Banks, accelerating efforts to move troubled mortgages off their books, are offering as much as $35,000 or more in cash to delinquent homeowners to sell their properties for less than they owe. Banks are nudging potential sellers by pre-approving deals, streamlining the closing process, forgoing their right to pursue unpaid debt and in some cases providing large cash incentives, said Bill Fricke, senior credit officer for Moody’s Investors Service in New York. Losses for lenders are about 15% lower on the sales than on foreclosures, which can take years to complete while taxes and legal, maintenance and other costs accumulate, according to Moody’s. The deals accounted for 33% of financially distressed transactions in November, up from 24% a year earlier, said CoreLogic Inc., a Santa Ana, California-based real estate information company. A mountain of pending repossessions is holding back a recovery in the housing market, where prices have fallen for six straight years, and damping economic growth.
Owners of more than 14 million homes are in foreclosure, behind on their mortgages or owe more than their properties are worth, said RealtyTrac Inc., a property-data company in Irvine, California.

Short sales represented 9% of all US residential transactions in November, the most recent month for which data is available, up from 2% in January 2008, according to Corelogic. Bank-owned foreclosures and short sales sold at a discount of 34% to non-distressed properties in the third quarter, according to RealtyTrac. As lenders shift their focus to sales, they are finding that some borrowers would rather risk repossession while they wait for a loan modification, according to Guy Cecala, publisher of Inside Mortgage Finance, a trade journal. In a loan modification, the monthly payment, and sometimes principal, is reduced to help prevent seizure. Homeowners facing foreclosure may live rent-free for years before they are forced out.
“That’s why the banks have got to pay the big bucks,” Cecala said. “The real question is why is the bribe so big? Is that what it takes to get somebody out of their home?”

Obama returning money, better late than never… Two American brothers of a Mexican casino magnate who fled drug and fraud charges in the United States and has been seeking a pardon enabling him to return have emerged as major fund-raisers and donors for President Obama’s re-election campaign. The casino owner, Juan Jose Rojas Cardona, known as Pepe, jumped bail in Iowa in 1994 and disappeared, and has since been linked to violence and corruption in Mexico. A State Department cable in
2009 said he was suspected of orchestrating the assassination of a business rival and making illegal campaign donations to Mexican officials. As recently as January of last year, one of Cardona’s brothers in Chicago, Carlos Rojas Cardona, arranged for the former chairman of the Iowa Democratic Party to seek a pardon from the governor for Pepe Cardona, according to prosecutors in that state. Last fall, Carlos Cardona and another brother in Chicago, Alberto Rojas Cardona, began raising money for the Obama campaign and the Democratic National Committee. The Cardona brothers, who have no prior history of political giving, appeared seemingly out of nowhere in the world of Democratic fund-raising, Democratic activists said.

The money Alberto Cardona raised put him in the upper tiers of fund-raisers known as bundlers, according to a list released last month by the campaign. He and Carlos Cardona each gave the maximum $30,800 to the Democratic National Committee, and a lesser amount to a state victory fund. A sister, Leticia Rojas Cardona of Tennessee, donated $13,000 to the national committee, and another relative in Illinois gave $12,600, records show.
There is no record of Pepe Cardona making a donation. Although the two brothers live and work in Chicago, they maintain ties to Pepe Cardona in Mexico. Alberto Cardona operates an advertising agency in Mexico that has worked for political candidates backed by his brother, according to public records and Mexican news reports. Public records also show that the domain name for the Web site of a restaurant Pepe Cardona owns is registered to Alberto Cardona. When The New York Times asked the Obama campaign early yesterday about the Cardonas, officials said they were unaware of the brother in Mexico. Later in the day, the campaign said it was refunding the money raised by the family, which totaled more than $200,000.

Olick – 40 states sign on to robo-deal

“After more than a year of negotiations, attorneys general from more than 40 states signed on to a proposed settlement agreement with five of the nation’s largest mortgage servicers over ‘robo-signing’ foreclosure processing abuses, according to the lead negotiator, Iowa Attorney General Tom Miller. ‘This enables us to move forward into the very final stages of remaining work.
Federal and state officials, as well as representatives from the banks, continue to address matters that they must complete before finalizing any settlement,’ Miller said in a statement released late Monday. The deal with Bank of America, Wells Fargo, Citigroup, JPMorgan Chase, and Ally Financial will reportedly total $25 billion. Some $17 billion of that would go toward writing down mortgage principal for an estimated 850,000 troubled borrowers, $3 billion could go toward restitution payments of $1,500 each to borrowers who lost their homes to foreclosure, and the rest could go to state funds for foreclosure relief, according to reports and estimates by Inside Mortgage Finance.
The total could be less, however, if California does not sign on.
As of late Monday, officials there said Attorney General Kamala Harris had not agreed to the proposal.

