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)

Treasury Announces Full Repayment with Interest for Investment Through TALF Financial Crisis Response Program Designed to Unlock Credit for Consumers, Businesses

US Department of the Treasury Press Release 1/15/2013

Page Content

Term Asset-backed-securities Lending Facility (TALF) Helped Support Auto, Small Business, and Student Loans to Consumers and Businesses after Credit Markets Seized Up During the Financial Crisis

 

 

WASHINGTON -- Today, the U.S. Department of the Treasury announced the full repayment with interest of its investment through the Term Asset-backed-securities Lending Facility (TALF). After giving effect to today’s announcement, interest and other gains above principal repayments to date for Treasury from the program would total $173 million – with additional payments expected moving forward.

 

The TALF program, which the Federal Reserve Board and Treasury announced in November 2008, was one part of the federal government’s broad efforts to help unlock credit for consumers and businesses during the financial crisis. TALF supported the issuance of nearly 3 million auto loans, more than 1 million student loans, nearly 900,000 loans to small businesses, 150,000 other business loans, and millions of credit card loans.

 

“TALF helped finance millions of new loans to consumers and businesses after the credit markets froze during the financial crisis,” said Assistant Secretary for Financial Stability Timothy G. Massad. “Now, this program is being wound down at a profit for taxpayers.”

 

Under TALF, the Federal Reserve Bank of New York (FRBNY) lent funds to investors in highly rated asset-backed securities (ABS) and commercial mortgage-backed securities (CMBS). By encouraging issuance of ABS and CMBS, which are securities backed by consumer and business loans, the TALF helped support the economy by increasing credit availability to American households and businesses.

 

As part of the program, Treasury originally pledged $20 billion in credit protection through the Troubled Asset Relief Program (TARP) against potential losses on TALF loans. In light of repayments over time and the number of TALF loans outstanding, Treasury’s credit protection commitment was subsequently reduced to $4.3 billion in June 2010 and to $1.4 billion in June 2012.

 

Today, due to the fact that the accumulated fees collected through TALF ($856 million) exceed the total principal amount of TALF loans outstanding ($556 million), Treasury’s commitment of TARP funds to provide credit protection is no longer necessary. Moreover, the early repayment of TALF loans has allowed the $100 million in temporary loans that Treasury made over the course of the program under its credit protection commitment to help finance TALF to be repaid in full with $13 million in interest.

 

The TALF remains a joint Treasury-Federal Reserve program supported by earnings due to the Treasury from the program and by collateral securing each TALF loan. The Treasury and Federal Reserve will continue to consult on the administration of the program. Any excess interest, fees, and gains collected above the remaining principal on outstanding TALF loans will be divided between Treasury (90 percent) and the Federal Reserve (10 percent). There will be an initial payment of approximately $177 million divided between Treasury and the Federal Reserve reflecting the excess of fees collected to date and the current remaining principal on outstanding TALF loans. There will then be additional payments as the remaining TALF loans are repaid.

 

Given that Treasury’s investment is being repaid in full with interest, each additional dollar Treasury collects through TALF moving forward represents an additional dollar of profit for taxpayers. The Federal Reserve is also fully protected against any losses on the remaining outstanding TALF loans, and its profits on repayment of TALF credits ultimately accrue to the taxpayer.

 

The final TALF loan is scheduled to mature on March 30, 2015. All loans remain well collateralized and current in payments of principal and interest.

 

Overall, nearly 93 percent ($387 billion) of the $418 billion in funds disbursed for TARP have already been recovered to date through repayments and other income. For more details on Treasury’s lifetime cost estimates for TARP programs, please visit Treasury’s Monthly 105(a) Report to Congress on TARP at this link.

4 Ways Buyers Can Mess Up a Loan Approval

Daily Real Estate News | Tuesday, January 15, 2013

  

Your home buyers have gotten approved for a mortgage and now they’re just waiting to make it to the closing table. Make sure they don’t throw their loan approval into jeopardy by making one of these common mistakes:

1. Making a big purchase: Tell your buyers to avoid making major purchases, like buying a new car or furniture, until after they close on the home. Big purchases could change the buyer’s debt-to-income ratio that the lender used to approve the buyer’s home loan and could throw the approval into jeopardy.
2. Opening new credit: Inform your buyers that now isn’t the time to open up any new credit cards.
3. Missing any payments: Home buyers need to be extra vigilant about paying all their bills on time, even if they’re disputing one.
4. Cashing out: Avoid any transfers of large sums of money between your bank accounts or making any undocumented deposits — both of which could send up “red flags” to your buyer's lender.

Source: “How to Keep Your Mortgage Approval Approved,” Realty Times (Jan. 14, 2013)

Banks Near $10B Settlement Over Foreclosure Abuses

Daily Real Estate News | Wednesday, January 02, 2013

  

Fourteen banks are reportedly nearing a $10 billion settlement with banking regulators over the banks’ past involvement in foreclosure mishandlings that included faulty paperwork and excessive fees, The New York Times reports.

About $3.75 billion of the reported settlement would go to aid home owners who lost their homes to foreclosure — more than double what was set aside from a $26 billion settlement reached in 2012 among the state attorneys general and five of the nation’s largest banks.

The majority of the money from the latest settlement would go to help home owners struggling to make their payments and remain in their homes, such as with aid like loan modifications or lowering the amount of principal on their mortgages.

Banks have faced several settlements with government officials and home owners in recent months that have aimed to hold them accountable for the 2008 financial crisis and subsequent housing slump. From 2007 to early 2012, four million Americans faced foreclosure.

“It’s certainly a victory for consumers and could help entire neighborhoods,” Lynn Drysdale, a former co-chairwoman of the National Association of Consumer Advocates, told The New York Times about the latest proposed settlement. “But the devil, as they say, is in the details, and for those people who have had to totally uproot their lives because of eviction it may still not be enough.”

The same banks involved in the $26 billion mortgage settlement--JPMorgan Chase, Bank of America, Wells Fargo, Citigroup and Ally Financial — also are included in this recent settlement, The New York Times reports.

Source: “Settlement Expected on Past Abuses in Home Loans,” The New York Times (Dec. 30, 2012)

Underwater Home Owners New Target of Scammers

Daily Real Estate News | Friday, December 14, 2012

  

Scammers are targeting home owners who’ve seen the value of their residence drop, which is prompting the Consumer Financial Protection Bureau to issue new warnings to underwater borrowers about widespread mortgage-modification scams.

Scammers try to dupe home owners by claiming to be affiliated with government agencies or programs. They make promises to obtain a mortgage modification on behalf of the underwater home owner. They will charge up-front fees for their service and usually instruct the home owner to stop paying their mortgage and not to contact their lender.

"It is absolutely unacceptable for unscrupulous con artists to take advantage of our nation's housing crisis by targeting home owners looking for help from the Troubled Asset Relief Program's Home Affordable Modification Program," says Christy Romero, special inspector general for TARP.

Home owners should beware of anyone contacting them pretending to be from a government program — such as the Home Affordable Refinance Program or the Home Affordable Modification Program — who try to charge them for a service. Government programs like HARP and HAMP do not charge for services related to counseling, refinancing, or modifying loans.

Source: “New Warning on Mortgage Mods: Demand for Up-Front Fees Is a Sure Sign of a Scam,” Credit.com (Dec. 13, 2012)