Education Campaign On New Mortgage Rules

Daily Real Estate News | Monday, December 23, 2013 

 

The Consumer Financial Protection Bureau is launching an education campaign to help make home buyers and home owners more aware of new mortgage regulations coming in January.

The materials are available at CFPB’s website.

The information includes fact sheets and tip sheets, such as on what a Qualified Mortgage is, why it was developed, and the characteristics of one. The Qualified Mortgage regulation goes into effect Jan. 10, 2014.
CFPB resources also explain how to gather information about an existing loan and where to get help when needed.

"Taking on a mortgage may be the largest financial obligation of a consumer's lifetime," says CFPB Director Richard Cordray. "We want to make sure that potential home buyers have the information they need to make responsible decisions and that current borrowers know about their new protections."

CFPB’s website includes fact sheets on consumer protections to borrowers under new servicing rules, and how to file a complaint with the agency if any violations are suspected by lenders. CFPB also provides a fact sheet of recommendations for home owners facing foreclosure.

CFPB’s education campaign includes tip sheets for home buyers who are looking for mortgage, such as new rights for home buyers at every stage of the mortgage process, from taking out a loan to paying it off.

Source: Consumer Financial Protection Bureau and “CFPB Launches Education Campaign Ahead of New Mortgage Rules,” Mortgage News Daily (Dec. 19, 2013)

Nearly Half of States Within Reach of Peak Home Prices

Daily Real Estate News | Wednesday, December 04, 2013

Twenty-three states are within 10 percent of their 2006 home price peaks, CoreLogic reports in its latest housing data report reflecting October data.

Home prices have increased 12.5 percent year-over-year. However, prices had a more modest month-over-month gain of 0.2 percent from September to October. CoreLogic’s Home Price Index also reflects distressed sales.

“In terms of home price appreciation, the housing market appears to be catching its breath as we head into the final months of 2013,” says Anand Nallathambi, president and CEO of CoreLogic. “The deceleration in month-on-month trends was anticipated as strong gains in home prices over the spring and summer slow in line with normal seasonal patterns and the impact of higher mortgage interest rates.”

The following five states have seen the highest home price appreciation year-over-year:

• Nevada: +25.9%
• California: +22.4%
• Georgia: +14.2%
• Michigan: +14.1%
• Arizona: +14%

The only state in the CoreLogic index that has seen prices fall is New Mexico, where home prices fell 0.5 percent year-over-year.

Soaring home prices are allowing more states to catch up to their home price peaks in 2006. Sixteen states are all within 5 percent or less of their peak home prices: Arkansas, Colorado, District of Columbia, Iowa, Louisiana, Nebraska, Montana, New York, North Dakota, Oklahoma, South Dakota, Tennessee, Texas, Vermont, Wyoming, and Alaska.

“The slowdown in appreciation is positive for the housing market as almost half the states are now within 10 percent of their respective historical price peaks,” says Mark Fleming, chief economist for CoreLogic.

Meanwhile, the following five states remain the furthest from their peak values as of October, according to CoreLogic:

• Nevada: -40.7%
• Florida: -37.4%
• Arizona: -31.5%
• Rhode Island: -29.3%
• West Virginia: -28%

The National Association of REALTORS® recently reported that its existing-home sales index saw home prices tick up 12.8 percent in October year-over-year. A persistent tight inventory of homes for sale is holding back sales but pushing up home prices in most areas of the country, Lawrence Yun, NAR’s chief economist, said in the report.

--REALTOR® Magazine Daily News

Foreclosed Owners Get Second Chance Sooner

Daily Real Estate News | Monday, December 02, 2013

Those who lost their home due to financial hardships may get another shot at being home owners again soon. The Federal Housing Administration recently announced that they would shorten the waiting period for qualified borrowers who’ve had a bankruptcy, foreclosure, deed in lieu of foreclosure, or short sale who want to buy a home again. Under the FHA's Back-to-Work program, home owners must show that they have their finances back in order and they must receive counseling from a HUD-approved agency. Those who meet the requirements can apply to buy a property in as little as a year.

“The Back to Work program is a great opportunity for us to help those impacted by the recent housing crisis,” Heather Shanahan, a representative with a HUD-approved housing counseling agency called Springboard, told HousingWire. "Our goal in our counseling sessions is to enable the borrower to better understand their loan options and the obligations.”

Counselors provide borrowers with a customized action plan that reflects household budgets and shows borrowers how they can meet their financial obligations to prevent default again in the future.
The Back-to-Work program is also helping borrowers purchase their first homes, in some cases.

Source: “Springboard helps formerly distressed borrowers get back on track,” HousingWire (Nov. 19, 2013)

Foreclosures Fall to 5-Year-Low

Daily Real Estate News | Monday, November 25, 2013

National foreclosure pre-sale inventory is at its lowest point since 2008, Lender Processing Services reports.

The inventory—which reflects the number of loans that are in some stage of foreclosure—represents 2.54 percent of all mortgaged homes in LPS' October data. That marks a 3.23 percent drop month-over-month, and a nearly 30 percent year-over-year drop. LPS’ data reflects about 70 percent of the mortgage market.

The National Association of REALTORS® reported last week that distressed homes are making up fewer of the total existing-home sales recorded in the past year. Sales of distressed homes—which include foreclosures and short sales—made up 14 percent of October sales, down 25 percent year-over-year.

Distressed sales tend to sell at a discount. NAR reported that foreclosures sold for an average discount of 17 percent below market value in October. Short sales were discounted 14 percent below market value.

Source: “Foreclosure Inventory Falls to 5 year Low,” Mortgage News Daily (Nov. 22, 2013) and National Association of REALTORS®

Another Sign Foreclosure Crisis Is Evaporating?

Daily Real Estate News | Thursday, November 14, 2013

Mortgage delinquency rates fell in the third quarter, marking it the seventh consecutive quarter for such a decrease, according to TransUnion data.

Mortgage delinquencies of at least 60 days dropped 4.09 percent in the third quarter, following a 4.32 percent drop in the second quarter. A year ago, mortgage delinquencies posted a 5.33 percent drop, according to TransUnion.

"We looked at all 52 million installment-based mortgages in the U.S., and the trend is clear — the percentage of borrowers willing and able to make their mortgage payments continues to improve," says Tim Martin, a TransUnion executive. "The overall delinquency rate is still high relative to 'normal,' but a 23 percent year-over-year improvement is great news for home owners and their lenders."

Source: “Mortgage Delinquencies Decline in 3rd Quarter -- TransUnion,”The Wall Street Journal (Nov. 12, 2013)

College Grads Face Home Ownership Delays

Daily Real Estate News | Monday, November 04, 2013

The home ownership rate among college graduates is less than non-grads for the first time on record, according to the New York Federal Reserve.