New York did not sign on to the deal either, according to sources in Attorney General Eric Schneiderman’s office. Schneiderman had said he would not sign, but reports earlier in the week suggested he was reconsidering, given his new roll as co-chair of a Justice Department task force to investigate mortgage-related abuses.
Attorneys general from Delaware and Nevada also have reportedly not agreed to the deal. Despite the Feb. 6 deadline, states can still sign on and the expectation is that more will. So-called robo-signing, where thousands of foreclosure documents are signed by one employee without proper verification, came to light in the fall of 2010. Miller formed the coalition of attorneys general to investigate major bank servicers in October 2010. Allegations of forgery and abuse in the documentation process ground foreclosures nearly to a halt for much of 2011, as servicers reviewed and changed the way they process foreclosure documents.
They are just now ramping up again in states where foreclosures are not required to go before a judge, or non-judicial states. In judicial states, foreclosures can now take up to three years.
Miller’s office would give no details as to the agreement, or the states that committed to it.”

After pipeline rebuke, Canada turns to Asia

Speaking ahead of Canada’s most high-powered trade mission to Beijing for almost 15 years, Prime Minister Stephen Harper said that Canada must focus on markets that are growing, regardless of the fate of the Keystone XL pipeline, which is proposed to carry crude from the Alberta oil sands to Texas refineries. The US State Department blocked Keystone last month, saying they didn’t have time for a thorough environmental review. Harper told Reuters in an interview: “I think we need to be clear. As much as I want to see that Keystone project proceed, I think this incident … underscore(s) the fact that it is in this country’s national interest to be able to sell products beyond the United States. And I don’t think a reversal of an American decision can change that fundamental reality. So I think it is absolutely essential that we find ways of being able to sell our products to the biggest growing markets in the world, and those are in Asia.”

Canada — the largest supplier of energy to the United States — was profoundly disappointed by Washington’s decision to veto TransCanada’s Keystone project. The United States — which is by far Canada’s largest trading partner — is unlikely to look at it again until after the election. At 170 billion barrels, Canada’s oil sands are the third-largest crude deposit in the world, and Canadian exports to bigger markets will be a focal point of Harper’s meetings in China, where he will be accompanied by five cabinet ministers and the heads of major corporations seeking business. China has already made clear it would like to import Canadian oil to help power its rapidly expanding economy.
It’s not clear to most people why the Obama government would rather import oil from the Middle East than from its own backyard.

MBA – Q4 2011 commercial/multifamily up 13% from 2010, but….

Commercial/multifamily originations during the fourth quarter of
2011 were up 13% over the fourth quarter of 2010, but fell 7% from the third quarter of 2011, according to the Mortgage Bankers Association’s (MBA) Quarterly Survey of Commercial/Multifamily Mortgage Bankers Originations. “MBA’s Commercial/Multifamily Mortgage Bankers Origination Index hit record levels for life insurance companies in the second and third quarters of 2011,”
said Jamie Woodwell, MBA’s Vice President of Commercial Real Estate Research. “In the fourth quarter, multifamily originations for Fannie Mae and Freddie Mac hit a new all-time high. While the CMBS market continued to be held back by broader capital markets uncertainty during the past year, others – like the GSEs, life companies and many bank portfolios – increased their appetite for commercial and multifamily loans.” The 13% overall increase in commercial/multifamily lending activity over the fourth quarter of 2010 was driven by increases in originations for industrial and multifamily property types. The increase included a 43% increase in loans for industrial properties, a 31% increase in loans for multifamily properties, an 8% decrease in loans for retail properties, a 24% decrease in loans for health care properties, a 29% decrease in office property loans and a 44% decrease in hotel property loans.

Among investor types, loans for commercial bank portfolios increased by 122% compared to last year’s fourth quarter. There was also a 17% increase in loans for Government Sponsored Enterprises (or GSEs – Fannie Mae and Freddie Mac), a 13% decrease in loans for life insurance companies and a 50% decrease in loans for conduits for CMBS. Fourth quarter 2011 commercial and multifamily mortgage originations were 7% lower than originations in the third quarter of 2011. Compared to the third quarter, fourth quarter originations for hotel properties saw a 52% decrease. There was a 39% decrease for office properties, a 24% decrease for retail properties, a 29% increase for multifamily properties, a 51% increase for industrial properties, and a 153% increase for health care properties. Among investor types, between the third and fourth quarters of 2011, loans for conduits for CMBS saw a decrease in loan volume of 26%, loans for life insurance companies saw a decrease in loan volume of 23%, originations for commercial bank portfolios decreased 16% and loans for GSEs increased by 34%.

Greek problems escalate

Greek party leaders face crunch talks on Tuesday to secure a new international bailout and avoid a chaotic debt default, caught between European Union (EU) demands that they accept painful reforms now and a national strike against more austerity. Prime Minister Lucas Papademos negotiated through most of the night with Greece’s European Union and IMF lenders, ending at 4 a.m.
(0200 GMT) when the 24-hour strike was about to begin, closing ports and tourist sites and disrupting public transport.
Papademos, a technocrat parachuted in to lead the Greek government late last year, must persuade leaders of the three parties in his coalition government to accept the EU/IMF conditions for the 130-billion-euro ($170-billion) rescue. An official said the government was preparing a text to put to the leaders for their approval, suggesting some movement in the process.

With Greece’s future in the euro zone in question, German Chancellor Angela Merkel said time was of the essence and there are growing signs that euro zone officials have lost patience.
They say the full package must be agreed with Greece and approved by the euro zone, European Central Bank and International Monetary Fund before February 15. This is to allow time for complex legal procedures involved in a bond swap deal – under which the value of private investors’ holdings of Greek debt will be cut radically in value – so Athens can get rescue funds before March 20 when it has to meet heavy debt repayments or suffer a chaotic default.

