Friday, March 27, 2009

NAR Warns of Rental Property Scam

The National Association of REALTORS®’ name is being used as part of a property rental scam in which rental property is offered to consumers, who are led to believe that NAR is functioning as an intermediary to receive rental deposits from prospective tenants.

“NAR is not involved in this business and has contacted law enforcement officials to request that the matter be investigated. We encourage any consumers who may be affected to file a complaint,” says NAR President Charles McMillan.

The scam claims that on receipt of a deposit, NAR will deliver the keys to the property to the tenant. Prospective tenants are instructed to send money via Western Union to NAR’s purported agent in the United Kingdom.

Some of the listings have been posted on Craigslist, which reportedly has had difficulty in tracing the original listings. NAR does not have an escrow service, or function as an intermediary to receive rental deposits.

Consumers who have encountered this scam may file a complaint with the Internet Crime Complaint Center, sponsored by the Federal Bureau of Investigation and the National White Collar Crime Center.

“Our mission is not only to protect consumers in the real estate transaction, but also guard them against fraud,” McMillan says.

Source: NAR

Monday, March 23, 2009

Homeowners Beware: Foreclosure Rescue Scams

This is brought to you by the California Association of Realtors® Though it is written specifically for California homeowners, this is good advice for everyone!

With the recent rise in foreclosures, foreclosure-related scams have exploded onto the real estate scene. These so-called “foreclosure rescue companies” claim they will help save your home, but in reality are out to make a profit -- at your expense.

Red Flags for Foreclosure Rescue Scams
If you are at risk of or in foreclosure, you should be on the lookout for foreclosure scams. Here are some of the red flags to watch out for:

• Asks for money upfront before providing any service
• Instructs you not to contact your lender, lawyer, housing counselor, family, friends, or others
• Asks for mortgage payments to be made directly to his or her company or a bank account set up by that person, rather than your lender.
• Requires payment only in the form of cash, cashier’s check, or wire transfer
• Promises to stop the foreclosure process, no matter the circumstances
• Advises you to transfer your property deed or title to his or her company
• Offers to fill out paperwork for you
• Asks for something to be done immediately and without delay. This includes pressuring you into signing paperwork that you have not had the chance to read thoroughly or do not fully
understand
• Encourages you to lease your house and buy it back over time
• Offers to buy your house for a fixed price that is not set by the housing market at the time of sale
• Asks for you to give a power of attorney
• Asks for signatures on a grant deed or deed of trust
• Asks for signatures on a document that has lines left blank
• Fails to provide copies of signed documents
• Refuses or fails to put an oral promise in writing



Report Fraud
If you have been a victim of a foreclosure-related scam or approached by a scam artist, you may report the incident to the following organizations and government enforcement agencies:
• California Attorney General http://ag.ca.gov/
• California Department of Real Estate http://www.dre.ca.gov/
• Department of Housing and Urban Development (HUD) http://www.hud.gov/
• Federal Trade Commission (FTC) http://www.ftc.gov/
• Your local Better Business Bureau http://www.bbb.org/


Legitimate Resources
If you are at risk of foreclosure or have already received a foreclosure notice, you should contact your lender immediately. Homeowners also may seek the advice of a reputable housing, financial or credit counselor, attorney, or other qualified professional. Homeowners may visit the U.S. Department of Housing and Urban Development (HUD) Web site at http://www.hud.gov/ to view its Guide to Avoiding Foreclosure and its list of California HUD-approved housing counseling agencies. In addition, the non-profit Homeownership Preservation Foundation has a 24/7 toll-free Homeowner’s HOPE Hotline at (999) 995-HOPE.

Friday, March 20, 2009

Thursday, March 19, 2009

Letter to the White House

I realize the delivery of bonuses to AIG employees is an area of great concern, both legally and ethically. I know there are others looking at the legality of paying this money. As for the ethical issue, I would like to propose the following.

Each recipient has the option to keep or return their bonus. Those who choose to keep the money, do so with the understanding that they will be barred from working for the US Government. Should they accept employment, the company in which they are employed will not be allowed to accept contracts from the US Government.

I realize one may argue that this will preclude the government from availing itself of the talents of these individuals. However, while one might argue that these individuals are extremely knowledgeable in their fields (though I believe their performance belies this), I think there is a larger issue to consider. Do we want someone who accepted the bonus money working for our government?

President Obama speaks often and passionately about changing the ethics and culture of Wall Street. I, for one, am prepared to forego expertise in exchange for ethics.

Thank you for your consideration.

Ida Abelson

Tuesday, March 17, 2009

Sales Down, Fraud Up

Even though loan applications were down by a third from 2007 to 2008, the amount of mortgage application fraud increased by 25%.

More than 60 % of the mortgage fraud cases last year were tied to falsified applications, 28% reflected falsified tax returns or financial statements, and 22 % were related to appraisals.