College graduates are facing increasing obstacles to home ownership, mostly due to high debt levels and weak job prospects. The delay in Millennials entering into home ownership could be a drag on the housing industry for years to come, CNNMoney reports.

The average student loan debt has climbed to $27,500, according to data from the Project on Student Debt. Lenders factor in debt—including student loan debt—when calculating how much mortgage they’ll give a person to buy a home. What’s more, if young professionals miss a payment on their student loans, that can damage their credit scores and further hamper their chances for qualifying for a mortgage.

However, renting a domicile is also an important stepping stone to home ownership. Thirty-six percent of young graduates are living with their parents, according to a Pew survey. That has prevented them from building credit histories, which they also need to get a mortgage.

Some of the effect has already been seen in the shrinking number of first-time home buyers. The National Association of REALTORS®  reported in their September housing numbers that first-time buyers accounted for 28 percent of existing-home purchases, down from 32 percent in September 2012.

Source: “Young and Smart, but Millennials Face Homebuying Hurdles,” CNNMoney (Oct. 31, 2013)

Strategic Defaulters in Fannie's and Freddie's Crosshairs

Daily Real Estate News | Tuesday, October 15, 2013

Fannie Mae and Freddie Mac are looking to collect unpaid mortgage debt from “strategic defaulters,” those underwater home owners who skipped out on their mortgages even though they had the ability to pay.

If a home is sold at foreclosure but the proceeds don't cover the outstanding balance of the home owner's loan, the mortgage giants can pursue judgments against the home owner forcing him or her to pay the deficiency. And the Federal Housing Finance Agency, which regulates Fannie and Freddie, is pushing them to step up their efforts to do just that.

The FHFA says Fannie and Freddie haven’t been aggressive enough in going after strategic defaulters, and the inspector general's office notes that the GSEs could cut their losses by making it more of a priority. The inspector general’s office estimates that Fannie and Freddie could recoup billions of dollars if they made strategic defaulters pay up. So far, the office has found that Freddie Mac did not refer 58,000 foreclosures — estimated deficiencies of $4.6 billion — for collection.

Some states do not allow deficiency judgments, but in more than 30 states and the District of Columbia, they are permissible. The FHFA says it will more closely monitor how effective Fannie Mae and Freddie Mac are in collecting deficiency judgments.

Source: “Fannie Mae, Freddie Mac to go after more strategic defaulters,” The Los Angeles Times (Oct. 13, 2013)

Flood Insurance Rate Hike Imminent

DAILY REAL ESTATE NEWS | WEDNESDAY, SEPTEMBER 25, 2013

More than 1 million home owners living in older houses along the coastlines and riverbanks of the United States are preparing for federal flood insurance rate hikes effective Oct. 1 under a law passed in the wake of devastating storms.

Congress passed the law in an effort to balance a $24 billion deficit in the National Flood Insurance Program, which had growing losses from Hurricane Katrina in New Orleans in 2005 and earlier disasters. The rate increase is designed to make property owners pay for the true risk of living in high flood hazard areas, including coastal areas of Florida, New Jersey, New York, Texas, and Louisiana, and inland states prone to river flooding.  Members of Congress from high-risk flood states want to delay the higher rates so they can gather more information on the impact on property owners, but with next Tuesday's deadline, time is running out.

The act requires the Federal Emergency Management Agency to phase out insurance subsidies enjoyed for decades by owners of homes that were built in high-risk flood zones before the creation of the original federal flood insurance rate maps and building standards, which in most communities occurred in the 1970s and 1980s.

The act comes on top of a nationwide remapping of flood zones, which in some coastal areas has moved some properties into newly widened hazard zones, exposing them to rate increases.  More than 80 percent of the 5.6 million properties nationwide covered by the $1.12 trillion program already comply with existing standards and would not see any change in their policies, at least for the time being, FEMA director Craig Fugate told a hearing of the U.S. Senate Banking, Housing and Urban Affairs Committee on Sept. 18. He acknowledged that the rates of those homeowners in compliance could go up, too, if new maps reveal higher flood risks.

Source: "Coastal, Riverbank Homeowners Brace for U.S. Flood Insurance Hike," Reuters (09/24/13)

Existing-Home Sales Reach Highest Pace Since February '07

Daily Real Estate News | Friday, September 20, 2013

  

Existing-home sales increased in August, reaching their highest level in 6 1/2 years. What's more, the median price shows nine consecutive months of double-digit year-over-year increases, according to the National Association of REALTORS®.

Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums, and co-ops, rose 1.7 percent to a seasonally adjusted annual rate of 5.48 million in August from 5.39 million in July. They're also 13.2 percent higher than the 4.84 million-unit level in August 2012.

Sales are at the highest pace since February 2007, when they hit 5.79 million, and have remained above year-ago levels for the past 26 months.

Lawrence Yun, NAR chief economist, said the market may be experiencing a temporary peak.
“Rising mortgage interest rates pushed more buyers to close deals, but monthly sales are likely to be uneven in the months ahead from several market frictions,” he said. “Tight inventory is limiting choices in many areas, higher mortgage interest rates mean affordability isn’t as favorable as it was, and restrictive mortgage lending standards are keeping some otherwise qualified buyers from completing a purchase.”

Total housing inventory at the end of August increased 0.4 percent to 2.25 million existing homes available for sale, which represents a 4.9-month supply at the current sales pace, down from a 5.0-month supply in July. Unsold inventory is 6.3 percent below a year ago, when there was a 6-month supply. “Limited inventory in some areas means multiple bidding remains a factor; 17 percent of all homes sold above the asking price in August, although 63 percent sold below list price,” said Yun.

Data from realtor.com®, NAR’s listing site, shows large declines in inventory from a year ago in the following areas:

• Naples, Fla.: down 23.5 percent
• Detroit metro: down 23.3 percent
• Greater Boston: down 20.7 percent

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage rose to 4.46 percent in August from 4.37 percent in July, and is the highest since July 2011 when it was 4.55 percent; the rate was 3.60 percent in August 2012.

The national median existing-home price for all housing types was $212,100 in August, up 14.7 percent from August 2012. This is the strongest year-over-year price gain since October 2005 when the median rose 16.6 percent, and marks 18 consecutive months of year-over-year price increases.

Distressed homes – foreclosures and short sales – accounted for 12 percent of August sales, down from 15 percent in July, and are the lowest share since monthly tracking began in October 2008; they were 23 percent in August 2012. Ongoing declines in the share of distressed sales are responsible for some of the growth in median price.