Better inventory levels, fragile prices

Home prices and sales remained fragile in January even as housing inventory levels and foreclosure starts improved during the same month, the Obama administration said in its latest Housing Scorecard Report. Inventories of existing homes for sale declined from 3.2 million in the second quarter of 2011 to 2.4 million in the fourth quarter, according to data from the US Department of Housing and Urban Development and the Treasury.
Overall, housing results were a mixed bag, the scorecard said.
Inventory levels improved in the last two quarters while the number of housing units held off market fell from 3.9 million in the first quarter to 3.6 million in 4Q, the scorecard said.
Foreclosure starts also fell in December, suggesting some signs of improvement.

Still, home prices are weak and foreclosure completions edged higher. Home prices hit $138,500 on average for November 2011, compared to $140,300 in October 2011, according to Case-Shiller data cited in the report. New home sales hit 25,600 in December 2011, down from 27,600 a year ago. Meanwhile, the number of existing home sales hit 384,200 in December 2011, up from 370,800 in the year-ago period. First-time homebuyer numbers grew to 204,900 in December 2011, up from 196,000 in November 2011, according to the scorecard. Foreclosure starts fell to 58,300 in December 2011, from 71,700 in November 2011. Foreclosure completions declined during the same period hit 61,800 in December 2011, up from 56,100 in the month before that. While mortgage originations for the purchase of new homes declined to 431,500 from 498,000 in the year-ago period, but refinance originations rose to 1.3 million in 4Q from 950,000 during 3Q.
Mortgage delinquency rates were mostly falling, dropping to 4.4% in December from 4.7% in the year-ago period.

As job losses mount and Americans are faced with mortgage payments they can no longer afford, many are asking: Should I stay or should I go?

Bailing out on your home loan and opting to rent may make economic sense in some circumstances, particularly if you are saddled with a big mortgage payment on a home that has dropped steeply in value. But there are serious consequences — financial, legal, emotional and ethical — attached to the decision.
Ads by Google

Stop Home ForeclosureGet pre-approved in minutes Stop foreclosure – Save your Home! www.ModificationResource.com
Behind on your Mortgage?Qualify for Mortgage Assistance. Lower Payment & Keep your Home. SaveHomeProgram.com
Ask a Foreclosure LawyerSolve it With a Lawyer Now! A Question is Answered Every 9 Sec. Law.JustAnswer.com/Foreclosure
Foreclosure HelpSave your home from foreclosure lower you payment – Get help Now! www.ModAmerica.com

“There is no angle that you can look at that situation and think it is a great idea,” said Bruce McClary, a spokesman for ClearPoint Credit Counseling Solutions. “It should be saved as the very last option that you have available, and you should look at every possible alternative.”

Turning your back on your home and your mortgage can ruin your credit score even if it is already tarnished by a default on your house note. That could complicate other future financial transactions, including renting a new place and buying a car.

Nevertheless, some say such drastic action should be reserved as an option of last resort, particularly with the number of Americans still “underwater,” or owing more on their mortgage than the home is worth. About 21% of U.S. households in single-family residences found themselves in this situation, Zillow.com reported this month.

Glenn Kelman, chief executive of the online real estate brokerage, contends that giving up should be an option.

“I think there are a lot of people who don’t walk away from their house for moral reasons that are economically irrational,” he said. “The problem is that we live in a reputation-based society, and people will track you down and never trust you again.”

So be ready for that. And also be aware that your credit is not the only thing at risk.

J. Scott Bovitz, a Los Angeles bankruptcy attorney, said a distressed borrower should be prepared for a host of potential legal and tax consequences.

Banks in California can pursue two routes of foreclosure, judicial and nonjudicial, he said.

In a nonjudicial proceeding, which is the most common for someone who owns a home as the primary place of residence, the lender can’t come after you for the money you still owe. A judicial foreclosure, though less common, can result in a debtor still owing the bank money even after the home is taken back.

Even if you escape your lender, Uncle Sam may still come after you. The Internal Revenue Code considers foreclosure a forgiveness of debt and therefore taxable income. If you are insolvent — your debts are more than your income — then you could be forgiven that debt, Bovitz said, but some folks might still face taxes after foreclosure. And that can come as a surprise.

Gail Cunningham, a spokeswoman for the National Foundation for Credit Counseling, said those homeowners who think they might face a financial shock, such as losing a job, need to seek housing counseling early on. The counselors shouldn’t charge a fee for their services and should be approved by the U.S. Department of Housing and Urban Development.

“The sooner the better, because the longer you wait, the deeper and more complex the problem becomes,” she said.
November 29, 2009|By Alejandro Lazo

Iowa AG: Banks may face criminal liability after robo-signing settlement
California may join probe of Wall Street’s role in mortgage meltdown
New York AG probes banks over mortgage securities
Cases against Wall Street lag despite Holder’s vows to target financial fraud
NY AG expects ‘meaningful relief’ from investigations of mortgage industry

Friday, January 27th, 2012, 10:53 am

The new federal task force led by New York Attorney General Eric Schneiderman sent subpoenas to the 11 largest financial institutions in the past few days as part of its investigation into possible residential mortgage-backed securities fraud.

