in and out of court over the years with a judge recently ordering the eviction which Chase Bank says is now off the table, telling the press they are working on keeping the women in their home.

The stress of the possible eviction made Lee’s daughter ill; she was rushed to the hospital the same day. Lee told the reporter that her message for the bank is simply “Please don’t come in and disturb me no more. When I’m gone you all can come back and do whatever they want to.”

Thanks for spreading the word

Friday, December 2, 2011

Los Angeles County Foreclosures

California real estate execs arrested in alleged foreclosure scam

California real estate execs arrested in alleged foreclosure scam

Posted By ANDREW SCOGGIN On December 2, 2011 @ 11:08 am

Authorities arrested three top officers at Stockton, Calif., real estate company who allegedly took in steep fees without performing loan modifications.

Magdalena Salas, owner of Legacy Home Loans and Real Estate, along with Angelina Mireles and Julissa Garcia, were arrested Thursday on 13 felony and two misdemeanor counts that include conspiracy, grand theft and false advertising.

The three allegedly took up to $5,000 in upfront loan modification fees from dozens and never performed services.The company, from November 2009 through August, advertised in different media and in English and Spanish about "guaranteed new lower mortgage payments," according to a release from the Office of the Special Inspector General for the Troubled Asset Relief Program.

In one such advertisement [1], Legacy CEO Julissa Garcia says "we would never let [foreclosure] happen to you."
SIGTARP and the California Attorney General investigated the company along with local authorities.
"The mortgage crisis has caused tremendous damage to our state and to California families," state attorney general Kamala Harris said in a release. "There is nothing worse than those who seek to capitalize on this devastation by defraud

About one in every 148 housing units in Stockton received a foreclosure filing in October according to data firm RealtyTrac.The three were held at the San Joaquin County Jail on $100,000 bail. Legacy's office could not be reached.

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Thursday, December 1, 2011

Not All Loans Qualify for the HAFA Program

Not All Loans Qualify for the HAFA Program

by Melissa Zavala on November 3, 2011
HAFA Program Do you remember the phrase, “If the glove doesn’t fit, you must acquit?” Most of you probably do. That wasn’t so long ago.
Well, the other day, I received the following email about participation in the HAFA program, and I felt that, in this case, the HAFA glove didn’t fit.
Check it out:

I read your article about HAFA short sales and I wanted to ask you to help me with your advice.  I am the seller of a house and have been approved by my first lien holder for a HAFA short sale. Now my real state agent indicated to me that my second lien holder has not agreed to a HAFA short sale and that they want more than the $6000 offered by the 1st lien holder. They sent an approval letter asking for $15,000 to settle the debt.  The problem is that under the HAFA rules sellers can’t give a contribution to the sale so I asked her if we could give them the $3000 that is offered to us for relocation. So, our agent said that we can do that but she also kind of hinted that we could pay the rest to make up for the $15,000. I told her I need to check into this further. Now, this is my problem: my agent told me that she doesn’t have any means to make the 2nd lien holder agree to the sale.
I find out that the 2nd lien holder is a participant of the HAMP program and they post it on the website. So, why they don’t obey the rules? 
And, the email goes on…

There are several issues here that need to be clarified not only for this short sale seller (who I have already spoken with) but also for agents who are not doing HAFA deals 24/7.

Point #1
If there are two liens on the property and the first lien holder participates in the HAFA program, the second must also agree to the terms and conditions of the HAFA program in order to complete a HAFA short sale. In a HAFA short sale, the first lien holder allows for a $3000 incentive to the seller at closing. The second lien holder agrees to accept $6000 from the first. Both agree to waive the right to pursue deficiency.

Point #2
Just because a lien holder is on a list of HAFA or HAMP participants does not mean that the borrower’s specific loan will be eligible for the HAFA program. For example, Bank of America services notes for over 200 different investors. While many of the investors do participate in HAFA, not all of them do. So, if you see Bank of America on a list of HAFA participants, know that this refers to the investors who participate in the program.

Point #3
Just because both lien holders do not participate in HAFA does not mean that you can’t do a short sale. The borrower above can still participate in a short sale, but will not be eligible to obtain the $3000 cash incentive and other benefits of the HAFA program.

Point #4
Agents, always remember that any contributions to the second lien holder need to be approved by the first lien holder and need to be shown on the HUD-1 (settlement statement). If a borrower needs to use some of the incentive money for payments at closing or if a borrower (a buyer, a seller or an agent) is going to contribute some cash (to the second lien holder, to the HOA, etc.), this must be approved by the first lien holder.
So, in the situation described above, the HAFA glove did not fit this short sale seller. So, she must acquit—of let go of the hope of participating in HAFA and work on closing this transaction as a traditional short sale.


Monday, November 28, 2011


Home Transition Guide
What you will find inside

Section 1 of this guide was designed by Bank of America and provides information about options to avoid foreclosure using a short sale or deed in lieu of foreclosure. You will still need to leave your house, but these programs can give you more control over the way you do it.

Section 2 contains community resources provided by United Way and other organizations to help you navigate the process of transitioning out of your current house, including information, referrals and budget tips.

Section 3 contains an Action Sheet of the steps you need to follow to complete a sale, short sale or deed in lieu, and leave your house.

Section 4 contains additional resources that may be helpful to you, as well as an index of all the resources mentioned in the first three sections. You will also find a glossary of terms and a budget worksheet referred to later in this guide.

30% of FHA mortgage modifications redefault within a year

30% of FHA mortgage modifications redefault within a year

Posted By JON PRIOR On November 18, 2011

More than 30% of the nearly 282,000 modifications completed on Federal Housing Administration mortgages in 2010 redefaulted within a year, according to an independent study sent to Congress this week.
It's not great news, but it is down from last year's statistics.

Modifications made in 2009 remain the worst performing since the financial crisis struck in 2007. Nearly 39% of the 180,700 FHA modifications completed that year redefaulted within 12 months.
FHA loans do not go through the wider Home Affordable Modification Program, but have their own FHA-HAMP option, which combines principal deferment, among others.

The FHA put in new tools in 2011 including longer forbearance timelines for unemployed borrowers.
Public programs, while they reach fewer borrowers than the private ones, have consistently performed better. The Office of the Comptroller of the Currency reported in October that 34% of the 129,000 permanent mods completed in the first quarter of 2010 redefaulted within one year [1], compared to 19.4% of the 100,200 HAMP workouts completed in the same period.

Still, public programs are funded through taxpayer dollars. The Treasury Department has obligated $29 billion through HAMP.