Eight percent of August sales were foreclosures, and 4 percent were short sales. Foreclosures sold for an average discount of 16 percent below market value in August, while short sales were discounted 12 percent.

NAR President Gary Thomas, broker-owner of Evergreen Realty in Villa Park, Calif., said rising home values will encourage more people to sell.

“As the equity position of most homeowners continues to improve, some who have been on the sidelines will list their home for sale,” he said. “Most of those owners also will be buying another home, but higher levels of new home construction going into 2014, combined with some reduction in demand from less favorable affordability conditions, will help to moderate price growth to more sustainable levels.”

The median time on market for all homes was 43 days in August, little changed from 42 days in July, but is much faster than the 70 days on market in August 2012. Short sales were on the market for a median of 98 days, while foreclosures typically sold in 52, days and non-distressed homes took 41 days. Forty-three percent of homes sold in August were on the market for less than a month.

First-time buyers accounted for 28 percent of purchases in August, down from 29 percent in July and 31 percent in August 2012.

All-cash sales comprised 32 percent of transactions in August, up from 31 percent in July and 27 percent in August 2012. Individual investors, who account for many cash sales, purchased 17 percent of homes in August, compared with 16 percent in July and 18 percent in August 2012. Last month, three out of four investors paid cash.

Single-family home sales rose 1.7 percent to a seasonally adjusted annual rate of 4.84 million in August from 4.76 million in July, and are 12.8 percent above the 4.29 million-unit pace in August 2012. The median existing single-family home price was $212,200 in August, which is 14.4 percent higher than a year ago.

Existing condominium and co-op sales rose 1.6 percent to an annual rate of 640,000 units in August from 630,000 in July, and are 16.4 percent above the 550,000-unit level a year ago. The median existing condo price was $211,700 in August, up 17.7 percent from August 2012.

Existing-home sales by region:

Northeast: Existing-home sales were unchanged at an annual rate of 710,000 in August but are 12.7 percent above August 2012. The median price in the Northeast was $268,800, up 7.6 percent from a year ago.

Midwest: Existing-home sales increased 3.1 percent in August to a pace of 1.32 million, and are 18.9 percent higher than a year ago. The median price in the Midwest was $166,100, which is 10.0 percent above August 2012.

South: Existing-home sales rose 3.8 percent to an annual level of 2.19 million in August and are 13.5 percent above August 2012. The median price in the South was $181,000, up 14.6 percent from a year ago.

West: Existing-home sales declined 2.3 percent to a pace of 1.26 million in August but are 7.7 percent higher than a year ago. With the tightest regional inventory conditions, the median price in the West rose to $287,500, which is 18.8 percent above August 2012.

Source: NAR

Loan Mods, Short Sales Outpace Foreclosure Sales

Daily Real Estate News | Friday, September 20, 2013

  

Loan modifications are strengthening the housing recovery by helping delinquencies and foreclosures fall, according to a report by Keefe, Bruyette & Woods.

So far this year, about 519,000 home owners have received permanent loan modifications from mortgage servicers. Meanwhile, an estimated 378,000 foreclosure sales have been reported so far this year, according to a newly released report from Hope Now. Since 2007, 6.6 million home owners have received permanent loan modifications.

“Loan modifications and short sales continue to outpace foreclosure sales,” says Hope Now Executive Director Eric Selk. “Through the first seven months of the year, there have been approximately 80,000 less foreclosure sales compared to the same time period in 2012.”

Source: “Loan modifications boost the housing recovery,” HousingWire (Sept. 19, 2013)

Foreclosure Crisis Near Its End?

Daily Real Estate News | Friday, August 30, 2013

  

Foreclosure inventories nationwide fell 32 percent in July compared to a year ago, another sign that the foreclosure crisis may finally be over, according to CoreLogic's latest foreclosure report released Thursday.

In July, 949,000 homes were in some stage of foreclosure, down from 1.4 million a year ago. That represents a decrease in foreclosure inventory from 3.4 percent of all homes with a mortgage in July 2012 to 2.4 percent in July 2013.

Completed foreclosures — which is a measure of all homes actually lost to foreclosure — were also down. In July, there were 49,000 completed foreclosures, down from 65,000 a year ago. That's a drop of 25 percent year-over-year. Prior to the housing crisis, completed foreclosures were averaging 21,000 a month. That means the number of foreclosures up for sale nationwide is gradually shrinking.

“Completed foreclosures and delinquency rates continue their rapid descent in July,” says Anand Nallathambi, president and CEO of CoreLogic. “Every state posted a year-over-year decline in foreclosures, and serious delinquencies fell to the lowest level since December 2008. Not surprisingly, non-judicial states have come the farthest the fastest in reducing the shadow inventory and lowering delinquency rates.”

The following five states had the highest foreclosure inventory (as a percentage of all homes with a mortgage), according to CoreLogic:

• Florida
• New Jersey
• New York
• Connecticut
• Maine

Meanwhile, the following five states had the lowest foreclosure inventory:

• Wyoming
• Alaska
• North Dakota
• Nebraska
• Colorado

Source: CoreLogic

Mortgage Fraud Shows First Notable Signs of Falling

Daily Real Estate News | Monday, August 26, 2013

  

The number of mortgage fraud cases dropped in 2012 — the first decline since the U.S. Treasury Department began tracking fraud in 2002.

The department’s Financial Crimes Enforcement received 69,277 mortgage loan fraud suspicious activity reports in 2012, 25 percent fewer than in 2011.

That majority of the suspicious activity with mortgages occurred during the final years of the housing crisis. Fifty-seven percent of the fraud reported in 2012 involved mortgages that originated in or before 2007. In 2011, that percentage stood at 58 percent of loans originated in or prior to 2007.

The state with the highest number of mortgage fraud cases is California, which also had the highest incidence of fraud in 2011 as well. Nevada, Florida, Arizona, and the District of Columbia rounded out the top five.

Source: “Feds See a Decline in Mortgage Fraud for the 1st Time,” Credit.com (Aug. 23, 2013

Second Chance for Foreclosed Homeowners

Daily Real Estate News | Monday, August 19, 2013

  

The Federal Housing Administration is giving some former home owners another shot at home ownership. The FHA sent a letter to mortgage lenders stating that it would offer mortgage insurance to borrowers who once filed for bankruptcy, or who lost their homes through foreclosure or short sale during the recession.

Still, potential borrowers must show they can meet all other FHA requirements and that they are no longer financially constrained. Borrowers also will have to undergo housing counseling and FHA is requiring lenders to verify that at least a year has passed since the foreclosure or “economic event" that caused the foreclosure or bankruptcy.