President Obama formed the task group and announced it during his State of the Union address Tuesday. Federal officials did not disclose which 11 banks have come under investigation.

Schneiderman said in a press conference Friday that he will be joined by Delaware AG Beau Biden, Massachusetts AG Martha Coakley, Nevada AG Catherine Cortez Masto, California AG Kamala Harris and Illinois AG Lisa Madigan.

U.S. Attorney General Eric Holder said 15 lawyers and investigators are working with the group. The FBI will add 10 agents, and another 30 lawyers and staff will join the group.

The Securities and Exchange Commission will also participate. SEC Director of Enforcement Robert Khuzami said there “would be no stone unturned, no dark corner unexposed to the light.”

“We have jurisdiction to go after every aspect of the mortgage bubble and the crash of the financial market,” Schneiderman said. “We have jurisdiction over every MBS issued over the last decade with Delaware and New York joining the group.”

Holder said if there is evidence of it, civil and criminal charges will be brought.

Department of Housing and Urban Development Secretary Shaun Donovan guaranteed any crackdown from the group’s investigation would include compensation to the homeowners affected by the financial crisis as well as investors.

“It became clear very quickly that Eric and I shared a vision that it would be a grave injustice to hold these institutions accountable and potentially have hundreds of billions be paid to private investors and pension funds but not make sure homeowners who hold those loans who depend on being able to get those loans fixed to be able stay in those homes,” Donovan said.

He also made clear the investigation and ongoing settlement negotiation between other state AGs and mortgage servicers over foreclosure problems would be separate and any charges would not release the banks from liability in the robo-signing scandal.

Iowa AG Tom Miller, heading up the mortgage servicer investigation, has said the resulting settlement would not release the banks from securitization or lending liabilities.

Schneiderman said there are some limitations to what documents the different participants could share. He clarified that the different charges brought against the banks may not have all of the AGs or DOJ listed as a prosecuting party but could be brought separately.

“I am confident you will see action in the weeks and days ahead that show this will be a very aggressive action,” Schneiderman said.
by JON PRIOR

The Office of the Comptroller of the Currency (OCC) is giving banks a “free pass” says Ohio senator Sherrod Brown (D) – and he’s not going to let them get away with it. In an open letter to the OCC, Brown accuses them of “implicitly approving the practice of having lenders release a lien securing a defaulted loan rather than foreclose on the residential property.” In effect, he says, banks now have a green light to abandon foreclosed homes, a practice that has wreaked havoc on property values and neighborhoods in Ohio and that “leaves local taxpayers on the hook for maintenance and cleanup costs.” While no one, including Brown, is denying that in some cases it makes more sense for lenders to walk away from a property than attempt to maintain and sell it, the senator insists that such actions should not be included in guidelines for regulators and essentially supported by the federal government[1]. By including this practice in the guidance issued by the OCC to mortgage servicers last month, Brown says that the federal government has, in effect, legitimized “a practice that is unfair to homeowners and local committees.”

In light of the new regulations and guidance formulas, Brown says that the OCC needs to “force stronger standards to help keep homeowners in their homes and prevent unneeded evictions in already distressed neighborhoods”[2]. This makes some sense, since these properties are more likely than most to be found “not worth saving” by lenders since they are in areas that already are dealing with plummeting property values. Ohio foreclosure rates slowed dramatically last year as a result of the robo-signer fiasco, but most analysts believe that foreclosures will speed up again in 2012 as lenders attain clarity on what they need to do to successfully foreclose and try to clear the foreclosure pipeline[3]. If this is the case, Ohio could be hit hard this year both by foreclosures and with abandoned property problems.

As home values continue to remain at low levels throughout the country, rental prices are soaring in contrast during these difficult times in the housing industry.
.

Foreclosure Deals released new research that depicts the stark price differences between renting a home rather than owning the same property. The data compare values recorded in 2008 to the current state of the housing market.

Because of the housing downfall that has led to approximately 2.1 million foreclosed homes nationwide, Foreclosure Deals revealed that in the past three years, the cost of rental properties has increased 60% while the prices of homes have decreased 46% across the country.

Analysts currently predict that by the end of 2011, that figure will rise another 4.5% and by at least another 3% in 2012.

“Foreclosures have had a huge impact on home values,” said John Miller, a real estate analyst with Foreclosure Deals. “In almost every market, prices are well below their 2008 values, simply because there are so many homes available.”

According to Miller, homeowners are currently going to pay less on a monthly mortgage payment if they buy their property as opposed to renting it every month.

“Rents are up and they’re going to stay up,” Miller said. “Even though it’s the best market for homebuyers we’ve seen in over a decade, the recession made a lot of people reconsider spending at the time, so they rented. This drove up demand, and prices, for rental properties.”

Analysts said the main reason why rental costs are so high today is because they are in greater demand. According to the analysts, buyers don’t want to invest in purchasing a home that might go down in value over time in which they won’t sell their asset for anywhere near what they paid for it.

Another incentive about buying a property is that an investor could always decide to rent the property to a prospective homeowner for a higher monthly value than what they purchased the home, apartment, condominium or commercial property for.