Foreclosure starts on FHA-insured mortgages dropped to less than 10,000 in September 2011 from nearly 28,000 at the peak in March 2010. But that has been due to the continued robo-signing freeze servicers put on in October 2010 to fix faulty affidavits and other practices. "That, in turn, produced a decrease in claim payments during FY 2011," according to the report. "The final resolution of these open cases is still unknown."

Ron D'Vari, CEO of the financial advisory firm NewOak Capital in New York, said housing cures will come by adding more jobs. "The ultimate cure will come with fixing the job market which most effects those less prepared to deal with a sustained unemployment.
," D'Vari said. "In many cases these borrowers are better off with renting and having a more flexible arrangement so they can migrate to where jobs are."

5 Scams Making Suckers Out Of Homeowners

Friday, November 25, 2011

BofA: Alternatives To Foreclosure Chart

The Chart from Bank of America's Home Transition Guide below provides an overview of selling your house, a short sale, a deed in lieu and  a foreclosure by comparing their different features.

Wednesday, November 23, 2011

CDPE: Interview with Bob Hora, Bank of America VP of Mortage Servicing

Special Broadcast Interview with Bank of America  Bob Hora, Senior Vice President of Mortgage Servicing at Bank of America Home Loans with Alex Charfen, founder of CDPE (Certified Distressed Property Expert) Institute.

This special interview is heralded as the important step as the nation's largest loan servicer continue the process to stem the  tide of homes going into foreclosure.  Mr. Bob Hora introduces about the changes forthcoming to assist homeowners to make informed decisions about available options.  He emphasizes the need to work with trained agents like CDPEs who are familiar with the process.

This will be available for limited time so please take a look. The link to the special interview is below.


Saturday, November 19, 2011

Study: African Americans & Latinos Twice as Susceptible to Foreclosure as Whites

Study: African Americans & Latinos Twice as Susceptible to Foreclosure as Whites

California Underwater Mortgage Map

DS NEWS :Past Due Mortgages = 6,298,000

Past Due Mortgages = 6,298,000
by Carrie Bay  DSNEWS.COM

There were 6,298,000 mortgages going unpaid in the United States as of the end of October, according to Lender Processing Services (LPS).

It’s a daunting number, but the data show that it’s actually been on a fairly steady decline for nearly two years now. At the start of 2011, the total number of non-current mortgages in the U.S. stood at 6,870,000. In January 2010, it was 8,118,000.

LPS’ more recent reports show the industry is slowly but surely chipping away at the number each and every
month – the result of both loss mitigation workouts and removing loans that cannot be resolved from the inventory through foreclosure.

At September month-end, the tally of non-current mortgages was 6,373,000. It was 6,397,000 at the end of August and 6,538,000 at the end of July.

LPS’ data indicates mortgage delinquencies are declining while the nation’s foreclosure inventory is growing.
Of the 6,298,000 loans past due at the end of October, 2,329,000 were behind on their payments by 30-89 days and 1,759,000 were 90 or more days delinquent but not yet referred to foreclosure.

Combined, these tallies represent 7.93 percent of the nation’s outstanding mortgages that are delinquent but not in foreclosure. The October delinquency rate is down 2.0 percent from the previous month and is 14.6 percent lower than the rate recorded in October 2010.

The foreclosure inventory rate, on the other hand, is up by both measures. LPS says 4.29 percent of the nation’s mortgages are winding their way through the foreclosure process, a month-over-month increase of 2.5 percent and a year-over-year increase of 9.4 percent.

By LPS’ calculations, there were 2,210,000 residential mortgage loans in foreclosure at October month-end.
States with highest percentage of non-current loans – which combines foreclosures and delinquencies – include: Florida, Mississippi, Nevada, New Jersey, and Illinois.
Montana, Wyoming, South Dakota, Alaska, and North Dakota have the lowest percentage of non-current loans.

Thursday, November 17, 2011

Foreclosure Vs. Short sale Homeowner Consequences

I have been asked by many homwoners about the consequences of doing a  short sale versus going through the foreclosure.  I had posted the below table back in September but after more than 50 postings later, it is buried. So, I have decided to repost so that interested  parties could learn about the differences.
Like in my previous postings, I would like to reiterate that I am not a lawyer and can't give any legal advices and the information presented is sorely for educational purposes and comes from my training material as Certified Distressed Property Expert (CDPE) Institute which certified my completeness of their training.

Wednesday, November 16, 2011

GSEs release guidance on HARP changes

GSEs release guidance on HARP changes
Tuesday, November 15th, 2011, 5:05 pm

Fannie Mae and Freddie Mac released specific guidance Tuesday on how mortgage servicers and lenders will be implementing changes to the Home Affordable Refinance Program to help more underwater borrowers move into lower-rate loans.

In October, the Obama administration and the Federal Housing Finance Agency said the mortgage giants would lift the loan-to-value ratio cap, along with certain appraisal requirements, upfront loan-level price adjustment fees, and representation and warranties risk for participating lenders.
The program will be extended through Dec. 31, 2013.

For loans refinanced by the original servicer and currently hold an LTV above 80%, Fannie and Freddie waived the bank from representation and warranty liability for the original purchase mortgage documents, according to guidance sent to servicers Tuesday.

This means if the original documents on the loan were either fraudulent or missing before being sold to Fannie or Freddie the bank wouldn't have to buy back the mortgage.
"The lender is not responsible for any of the representations and warranties associated with the original loan," Fannie explicitly said in its guidance.

The servicer will also be relieved of rep and warranty liability on the new HARP refinanced loan if the data in the case file is complete, and the lender follows instructions gathering income, employment and asset documentation.

The GSEs will also clear banks from rep and warranty risk on the valuation, marketability or condition of the underlying property – unless the lender obtains an appraisal for the new HARP refinance.
However, the bank is still on the hook for any possible fraud it participates in or fails to detect.

There's a caveat. If the borrower goes to a new lender to refinance the loan under the new HARP rules, the rep and warranty risk on the essentially new loan transfers to the new lender, according to guidance from Freddie.

Fannie and Freddie will permit a borrower to have been delinquent on one mortgage payment in the previous 12 months as long as the delinquency didn't occur within the last six months.
Banks are allowed to solicit and advertise the changes to potential borrowers so long as they do so for both GSEs and for loans bundled into Fannie or Freddie MBS pools the bank is invested in.

HARP launched in March 2009. Roughly 838,000 Fannie Mae and Freddie Mac mortgages refinanced through the program since, but 58,000 had loan-to-value ratios above 105%.
Roughly 4 million Fannie and Freddie borrowers owe more on their mortgage than their home is worth.

