Archive for the 'Foreclosures' Category

The bankers who had a big part in the flood of foreclosures that downed the housing market and the national economy are blocking a significant solution to the problem, according to Henry Sommer, author of bankruptcy textbooks and an attorney at Consumer Bankruptcy Assistance in Philadelphia.

Sommer is referring to the Mortgage Bankers Association who had been campaigning against President Barack Obama’s proposal to grant judges the authority to modify mortgage terms to make monthly payments affordable and stop further foreclosures.

The MBA, led by its chairman David G. Kittle, sent a letter to Congress saying Obama’s proposal to involve the judicial process in his program to mitigate foreclosures would worsen the mortgage market by increasing mortgage lenders’ risks and encouraging bankruptcy filings. The MBA also said that the proposal would make it harder for people to buy a home because investors would shy away from investing in uncertain mortgages.

Kittle even suggested that Citigroup has supported Obama’s plan to involve judges in stopping foreclosures because it is indebted to the federal government, having received much of the $700-billion Troubled Asset Relief Program funds. He said the federal government already owns 40 percent of Citigroup.

Sommer responded to the MBA campaign by arguing that the mortgage bankers had a big role in the housing crisis. They offered exotic mortgages that the borrowers did not fully understand, offered loans to people they did not screen and created complicated financial instruments such as collateralized debt obligations and mortgage-backed securities to make more money from the mortgage loans. Sommer insisted the real cause of the bankers’ opposition to the proposal is their refusal to accept the losses they created and their fear of write-downs.

Mark Zandi, leading economist at Moody’s Economy.com, is another supporter of the judicial involvement proposal. He explained that the Homeowner Affordability and Stability Plan would grant mortgage lenders and services about $5,000 for each loan restructured. The involvement of the judicial process would complement the cash incentives in forcing mortgage lenders to consider loan modifications. Under the Bush administration, officials depended on voluntary modifications from the lenders and got nothing.

Zandi said he initially was against the proposal, but he saw what it can do to head off foreclosures. He reiterated that continued foreclosures do not affect only those Americans losing their homes. The foreclosure crisis has affected everyone, including people in other countries.

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As Florida foreclosures continue to soar in January, courts in the state have been conducting rocket docket hearings to clear their backlogs of foreclosure filings. Rocket docket takes just a few seconds.

In rocket docket, the judge just asks two questions: whether the homeowner is currently occupying the home and whether he is current with his monthly amortization. While the answer to the first question could be yes or no, the answer to the second question is always no. The judge will then inform the homeowner how many days he is allowed to stay in the house if he is unable to negotiate a deal with the lender.

According to the national delinquency study of the Mortgage Bankers Association (MBA), Florida foreclosures continue to be among the highest nationwide, along with California foreclosures. While the foreclosure rate has slowed down a bit, Florida foreclosures for the month of January 2009 were still 18 percent above foreclosures in January 2008.

The rocket docket process is a common occurrence at Fort Myers foreclosure court in Lee County, which is among the counties with the highest number of foreclosed properties nationwide. The county has become a microcosm of what is happening in the national housing market, with home prices falling to 50 percent of their 2005 price levels and the unemployment rate rising to 10 percent.

Judge Hugh Starnes is one of retired judges rehired to help deal with Florida foreclosures. He says that handing out foreclosure orders is an unhappy job for him, but he says that it is a lawful procedure that must be done to respond to foreclosure filings.

While many are given orders to vacate their homes, the case of mortgage broker Patricia Valverde is a positive one. Because she took out a flexible-rate mortgage loan of $300,000, her monthly payments soon jumped from $1,700 to $2,250. When she lost her job, she had almost accepted that her home would become just one of thousands of Florida foreclosures. But President Barack Obama’s Homeowner Affordability and Stability Plan has given her hope. She is now preparing to apply for refinancing.

Meanwhile, Robert Hill, a lawyer hired by a group of lenders to handle Florida foreclosures, says that the rocket docket is an efficient and realistic response to the foreclosure case backlog. He says that in most cases, delinquent borrowers have been living in the bank properties for more than one year for free.

In more than half of Florida foreclosures, the foreclosed properties involved homebuyers who were speculating for higher home prices and who were not residents in the area. For these cases, according to the Fort Myers judges, the rocket docket process fits perfectly.

The housing recession for the past two years has increased foreclosures to record levels as more and more families are struggling to make payments on properties that are decreasing in value. Despite these hard times, there is still something to be optimistic about.

According to a Credit Suisse report last Monday, the plan to let bankruptcy judges lower a loan amount or erase some mortgage debt can help decrease foreclosures by as much as 20 percent and even alleviate the distressed housing market.

Moreover, a “cram-down” or lowered loan amount will provide an incentive for mortgage companies to curb more failing loans on their own. Supporters of the mortgage cram-down contend that bankruptcy judges are exclusively able to slash through mortgage contracts and rewrite loan terms.

The new bankruptcy reform is expected to boost loan mods, specifically in principal reduction mods, since it will most likely to both pressure and provide justification to servicers to more effectively engage in principal reduction mods. Democratic leaders who manage the White House and Capitol Hill will advocate the cram-down bill early this year.

In addition, the report states that the cram-down bill can help a significant percentage of delinquent borrowers and provide a 20 percent drop in foreclosures.

However, a separate report from Friedman, Billings, Ramsey & Co state that although the cram-down bill can reduce foreclosures, it cautions that modifying the bankruptcy rules through increased mortgage rates and reduced affordability will probably create long-term problems for the housing market by further destabilizing home values and causing mayhem on second-lien and consumer lenders. Bankruptcy judges would most likely wipe out second-lien holders, also hurting lenders that specialize in those loans.

Most distressed consumers and those on the verge of foreclosure will be persuaded by the opportunity of getting assistance through the courts. An increase in bankruptcy filings will signify more write-offs across the sector and cause a surge in credit card losses, since lenders are obliged to charge off the account upon receiving the bankruptcy notice.

The building of affordable housing for people with low income in San Diego County are affected by the increase in California foreclosures and lack of tax credit investments.

Bill Hills, director of Housing and Neighborhood Services, introduced the $2,267,290 HUD Community Development Block Grant budgeted federal program that will be directed in purchasing foreclosed homes, refurbish them and have it occupied.
The federal program is divided into two. The first program is a procurement aid for possible buyers and a $20,000 grant that may [...]

Governor Arnold Schwarzenegger was venerated by the lot when he was on with the Assembly Democrats in the pursuit in cutting down foreclosure by going against mortgage related bills in the Legislative regular session. But this did not actually alarm the legislators, not because the problem is not urgent but because the problem is not [...]

When lenders are faced with bad loans during foreclosure crisis, they reach homeowners and express how there may be some ways to be done to be saved from their loan troubles. However, when a third party is involved, things may prove to be a lot more difficult to handle, especially if the homeowner is no longer aware of who is the rightful owner of their loans.

All eyes are on North Carolina’s exiting Gov. Mike Easley as he will have an opportunity to strengthen his influence before he leaves office, as he put stress on his accomplishments particularly about reducing mortgage foreclosures.

According to Mortgage Bankers Association, default payments and foreclosure rates have risen in 3rd quarter of this year and it threatens to soar while the downturn also increased the number of unemployed people.

Some people just know how to make the best out of any situation. This is just what Rich Sammons of Monroe County is doing about increasing Washington foreclosures.