Foreclosure Deals said the best commodities currently available on the market are foreclosure homes because they sell for 10%, 25% and often 50% off their actual market value. The Miami-based real estate provider added that since the market is currently flooded with foreclosure properties, investors are seeing even greater deals at auctions throughout the country.

Despite the sluggish economy, Miller said this is still the perfect market for real estate investors to buy their own property rather than renting because mortgage interest rates are at historic lows ranging from 3.5% to 4%.

“Not only do you have rock bottom prices, you’ve got a terrific market to rent out your property while you wait for prices to rise,” Miller added. “Home values will come back, but the days of low mortgages aren’t going to be around forever. Once home values rise, those interest rates will rise, too.”

Thursday, December 15, 2011
By Rick Sharga

By yearend RealtyTrac reported that foreclosure activity decreased by 3% compared to the previous month, and by 14% compared to November of 2010, but that a nine-month high in scheduled foreclosure auctions suggested that a “new set of incoming foreclosure waves” may be coming. I’m not so sure I agree.

Like what you see? Click here to sign up for the Mortgage Servicing News weekly newsletter to get the latest news headlines, statistics and feature stories on the servicing industry, including short-sales and REO.

Process delays related to “robo-signing” and other problems began to slow down foreclosure activity in mid-October, 2010.

Last November was the first month where these delays really affected the numbers in the RealtyTrac report – the 262,339 foreclosure actions reported were the lowest number since November of 2008, and down 14 percent from November of 2010.

If this month’s report was to be an indication that the delays were over and foreclosure activity was going to re-start in earnest, we should have seen an increased level of default activity; instead, default notices were actually down by 9% compared to last year.

REO activity was off by 17%. And what about that nine-month high in scheduled auctions? Even those were off by 17% from last year’s numbers.

None of this suggests a coming wave of foreclosure activity to me. In fact, the numbers indicate that activity continues to slow down, even compared to last year’s artificially low numbers.

Whether this continued decline is due to ongoing process delays, legislative or regulatory issues, seasonal slowdowns or industry bandwidth is something we can cover in a subsequent post. But activity levels continue to be lower than what market conditions suggest that they should be.

Don’t get me wrong: with several million seriously delinquent loans waiting to enter the foreclosure process, it’s almost inevitable that we’re still going to see an awful lot of foreclosure activity for several more years. But I think it’s more likely that we’ll see these foreclosures continue to happen at a steady drip rather than a new, massive wave.

Down with Higher Down Payments
Gary Thomas, Mortgages, by NAR
Share|

By Gary Thomas, 2012 President-Elect, National Association of REALTORS®

In 2011, all of you heard quite a bit about a devastating provision in the Dodd-Frank financial reform law called the Qualified Residential Mortgage or QRM.

There was quite a bit of activity before the August 1st deadline for a letter to be submitted to federal regulators.

After that, things have been kind of quiet. But don’t mistake that for inactivity. The regulators have been reading excellent comments about how this rule would devastate the housing market.

To keep the pressure up, we gathered the Coalition for Sensible Housing to plan strategy for the year ahead. The broad-based Coalition, forged by NAR along with 47 other organizations, focuses on the proposed Qualified Residential Mortgage (QRM) rule. Published on April 29, 2011, the proposed QRM regulation is a complicated issue that could hurt our businesses

It was a great meeting of minds. A lot of smart ideas were bounced around about how to keep the issue in front of elected officials, the media and the regulators.

Last week, there was a meeting of the Coalition for Sensible Housing to plan strategy for the year ahead.

The Coalition has made an impact. We have gathered support from 53 U.S. senators, who wrote and submitted a letter by the August 1st deadline. The letter expressed their intent on QRM and opposition to the larger down payment. In addition, 310 House members signed a similar letter. Regulators have received many comments and are currently digesting that feedback.

The issues surrounding QRM arose from the financial reform legislation. Congress sought to improve the quality of mortgage lending and restore private capital to the housing market. To discourage excessive risk taking, they passed the Dodd-Frank Act requiring that lenders securitize mortgage loans to retain 5 percent of the credit risk, unless the mortgage is a Qualified Residential Mortgage (QRM) or is otherwise exempt.

Unfortunately, the rule defining how the law should be enacted has been too narrowly written. Particularly troublesome are provisions mandating higher down payments—as high as 20 percent—with even higher levels of minimum equity required for refinancing.

Even if we succeed in eliminating the down payment rule, we still need to focus on the debt-to-income ratios and credit standards.

As proposed, the rule would disproportionally impact first-time and minority borrowers. In addition, the higher rates will slow home sales, lower home prices and likely slow the housing industry during what is a fragile stage of its recovery.

We’ve been working on the issue for some time now, and I wanted to let you know that it is still very much a priority for NAR. We don’t know when the final rule will come out, but we are continuing to push back—now and in 2012.
Gary Thomas, Mortgages, by NAR
Share|

December 15, 2011
Let’s face it. Banking is a protected industry. It’s a government-coddled industry.

The problem with that is, banks really aren’t subject to free market forces that would naturally eliminate insolvent and inefficient institutions. The result is more bad banking.

If we ever want to free ourselves from the yoke of czarist money-changers and free up capital to flow into and throughout the economy, we must subject all banks, and all financial institutions, to free market forces so the weak ones fail and the strong survive.