Across all investor types, however, nearly 11 million are underwater in the U.S., roughly 22.5% of all outstanding loans, according to CoreLogic (CLGX: 13.55 0.00%). Another 2.4 million hold less than 5% equity in their homes.Royal Bank of Scotland analysts expect most of the loans impacted by the changes will have origination dates between 2006 and 2008.

While the largest lenders and servicers have committed to the new program, not everyone is participating.
United Guaranty, the mortgage insurance arm of American International Group (AIG: 23.12 0.00%), said many lenders will be using the revamped HARP to avoid representation and warranty claims on loans with fraudulent or missing paperwork. United said Tuesday while it supported the program, it was not going to waive its right to void policies in these instances.

Saturday, November 12, 2011

SAC. BEE Editorial:A lifeline for homeowners, but not enough

Editorial: A lifeline for homeowners, but not enough

Published Wednesday, Oct. 26, 2011

The nation and California in particular are drowning in a home foreclosure crisis that is dragging down the rest of the economy. President Barack Obama's newest plan to help those stuck in "underwater" mortgages – owing more on their homes than they are worth – is a recognition of that painful fact.

But it won't be enough to solve the housing crisis, as he himself admitted in unveiling the plan Monday in Nevada, another state that took it on the chin when the housing bubble burst.

The best guess is that the plan will aid somewhere around 1 million homeowners by allowing them to refinance their mortgages at current historically low rates. But there are more than 10 million homeowners nationwide, 2 million in California, who are underwater.

The plan loosens rules and restrictions in Obama's 2009 Home Affordable Refinance Program that has helped far fewer people than designed. It will depend on the details, such as the upfront costs for refinancing that could eat up much of the savings, how many homeowners will sign up this time.

It's as much an economic stimulus strategy as housing relief. The lower monthly payments are supposed to free up cash that homeowners can spend elsewhere in the economy, but their mortgages will still be underwater.

As the president often does (too often for the liking of many of his allies), he has chosen the path of less political resistance. Going into his reelection campaign, it would be much riskier to champion more sweeping solutions that some are endorsing.

Economists on the left and right are calling on the nation's big banks to write down the value of underwater mortgages to market values, accepting losses but allowing people to stay in their homes. Some propose using taxpayer money to encourage banks to reduce the principal on underwater loans. Obama would have to expend quite a bit of political capital to either bully banks into write-downs or to get a requirement through Congress.

With all these attempts to ease the housing crisis, there's good reason to be skeptical because high-profile pronouncements have not been matched with actual performance.
Speaking of which (and closer to home), the state Housing Finance Agency needs to get a move on with the Keep Your Home California program. Its launch was delayed and the eligibility guidelines were quickly expanded. Even so, since starting in February, only about 7,000 low- and moderate-income homeowners have received about $128 million in benefits, including cash assistance for those who have lost their jobs or are in financial distress.

That 7,000 is only a small fraction of those in need and hasn't kept pace with foreclosures. As The Bee's Rick Daysog reported on Monday, some consumer advocates are very concerned that the state won't make a 2017 deadline to use $2 billion in federal stimulus funding for the program. Any leftover money will go back to the feds.

Agency leaders say they're confident as more banks sign on to the program – the nation's biggest, Bank of America just did in August – that the pace will pick up rapidly.
It better and soon, or they'll have quite a bit of explaining to do.
Usually, it's the lack of money that's the big hurdle. That's not the case here. It would be a travesty if red tape or bad management gets in the way of helping Californians stay in their homes.
© Copyright The Sacramento Bee. All rights reserved.

TIMES: After Walking Away from Mortgages-No Regrets

Time Magazine reports on a study that indicates 35 % of mortgage defaults were strategic as of last September compared to jut 26 % of mortgage defaults in March 2009. While the ethical debate as to the strategic default is still going on, many believe that this trend of walking away will raise the overall number of foreclosures and bring unwanted consequences.  Please read the article below:

TIMES: After Walking Away from Mortgages-No Regrets

Friday, November 11, 2011

California Expands Mortgage Help to those with 2nd Homes. Good News !

By Jon Prior, Housingwire Nov 10, 2011

California expanded its $2 billion program to help homeowners avoid foreclosure to those with second homes as well.

The California Housing Finance Agency established the four Keep Your Home programs using money from the Treasury Department's $7.6 billion Hardest Hit Fund. Before, borrowers were restricted from modifications, unemployment funds, relocation assistance and even principal reductions if they had a second home.

Officials eliminated the exclusion, because they said many homeowners are co-signers on a second home or are underwater on their first property.

Other changes to the programs include allowing borrowers to take advantage of principal reduction offers even if they completed a cash-out refinance in the past, which many Californians did during the boom.

CalHFA also increased the amount of unemployment assistance qualified borrowers would receive and how long they could get it. Out-of-work homeowners can receive up to $3,000 in mortgage and tax assistance per month for up to nine months, an increase from six months before the change.

Borrowers can also get $20,000 through a reinstatement program to use for past-due mortgage payments, up from $15,000.

"This expanded eligibility will allow more families to qualify and receive greater assistance," said Claudia Cappio, Executive Director of the California Housing Finance Agency.

In order to qualify for these programs, the borrower's servicer must participate. CalHFA said nearly 50 mortgage servicers now participate in at least one of the four. But only 11 servicers participate in the principal reduction program that requires the bank to match each dollar the agency removes from the loan.
While Bank of America (BAC [1]: 6.21 +2.99%) joined [2] the California principal reduction program in July, Fannie Mae and Freddie Mac loans are still excluded.
The California Attorney General Kamala Harris recently called on [3] both companies to provide principal reduction to her constituents.

Monday, November 7, 2011

Who are The Winners and Losers in HARP 2.0 ?

CoreLogic Identifies HARP 2.0 'Winners and Losers'

Administration officials unveiled a highly anticipated program last week aimed at allowing borrowers who owe significantly more than their home is worth take out new loans with lower interest rates.

The initiative has taken the form of a newly revamped Home Affordable Refinance Program (HARP), which has been opened up to any borrower whose loan was sold to Fannie Mae or Freddie Mac prior to April 2009, as long as they are current on their payments and no matter how far underwater they are.

Mark Fleming, chief economist for CoreLogic says the impact of HARP 2.0 will be targeted to the housing markets and local economies that have suffered the most from the housing collapse.
Nationally, based on CoreLogic’s quarterly analysis, there are more than 20 million borrowers who have insufficient or negative equity positions on their homes, taking into account all outstanding liens. The company says 4.7 million of these households are underwater by 25 percent or more.