"FHA recognizes the hardships faced by these borrowers, and realizes that their credit histories may not fully reflect their true ability or propensity to repay a mortgage," according to the letter FHA sent to lenders.

Source: “FHA offers mortgage backing to the once bankrupt,” HousingWire (Aug. 16, 2013)

FTC Halts Allegedly Phony Mortgage Relief Scheme

Victimizing Thousands of Consumers, Marketers Falsely Touted Legal Assistance and "Forensic Audits" for Homeowners Facing Foreclosure

Press Release Federal Trade Commission

The Federal Trade Commission filed suit in federal court to halt a mortgage relief scheme that allegedly deceived and preyed on distressed homeowners by charging them $2,000 to $4,000 based on bogus foreclosure rescue claims.

The defendants allegedly falsely claimed they would provide legal help to save consumers’ homes from foreclosure and lower their mortgage payments, then charged them up-front fees in violation of federal law, delivering little or no help, and driving them deeper into debt.

The temporary restraining order signed by the court shuts down the defendants’ websites, freezes their assets, and provides for appointment of a receiver pending trial.

The defendants marketed their scheme in a variety of ways, which included using an official looking mailer that implores consumers to act quickly before they “FORFEIT LEGAL RIGHTS,” or face a “statute of limitations and government program deadlines,” according to the FTC. Three individuals – Ratan Baid, Madhulika Baid, and William D. Goodrich – and seven companies falsely promised lower monthly payments and interest rates, and conversion of adjustable-rate mortgages to fixed ones, the FTC complaint alleged. Many consumers who called the toll-free numbers were falsely guaranteed a loan modification that supposedly would make their payments more affordable, that they would get results within 60 to 90 days, or that Goodrich, an attorney, would use his impressive legal experience on their behalf, according to the complaint.

The defendants also marketed their scheme online, through telemarketing calls and with television and radio ads, according to the complaint. The defendants’ websites touted a range of financial services, including bankruptcy advice, credit counseling, and “forensic mortgage audits.” One of the sites described how these “audits” can help consumers hold onto their homes or lower their mortgage payments. It falsely claimed that the “audits” could uncover any “lending violations” committed by lenders, and that the information could be used “to gain leverage in a successful loan modification,” the complaint stated.

In reality, however, the defendants generally did not provide the promised loan modification or help consumers avoid foreclosure, either directly or through the “forensic mortgage audits.”

The complaint charges the defendants with violating the Federal Trade Commission Act and with violating the Mortgage Assistance Relief Services Rule, which bans mortgage foreclosure rescue and loan modification services from collecting fees until homeowners have a written offer from their lender or servicer that they deem acceptable.

The complaint also names as defendants Apex Solutions, Inc.; William D. Goodrich, Attorney, Inc.; A to Z Marketing, Inc.; Apex Members, LLC; Backend Inc.; Expert Processing Center, Inc.; and Smart Funding Corp.

The Commission vote authorizing the staff to file the complaint and seek temporary restraining orders against the defendants in this case was 4-0. The FTC filed the complaint and request for a temporary restraining order in the U.S. District Court for the Central District of California on June 18, 2013, and the court entered the temporary restraining order the following day.

NOTE: The Commission files a complaint when it has “reason to believe” that the law has been or is being violated and it appears to the Commission that a proceeding is in the public interest. The case will be decided by the court.

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 2,000 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s website provides free information on a variety of consumer topics. Like the FTC on Facebook, follow us on Twitter, and subscribe to press releases for the latest FTC news and resources.

Change of Address Scam

Daily Real Estate News | Friday, July 26, 2013

  

When you move, you need to contact the post office to complete a change of address form to receive mail at their new residence. But a new scam is popping up that gets movers to change their address on the private business Web sites and then charges a fee for something your clients can do for a dollar — or free — on their own.

Some people are getting duped by performing random online searches for “address changes,” who then end up on a site run by private businesses that may charge $17 to $24 to file a simple change of address on the person’s behalf. The United States Post Office site only charges $1 online and the service is free at any post office.

"Some people report they are charged a dollar at first [on these other sites], but then a short time later, there's another charge for additional services they did not knowingly purchase," says Miranda Perry with Scambook.com, an online complaint resolution site that has fielded several complaints about “change of address” scams recently.

About 150 customer complaints have been filed recently with the Better Business Bureau about one site in particular: Change-My-Address.com. This site's advertisements say “USPS(R) Change of Address Form. Fast & Secure Mail Forwarding.” A spokesperson with the company says that it states in several places online that it is not affiliated with the USPS, and that it is in compliance with all local, state, and federal laws.

You can change your address by visiting the official United States Postal Service Web site and submit a request for $1, or you can visit your neighborhood post office and change their address for free.

Source: CNBC

3 Real Estate Scams You Fall For

Daily Real Estate News | Thursday, July 18, 2013

  

Though the housing recovery is trucking along, that doesn't mean real estate scams have gone away. Home owners have been duped out of an average of $4,000 to $5,000 from scams, but even five-figure losses aren’t uncommon for those who have fallen prey to fake loan modifications and other housing fraud. Forbes recently highlighted three of the most common real estate scams today:

 

1. Rental scams: Scammers illegally pull online listing information from a home for sale and re-post it as a rental on another site, such as Craigslist. They’ll often ask for money upfront, in the form of a security deposit or broker fee, from prospective tenants. Scammers often advertise the home at a low price and collect application fees from several prospective tenants in order to hold the property for them.

 

Warning signs: Be cautious of wiring money or paying any upfront fee before you’ve met the agent or signed the contract. Also, be skeptical if they can’t show you the property when you ask.

2. Loan modification scams: Scammers may offer “fake foreclosure counseling, phony forensic loan auditing, nonexistent mass rejoinder lawsuits, bait-and-switch ploys, leaseback programs, and fraudulent ‘government’ modification programs,” Forbes reports.

Warning signs: Be skeptical if anyone asks for money for foreclosure counseling. Foreclosure counseling is free from agencies like the U.S. Department of Housing and Urban Development. Also, always contact your lender directly to work through a modification process. Don’t allow someone to do that on your behalf.

3. Workshop scams: An investment guru will host a get-rich-quick real estate investing seminar and have you sign up for a course that is free or low-cost. The investor may then give you actual properties to invest in if you offer up thousands of dollars in advance. They make bold promises that you’ll become a millionaire, but then nothing ever happens. Also, a form you may have signed initially to take the class may prevent you from taking legal action against the instructor to recoup your money.

Warning signs: While not every workshop instructor is a scammer, be sure to check out the program thoroughly before signing up. Check the company’s rating with the Better Business Bureau. Also, check if it’s linked to a reputable industry association.