How do we that?

It’s easy. We remove the rocks under which banks hide by making all banks’ (including the U.S. Federal Reserve) books and records transparent with a one-month lag. While we’re at it, why not legislate the same rule for all regulatory bodies? They are supposed to be protecting us, after all, so what’s there to hide?

(Speaking of transparency, it wouldn’t be a bad idea to stop members of Congress from trading stocks that are directly affected by pending legislation. More on that here.)

And, if that’s not a palatable option for bankers used to being sheltered, we should give them the ultimate protection they demand and simply turn them into utilities, along with the transparency that comes with it.

Let me make this simple.

If banks get into trouble and have to borrow huge amounts from each other, or have to borrow from the Federal Reserve – either from its discount window, through swap lines, or through any of the other central bank liquidity provision programs currently available – we should know about it. I suggest a one-month lag before that information is released because that’s all the time they should be given to fix themselves.

If the banks are so important to the economy that they have to be given massive liquidity and regulatory cover to right themselves when they are in danger of sinking, then the financial system is nothing more than the clever rhetoric of an ensconced oligopoly manifesting its power.

If we had “one-month transparency,” and faltering institutions were clearly identifiable, their stockholders would jump ship, their debt holders would man lifeboats, and unless the institution could be saved from free market destruction by the free market intervention of risk-takers willing to saddle themselves with personal exposure, they would fail.

Look through the bankers’ rhetoric that they need protection and cover from public scrutiny, and what do you see? You see inefficient institutions that leverage themselves for profit, get bailed out, merged, and recapitalized by an unsuspecting public that’s been duped into believing bank CEOs, regulators, and the Fed that everything is fine — or will be with time.

Who cares if banks fail before they get too big to have to be bailed out, or too big to be systemically threatening? We all should care. They should be allowed to fail.

And the sooner the better.

America’s Energy Mega-Shift:
How To Profit As “Home Grown” Fuel Takes Over The U.S. Power Market
Sign up now to receive this free report from Dr. Kent Moors.
Enter Email Address Here:
Cancel at any time | How it works
If that’s not a palatable solution for the industry, then why don’t we treat banking like we do utilities? After all, that’s what banks are. They are utilities – although their profits are not capped, nor is their leverage, nor is the disaster they can wreak on all of us.

Fixing America, and the world for that matter, isn’t complex. It’s just hard because banks control us, not the other way around.

The only way to get around the global banking cabal is to dismantle all the too-big-to-fail banks everywhere and let the world see what’s on every bank’s books. Let the world see how leveraged they are, how much they have to borrow to cover holes in their balance sheets and their capital reserves, and make all regulators findings, admonishments and help known to the public fairly immediately.

Transparency is next to godliness, even if you don’t believe in God

By Shah Gilani, Capital Waves Strategist, Money Morning

There was a time you could sit in a chair for a couple hours, and someone else would fill out all the paperwork and then one person would slide you a check and another person would hand you the keys to your house. Those days are gone. That “Money Fairy” may not be back for a while. This is a ‘New Now’ and survival requires new tactics…
#1. Go on the offense
Steer right into the problem and attack. Do not wait and react to their strategy on you. Remember, your Attitude and Determination is the most valuable difference maker. From my years of Financial Crisis Management experience, the homeowner that’s successful is the one that does not wait for fate, chance, or luck to determine the outcome. Whether it’s Loan Modification, Sheriff Sale, Bankruptcy, Buying Time, or Refinancing, start today to create a plan based on fact with contingencies and work your plan every day.
#2. Protect the dry powder
Reduce and Eliminate Current Debt Any Way Possible. Never in your life did you think you would be here, but at some point you may have to make a decision ‘Cash or Credit’. How you arrive at that decision and how you execute it, is paramount. I have seen too many families exhaust all of their resources trying to do the right thing only to wash up on the beach 6 months later. Make the tough decision soon enough for you to receive the benefits of it.
Who to pay and when to pay is all part of the encompassing strategy that have you living powerfully inside your income.
Here’s Where to Start: Get “Emergency Cash.”
I recommend you have at least $5,000-7,000 liquid for all of life’s inconveniences. You don’t know when the hot water tank leaks or your car needs work. Just one hardship of $1,500 can derail 10 years of home ownership…at some point you may need to hire an expert, move, or pay rent.
Remember Cash is King.
#3. Know the Terrain.
The government is neither your savior, nor your enemy. The fundamental flaw from the beginning was presuming the people who caused the mortgage crisis were somehow going to act in the public interest to fix it.
The truth is that the U.S. federal government does not seem to be able to do much about the massive wave of foreclosures and recessionary type unemployment that is swamping this nation.
What we are going through is not a financial crisis for the banking industry anymore, their financial crisis was remedied by the American Taxpayers and now their position has been solidified by the profits generated from foreclosures. Despite the massive loss of personal wealth, despite the rescue of banks that still won’t do their share, and despite the fact that help for struggling homeowners would help get the economy moving, we’re not seeing the leadership we need.
No one cares about your home more than you.
Where to Start: Build a plan based on fact. Stay on course. Don’t give up. If you’re unclear of what action to take seek an expert that has proven results.
#4. Strengthen your Relationships
This is the most unforgiving economy in our lifetime and it’s not getting better…but American Families are getting smarter and stronger.
I see unemployed Dads busting butt to reinvent themselves and spending much more time than when they were working on being a better Dad and Husband.
I see families turning to the church and using their lowest moment to help others. Couples who initially looked very weary…gain momentum as they start accomplishing things together, heck, once their backs are against the wall and they start working together again they actually remember why they married each other…
Look, everybody wants their money back, but aren’t you becoming a better person? Like many other things, money is only a tool. Unfortunately, too many people worship it or measure themselves by how much they have or had.
There is a point when you are no longer looking over your shoulder. You no longer worry about what’s going to happen…you can go out to eat with your family and not feel guilty, and you can be in your home not surrounded by frustration and fear…that’s the day we work toward. And when we get there, we can catch our breath and look a little farther up the mountain.
-Craig Nester