Nevada and Florida rank 1st and 3rd for the highest levels of negative equity (60 percent and 45 percent, respectively) and account for 2.3 million – or 21 percent – of the underwater mortgages nationally.
In those same two states, the share of loans that are current in the GSE portfolio is significantly lower than in the overall GSE portfolio, Fleming explained. Florida and Nevada loans held by the GSEs are current at rates of 85 and 87 percent, respectively, compared to 93 percent of loans that are current when looking at the full GSE portfolio.

“It’s not surprising that where insufficient and negative equity is concentrated is also where delinquency levels are higher,” Fleming said. “Therefore, the HARP 2.0 requirement that the borrower must be current reduces eligibility in many of the areas where negative equity presents the biggest impediment to refinancing.”
Fleming says it’s certain that many more borrowers will benefit from HARP 2.0 than would have prior to the new program revisions. But he says it will not be a panacea for the housing market directly, because it doesn’t address the two biggest downdrafts for housing: distressed borrowers and shadow inventory.
Moving beyond the borrowers themselves, Fleming cites several other ‘winners’ and ‘losers’ under the new refi effort.

He says HARP 2.0 will be positive for the GSEs themselves because it reduces default risk by reducing the mortgage payment and improving the household balance sheet.
The origination market is another winner in the program’s refi push. Fleming estimates that HARP 2.0 will lead to an increase of somewhere around 2 million additional transactions, starting in 2012 and going into 2013. With an average loan amount of $175,000, this equates to $350 billion over two years, although Fleming believes it will be frontloaded in 2012.

If as many as 2 million borrowers refinance and reduce their mortgage payments, HARP 2.0 constitutes a significant economic stimulus on the order of several billion dollars given to borrowers in many of the economically hardest hit areas, according to Fleming. “[T]his represents an effective tax cut on the order of a few billion dollars,” he said.

Bondholders of high coupon GSE mortgage-backed securities (MBS) fall on the losing side of this plan. Fleming says investors will see prepayment speeds increase significantly. They’ll receive their capital back sooner and will have fewer options for investing it at similar rates, he explains.
For the housing market itself, the impact will likely be “neutral,” Fleming says. He explains that refinancing will not significantly reduce the level of negative equity and will be unlikely to effectively reduce strategic default since the program only offers the potential of lower payments but doesn’t reduce principal.
In addition, Fleming stresses that because borrowers need to be current on existing loans, HARP 2.0 will not reduce the level of the shadow inventory, which, by definition, is composed of seriously delinquent loans and REO held off the market.

Fleming says there is little direct and immediate benefit to the impacted housing markets in the near term or to the borrowers who are already delinquent. Instead, he says, benefits of HARP 2.0 will be longer term in the form of reduced, new distressed assets.
“There are no silver bullets that will solve the issues facing the housing and mortgage markets, only solutions that play their small part,” Fleming said. “In the end, the best solution will be a stronger economy and the passing of time.”

Monday, October 31, 2011

Bank of America Launches ‘Test-and-Learn’ Short Sale Program in Florida

Bank of America Launches ‘Test-and-Learn’ Short Sale Program in Florida

By: Carrie Bay 10/11/2011

Bank of America has begun a pilot program in Florida offering extra incentive payouts to distressed homeowners who agree to and successfully close on a short sale.
Incentive payments for relocation assistance range between $5,000 and $20,000. The program is being offered on a limited basis for investor-approved, pre-offer short sales.

Bank of America is calling it a pilot “test-and-learn” program.
A spokesperson for the bank explained that Florida is experiencing higher foreclosure rates than other parts of the country, and is therefore seen as a “viable market to gauge incremental short sale response and completion rates when presenting homeowners with relocation assistance at closing.”
If successful in Florida, Bank of America says the “test-and-learn” could be expanded to other states.

The short sale must be initiated between September 26 and November 30, 2011 and close by August 31, 2012.Florida homeowners who qualify for the “test-and-learn” program will receive a solicitation mailer directly from Bank of America, or may learn about the program if they are working with a real estate agent who handles pre-approved short sales for BofA.

The bank has a dedicated team of short sale specialists standing by to help agents determine if their homeowner client qualifies for the short sale relocation assistance at: 877.459.2852.
Bank of America has already been offering short sale payouts in the state of Florida, albeit for smaller amounts.Susie Kirkland with RE/MAX Southern Realty in Destin says she’s closed five transactions within the past couple of months through what BofA calls its Cooperative Short Sale Program. The bank awarded Kirkland’s short sellers $2,500 upon closing.

BofA is even extending short sale incentives to some investors. Steve Kravitz of Bankers Realty Services, Inc. in Fort Lauderdale just completed a short sale transaction last week on an investment property. BofA offered the non-occupant owner/seller $3,600.Kravitz says his client had been late on a few payments, but there was no foreclosure filing on the property.

BofA and other lenders are looking to short sales earlier on in the process, and getting ahead of the foreclosure crisis in areas where the system is already bogged down with distressed properties.
“We’ve had cases here where we’ve gotten short sales through where there haven’t even been any late payments at all,” Kravitz said. Kravitz says short sales just make sense for a market as hard-hit as Florida. Not only can a short sale be more cost efficient when lenders are facing a foreclosure timeline of nearly two years, but it “gets more product and better product out to buyers,” he says.
He explained that oftentimes, a foreclosure property can sit vacant for more than a year, whereas with a short sale, the home is typically occupied up until a week or a few days prior to changing hands, which translates to a better quality home in better shape.

Kravitz says banks are becoming “more cooperative” and approving short sales more quickly. The investment property short sale Kravitz closed last week took just 45 days.
Other lenders are also extending incentive payouts to short sellers in Florida and some other hard-hit states such as California.

In July, reported that Wells Fargo, JPMorgan Chase, and Citi were all offering extra relocation assistance to borrowers opting for a short sale in certain markets.
Robert Valenzuela with Century 21 Schwartz Realty in Key Largo, Florida, says he’s completed six short sale transactions in which the seller was given money to help with relocation, the largest of which was a $45,000 payment from Chase Bank.

MReport:Four major banks sign up for HARP expansion.

Will the HARP2.0 generate the desired outcome that Obama Administration is aiming for ?

Click below the link to learn about the issue.

Four Major banks sign up for HARP expansion

Los Angeles tops for second-quarter short sales

Los Angeles had the nation's highest number of housing short sales in this year's second quarter, with Phoenix a close second, according to foreclosure data firm RealtyTrac.

Short sales totaled 9,145 in Los Angeles for the quarter, making up 25% of all sales with an average short-sale price of $350,237. Phoenix saw 8,434 short sales at an average price of $133,793, with short sales making up 23.4% of all sales.

RealtyTrac reported in August that U.S. short sales increased 19% in the second quarter to 102,407, up from 86,059 in the previous quarter.