Source: “3 Real Estate Scams and How to Avoid Them,” Forbes.com (July 16, 2013)

Builders Haven't Felt This Upbeat Since 2006

Daily Real Estate News | Wednesday, July 17, 2013

  

Builders continue to feel more optimistic about the direction of the recovery for newly built single-family homes. Builder confidence rose six points in July to 57, according to the National Association of Home Builders/Wells Fargo Housing Market Index. Any number above 50 indicates more builders view conditions as good than poor.

The index gauges builders’ perceptions on single-family home sales, sales expectations for the next six months, and buyer traffic. The gauge for current sales condition rose to its highest level since early 2006, and the index’s measurements for prospective buyers and sales expectations for the next six months rose to the highest levels since late 2005. The latest report also showed improvements in builder confidence has expanded across every region of the United States.

"Builders are seeing more motivated buyers coming through their doors as the inventory of existing homes for sale continues to tighten," says NAHB Chief Economist David Crowe. "Meanwhile, as the infrastructure that supplies home building returns, some previously skyrocketing building material costs have begun to soften."

Source: National Association of Home Builders

Gay Marriage: Impact on Real Estate

Daily Real Estate News | Wednesday, July 03, 2013

  

Married same-sex couples in 13 states and Washington, D.C., are now or soon will be eligible for more than 1,100 federal benefits and protections denied to them under the Clinton-era Defense of Marriage Act. A key provision of the federal law, which withheld benefits from gay couples who had been lawfully married in those states that permit it, was struck down last week by the Supreme Court. And though property rights are set at the state level, the ruling has bearing on a number of real estate–related matters that involve federal law.

The ruling may influence how couples decide to hold title on a property. It will also affect the calculation of estate taxes owed when a spouse dies and how much capital gain is exempt from taxes in the sale of a home that is owned in the name of only one member of the couple.

For real estate practitioners, “understanding the status of [your clients’] relationship is critical if you are in a jurisdiction that recognizes marriage” for gay couples, says Los Angeles attorney Wendy E. Hartmann, who specializes in tax and estate planning for same-sex couples. Practitioners should, however, encourage couples to obtain legal advice on such title and tax matters from an attorney, she noted.

While the dismantling of DOMA provides clear-cut benefits for married gay couples who reside in the states they were married in, it creates significant ambiguities in other situations. For example, the immediate future is murky for partners who were legally married in one state but move to a state that does not recognize their union. For now, these people are caught in a confusing tangle of laws.

—Wendy Cole, REALTOR^® Magazine

HUD Finds Rental Bias Against Same-Sex Couples

Daily Real Estate News | Thursday, June 20, 2013

Same-sex couples are significantly more likely to face discrimination in the online rental housing market than heterosexual couples, according to a new study of 50 metro markets released by the Department of Housing and Urban Development.

“This is simply wrong. It is unjust, and we as a country cannot stand for it,” HUD Secretary Shaun Donovan said about the study’s findings.

For the study, HUD testers sent to landlords one e-mail from a heterosexual couple and another e-mail from a gay couple about the availability of a rental unit.

Heterosexual couples were “significantly more likely” to receive an e-mail response than gay male and lesbian inquiries.

“Heterosexual couples were favored over gay male couples in 15.9 percent of tests and over lesbian couples in 15.6 percent of tests,” according to the study.

“Federal housing laws do not prevent discrimination based on sexual orientation or gender identity, but 20 states and Washington D.C. have taken preventative measures to pass laws that prohibit discrimination again LGBT people,” MSNBC reports.

Source: “Same-sex couples face significant housing bias, study finds,” MSNBC (June 18, 2013)

Former Employees: Bank of America Regularly Lied to Homeowners

From ProPublica

Bank of America employees regularly lied to homeowners seeking loan modifications, denied their applications for made-up reasons, and were rewarded for sending homeowners to foreclosure, according to sworn statements by former bank employees.

The employee statements were filed late last week in federal court in Boston as part of a multi-state class action suit brought on behalf of homeowners who sought to avoid foreclosure through the government’s Home Affordable Modification Program (HAMP) but say they had their cases botched by Bank of America.

In a statement, a Bank of America spokesman said that each of the former employees’ statements is “rife with factual inaccuracies” and that the bank will respond more fully in court next month. He said that Bank of America had modified more loans than any other bank and continues to “demonstrate our commitment to assisting customers who are at risk of foreclosure.”

Six of the former employees worked for the bank, while one worked for a contractor. They range from former managers to front-line employees, and all dealt with homeowners seeking to avoid foreclosure through the government’s program.

When the Obama administration launched HAMP in 2009, Bank of America was by far the largest mortgage servicer in the program. It had twice as many loans eligible as the next largest bank. The former employees say that, in response to this crush of struggling homeowners, the bank often misled them and denied applications for bogus reasons.

Sometimes, homeowners were simply denied en masse in a procedure called a “blitz,”said William Wilson, Jr., who worked as an underwriter and manager from 2010 until 2012. As part of the modification applications, homeowners were required to send in documents with their financial information. About twice a month, Wilson said, the bank ordered that all files with documentation 60 or more days old simply be denied. “During a blitz, a single team would decline between 600 and 1,500 modification files at a time,” he said in the sworn declaration. To justify the denials, employees produced fictitious reasons, for instance saying the homeowner had not sent in the required documents, when in actuality, they had.

Such mass denials may have occurred at other mortgage servicers. Chris Wyatt, a former employee of Goldman Sachs subsidiary Litton Loan Servicing, told ProPublica in 2012 that the company periodically conducted “denial sweeps” to reduce the backlog of homeowners. A spokesman for Goldman Sachs said at the time that the company disagreed with Wyatt’s account but offered no specifics.

Five of the former Bank of America employees stated that they were encouraged to mislead customers. “We were told to lie to customers and claim that Bank of America had not received documents it had requested,” said Simone Gordon, who worked at the bank from 2007 until early 2012 as a senior collector. “We were told that admitting that the Bank received documents ‘would open a can of worms,’” she said, since the bank was required to underwrite applications within 30 days of receiving documents and didn’t have adequate staff. Wilson said each underwriter commonly had 400 outstanding applications awaiting review.

Anxious homeowners calling in for an update on their application were frequently told that their applications were “under review” when, in fact, nothing had been done in months, or the application had already been denied, four former employees said.

Employees were rewarded for denying applications and referring customers to foreclosure, according to the statements. Gordon said collectors “who placed ten or more accounts into foreclosure in a given month received a $500 bonus.” Other rewards included gift cards to retail stores or restaurants, said Gordon and Theresa Terrelonge, who worked as a collector from 2009 until 2010.

