New York Times, April 18, 2013
By JESSICA SILVER-GREENBERG
and BEN PROTESS
11:25 p.m. | Updated
When the bank account is running dry and the mortgage
payment is coming due, the phrase “insufficient funds” is the last thing you
want to hear.
Now imagine hearing those two words when trying to cash a long-awaited check
from the same bank that foreclosed on you.
Many struggling homeowners got exactly that this week when they lined up to
take their cut of a $3.6 billion settlement with the nation’s largest banks —
lenders accused of wrongful evictions and other abuses.
Ronnie Edward, whose home was sold in a foreclosure auction, waited three
years for his $3,000 check. When it arrived on Tuesday, he raced to his local
bank in Tennessee, only to learn that the funds “were not available.”
Mr. Edward, 38, was taken aback. “Is this for real?” he asked.
It is unclear how many of the 1.4 million homeowners who were mailed the
first round of payments covered under the foreclosure settlement have had
problems with their checks. But housing advocates from California to New York
and even regulators say that in recent days frustrated homeowners have bombarded
them with complaints and questions.
The mishap is just the latest setback to troubled homeowners. It took more
than two years to resolve a federal investigation into the foreclosure abuses.
Even after the settlement in January, the checks were delayed for weeks.
“It’s the perfect ending for such a debacle,” said Michael Redman, a
paralegal who runs 4closurefraud.org, a Web site for victims of
foreclosure abuse. He said he had received 15 e-mails on Tuesday from homeowners
whose checks bounced.
The first round of the settlement checks was mailed last week. In recent
days, problems arose at Rust Consulting, a firm chosen to distribute the checks,
people briefed on the matter said. After collecting the $3.6 billion from the
banks, these people said, Rust failed to move the money into a central account
at Huntington National Bank in Ohio, the bank that issued the checks to
homeowners.
Many banks, after spotting a phone number for Huntington on the back of the
checks and confirming the legitimacy of the money, agreed to process the
payments. But some credit unions, check cashers and community banks apparently
looked only at the account number on the unfamiliar-looking checks and
ultimately found a zero balance, the people briefed on the matter said.
Rust says it does not know how many homeowners encountered the check mishap,
adding only that it “was aware of 12 situations.”
Still, banking regulators, frustrated with missteps at Rust, urged the
consulting firm to shore up the account Tuesday. Now, regulators say the
problems are resolved, and are urging homeowners to try again. Officials worry
that homeowners, weary from a process that has stretched on for years, will give
up.
In a statement, the Federal
Reserve assured
the public that “Rust subsequently corrected problems,” adding that the Fed
would “continue to monitor the payments closely.”
Rust, an oft-used middleman for class action lawsuits and government
settlements, has faced similar concerns previously. In 2006, when it helped
distribute payments from a class-action case involving title insurance costs,
some consumers complained that the checks bounced.
Some officials say it is common for Rust to keep accounts empty. Rather than
lose access to the money, the firm often fills requests for payment at the end
of each day. The officials have questioned whether Rust hangs on to the cash to
earn interest throughout the day. Others noted that it may be difficult to move
a sum as large as $3.6 billion into a single account.
“We apologize to anyone who experienced problems trying to cash their
checks,” a senior vice president at Rust, James Parks, said in a statement. “We
are working hard and communicating with the banking regulators, the servicers,
and other banks to ensure those issues are not repeated.”
Rust is authorizing its employees to arrange conference calls with Huntington
National Bank to provide outside verification that the cash is available, a
company spokesman said.
Housing advocates remain wary, however. The Northside Bank Tenant Association
in Boston held a meeting on Wednesday where housing advocates addressed
questions from frustrated homeowners. Also in Massachusetts, Lynn United for
Change said it had received calls from at least six homeowners in the last two
days.
Regulators have said that, by the end of Wednesday, homeowners successfully
cashed or deposited about 342,000 checks, or roughly 25 percent of the total
checks issued. That leaves more than 1 million people who have either delayed
cashing the check or have had problems doing so.
The homeowners unable to cash the checks are not the only ones languishing.
