Wednesday, September 29, 2010

Fannie Mae Announces New Help for Military Homeowners

WASHINGTON, DC — At an event today at the Pentagon, Fannie Mae (FNMA/OTC) and the U.S. Army announced new initiatives to help service members who are struggling with their mortgage payments avoid foreclosure. The effort includes a mortgage payment forbearance of up to six months where the death or injury of a service member on active duty causes a hardship for impacted military families with a mortgage obligation.

The company also announced the creation of a special hotline, 877-MIL-4566, available to all service members to receive guidance about their mortgage options and enlist assistance.

"The men and women of our Armed Forces have shown extraordinary commitment to our country while facing unique challenges as a result of their service," said Jeff Hayward, Senior Vice President of Fannie Mae's National Servicing Organization. "No family impacted by a death or injury in the line of duty should have to face the additional burden of foreclosure as a result of the hardship. We want to do all that we can to provide support to these families at a time of need as we honor their sacrifices and service to our country."

The Honorable Katherine Hammack, Assistant Secretary of the Army (Installations and Environment), remarked, "We who serve alongside our military recognize the great sacrifice they and their families make each day. The initiative between Fannie Mae and the lending community recognizes their sacrifice and demonstrates our gratitude for those who face economic hardships as a result of their service. We are profoundly grateful for this heartwarming response from the lending community as they become partners in designing and implementing this initiative."

Service members or surviving spouses who may be eligible for the special forbearance are to contact their mortgage company. The mortgage company may grant forbearance of up to six months under Fannie Mae's "Unique Hardships" guidelines with Fannie Mae's approval. Under forbearance, the mortgage company may reduce or suspend the borrower's monthly payments for the specified period. Credit bureau reporting will be suspended during the forbearance to minimize any derogatory impact.

Fannie Mae has also created printed materials that will be available on military bases to help service members understand their options if they find themselves having trouble making their mortgage payments. Fannie Mae's new consumer education Web site,, is another resource for struggling homeowners. The site outlines the choices available to homeowners and provides guidance on how they can contact and work with their mortgage company to find solutions.

Service members are encouraged to visit or call the Fannie Mae Military Support Hotline, 877-MIL-4566.

Friday, September 24, 2010

Banks Behaving Badly

Today there were two news stories about banks harassing their customers.

First up is GMAC Mortgage. In 2006 they were sanctioned for foreclosing on homes without the proper documentation. Seems the "sworn affidavits" signed by a mortgage executive which were used to justify the foreclosure were not actually read by said executive, nor were these documents signed in front of a notary.

Guess they didn't learn the error of their ways, since the GMAC Mortgage is facing new allegations that they evicted homeowners without checking to see if they were actually in default. Since this new allegation came out, GMAC Mortgage has suspended foreclosures in 23 states.

The second sunmission in today's Bad Bank contest is Bank of America. The bank has fired a debt collection service after an expose' by ABC News revealed the agency used racist slurs when contacting Bank of America customers.

What kind of slurs? Here are some excerpts from calls made to Allen Jones. Mr. Jones owed $81 on his Bank of America credit card:

"What's up, you f---ing n---r?"
"This is your f---ing wake up call, man."
"You little, lazy ass bitch, get your mother f---ing ass up and go pick some mother f---ing cotton fields, bitch."

You can see the full story on tonight's ABC World News with Diane Sawyer and Nightline.

Monday, September 20, 2010

Mortgage Lender Will Pay $1.5 Million to Settle FTC Charges That It Discriminated Against Hispanic Borrowers

FTC Press Release 9/20/2010

A California-based mortgage lender and its owner have agreed to settle FTC charges that they illegally charged Hispanic consumers higher prices for mortgage loans than non-Hispanic white consumers – price disparities that could not be explained by the applicants’ credit characteristics or underwriting risk.

“We will continue to be vigilant in enforcing fair lending laws and we’re not going to tolerate discriminatory practices by mortgage lenders,” FTC Chairman Jon Leibowitz said. “Lenders who allow discretion in pricing loans can’t escape liability simply by burying their heads in the sand. Those lenders must monitor discretionary pricing to ensure that American borrowers are treated equally based on their credit – not their race, national origin, or gender.”