This is certainly not the first time the bank has faced such allegations. In 2010, Arizona and Nevada sued Bank of America for mishandling modification applications. Last year, Bank of America settled a lawsuit brought by a former employee of a bank contractor who accused the bank of mishandling HAMP applications.

The bank has also settled two major actions by the federal government related to its foreclosure practices. In early 2012, 49 state attorneys general and the federal government crafted a settlement that, among other things, provided cash payments to Bank of America borrowers who had lost their home to foreclosure. Authorities recently began mailing out those checks of about $1,480 for each homeowner. Earlier this year, federal bank regulators arrived at a settlement that also resulted in payments to affected borrowers, though most received $500 or less.

The law suit with the explosive new declarations from former employees is a consolidation of 29 separate suits against the bank from across the country and is seeking class action certification. It covers homeowners who received a trial modification, made all of their required payments, but who did not get a timely answer from the bank on whether they’d receive a permanent modification. Under HAMP, the trial period was supposed to last three months, but frequently dragged on for much longer, particularly during the height of the foreclosure crisis in 2009 and 2010.

ProPublica began detailing the failures of HAMP from the start of the program in 2009. HAMP turned out to be a perfect storm created by banks that refused to adequately fund their mortgage servicing operations and lax government oversight.

Bank of America was far slower to modify loans than other servicers, as other analyses we’ve cited have shown. A study last year found that about 800,000 homeowners would have qualified for HAMP if Bank of America and the other largest servicers had done an adequate job of handling homeowner applications.

Paul Kiel is a reporter for ProPublica, an independent, nonprofit newsroom.

Treasury Department Extends Mortgage Relief, Refinancing Program

Daily Real Estate News | Friday, May 31, 2013

  

The White House announced that it is extending the Making Home Affordable Program, a refinancing program that has helped home owners lower their monthly mortgage payments and obtain loan modifications. The program, originally set to expire at the end of this year, has been extended two years until Dec. 31, 2015.

The Making Home Affordable Program encompasses the Home Affordable Modification Program (HAMP), among other consumer protections.

More than 1.1 million home owners have received permanent loan modifications on their mortgages through HAMP as of March 2013. The median savings of borrowers who have participated in HAMP is $546 a month -- or 38 percent of their previous payment, according to the Treasury Department.

The program encourages lenders to lower monthly mortgage payments of struggling home owners by either reducing the interest rate on the loan or forgiving some of the principal.

“The housing market is gaining steam, but many home owners are still struggling,” said Jacob J. Lew, the Treasury secretary. “Extending the program for two years will benefit many additional families, while maintaining clear standards and accountability for an important part of the mortgage industry.”

The mortgage program was introduced by President Obama in early 2009. Banks and other lenders were slow to participate in the program, however. The government has since tweaked the program to allow more borrowers to qualify for it, after spending only $5.2 billion through March of the $29.9 billion allocated for HAMP.

Source: U.S. Department of Treasury and “Federal Program for Distressed Home Owners Is Extended,” The New York Times (May 30, 2013

Short Sales Losing Favor With Lenders?

Daily Real Estate News | Thursday, May 30, 2013

  

Lenders may be less inclined to approve short sales due to rising home prices, according to a new report by RealtyTrac.

During the first quarter, short sales posted a 35 percent drop compared to year-ago levels.

"The decrease in short sales was a bit of surprise given that 11 million home owners nationwide still owe more on their homes than they're worth," says Daren Blomquist, spokesman for RealtyTrac.

"Rising home prices are taking away the incentive for short sales on the part of both home owners and lenders."

Foreclosure prices are on the rise, increasing 28 percent in the first quarter. The banks may be realizing they won’t necessarily lose a lot more money by letting a home go into foreclosure instead, Blomquist says.

However, foreclosure sales have been plummeting too, reaching their lowest levels since early 2008. Foreclosure sales made up 21 percent of the total market during the first quarter, which is down from 25 percent one year ago, according to RealtyTrac.

Foreclosure sales peaked in early 2009, when they made up 45 percent of all homes sold nationally.

Still, foreclosures are making up the biggest bulk of sales in certain states, such as Georgia (where 35 percent of sales were foreclosures in the first quarter), Illinois (32 percent), and California (30 percent), according to RealtyTrac.

Source: “Foreclosure sales fall to lowest level since 2008,” CNNMoney (May 30, 2013)

Some Home Owners Chip Away at Mortgage With Credit Card

Daily Real Estate News | Thursday, May 30, 2013

  

Wells Fargo’s credit card, the Home Rebate card, has allowed its customers to pay down $50 million in mortgage balances since the card’s debut in 2007.

Every purchase a customer makes with the card counts toward a rebate credited to the principal of the borrower’s Wells Fargo mortgage.

Over a 30-year time period, the card has the potential to help chip away at a home owner’s mortgage balance by reducing the mortgage interest they owe by potentially “thousands of dollars” as well as lowering the number of payments required, Wells Fargo officials say.

As a recent HousingWire article reports: “Wells Fargo claims a cardholder with a $150,000 mortgage who spends $1,500 a month on the Home Rebate Card could shorten their payment schedule by more than a year.”

Source: “Credit Card Allows Borrowers to Simultaneously Pay off a Mortgage, Daily Bills,” HousingWire (May 29, 2013)

Short Sales Routinely Show In Credit Reports As Foreclosures

By Kenneth R. Harney

May 17, 2013, 8:20 p.m.

WASHINGTON — Are large numbers of homeowners who have negotiated short sales with lenders at risk because of a startling omission in the American credit system? Do their credit reports and scores indicate that they were foreclosed upon, rather than having negotiated a mutually agreeable resolution with their lender?

The answer appears to be yes, and recently two federal agencies — the Federal Trade Commission and the Consumer Financial Protection Bureau — were asked to investigate why. The reality is this: The credit reporting system now in place does not have a separate code that distinguishes a short sale from a foreclosure. Yet there are crucial differences between the two.

In a short sale, the bank approves the sale of the house to a new buyer at a mutually acceptable price. Any unpaid remaining loan balance not covered by the sale proceeds may then be either partially or fully forgiven. The bank is an active participant throughout the process, negotiating for a higher price and higher repayment of principal from the original borrower.

In a foreclosure, the bank is essentially left holding the bag. The owners walk away at some point or live in the property rent-free until they're evicted. Frequently there is damage to the house left by the departing owners, sometimes extensive. There is little or no cooperation between them and the bank.
Both transactions are serious, negative credit events for the borrower. After all, the mortgage wasn't fully repaid. But the financial losses generated by a foreclosure typically are more severe for the lender than by a short sale.