Short sales made up 12% of all residential home sales in the second quarter, with nearly one-third of all sales at some stage of foreclosure.

Reno, Nev., saw the biggest quarterly increase in short sales to nearly 50%, making up about 30% of total sales.

Article from

Los Angeles Tops for 2nd Q Short sales.

Thursday, October 27, 2011

The Home Affordable Refinance Program.What You Need to Know

On, Monday, the Obama administration announced the implementation of far'reaching changes to boost the economy by allowing underwater homeowners to refinance their proeprties at today´s low interest.

There are certain requirements despite eliminating many road blocks. Press the link below to learn more about the HARP which was enacted in 2009 but so far only reached one tenth of the 5 million borrowers it was designed to help.

Home Affordable Refinance Program. WP Oct. 24th

Tuesday, October 25, 2011

FHFA, Fannie Mae and Freddie Mac Announce HARP Changes

The Federal Housing Finance Agency, with Fannie Mae and Freddie Mac (the Enterprises), today announced a series of changes to the Home Affordable Refinance Program (HARP) in an effort to attract more eligible borrowers who can benefit from refinancing their home mortgage. The program enhancements were developed at FHFA’s direction with input from lenders, mortgage insurers and other industry participants.
Here are the details:

FHFA, Fannie Mae and Freddie Mac Announce HARP Changes

Thursday, October 20, 2011

FICO tells mortgage servicers to reach out to strategic defaulters

FICO tells mortgage servicers to reach out to strategic defaulters


Thursday, October 20th, 2011, 7:06 pm

Consumer credit analytics firm FICO (FICO: 25.96 +2.12%) said mortgage servicers need to take a more proactive approach to borrowers they feel are likely to strategically default on their mortgage. The prevention of future litigation costs, FICO said, is alone worth the effort.

"Within the current population, the goal is to spot likely strategic defaulters before a delinquency develops, enabling servicers to intervene early," FICO said Wednesday in a blog post.

Mortgage servicers should give potential strategic defaulters advice on other ways to relieve their mortgage burden such as a short sale or loan modification, the company said. Mortgage lenders and servicers have said they are more likely to seek a deficiency judgment if they perceive the borrower to be a strategic defaulter.

A Wall Street Journal review of hundreds of foreclosures in seven states found that the average amount by which foreclosure sales fell short of loan balances was roughly $100,000. The review found that 64% of the 4.5 million foreclosures since the start of 2007 have taken place in states that allow deficiency judgments.

Florida is one of the biggest deficiency judgment states. Since the beginning of 2007, it has had more foreclosures than any other state that allows deficiency judgments –more than 9% of the U.S. total, according to research firm Lender Processing Services Inc.

A growing national secondary market of deficiency judgments could lead to a bundling of those judgments into packages that resemble mortgage-backed securities, some investors say.

Strategic defaulters behave differently from traditional mortgage defaulters in that the former generally have higher FICO credit scores, exhibit better credit management behavior and live on the property for a shorter length of time and therefore are less attached to it.

Strategic defaulters can afford to make payments on their loan, but do not because they are "underwater," meaning they owe more on their mortgage than their house is worth. Traditional defaulters generally do so because they cannot afford the payments.

Short Sales. Tips to getting your short sale approved

Listen to internet radio with DavidSchenck on Blog Talk Radio

Foreclosure Radar Los Angeles County Report

As a realtor helping homeowners with their situations, it is imperative that I am informed about the latest trend, policies affecting my clients. I rely on reports from Foreclosure Radar.  Today I wanted to share with you some of the latest developments.  Please click on the link below:

Foreclosure Radar Los Angeles Report

Wednesday, October 19, 2011

WSJ : New Mortgage Plan Floated

California State Attorney Kamila Harris bolted from talks with the nantion's five largest lenders to reach some settlement.  Without California's participation, the plan to reach settlement in the $20 to $25 billion would be impossible.

The plan under consideration would make refinancing available to some borrowers whose houses are worth less than their loans, so long as they are current on mortgage payments, according to people familiar with the matter. Please click on the link below.

WSJ: New Mortgage Plan Floated

LA Times: Foreclosure Activity Soars in Third Quarter

As expected, banks are in full gear to increase the foreclosure activities after a temporary moratorium. The number of default notices jumped 25.9 % from previous quarter. The reason is that banks have easier time filing in non-judicial states like California where foreclosure proceedings are shorter than judicial states.

LA Times: Foreclosures Soar in 3rd quarter

Tuesday, October 18, 2011

REO Sales May Not Peak Until 2013

REO sales may not peak until 2013

Posted By JON PRIOR On October 17, 2011

The sale of properties repossessed through foreclosure may not peak until 2013, keeping home prices from a meaningful recovery for some time, analysts estimated Monday.
Nearly half of the more than 552,000 REO properties liquidated in the first half of 2011 were held by private banks. In the years ahead, the government — including the Department of Housing and Urban Development, Fannie Mae and Freddie Mac — will begin taking a majority of the activity.

In 2013, REO sales could reach 1.48 million properties, according to estimates from Bank of America Merrill Lynch analysts, a 10% increase from projected amount in 2012.
"We do not expect to see anywhere near the downward pressure on home prices that we had back in 2008, since the expected percent changes in liquidation volumes are so much smaller," BofAML analysts said. "But home prices are starting from a negative point, so the implication is that home prices will continue to decline as the foreclosures transition through the pipeline."

Most of the projected increase will come as the government begins to unload its backlog. The government-sponsored enterprises and HUD, analysts estimate, will liquidate roughly 595,000 properties in 2013 alone.
Total REO liquidations wouldn't drop below 1 million until 2015, according to BofAML.

The Obama administration began work [1] last month developing new strategies for selling this mass of properties, which may involve renting more of them. The Federal Housing Finance Agency is also working on a way [2] to refinance more underwater borrowers to entice them from walking away.
"I would essentially rent the house back to those who are living in them now," said Susan Woodward, an economist with Sand Hill Econometrics. "I don't think it makes a lot of sense to push 4 million people out of their homes when they're victims of a slower economy they had nothing to do with."

Other analysts were skeptical of anyone who could predict accurately what the GSEs or Washington would do, especially after the elections in 2012."Do they really think that the government under any administration would let 500,000 homes hit the market and crash prices all over again, six years after the first crash?" said Scott Sambucci, chief analyst at Altos Research.

He said even if unemployment improved by a full percentage point or two — which he said would be a stretch — the market would still struggle to meet such a supply influx."It would crash the market, so no, it'll never happen," Sambucci said.Daren Blomquist at RealtyTrac, which monitors foreclosure filings across the country, said the sale of REO is on track to reach 825,000 by the end of 2011.