The FTC filed a complaint in federal court on May 7, 2009, alleging that Golden Empire Mortgage, Inc. and Howard D. Kootstra violated the Equal Credit Opportunity Act in pricing mortgage loans. They allegedly gave loan officers and branch managers wide discretion to charge some borrowers, in addition to the risk-based price, “overages” through higher interest rates and higher up-front charges. They then paid loan officers a percentage of the overages as a commission, according to the complaint, and failed to monitor whether Hispanic consumers were paying higher overages than non-Hispanic white borrowers. (5/11/2009 release

The settlement order permanently prohibits Golden Empire and Mr. Kootstra from discriminating on the basis of national origin in credit transactions, or otherwise failing to comply with the Equal Credit Opportunity Act and its implementing Regulation B. The order imposes a $5.5 million judgment that will be suspended when $1.5 million has been paid for consumer redress. The full judgment will become due immediately if the defendants are found to have misrepresented their financial condition.

The order also requires Golden Empire to have a policy that restricts loan originators’ pricing discretion, a fair lending monitoring program, a program to ensure the accuracy and completeness of their data, and employee training programs. The pricing policy and fair lending monitoring program set forth in the settlement order are intended to facilitate order enforcement in this case.

In fair lending cases, the Commission strives to have before it as wide a range of information as possible to determine whether a lender’s policies have run afoul of fair lending laws. As with other FTC orders, the order against GEM is designed to fit the facts of this case.

The extent to which other lenders should use the same methodology in monitoring ECOA compliance will depend on the facts and circumstances of each lender. An appropriate monitoring program requires an examination of a lender’s policies, business model and business necessities and should include statistical analyses that consider, as warranted by the lender’s particular circumstances, various information such as loan characteristics, geographic variations and other relevant factors.

The Equal Credit Opportunity Act and its implementing Regulation B bar creditors from discriminating against applicants for credit on the basis of race, color, religion, national origin, sex, marital status, age, or the fact that an applicant’s income is derived from public assistance. More information about consumers’ rights under the Act is available at

The Commission vote to file the stipulated final order was 5-0. The order was filed in the U.S. District Court for the Central District of California.

NOTE: Stipulated court orders are for settlement purposes only and do not constitute an admission by the defendants of a law violation. Stipulated orders have the full force of law when signed by the judge.

Friday, September 10, 2010

As Housing Languishes, Mortgage Write-downs Gain Appeal for Banks

By David Bracken

RISMEDIA, September 10, 2010--(MCT)--Eager to avoid writing down the loans on their books, banks have been extending many of them with the hope that the market will improve.

Even banks that foreclosed on properties have kept them on their books, reluctant to auction them in a market where investors offer as low as 10 cents on the dollar.

Now that appears to be changing, and it could have implications for property owners caught up in the sell-off.

"The proverbial logjam is beginning to break up," said Jim Anthony, CEO of Anthony & Co., a Raleigh real estate services company.

As evidence, Anthony said BB&T plans to auction $1 billion of performing and nonperforming loans in the Southeast.

BB&T would neither confirm nor deny reports of the auction.

"BB&T continues to evaluate opportunities to best execute our problem loan disposition strategy, which may or may not include bulk sales," said spokeswoman Cynthia Williams.

BB&T has been more aggressive of late in writing down its troubled loans and moving to rid itself of some of them. The bank's CEO, Kelly King, has indicated the strategy will continue as long as investor appetite for the loans remains at current levels.

Other regional banks, including Pittsburgh-based PNC Financial Services Group and Birmingham, Ala.-based Regions Financial, are pursuing similar strategies.

The move to deal with troubled real estate loans is driven partly by federal regulators who have increased pressure on banks whose capital ratios fall below a certain level.

"I think the banks are coming to terms with the fact that, particularly, commercial real estate is declining in value and it's just not coming back in the next three months or six months," said Tony Plath, a banking professor at the University of North Carolina-Charlotte. "It's going to be a while before we're out of the hole as far as real estate values are concerned."

The auctions also are a sign that the gap between what the banks will take for the loans — and what investors will pay — is narrowing.

"I think all of the banks have reached the point where they realize they're not going to get 80 cents on the dollar for the value of the loans they package," Plath said. "They're going to be looking at something like 35 or 40 cents on the dollar, which seems to be where these loan packages are selling."

For property owners whose loans are included in these packages, the auctions could mean trouble.