Many are still mired in bureaucratic delays, like Nancy Brown, of
Fredericksburg, Va., who recently learned that her check will be made out
jointly to her and her ex-husband, whom she has lost contact with. As a result,
she fears being unable to collect the money.
Other homeowners like Yanko Matias, of Lynn, Mass., say they are afraid to
cash the checks. Mr. Matias, 37, was initially wary that the $500 he received
was just another empty promise — or worse, a scam.
“I just want my house back,” Mr. Matias said.
For Mr. Edward, the Tennessee man, the check mishap caps a foreclosure
“nightmare” that began in 2010 when a neighbor called to tell him that his home
was being advertised for foreclosure auction in the local paper. Mr. Edward, a
retail supervisor who left the home later that year, said it was the first he
learned of the foreclosure.
With the check cashing denied on Tuesday, Mr. Edward remarked: “This is the
latest runaround.”
This post has been revised to reflect the following correction:
Correction: April 17, 2013
An earlier version of this article misstated the name of a company in one
instance. It is Rust Consulting, not Rust Consultant.
Thursday, April 18, 2013
Friday, April 12, 2013
HARP Program Extended Another 2 Years
The Home Affordable Refinance Program — a government refinancing program for underwater home owners — will be expanded for another two years, the Federal Housing Finance Agency announces. HARP was originally set to expire Dec. 31, 2013, but will now be extended to the end of 2015.
"More than 2 million home owners have refinanced through HARP, proving it a useful tool for reducing risk," says FHFA acting director Edward DeMarco.
Home owners eligible to apply for refinancing under HARP must have a Fannie Mae- or Freddie Mac-backed mortgage that was guaranteed on or before May 31, 2009, must be current on their loan, and must have a current loan-to-value ratio more than 80 percent.
Source: “HARP mortgage refinancing program extended by 2 years,” Chicago Tribune (April 11, 2013)
"More than 2 million home owners have refinanced through HARP, proving it a useful tool for reducing risk," says FHFA acting director Edward DeMarco.
Home owners eligible to apply for refinancing under HARP must have a Fannie Mae- or Freddie Mac-backed mortgage that was guaranteed on or before May 31, 2009, must be current on their loan, and must have a current loan-to-value ratio more than 80 percent.
Source: “HARP mortgage refinancing program extended by 2 years,” Chicago Tribune (April 11, 2013)
Foreclosure Errors Found To Be More Widespread
About 30 percent of more than 3.9 million households whose properties were foreclosed on in 2009 and 2010 nearly lost their homes due to potential bank errors, government regulators said.
Nearly 1.2 million borrowers faced foreclosure notices even after not having defaulted on their mortgage, being protected under federal laws, or having been in good standing under bank-approved plans to either modify their loan or temporarily delay their payments, according to a report from the Huffington Post. Of those borrowers, more than 244,000 did eventually lose their homes, new government data shows.
The government breaks out the data more fully of those who faced foreclosure due to errors, including:
Source: “Foreclosure Review Finds Potentially Widespread Errors,” Huffington Post (April 9, 2013)
Nearly 1.2 million borrowers faced foreclosure notices even after not having defaulted on their mortgage, being protected under federal laws, or having been in good standing under bank-approved plans to either modify their loan or temporarily delay their payments, according to a report from the Huffington Post. Of those borrowers, more than 244,000 did eventually lose their homes, new government data shows.
The government breaks out the data more fully of those who faced foreclosure due to errors, including:
- Nearly 700 borrowers who faced foreclosure during 2009 and 2010 never defaulted on their loans.
- More than 28,000 faced foreclosure who were protected under federal bankruptcy laws.
- About 1,100 who faced foreclosure had been meeting all the requirements of forbearance plans that their lender had agreed to.
- About 1,600 borrowers who faced foreclosure were protected by the Servicemembers Civil Relief Act of 2003, which bans foreclosures on active-duty military personnel and their families.
Source: “Foreclosure Review Finds Potentially Widespread Errors,” Huffington Post (April 9, 2013)
Wednesday, April 10, 2013
4.2M Borrowers to Start Receiving Foreclosure Payouts
About 4.2 million eligible home owners who underwent foreclosure in 2009 and 2010 will start receiving cash payments on Friday, ranging from $300 to $125,000. The payouts are part of a $3.6 billion settlement over foreclosure mishandlings reached among 13 mortgage servicers and the government.