Not only are there extended periods of nonpayment by the borrower but there are also substantial property management expenses, renovation costs, local property taxes and insurance while the house is being readied for resale. In some parts of the country, the average time to complete a foreclosure has exceeded two years.

The nation's major sources of mortgage financing — Fannie Mae, Freddie Mac and the Federal Housing Administration — all recognize the differences between short sales and foreclosures in their underwriting policies regarding new mortgages. Fannie Mae generally won't approve a new mortgage application by borrowers with a foreclosure on their credit report for up to seven years, but will consider lending to people who were involved in short sales, and who otherwise qualify in terms of recent credit behavior and available down payment, in as little as two years.

But if short sales routinely show up in credit reports coded as foreclosures, borrowers who might be able to qualify for a new mortgage two or three years after a short sale find themselves shut out of the market. George Albright, who completed a short sale on his home in New Port Richey, Fla., in 2010, has been trying for months to get through the hoops for a Fannie Mae conventional mortgage.

According to his mortgage broker, Pam Marron, Albright has a solid 720 FICO credit score, 20% down payment cash and more than adequate monthly income and reserves for a new home. But he keeps getting rejected because his credit report indicates a foreclosure, not a short sale.

That's not unusual, Marron said, since there is no specific code to identify short sales. In a highly automated and strict underwriting environment, lenders go by the codes, according to Marron, harming creditworthy applicants like Albright.

"I did my time," Albright said. "I'm ready to move on," but because of the inadequacy of current credit reporting practices "I'm still paying more for rent than I'd be paying on a new mortgage."

After a Capitol Hill hearing May 7 on credit reporting issues, Sen. Bill Nelson (D-Fla.) sent requests to both the FTC and the CFPB to investigate what he called the "disturbing practice" of misidentifying short sales, and to "penalize responsible parties in the mortgage- and credit-reporting industries, if they don't fix this coding problem within 90 days."

Nelson said real estate industry data indicate that there have been 2.2 million short sales nationwide during the last several years. Consumers who opted for a short-sale route rather than a more costly foreclosure are now being blocked from "reentry into the housing market," he said, thereby "stifling economic recovery for all homeowners."

Officials of the main trade group for the credit reporting industry, the Consumer Data Industry Assn., were not available for comment on Nelson's short-sales complaint to the federal agencies.

kenharney@earthlink.net.
Distributed by Washington Post Writers Group.

Copyright © 2013, Los Angeles Times

Freddie Releases New Loan Program Early

Daily Real Estate News | Tuesday, May 14, 2013

Mortgage giant Freddie Mac announced that it will make a new streamlined loan modification program for delinquent borrowers available now, instead of holding off the launch date to July 1 as originally planned.

Mortgage servicers will be able to offer a streamlined modification to borrowers who are at least 90 days late on their Freddie-owned or guaranteed mortgage. Borrowers cannot be more than 720 days delinquent on their loan, however, to qualify. Also, the loan must be at least a year old.

The new program will waive any document requirements for borrowers to receive the modification. The borrowers' modification becomes permanent after he or she makes three on-time payments during a three-month trial period.

"Today, Freddie Mac is giving a green light to its mortgage servicers to speed up financial relief for potentially thousands of families with delinquent mortgages across the nation," Freddie Mac said in a statement. “Freddie Mac is focused on adding momentum to the housing recovery by giving distressed borrowers more options to avoid foreclosure."

Source: “Freddie Mac speeds up availability of streamlined loan mods,” HousingWire (May 13, 2013)

Mortgage Relief Checks Go Out, Only to Bounce

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.

HARP Program Extended Another 2 Years

Daily Real Estate News | Friday, April 12, 2013

  

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)

Foreclosure Errors Found To Be More Widespread

Daily Real Estate News | Friday, April 12, 2013

  

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:

• 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.

Payments have started being mailed this week to many of those affected, after about a dozen financial institutions agreed to make $3.6 billion in cash payouts to more than 4 million borrowers who potentially faced wrongful foreclosures from 2009 and 2010.

Source: “Foreclosure Review Finds Potentially Widespread Errors,” Huffington Post (April 9, 2013)

4.2M Borrowers to Start Receiving Foreclosure Payouts

Daily Real Estate News | Wednesday, April 10, 2013

  

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)

White House Rolls Out 3 Foreclosure Prevention Efforts

Daily Real Estate News | Tuesday, April 09, 2013

  

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

4 Largest Mortgage Insurers Fined Over Alleged Kickbacks

Daily Real Estate News | Friday, April 05, 2013

  

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)

New Database Allows Americans to Post Mortgage Gripes

Daily Real Estate News | Friday, March 29, 2013

  

Americans have a lot of gripes when it comes to mortgages. Of the 90,000 consumer complaints that have been filed so far to the Consumer Financial Protection Bureau’s new consumer complaint database, 50,000 have related to mortgage issues. Complaints over loan modifications, foreclosures, and other servicing issues dominate.

The CFPB launched a database on Thursday to field consumer complaints -- the nation’s largest public database for consumer financial complaints. The database captures individual complaints on everything from mortgages to credit cards, student loans, bank accounts, and other financial services.

The public can view the complaints in the database by mortgage issue and product type and even organize the issues by name of the lender or servicer. The identity of the person who posted the complaint is not included in the database.

"By sharing these complaints with the public, we are creating greater transparency in consumer financial products and services," says Richard Cordray, CFPB director.

The agency’s Web site notes, however, that it does not verify “all the facts alleged in these complaints but we do take steps to confirm a commercial relationship between the consumer and company.”

You can find this data base at http://www.consumerfinance.gov/complaintdatabase/


Source: “Loan mod, foreclosure complaints dominate CFPB consumer reports,” HousingWire (March 28, 2013) and “CFPB enhances transparency with consumer complaint database,” HousingWire (March 28, 2013)

Mortgage Program Aims to Cut Payments

Daily Real Estate News | Thursday, March 28, 2013

  

The Federal Housing Finance Agency is rolling out a new program designed to help more borrowers reduce their monthly mortgage payments.

Under this program, home owners who are beyond 90 days late on their mortgages automatically will become eligible for a loan modification. The program will be available only to borrowers whose loans are owned or insured by Fannie Mae or Freddie Mac.

A modification would be finalized after the borrower makes three on-time payments at the lower amount.

Some financial analysts have expressed concern that the program could encourage other borrowers to deliberately miss payments in an attempt to become eligible. FHFA has offered assurances Fannie and Freddie would take certain measures to screen out strategic defaulters.

Source: "Mortgage Program Aims to Cut Payments," Washington Post (March 28, 2013)

Are Banks Easing Up on Mortgage Standards?