"We do expect the REOs to pick back up in 2012 as lenders push through some of the foreclosures delayed by processing and paperwork issues," Blomquist said, adding the inventory needed to be sold could reach well into the millions.If half of the 800,000 mortgages currently somewhere in the foreclosure process and another half of the 1.5 million loans in serious delinquency end up REO, it could mean an additional, 1.15 million properties that would need to be liquidated — not including new foreclosures that enter the process, according to RealtyTrac.

"That's very possible given continued high unemployment rates and high underwater rates," Blomquist said. RealtyTrac estimates roughly 27% of all outstanding mortgages are worth more than the underlying property.
Woodward said refinancing borrowers, in negative equity or not, down to current market rates could result in a total savings for U.S. households at $250 billion annually. When asked if private investors would return to fund the future mortgage market after such a radical change, she said they would.
"I think the whole world would see this as a one-time fix. We did similar extreme things during the Great Depression," Woodward said.
Investors themselves, though, showed little confidence they would take on such a risk again. In fact, most are trying [3] to keep the government involved in the housing market for the future, to keep risks as low as possible. Otherwise, foreign investors would flee.
While the estimates on how many REO will be sold in the future are extremely difficult to nail down, the size of the best projections share a common and threatening scale. Analysts said major refinancing schemes or new strategies for liquidating REO on a local level would need to be completed soon to rescue house prices from the still increasing pressure of mounting foreclosures.
"The need for policy support would therefore be considered urgent," the BofAML analysts said.

Article printed from HousingWire:
URL to article:

Wednesday, October 12, 2011

Huff Post: Why Home Affordable Modification Program [HAMP] is a failure.

Why Home Affordable Modification Program [HAMP] is a failure.

SB 458 : Amendment of Section 580e Antideficiency Judgement

What Kind of Properties Qualify for Protection under the amendment to C.C.P 580e under SB 458:
This deficiency judgment prohibition applies to a broad category of 1 to 4 residential units with exceptions noted below.  It applies to:
•Cash-Out Refinanced loans
•Non-Owner Occupied Homes
•Second Homes
•Vacation Homes
Are There Exceptions to C.C.P. section 580e? (SB 458):
Section 580e does not apply in the following circumstances:
  • Where debtor is a corporation, limited  liability company, limited partnership, or political subdivision of the state.   C.C.P.  580e( d)(1).
  • Where debtor engages in fraud in the sale or waste of the property  C.C.P. 580e( c).
  • A lien secured by a bond as specified; a public utility lien; and additional rules apply if a note is cross-collateralized by more than one property.    C.C.P. 580e(d)(2).
  • For other exceptions that may apply to your specific factual scenario, speak to a lawyer.

Friday, October 7, 2011

The Truth About Mortgage Modifications

The Truth About Mortgage Modifications

While mortgage modifcations can be an ideal solution for homeowners who qualify, it

is important to understand the current trends concerning mortgage modification success

rates. According to the most recent MHA report, only 12% of eligible homeowners have

started a modification. The provider of this report understands that to increase this statistic,

more homeowners need to find out if they are eligible and apply.

Also, a mortgage modification is primarily for those who can almost make their payments

each month, but not quite. If you or someone you know is one of the many homeowners

facing certain financial hardships—such as unemployment, forced relocation or divorce—you are less likely

to qualify. The current re-default rate on mortgage modifi cations is 50–60%. Find out the facts, apply for a

solution, but have a contingency plan. It is important to explore all of your options, and an educated real

estate agent can help.

Setting goals and keeping updated records will streamline your process to success and

recovery. It will also save you time, hassle and distress when making plans for your

financial future.

If a mortgage modification isn’t an option for you, a short sale might be. It’s understandable

if you’ve never heard of a short sale or don’t know what one entails, but imperative that

your agent is educated and experienced in this area.

Solutions are out there to ease your financial strain. Be sure to take advantage of all the options

available. You can take back control of your financial future. Get all the facts regarding your situation, let a

qualified agent help you formulate a plan, and get back on the right track.

Thursday, October 6, 2011

Foreclosures Forecast to Hit 15 Million Homeowners

Foreclosures Forecast to Hit 15 Million Homeowners

By Kevin Chiu
The foreclosure crisis has produced an overpowering series of affects across the U.S., destroying businesses, taking away livelihoods, foreclosures tossing millions of homeowners out of their homes and pressuring home prices in the over-whelming majority of neighborhoods lower.
The crisis, first forecast by Housing Predictor almost five years ago as the first real estate research firm to forecast the mess, has had a devastating impact on the nation’s economy and sent 45 million Americans into unemployment. An estimated 7.6-million residential properties have been foreclosed since the crisis started, with another 7.4-million foreclosures forecast through 2016.
Banks, mortgage companies, state and federal loss mitigation programs and moratoriums delayed foreclosures in 2009 through early 2011 before formal foreclosures were sped up. Attorney generals representing 47 states with the U.S. Justice Department are still negotiating with the nation’s six biggest banks to work out an agreement on foreclosures that were mishandled in the robo-signing scandal. Bank servicing employees admitted to making at least hundreds of thousands of forgeries on foreclosure documents.
Foreclosures were first concentrated in poorer neighborhoods made up of mainly subprime mortgage borrowers, but it didn’t take long for the crisis to spread to the mainstream of conventional mortgages, increasing our foreclosure forecast.
As the foreclosure crisis broadens to include more areas of the country, all sorts of homeowners are falling into its trap from a wide array of incomes, races and cultures. This epidemic like the mortgages that produced it doesn’t discriminate based on race, creed, income, national origin or background.
Going out of Business
Foreclosure reports from data firms vary, but roughly two-thirds of current foreclosures are confined to the ten hardest hit states, which include California, Florida, Nevada, Arizona, Ohio, Alabama, Georgia and Illinois. But as the crisis drags on, Housing Predictor forecasts the concentration of foreclosed homes will expand to include more states as economic hard time’s impact more areas of the country.
Almost one-in-three homeowners are without any home equity or are on the brink of being underwater on their homes. For millions the dream of home ownership has turned into an American nightmare. Job losses and especially high unemployment in the majority of the country are hurting the housing market.
The Obama administration has implemented a series of programs to aid the market. Mortgage modifications, which are the only real step towards a healthier housing market have been completed for nearly 5-million homeowners, 80% of which have been by banks and mortgage companies not associated with government programs.
The battle to resolve the crisis and produce a foreclosure forecast that is more positive for the U.S. is likely to be delayed for years as politicians, divided by party lines and backed by special interests fail to do their jobs for the electorate as elected. A new mortgage finance system would go a long way in bettering economic conditions.
Congress has become so overly concerned about destroying the other party that the entire nation is suffering as members of the House and Senate pick-up record pay-days from special interests, including bankers and Wall Street to run their campaigns. Things have to change before the housing mess can possibly be straightened out.