Military service members whose homes were repossessed while they were on active duty will receive the largest checks — $125,000. The Servicemembers Civil Relief Act prevents military personnel from being foreclosed on while on active duty.
Other home owners will receive payments from servicers that charged unfair fees or failed to do a loan modification.
Originally, the 13 servicers had agreed to conduct independent foreclosure reviews for each borrower, but the reviews proved too costly and time consuming, says Brian Hubbard, a spokesman for OCC. Also, only about 439,000 borrowers had asked for a review out of the some 4 million who were eligible.
In January, lenders revised the settlement terms to include all borrowers in default in 2009 and 2010 to be eligible for the payments, Hubbard says. For those borrowers who did request independent foreclosure reviews, they will receive double the compensation in most cases.
The following servicers are participating in the settlement: Aurora, Bank of America, Chase, Citibank, Goldman Sachs, HSBC, MetLife Bank, Morgan Stanley, PNC Mortgage, Sovereign Bank, SunTrust, U.S. Bank, and Wells Fargo. Goldman Sachs and Morgan Stanley will issue their payments to customers at a later date. All other servicers will start issuing payments to customers this week and will be completed by July.
Source: “Payments coming for borrowers in $3.6B foreclosure settlement,” CNNMoney (April 9, 2013)
Military service members whose homes were repossessed while they were on active duty will receive the largest checks — $125,000. The Servicemembers Civil Relief Act prevents military personnel from being foreclosed on while on active duty.
Other home owners will receive payments from servicers that charged unfair fees or failed to do a loan modification.
Originally, the 13 servicers had agreed to conduct independent foreclosure reviews for each borrower, but the reviews proved too costly and time consuming, says Brian Hubbard, a spokesman for OCC. Also, only about 439,000 borrowers had asked for a review out of the some 4 million who were eligible.
In January, lenders revised the settlement terms to include all borrowers in default in 2009 and 2010 to be eligible for the payments, Hubbard says. For those borrowers who did request independent foreclosure reviews, they will receive double the compensation in most cases.
The following servicers are participating in the settlement: Aurora, Bank of America, Chase, Citibank, Goldman Sachs, HSBC, MetLife Bank, Morgan Stanley, PNC Mortgage, Sovereign Bank, SunTrust, U.S. Bank, and Wells Fargo. Goldman Sachs and Morgan Stanley will issue their payments to customers at a later date. All other servicers will start issuing payments to customers this week and will be completed by July.
Source: “Payments coming for borrowers in $3.6B foreclosure settlement,” CNNMoney (April 9, 2013)
Tuesday, April 9, 2013
White House Rolls Out 3 Foreclosure Prevention Efforts
The Obama administration announced the extension or debut of three programs aimed at helping distressed home owners avoid foreclosure. The three initiatives are:
Increasing outreach in the Making Home Affordable Program: The U.S. Department of Treasury is partnering with NeighborWorks America as well as the National Foreclosure Mitigation Counseling program to increase support for struggling home owners who seek assistance through the Making Home Affordable Program, which includes the Home Affordable Modification Program (HAMP). HAMP reduces monthly payments by more than $540 each month, on average. “Through the new initiative, housing counseling agencies will help struggling home owners successfully complete and submit application documents to their mortgage company free-of-charge,” according to the White House blog.
Informing the unemployed about programs: The Department of Labor will be encouraging American Job Centers to inform unemployed home owners about federal foreclosure prevention options that are available to them. For example, there is unemployment forbearance through HAMP that allows qualifying home owners who are unemployed to reduce or suspend their mortgage payments for up to 12 months.
HUD’s new Housing Counseling Office: The Department of Housing and Urban Development has launched a Housing Counseling Office, which offers at-risk home owners free or low cost information about foreclosure prevention and loan modification programs. It also offers general information on buying or renting a home, handling foreclosures, and how to avoid scams. The office is made up of a network of 2,500 HUD-approved housing counseling agencies.