If an investor buys a loan for 40 cents on the dollar, that means they can foreclose on the property, auction it off and still make a profit.

"The borrowers that are included in the package face much more rigorous collection efforts on behalf of the buyer," Plath said. "(If you're a borrower,) you really don't want that loan sold."

(c) 2010, The News & Observer (Raleigh, N.C.).
Distributed by McClatchy-Tribune Information Services.

Tuesday, September 7, 2010

HUD Announces National First Look Program

HUD Press Release

WASHINGTON - U.S. Housing and Urban Development (HUD) Secretary Shaun Donovan today announced an unprecedented agreement with the nation's top mortgage lenders to offer selected state and local governments, and nonprofit organizations a "first look" or right of first refusal to purchase foreclosed homes before making these properties available to private investors.

The National First Look Program is a first-ever public-private partnership agreement between HUD and the National Community Stabilization Trust (Stabilization Trust). In collaboration with national servicers, Fannie Mae, and Freddie Mac, the First Look program is intended to give communities participating in HUD's Neighborhood Stabilization Program (NSP) a brief exclusive opportunity to purchase bank-owned properties in certain neighborhoods so these homes can either be rehabilitated, rented, resold or demolished.

"This groundbreaking agreement will help rebuild neighborhoods that have been struggling with blight and declining home values due to foreclosures," said HUD Secretary Shaun Donovan. "Local communities will now get an exclusive option to buy foreclosed properties in targeted neighborhoods so they can turn the homes into affordable housing or, in some cases, tear them down. This agreement helps us level the playing field to give communities a better chance to stabilize these neighborhoods."

"The Stabilization Trust is delighted to be working with HUD Secretary Donovan on the National First Look Program," said Craig Nickerson, President of the NCST. "By serving as the operations ‘engine' behind the First Look Program, the Stabilization Trust can facilitate the transfer of more foreclosed property for participating financial institutions to local community buyers, thereby accelerating the road to neighborhood recovery."

HUD's NSP grantees, which include state and local governments and non-profit organizations, often find themselves competing with private investors for real estate-owned (REO) properties, which can hinder their efforts to stabilize neighborhoods with high foreclosure activity. With today's announcement, HUD and the Stabilization Trust, working with national servicers, Fannie Mae, and Freddie Mac, will standardize the acquisition process for NSP grantees, giving them an exclusive option to purchase foreclosed upon homes in certain targeted neighborhoods.

The Stabilization Trust pioneered the 'First Look' model to create a transparent and streamlined process to facilitate the transfer of foreclosed and abandoned properties from key financial institutions to local government housing providers. First piloted in 2008, the model has gained recognition as a critical tool for positively tipping the scale in neighborhoods hard hit by foreclosures. NSP grantees will also be aided by REOMatch™, a web-based mapping and acquisition management tool developed by the Stabilization Trust. REOMatch will assist NSP grantees easily identify REO properties and make more strategic decisions about which properties to acquire, based on real-time data on an interactive mapping platform.

The nation's leading financial institutions are participating in the National First Look Program, representing approximately 75 percent of the REO marketplace. Participating institutions include: Bank of America, Chase, Citi, Deutsche Bank, GMAC, Nationstar Mortgage, Ocwen Financial Corporation, Saxon Mortgage Services, U.S. Bank, Wells Fargo, Fannie Mae, Freddie Mac, and the Federal Housing Administration (FHA).

The National First Look Program will allow NSP grantees the exclusive opportunity to purchase available REO properties located within the defined boundaries of NSP target areas. NSP grantees will be immediately notified when a property becomes available and will have 24-48 hours to express interest in pursuing a specific property. Furthermore, these institutions will provide NSP purchasers with the opportunity to purchase REO properties at a discount their appraised value, reflecting the cost savings of a quick sale. NSP grantees may acquire these properties with the assistance of NSP funds for any eligible use.

After expressing interest in a property, the First Look Period will last approximately five to 12 business days during which the NSP Grantee will conduct inspections and establish costs to repair in anticipation of the financial institution's price offer. In the event that no NSP grantee exercises its preference to purchase an REO property during the First Look period, the financial institution will follow its normal process to sell the home on the open market.