“I have been with this bank for almost 10 years…and this is the first time I’ve ever been late. Now I send them the payments and they won’t cash the check!”

Most of the “information” and “how to” tips for getting out of foreclosure are from the very folks who are now threatening to take your home away from you. Read on about what people often believe when dealing with mortgage lenders and loan modifications:
1) … “I’ve been a good customer of theirs for years.”

Back in the days, you had one loan and one lender. The person you met and the bank that you did your application with held that loan in its portfolio. It was a time when they actually DID care whether or not you made your payments. The same bank that you signed up with would then service the loan. If they did sell the loan, they would sell the whole loan so the new company would hold the note and service the loan. Most likely, your loan would get sold, you wouldn’t like the new company, some new procedures would be introduced, and a payment or two would get messed up.

Today, it’s completely different.

Your loan is sold immediately after closing and the servicer of the loan is separated from the actual dollars and cents of the loan. So now, there are two parts to the mortgage process. One is the origination side on the mortgage (they focus on new customer acquisition) and the other is the servicing (they focus on after sale activities). The Loan officer fills out the application and submits the documents to underwriting and gets you to the closing table AND gets paid a fee for the work.

Then, that loan closes and the servicing side takes over. They prepare your monthly statements, field calls, cash checks, etc. AND get paid for the work.

Here’s the bottom line: the person you are speaking with does not own the loan. Instead, they are servicing the loan.

You are not the customer of the lender; the servicer is a customer of the investor that bought your mortgage.

What does that mean?

It means the people you call are nothing more than a debt collector. You understand what debt collectors want and how they make their money, right?

For instance, if you were the customer of the bank and were unhappy with the service, you would hope that you can easily switch, like going from Direct TV to Comcast. However, with your mortgage, once you’ve signed the papers, you’ve just been demoted from Customer to Borrower. What this means is that you are no longer a customer, you won’t be able to easily switch, and the bank has now captured you as their revenue stream.
2) … “They can’t foreclose on me, I’m upside down, and they will lose money”

This is the all-time favorite because we hear this one just about every day.

Many people think that just because there is no equity or because they are upside down on a property, that it is better for the lender to keep them in the house. Absolutely NOT true.

They would, on the contrary, prefer to foreclose on the property. Here’s the process:

Your loans are sliced and bundled up with other sliced up loans and sold. It went from a loan to a stock. Now, these loan slices are then sold to entities, pension funds, mutual funds, etc. So, your loan has a 98% better chance of being owned by the retired teachers’ pension fund of South Carolina than it does by Bank of America.

When they bought your loan, they bought it at 60 cents on the dollar. In most cases, the bank can foreclose on your home, take it over, kick you out, clean it up, and then sell it at a 25% discount and still make profit. In fact, the sooner the lender forecloses the better because there are fewer risks involved.

Investors know that over 60% of loan modifications fail. For investors, it’s not IF it fails, it is WHEN it fails, so timing is critical. In perspective, investors are probably much better off foreclosing now than losing money every month for the next two years and getting less than they could if they were to foreclose today. When you do the math, it’s a no brainer decision.

Now the people who you talk with on the phone, the servicer, get paid for any fees associated with the foreclosure process. Do you think they would put their thumbs on the scale when it comes to these fees? The people on the phone will not lose money.
3) … “The lender doesn’t want my house. They’re a bank; they are not in the business to own my home. They came right out and said it on the phone.”

If that’s true, then why foreclose at all? If that’s true, why have there been over 9,000,000 foreclosures nationwide and why do loan modifications have less than a 5% success rate?

First of all, the lenders have field representatives that can take pictures, change locks, and winterize the property. Next, they have REO departments whose sole purpose is to take on the foreclosed inventory. They have construction crews that fix and rehab properties. They have title companies which allow them to insure they have the right documentation that they are the owners of the property and have a clean title. They have relationships with real estate agents, appraisers, and auction houses to get the house sold.

Lenders are fully equipped to take back any property in any condition at any time. In fact, there is no industry or group of companies that’s better prepared to own a home than the banks themselves.

They’ve had 9 million chances to get it right…

These fortune 100 companies have resources and they have the funds to hire an aggressive law firm to go against any homeowner.

How many times in the past have you negotiated against a fortune 100 company’s law firm with your house on the line and won?

The bank is in the business to own your home and just because they figured out it’s more profitable to take your home instead of help doesn’t mean we have to let them.