“While we are encouraged that the housing market is on the path to recovery, our job is far from finished,” according to the White House blog. “There are still many struggling home owners who need assistance. By connecting eligible home owners with existing foreclosure prevention programs, our new counseling initiatives will enable more borrowers to remain in their homes and go a long way in ensuring a brighter economic future for these families.”
Source: The White House Blog
Increasing outreach in the Making Home Affordable Program: The U.S. Department of Treasury is partnering with NeighborWorks America as well as the National Foreclosure Mitigation Counseling program to increase support for struggling home owners who seek assistance through the Making Home Affordable Program, which includes the Home Affordable Modification Program (HAMP). HAMP reduces monthly payments by more than $540 each month, on average. “Through the new initiative, housing counseling agencies will help struggling home owners successfully complete and submit application documents to their mortgage company free-of-charge,” according to the White House blog.
Informing the unemployed about programs: The Department of Labor will be encouraging American Job Centers to inform unemployed home owners about federal foreclosure prevention options that are available to them. For example, there is unemployment forbearance through HAMP that allows qualifying home owners who are unemployed to reduce or suspend their mortgage payments for up to 12 months.
HUD’s new Housing Counseling Office: The Department of Housing and Urban Development has launched a Housing Counseling Office, which offers at-risk home owners free or low cost information about foreclosure prevention and loan modification programs. It also offers general information on buying or renting a home, handling foreclosures, and how to avoid scams. The office is made up of a network of 2,500 HUD-approved housing counseling agencies.
“While we are encouraged that the housing market is on the path to recovery, our job is far from finished,” according to the White House blog. “There are still many struggling home owners who need assistance. By connecting eligible home owners with existing foreclosure prevention programs, our new counseling initiatives will enable more borrowers to remain in their homes and go a long way in ensuring a brighter economic future for these families.”
Source: The White House Blog
Friday, April 5, 2013
4 Largest Mortgage Insurers Fined Over Alleged Kickbacks
The Consumer Financial Protection Bureau has fined four of the nation’s largest mortgage insurance providers for alleged kickbacks to lenders in order to win more business, a practice the agency says has been going on for more than a decade.
The four mortgage insurance providers have been fined $15.4 million by the agency.
The CFPB alleges the mortgage insurers paid millions of dollars to mortgage lenders in return for extra business. The agency says the practice inflated borrowers’ costs because home owners were given policies that were based on business relationships and not competitive pricing.
The four companies fined by the agency are Genworth Financial Inc., American International Group Inc.’s United Guaranty unit, Radian Group, and MGIC Investment Corp. The companies did not admit or deny any wrongdoing with the allegations. They said their relationships complied with federal law.
The CFPB is also investigating lenders who took part, and they may soon face fines as well, The Wall Street Journal reports.
"In every kickback situation, there's somebody paying and there's somebody receiving," says Kent Markus, the CFPB's assistant director of enforcement. "We have more work to do on this matter."
Mortgage insurance is usually required when home buyers purchase homes with down payments of less than 20 percent.
Source: “Regulator Fines Mortgage Insurers $15 Million,” The Wall Street Journal (April 4, 2013)
The four mortgage insurance providers have been fined $15.4 million by the agency.
The CFPB alleges the mortgage insurers paid millions of dollars to mortgage lenders in return for extra business. The agency says the practice inflated borrowers’ costs because home owners were given policies that were based on business relationships and not competitive pricing.
The four companies fined by the agency are Genworth Financial Inc., American International Group Inc.’s United Guaranty unit, Radian Group, and MGIC Investment Corp. The companies did not admit or deny any wrongdoing with the allegations. They said their relationships complied with federal law.
The CFPB is also investigating lenders who took part, and they may soon face fines as well, The Wall Street Journal reports.
"In every kickback situation, there's somebody paying and there's somebody receiving," says Kent Markus, the CFPB's assistant director of enforcement. "We have more work to do on this matter."
Mortgage insurance is usually required when home buyers purchase homes with down payments of less than 20 percent.
Source: “Regulator Fines Mortgage Insurers $15 Million,” The Wall Street Journal (April 4, 2013)
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