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.