Currently, the Federal Housing Administration (FHA) offers a complementary pilot program in which NSP grantees receive an exclusive option to purchase so-called ‘HUD Homes' at a discount prior to those homes being made available to the investor community. The FHA pilot, alongside today's agreement expands the opportunity for NSP grantees to gain access to REO properties through a national first-look standard option.

HUD's Neighborhood Stabilization Program was created to address the housing crisis, create jobs, and grow local economies by providing communities with the resources to purchase and rehabilitate vacant homes. NSP grants are helping state and local governments, as well as non-profit developers, acquire land and property; demolish or rehabilitate abandoned properties; and/or offer downpayment and closing cost assistance to low- to middle-income homebuyers. Grantees can also stabilize neighborhoods by creating "land banks" to assemble, temporarily manage, and dispose of foreclosed homes. To date, HUD has allocated nearly $6 billion in funding to state and local governments and non-profit housing developments. In the coming weeks, HUD will allocate an additional $1 billion in NSP funding, which was provided through the Dodd-Frank Wall Street Reform and Consumer Protection Act.

Monday, September 6, 2010

FTC Warns of Oil Spill Scams

Alert from the Federal Trade Commission

It’s no secret that scam artists follow the headlines, and the daily news of the oil spill in the Gulf of Mexico is no exception. The Federal Trade Commission (FTC), the nation’s consumer protection agency, cautions consumers and businesses to be on the alert for fraudulent activity related to the explosion aboard the Deepwater Horizon drilling rig and the resulting spill – and to report their experiences to federal and state authorities. BP leased the rig, which was owned and operated by Transocean.

The FTC says it’s likely that scammers will use e-mails, websites, door-to-door collections, flyers, mailings and telephone calls to make contact and solicit money. Some may claim they’re raising money for environmental causes or offer fraudulent services – like remediation services – related to the oil spill. Others may claim they can expedite loss claims for a fee. Still others may knock on your door and talk about placing booms or checking for oil on your property. Chances are they’re trying to gain your trust to get inside your home or get access to your personal information.

The FTC says that at the very least, you will want to do some homework before making a donation or entering into an agreement for services.

Regarding Claims

Expect some scam artists to pose as authorized adjusters and ask for fees to expedite services. ESIS, BP’s authorized claims administrator, is not charging individuals or companies any fee to process claims. If you make a claim, you are assigned a claims number through the BP hotline at 1-800-440-0858. An authorized ESIS adjuster will contact you to further verify and process the claim for payment. If you are not satisfied with the resolution, you should call the U.S. Coast Guard’s National Pollution Funds Center (NPFC) at 1-800-280-7118, or visit the NPFC for more information at:

Expect other scam artists to pretend to be government officials – and then require a processing fee to provide government services. The government does not require processing fees.

Regarding Insurance

Verify that you are dealing with authorized representatives of BP, and don’t sign waivers of liability too quickly without getting adequate legal and financial counsel.

Report anyone who is making false or exaggerated insurance claims to your state insurance commissioner.

Report anyone who is making insurance claims but lives outside the disaster zone.

Regarding Contractors

Don’t do business with contractors who require up-front payment for services: You will be out the money if they fail to perform the work or finish the job to your specifications or satisfaction.

Require any contractors you use to detail the services they will perform on a written contract.

Use only licensed contractors.

Regarding Donations to Charities

Some people may misrepresent an affiliation with an environmental organization when they ask for donations via e-mail or social networking sites. If you’re tempted to contribute, check out the charity at, the website of the Better Business Bureau.

Some sham organizations may use copy-cat names to cash in on the reputations of older, more established charities.

Rather than clicking on a link to a purported website, verify the legitimacy of a nonprofit organization by using search engines and other online resources to confirm the group’s existence, history, mission and nonprofit status.

To ensure your contributions are received and used for the purposes you intend, contribute directly to organizations you know rather than relying on other people to make a donation on your behalf.

If you get pressure to make a contribution, look for another charity. Reputable charities don’t use those kinds of tactics.

Avoid donating cash if possible. Pay by debit or credit card, or write a check directly to the charity.

If an organization suggests you wire your donation to them, cross them off your list. Legitimate charities usually do not solicit donations via money transfer services.

Most legitimate charities websites end in .org rather than .com. For more information on the warning signs of a charity scam, visit

Regarding Employment and Volunteer Opportunities

Avoid any job or volunteer opportunities that require you to pay a fee before the job begins.