But the biggest scam "growth industry" is in "Foreclosure Prevention". These "specialists" promise - for a fee - to help struggling homeowners save their homes. What really happens is the homeowner pays the fee, the scammer disappears, and the borrower loses their house AND their money.

Monday, March 16, 2009

Scammers Prey On Desperate Homeowners

As the pain from the housing market disaster has spread, so have the number of people trying to profit from that pain. With the advent of President Obama's foreclosure prevention plan, scam artists are using this plan to try and steal money from troubled homeowners.

These crooks promise to negotiate with the banks for the borrower. Of course, there is an up-front fee, often more than $1,000. charge fees for what they tell borrowers And, of course, the borrowers get nothing in return.

The Federal Reserve recently issued this advice for people seeking to modify their mortgages:

Work only with HUD-approved nonprofit counselors. (See www.hud.gov)
Don't agree to pay a fee before you are provided with the promised service.
Beware of people offering "guaranteed" results.
Don't sign blank forms or documents you haven't read.

Friday, March 6, 2009

Freddie Mac Launches Rental Initiative

Freddie Mac is launching a rental initiative, which will give former owners and tenants of foreclosed property the opportunity to lease their recently foreclosed properties month to month.

The REO rental initiative will be managed by HomeSteps, Freddie Mac’s national real estate unit, and implemented through several national property management firms. Freddie Mac has about 8,500 properties in various stages of foreclosure.

Freddie Mac also will continue to suspend evictions through March 31 to ensure that former owners and occupants have an opportunity to explore new options available to them.

To qualify for a lease, the tenant or former owner must occupy the property and show they have adequate income to pay the monthly rental amount established by the property management company based on market rents for the area. Occupants must agree to allow HomeSteps to show the home to potential buyers during the lease period.

Source: Freddie Mac (03/05/2009)

Thursday, March 5, 2009

Understanding the New Housing Plan

The National Association of Realtors has written a very clear summary of the new housing plan. I have reprinted it here in its entirety:

Making Home Affordable—the Obama Housing Plan

On February 18, 2009, President Obama announced his plan designed to help up to 7 to 9 million families avoid foreclosure by restructuring or refinancing their mortgages. The plan also strengthens the federal commitment to Fannie Mae and Freddie Mac (the government sponsored enterprises, or GSEs).

On March 4, 2009, the Treasury Department released detailed guidance on the Making Home Affordable Program.

The Obama plan has three main elements.

1. The Home Affordable Refinance Program: GSE Refinancing for 4 to 5 Million Responsible Homeowners Suffering from Falling Home Prices.

Under this program, eligible borrowers may refinance loans that the GSEs own or guarantee (about half of all outstanding mortgages). The program can help homeowner-occupants who are current in making loan payments, have loan-to-value ratios (LTVs) above 80 percent but not more than 105 percent, have sufficient stable income, and meet other requirements.

Borrowers should contact their loan servicers to see if they qualify.

Borrowers will pay the current low mortgage interest rates, plus lender points and fees.

Prepayment penalties, balloon payments, and cash-out refinancings are not permitted.

Borrowers may refinance using a 30 or 15 year fixed rate loan. The new payments may be lower than today’s or lock in affordable payments today to avoid future increases (such as payment jumps typical with interest-only and teaser rate loans).

The program ends in June 2010.

Borrowers may check with the GSEs to learn whether they have a GSE loan:

For Fannie Mae
1-800-7FANNIE (8am to 8pm, EST)
www.fanniemae.com/homeaffordable

For Freddie Mac
1-800-FREDDIE (8am to 8pm EST)
www.freddiemac.com/avoidforeclosure

2. Home Affordable Modification Program: $75 Billion Initiative to Reach up to 3 to 4 Million At-Risk Homeowners

This $75 billion program provides for loan modifications for homeowner-occupants who are at risk of default or already in default, are experiencing a hardship, and have loans at or below the maximum GSE conforming loan limit of $729,750 (or higher for 2-, 3-, and 4-unit properties).

Servicers may use a broker price opinion (BPO), a GSE automated valuation model, or other specified means to determine the value of a property.

To facilitate short sales or deeds-in-lieu of foreclosure, where borrowers do not qualify or default under the program, the program will compensate servicers and borrowers. Details are not available.

Servicers will decide whether a borrower is at imminent risk of default, such as due to upcoming jumps in mortgage payments or significant reductions in income.

Servicers must consider refinancing a borrower into the Hope for Homeowners program when feasible.