Published October 6, 2011

Tuesday, October 4, 2011

LPS: Foreclosure starts up 20% in August.

LPS: Foreclosure starts up 20% in August

Tuesday, October 4th, 2011, 9:20 am

Foreclosure starts rose 20% in August from the prior month to the highest level of the year and mortgages facing foreclosure are delinquent an average of 611 days, the highest level yet.

Lender Processing Services' (LPS: 13.225 +0.88%) mortgage monitor report for August showed foreclosure starts fell more than 12% from a year earlier, and the national delinquency rate is 8.13%, which is 2.5% lower than the prior month.

In late August, the Federal Deposit Insurance Corp. said the combined delinquency rate on mortgages held by major banks dropped to 6.68% in the second quarter, the lowest level since the third quarter of 2009.

First-time delinquencies accounted for nearly one-quarter of new delinquencies in August, according to LPS. And 23% of the nearly 46 million loans that were current at the end of August are at risk of foreclosure due to negative equity.

LPS said more mortgages moved back into delinquent status from foreclosure in August than ever before, "suggesting that process reviews and potential loss mitigation activity are continuing."

The company said the average delinquency process in non-judicial states is about six months shorter than judicial states, where backlogs remain extremely high. LPS said loans delinquent more than 90 days declined to 2008 levels in August.

Florida, Mississippi, Nevada, New Jersey and Illinois had the highest percentage of loans in delinquency or foreclosure. The states with the lowest rates of non-current loans were Montana, Wyoming, Alaska, South Dakota and North Dakota.


Sunday, October 2, 2011

Adjustable Rate Mortagage Reset Schedule Graph.

The above graph is the graph from Credit Suisse that has many people nervous (especially in the financial sector) and squirming in their chairs.  It displays the 2nd wave of adjustable rate mortgage (ARM) resets coming straight at us this year and next year.  California is particularly vunerable since almost 60 % of this type of loan were sold for new purchase and refinance.

The reason behind the popularity was that people did not need the fixed 30 year mortgage since people moved or refinanced every 3 to 5 years so many homeowners traded the secure mortgages for low teaser rate yet dangerous offers  "to cash out their equity".

Not only ARM was popular but the option ARM was also widely embraced by homeowners because it allowed the  borrowers to pay less than the interest payment thus accruing negative equity.  These are the loans that are almost impossible to modify or become impractical since payment can't be reduced. From the graph, one can easily tell the higher proportion of option ARM loan that is about to be rest.  Only after the end of 2012 the reset declines.

The first wave of ARMs adjusted in 2007. This year 2011 is the year that large amounts of loan known 5/1 will be reset.Close to $ 500 Billion in Option ARMs is scheduled for reset.  The exact date might not be accurate as banks try to modify some of the loans by postponing thru forebearance and beacuse home do not foreclose overnight. On average ,a foreclosure takes more than 12 months.

According to latest survey, there are more than 11.1 Million homeonwers (some source says is close to 15 M) with a mortgage that is negative in equity (underwater), meaning their house is worth less than the loan balance. They cannot sell, they cannot refinance, and there seem to be no solution.

The significance of this impending reset is that the additional homes with ARMs scheduled for foreclosure and the additional shadow inventories(estimated at 2 Million units) will further depress home values.  It is estaimated that for every 5 % decline in home values, an extra 300,000 homeowners will be negative in quity or upside down.

If the homeowners can't cure the default by paying the balance the bank will eventually foreclose on their properties. It is important for homeowners to work with properly trained agents to assist them with the short sale.

Saturday, October 1, 2011

No Plan for Principal Reductions at Fannie Mae

No plan for principal reductions at Fannie Mae

Friday, September 30th, 2011, 4:16 pm

The number of Americans struggling to make their mortgage payments is at traditional highs, while properties remain at high levels of negative equity.

Popular strategies for helping distressed borrowers include mortgage modification and refinancing, to name a few. But at the largest mortgage player in the nation, Fannie Mae, there is one option that the government-sponsored enterprise has no plans to use.

Michael Williams, the CEO of Fannie Mae, tells HousingWire magazine that the firm will not ask mortgage servicers to reduce the principal on distressed loans.

"We do not do principal reduction," Williams said. "When we look at the toolset that we bring to the table, we really look at the interest rate, term and then forbearance of principal but not forgiveness of principal."

Williams joins the CEO of Freddie Mac, Charles "Ed" Haldeman in the resolve to pursue loss mitigation strategies, such as mortgage modifications. Both men disclosed this information in separate interviews with HousingWire magazine.

In April, the Federal Housing Finance Agency directed Fannie Mae and Freddie Mac to align guidelines for servicing delinquent mortgages.

Both CEOs refer to foreclosure as an option of last resort, something that is ultimately in the best interest of the American taxpayer, they say.

"We have found that majority of the borrowers that we are dealing with have a challenge in meeting their monthly payment," Williams said in reference to actions at Fannie Mae, "so what we want to do is put them in a modification that really gets them to a point where they can afford the payment."

Williams outlines his strategy in greater detail in the October issue of HousingWire magazine.

Friday, September 30, 2011

Housin Market Hit Bottom: Former Realty Trac Executive Rick Sharga

Housing market hit bottom: former RealtyTrac exec

Friday, September 30th, 2011, 4:23 pm

The U.S. housing market hit bottom this year and will remain flat until 2014, when it will start to slowly recover, said Rick Sharga, an executive vice president with Carrington Mortgage Holdings.

"We’re looking at a catfish recovery," he told attendees at the Asian Real Estate Association of America conference in San Francisco Friday, saying the market will bump along the bottom for some time before starting to revive.

More than a million foreclosure actions that should have taken place this year have not yet moved forward, and that delay pushes a resolution of the housing market’s problems into next year and beyond, he said, citing data from RealtyTrac, where Sharga served as a senior vice president until this week.

"We can’t expect to see home price appreciation until we work through these distressed assets," he said.

Since 2005, there’s only been one quarter in which U.S. banks have sold more properties than they’ve taken back through foreclosure, leaving a huge overhang of real estate-owned assets that need to be cleared out.

Banks hold about 800,000 REOs, and three-quarters of those are not listed for sale, said Sharga. Another 800,000 homes are in foreclosure and 1.5 million loans are delinquent.