There is too much at stake for the average individual to try to properly address all the issues of the foreclosure process.

People make mistakes off of bad information from well meaning people or because of the lack of a coherent strategy. They fail to take any action and find themselves unnecessarily homeless and/or still hopelessly in debt.
4) … “The lender will work for me to find the best solution.”

The instructions given were to call your lender and your local government centers. Unfortunately, it seems that these federal programs don’t work, at least not in favor of the average person just trying to keep a roof over his head. The loan modification process can be very complicated, frustrating, and downright belittling.

Here are the top 4 complaints:

1) Losing important documents (sometimes multiple times)

2) Not responding to borrower’s needs, questions and concerns, emails, phone calls

3) Outright lies, mistakes or misrepresentations about the availability of loan modifications

4) Promising loan modifications and then proceeding with foreclosure anyway

First of all, you have to get the lender’s attention. By now, you’ve probably figured out that they don’t care and it appears they would rather take the house back than take your phone call. Depending on the source, you have less than a 1 in 20 chance of success for a permanent modification.

If you have a 5% chance of something, you better start thinking about your back up plan. The servicers are over worked and understaffed. Servicers for BOA get over 100,000 calls per day; one person may even be assigned and responsible for handling up to 500 loan modification files.

Makes you wonder why they don’t just add more staff doesn’t it? Well, the servicer gets paid a very small percentage of your monthly payment. So, when you stop making your payment, how can they make money off you now? Here’s how:

The servicers get to charge and keep fees on delinquent loans. So as long as you are late, they can continue to pad the loan with junk fees. Bottom-line: the more often you make a late payment, the more money servicers could potentially make.

Can you see now why Banks tell you that you have to be late before you can enter a Loan Modification Program?

That’s why trial modifications go on for so long. They get some money for the partial payment, but they can still charge 100% of the late fees and then if they foreclose on your property, they can also get the fees associated with the foreclosure process.

So for instance, if a servicer wanted to maximize his profits, the best case scenario would be that he would put you on a trial payment, string it out for a while so he could rack up fees, get paid for it, and then take the house anyway.

We talked with some servicers and these people are principally looking for any reason to deny a file, a denied file is a closed file and their job is to close files. Chances are they don’t have the time to listen to your story; they stopped listening to stories in 2008. If you get somebody new they will probably listen for the sake of common courtesy. But even then, you’re likely just speaking to hear yourself talk. If there is ANY reason to deny your file…they will do it.

Many servicers are evaluated based on how many files they resolve. Once the big rubber “denied” stamp hits the file, it’s just one more phone call they don’t have to take. Remember, their customer is the investor (NOT YOU) who profits from you losing your home. It is true they have to hit some loan modification numbers to keep in good standing, so they most likely will look for the low hanging fruit.

As an example, if you don’t know what they need and how the package needs to look, you’ll probably get denied. Proving you’re broke doesn’t help and proving you make the payment doesn’t help either.

Don’t you think the 9,000,000 people who got foreclosed on before you and lost their home have asked the bank if they could just make lower payments for a little while? Most definitely they have and failed.
5) … “I’m home free…I’m going through my trial portion of the modification.”

Many people who sought help under a federal program that was created to keep them from losing their homes are instead getting saddled with huge, unexpected bills.

Lenders routinely approve short-term “trial” loan modifications that reduce payments for desperate borrowers under the umbrella of the Obama administration’s Home Affordable Modification Program. But during the trial plan, the lenders continued to count the mortgages as delinquent or in default. Now instead of granting permanent modifications, lenders often are reinstating the original loan terms and demanding big back payments.

A family in St. Louis Park, Minnesota, was ecstatic when they were offered in November of 2009 to cut their monthly mortgage payments by about 25% under a trial modification. One of the spouses was out of work with a neck and back injury and with the other at 60% of his past income, they were having difficulty making ends meet.

After 19 consecutive trial payments and a year and a half later, the modification was denied and that they would have to pay $24,228 to bring their mortgage current to avoid foreclosure.

“We did everything that was asked of us, and it only pushed us deeper in the hole.”

We’re seeing a lot of really sad stories of families who thought they were getting help only to discover they’re $20,000 or $30,000 behind and still about to lose their house.

This is a scary proposition for any family to have to go through and it’s even more stressful when there’s no one readily available to provide families the necessary information to help them navigate the chaos and move on with their lives.

Going through foreclosure one time does not make one an expert. Being a real estate agent for a number of years does not make one an expert. Having a law degree does not make one an expert in this subject matter. If you are going to get advice about foreclosure, be sure to qualify them. Understand that having an opinion does not make one an expert…when it comes to foreclosure, everyone has an opinion.
The government is not your enemy or your savior…no one cares about your home MORE than you.

The Cover Your Assets 21 team, comprised of financial crisis strategist, Todd Rooker, foreclosure defense expert, Craig Nester, and Real Estate Professionals, Jason & Derek Walgrave, have successfully navigated over 500+ MN families to a soft landing through loan modifications, short sales, deed in lieu, financial education, and other cutting-edge management strategies.

They are LIVE on AM1280-The Patriot every Saturday from 8-9am CST, providing consumers with the best unbiased financial and real estate information available, empowering them to confidently make better decisions, understand their options, and overcome challenges related to these critical issues.