The program shares the cost of reducing mortgage payments from 38 percent of gross monthly income to 31 percent (lenders cover the full cost of reductions down to 38 percent). First, the rate is reduced as low as 2 percent for 5 years. If that is not sufficient to reduce the payment to 31 percent, the servicer will extend the term to up to 40 years. On top of that, if necessary, the servicer will then forebear principal. Principal forgiveness is permitted, but not required.
Borrowers must show they can meet the new payments for 3 months before a permanent modification agreement goes into effect. The interest rate increases after 5 years, but no more than one percentage point a year, until the market rate on the date of the modification is reached.

There is no cost to borrowers for the program.

Borrowers are warned to avoid foreclosure rescue schemes and other housing organizations that charge fees for counseling or loan modifications.

3 Incentives:

As an incentive to loan servicers, they will receive $1,000 up front for each qualified loan modification. For borrowers who stay current on the modified loan, servicers will receive a monthly "pay for success" fees up to $1,000 a year for 3 years.

As an incentive to borrowers to stay current, borrowers may receive a monthly reduction in their mortgage balance, up to $1,000 a year for 5 years.

As an additional incentive to help borrowers avoid going into delinquency, servicers will receive $500 and mortgage holders will receive $1,500, if they modify at-risk mortgages before the borrower becomes delinquent.

As an incentive for lenders to modify more mortgages, the Obama plan—together with the FDIC—has developed a partial guarantee initiative. The Treasury Department will establish an insurance fund of up to $10 billion to discourage lenders from foreclosing on mortgages, by limiting their lose if home prices decline more than expected. Mortgage holders of modified mortgages could receive a payment on each modified loan, linked to home price index declines.

Loan modifications under the program may be made until December 31, 2012.

The plan includes other elements, including:

Strong oversight.

"Allowing Judicial Modifications of Home Mortgages During Bankruptcy for Borrowers Who Have Run Out of Options." Homeowners must first seek a loan modification. Legislation is needed. The plan also anticipates legislation to give FHA and VA authority to pay partial claims if there is a bankruptcy or voluntary loan modification so holders of FHA and VA guaranteed loans are not hurt.

Funding for displaced renters and neighborhood stabilization.

Improving Hope for Homeowners and other FHA programs.

Supporting Low Mortgage Rates by Strengthening Confidence in Fannie Mae and Freddie Mac

The Obama Plan beefs up the current support for the GSEs.

The Treasury Department is doubling, from $100 billion to $200 billion for each GSE, its pledge to invest money to make sure that the GSEs maintain a positive net worth. This will further assure that the federal government is committed to maintaining the mission of the GSEs. In a statement issued today, Director Lockhart described this mission as "providing much-needed liquidity, stability and affordability to the housing market at this time." He went on to say that doubling the commitment "should remove any possible concerns debt and mortgage-backed securities investors have about the strong commitment of the U.S. Government to support Fannie Mae and Freddie Mac." He expects the increased commitment to help keep interest rates low, which will help both current and future homeowners. The additional $200 billion is from HERA in connection with the conservatorship, not from the Financial Stability Plan or TARP.

Treasury will continue to buy GSE MBSs, as announced when the GSEs were placed into conservatorship.

The GSEs will be able to increase their portfolios by $50 billion to $900 billion, and increase their outstanding debt.

The Administration will work with the GSEs to support state housing finance agencies.

Wednesday, March 4, 2009

Clarifications On Loan Modifications

The Obama administration's foreclosure prevention program is designed to help "at risk" homeowners remain in their homes. Below are some of the requirements in order to be eligible for this program:

obtained their mortgage before January 1, 2009;
first mortgage of less than $729,500;
live in the property;
fully document their income by providing tax returns and pay stubs;
sign a statement of financial hardship; and
go for counseling if their total household debt -- including auto loans, credit cards and alimony -- totals more than 55% of their income.

The modification program will be in effect until the end of 2012, but loans can only be adjusted once. Contact your loan servicer (the company to whom you make your loan payments) to see if you qualify.

Tuesday, March 3, 2009

IRS To Expedite Tax Lien Relief for Homeowners

The Internal Revenue Service (IRS) recently announced it will expedite its process of providing relief from federal tax liens for distressed homeowners. With over one million current federal tax liens against real and personal property, the IRS announcement should help REALTORS® and their clients resolve federal tax lien issues in their sale and loan transactions.

As background, a homeowner seeking to sell or refinance a property must generally pay off an existing federal tax lien. However, during the current economic downturn, many homeowners don't have the cash or equity to do so. Hence, for a refinance, the homeowner may request that the IRS makes its tax lien subordinate or secondary to the lien of the refinancing lender. For a sale transaction, the homeowner may, under certain circumstances, request that the IRS discharge its claim. The IRS's processing time for subordination or discharge requests has been about 30 days. The IRS is currently working to expedite that time frame to help distressed homeowners. For IRS instructions on requesting relief from federal tax liens, go to the IRS Publication 783 (discharges) and Publication 784 (subordinations) at www.irs.gov .

From the California Association of Realtors