This "shadow inventory" will slow down a housing market recovery, he said, as monthly foreclosure numbers will remain elevated through 2012 and REO inventories will stay high through 2013.

Even with the continuing distress in the housing market, the country is not likely to enter a double-dip recession, said Eugenio Aleman, a director and senior economist at Wells Fargo & Co (WFC: 24.12 -3.48%).

Although U.S. workers have suffered as the nation has lost 9 million jobs over a two-year period, the manufacturing and service sectors are expanding, he noted.

"The rest of the economy is not booming, but it’s doing fine," said Aleman. Wells Fargo is projecting that the U.S. economy will expand over the next few years, but at anemic rates: 1.6% this year, 1.4% in 2012 and 1.9% in 2013.

"We are standing firm," said Aleman of Wells Fargo's economic forecast. "We are not going to go into a recession."


Fewer Loan Modifications Completed- O.C. Register

The nation’s mortgage lenders modified fewer mortgages to help keep delinquent borrowers in their homes this past summer, even though mortgage starts and sales increased, a new survey shows.

Lenders have been working to modify loans of borrowers who have fallen behind on payments by lowering monthly payments, lowering interest rates or in some cases by reducing the amount owed.

Hope Now, a coalition of loan servicers, investors and counselors, reported that loan mods fell nationwide to 55,828 in August.
That compares to monthly averages ranging from 84,000 to 115,000 loans modified a month in the previous nine months.

In addition, Hope Now reported:

221,746 loans were made in the third quarter ending in August.

That’s down from 345,197 loan mods made in the fourth quarter of 2010.

Lenders have modified nearly 4.9 million loans for homeowners since Hope Now began gathering data in 2007.

Of those, only 791,399, or 16.3%, of the loans were modified under the federal Home Affordable Modification Program, or HAMP.

Completed foreclosure sales increased 5% in August to 68,000, compared to 65,000 in July.

Foreclosure starts increased by 18% to 218,000 in August, up from 185,000 in July.

Read More from the Article Source:

Thursday, September 29, 2011

Why Is JPMorgan Chase Paying Up To $ 30,000 For Short Sale ?

Why Is JPMorgan Chase Paying Up to $30,000 for Short Sales?

Apparently Chase has been aggressively pursuing homeowners to enroll in their Short Sale Outreach Program. They are sending letters to certain mortgagors, offering up to $30,000 to people who are behind on their mortgages, to try to short sell the property, rather than letting it go to foreclosure. They promise to give approval within a short period of time, and to forgive any deficiency. There is one catch, the mortgage has to be owned by Chase (not merely serviced by Chase).

Why would they do this? Because they understand the math involved in a foreclosure. The mortgagee (holder of the mortgage) usually loses a huge amount of money if the property goes to foreclosure. In Florida, the average time from beginning to end of a foreclosure is over 600 days! [Editor’s note: nationally, the average is over 500 days.] That's almost two years worth of interest lost, real estate taxes and legal fees that have to be paid and association dues owed.

When you include the deterioration to the property, the loss in value overall, lenders are lucky to recoup 50% of the money owed on any foreclosure. The average price discount on a short sale is 12%, while on an REO it is 25%. It is much cheaper to pay the delinquent homeowner to get out, than to go through the entire foreclosure process.

The real question is why are they not being as aggressive on the loans which they service? Again, they understand the math involved. Since it is not their money being lost in the process (they already sold the loan to an investor, who is taking the loss), there is little incentive to stop the bleeding. And, the financial remuneration involved in servicing the loans actually goes up once a loan becomes delinquent.

As the servicer of a loan, a bank gets paid a small percentage (usually about 0.25%) of the principal balance of the loan, to take in the monthly payments, and distribute the money (taxes, insurance, interest, principal). But, when a loan becomes delinquent, they raise the percentage (to over 0.5% - doubling their income), charge late fees and make money on force-placing insurance. This means that if they encouraged modifications or short sales of these loans, servicing income would decrease dramatically (since the principal balance of the loans they service would decrease). Instead, the longer a property remains delinquent, the more money they earn.

But wait, how can they be making money when no payments are coming in? Because their servicing agreements state that they are entitled to be paid first out of any proceeds from the sale of the property. So, when the property is finally foreclosed, all of their fees (together with interest on any money they had to front) gets paid to them first, with anything left over going to the investors.

Chase's program only underscores what many inside the industry have always known. If borrowers and investors could directly deal with each other to modify or allow a short sale, the real estate industry would recover much faster. However, it would mean that banks would not be able to make as much profit, so they do everything possible to keep the communication lines cut. [Bank of America, alone, reported a profit of $2 billion in the 2011 first quarter.

Source: Shortsaledailynews

Home Price Declines, Tight Lending Standards Blocked 2.3M Refinances - Fed Study

Home Price Declines, Tight Lending Standards Blocked 2.3M Refinances - Fed Study
By Alan Zibel

Published September 22, 2011

|WASHINGTON -(Dow Jones)- Tight mortgage-lending standards and dramatic declines in home prices prevented more than two million U.S. homeowners from refinancing last year, the Federal Reserve said Thursday in a new study.

The annual report underscores the difficulties that policymakers have had over the past two years in encouraging more Americans to refinance their mortgages and take advantage of ultra-low rates.

The report found that about 2.3 million homeowners would have been able to refinance their loans were it not for strict underwriting standards enacted after the housing bubble burst, and for home price declines that left millions of Americans owing more on their properties than their homes are worth. About 4.5 million of refinances were made last year, the study said.

The report analyzed data from more than 7,900 mortgage lenders, which are required to report detailed data on mortgage lending to the Fed and other regulators under the Home Mortgage Disclosure Act. In total, 7.9 million home mortgages--including refinances, home purchases and other loans--were made last year by the institutions analyzed in the report. That was down from 9 million in 2009 and a peak of 15.6 million in 2005.

The White House in 2009 launched an initiative called the Home Affordable Refinance Program that allows borrowers whose properties have declined in value to refinance without putting down more cash. It has enrolled about 830,000 homeowners, far fewer than expected. The Obama administration and regulators have been working on ways to expand access to that program.

The report comes as maximum size of loans that can be backed by government-controlled mortgage companies Fannie Mae (FNMA), Freddie Mac (FMCC) and the Federal Housing Administration is scheduled to decline at the end of the month. The new limits vary by location, but will drop to $625,500 in expensive markets such as New York, Los Angeles and Washington from the current $729,750.

The Fed study concluded that only a small number of loans are likely to be impacted by this change. It calculated that only about 1.3% of purchase and refinance loans guaranteed by Fannie and Freddie made last year would have been impacted had those lower limits been in effect.

Copyright © 2011 Dow Jones Newswires