Daily Real Estate News | Tuesday, March 05, 2013

A very tight mortgage lending environment “promises improvements this year as the drivers of tough credit standards reverse,” according to Moody’s Analytics ResiLandscape Report. Still, lending will remain tight by historical standards, the report notes.

Tight underwriting conditions have been one of the main obstacles for the housing market recovery. But the credit agency says that those conditions began to ease somewhat this year and likely will continue to.

"Rising house prices give lenders more breathing room to extend credit," the analysts at Moody’s noted.

Over the past year and a half, large lenders have loosened up or held standards stable on prime loans for mortgage originations, according to the Survey of Senior Lending Officers.

Aiding lenders’ confidence is that mortgage delinquencies have fallen to pre-recession rates.

"Being right-side up on the mortgage improves a borrower’s credit profile. It also lowers the risk of default and increases the likelihood of trade-up buying," according to the Moody’s report.

Mortgage supply will remain constrained, but “improved consumer credit quality combined with steady growth in jobs, low mortgage interest rates and modestly rising house prices makes it clear that more households will be able to qualify for a mortgage," Moody's said. "Greater credit availability will in turn help drive stronger home sales and stronger price appreciation and help keep the housing market and the larger economy on an upward path."

Source: “Slight opening of credit spigot aids housing outlook,” HousingWire (March 4, 2013

More Home Owners Have Equity Again

Daily Real Estate News | Friday, February 22, 2013

  

With home prices inching up, more Americans are emerging from being underwater — owing more on their mortgage than their home is currently worth.

Several reports have tried to estimate how many home owners came out from being underwater last year. CoreLogic reported that for the first nine months of 2012, about 1.4 million borrowers moved above water. Zillow recently estimated that 2 million home owners last year emerged from being underwater. And J.P. Morgan Securities reported that the number of underwater home owners fell from 11 million to 7 million last year.

“Estimates can vary for a number of reasons,” The Wall Street Journal reports. “Underwater borrowers can move back to positive equity by paying down their loan principal or by seeing prices rise. Properties can also ‘exit’ negative equity when they go through foreclosure or when the bank approves a short sale. In those cases, borrowers aren’t being returned to positive equity — instead, they simply cease to be borrowers.”

Many of the largest home gains across the country came in areas that had a high number of underwater borrowers. “If this correlation persists in the coming years, the underwater problem could fade much faster than implied by the speed of national house prices appreciation,” Goldman Sachs researchers told The Wall Street Journal.

Source: “Rising Prices Shrink Ranks of Underwater Borrowers,” The Wall Street Journal (Feb. 21, 2013)

Fannie, Freddie to Allow Walkaways in Some Cases

Daily Real Estate News | Friday, February 01, 2013

  

Underwater borrowers who have stayed current with their mortgage payments now may be able to give up their properties and get their debts erased, according to new guidelines issued by mortgage giants Fannie Mae and Freddie Mac.

Non-delinquent borrowers who have Fannie and Freddie-backed loans and who can document a hardship, such as an illness, job change, or other situation that requires they must move can apply for a deed-in-lieu transaction. Eligible borrowers also must have a 55 percent debt-to-income ratio. Servicers will be required to confirm that the property has been left in good condition.

Borrowers who are eligible will have the debt remaining between the property’s value and size of mortgage erased.

“The goal is to make sure people who have suffered a hardship have the appropriate options to prevent foreclosure,” says Andrew Wilson, spokesman for Fannie Mae.

Borrowers may still be required some repayment, however, if the borrower has the means to do so. “Home owners applying for deed-in-lieu transactions may be asked to make cash contributions of up to 20 percent of their financial reserves, excluding retirement accounts,” Bloomberg reports about the guidelines. “Or, they may be asked to sign a promissory note for future no-interest repayments. The amount and terms can be negotiated.”

Fannie and Freddie’s new eligibility for deed-in-lieu of transactions has been met with some criticism, particularly at a time with the government-sponsored enterprises are still underwater themselves from steep losses the last few years. The GSE’s have, to date, required $190 billion of taxpayer money since 2008.

“It’s an extraordinarily generous approach for companies still in debt to American taxpayers,” Phillip Swagel, a professor at the University of Maryland’s School of Public Policy, told Bloomberg. “We’re giving people an incentive to walk away, right when the housing market is starting to right itself.”

But some argue that past programs tended to penalize borrowers on the brink of foreclosure who kept making their payments, says Julia Gordon, director of housing finance and policy at the Center for American Progress. Mortgage servicers in some cases were even advising borrowers to stop making their mortgage payment so that they could qualify for more assistance.

“Fannie and Freddie are finally recognizing that some people are stuck in their homes,” Gordon told Bloomberg. “There are a lot of families who need to move who can’t do it if they’re going to have debt hanging over their heads. There’s no winner when someone is forced to default on their mortgage -- not the investor, not the home owner, and certainly not the neighborhood.”

Source: “Fannie To Allow Walkaways by On-Time Borrowers: Mortgages,” Bloomberg (Jan. 28, 2013)

Federal Agency Releases New Rules for Foreclosures

Daily Real Estate News | Friday, January 18, 2013

  

The Consumer Financial Protection Bureau released new guidelines for mortgage servicers on Thursday that set out to help protect home owners who may be facing foreclosure.

CFPB Director Richard Cordraysays the new rules are aimed at trying to prevent “unnecessary foreclosures” as well as “ensure fair treatment for all borrowers and establish strong protections for those struggling to save their homes.”

Among the CFPB’s new guidelines:

• Mortgage servicers are prohibited from foreclosing on a home owner who is seeking loan modifications. Servicers will be unable to file a foreclosure notice until a home owner is at least 120 days behind on a mortgage payment.
• A foreclosure sale on the home will be prohibited until alternatives are considered. Servicers will be required to give home owners adequate time to accept an alternative to foreclosure before going ahead with a foreclosure sale. Servicers must respond to loan modification requests from home owners who apply for a loan modification at least 37 days prior to a foreclosure auction.
• When a home owner has missed two consecutive payments, servicers are required to send a written notice of foreclosure alternative examples to the home owner, such as deferred payments and loan modifications.
• Servicers must be easily accessible to the home owners for assistance.
• Servicers will be required to publish more clear mortgage statements, which includes mortgage payments broken down by principal, interest, fees, and escrow as well as includes the amount and due date of the next payment.
• Servicers must notify home owners early about any interest rate changes to their mortgage payments.
• Servicers will be required to credit a home owner’s account on the date a payment arrives.

The new rules take effect January 2014.

Source: “New Rules Aim to Protect Home Owners From Foreclosure,” CNNMoney (Jan. 17, 2013)