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Obama proposes $5-10 billion for home refinancing
By Reuters
President Barack Obama on Wednesday called on Congress to approve a $5 billion to $10 billion effort to help U.S. homeowners refinance as part of a wider package of proposals to shore up the depressed housing market.
Obama had sketched out the proposals in his State of the Union address last week, including a tax on banks to pay for the plan that Republicans quickly rejected.
The White House offered more details on Wednesday ahead of a speech by Obama to expand on his initiative, which some Republicans have derided as an election-year ploy.
Nearly 11 million Americans are underwater on their mortgages, meaning they owe more than their homes are worth. Millions more have lost homes to repossession in states that will be up for grabs in 2012.
"While the government cannot fix the housing market on its own, the president believes that responsible homeowners should not have to sit and wait for the market to hit bottom to get relief," the White House said in a statement.
The White House is seeking to contrast Obama's stance with that of Republican presidential front-runner Mitt Romney, who has said U.S. foreclosures should be allowed to run their course.
The next contest in the state-by-state battle for the Republican nomination is in Nevada, the state with the highest rate of foreclosure filings for the past five years.
The White House said the refinance program would be run by the Federal Housing Administration. The FHA has already been hard hit by rising defaults on mortgages it had insured, and its cash reserves reached a record low last year.
Many Republicans are likely to resist a larger role for the agency out of concerns taxpayers could be left on the hook for losses.
Obama's proposal, which needs congressional approval, would be open to borrowers who have been current on their payments for the last six months and have no more than one missed payment in the prior six months.
The administration also wants to broaden its Home Affordable Refinance Program, which seeks to provide refinancing options to underwater borrowers who have no equity in their homes.
The White House said the housing regulator overseeing Fannie Mae and Freddie Mac has exhausted its efforts to make HARP more widely accessible to lenders and borrowers, and now it will ask Congress to make changes. Among those requested changes, it will seek to eliminate the costs of appraisals.
Copyright 2011 Thomson Reuters.
White House wants to convert foreclosed houses to rentals
By Diana Olick , cnbc.com
The Obama administration, in conjunction with federal regulators and led by the overseer of Fannie Mae and Freddie Mac, are very close to announcing a pilot program to sell government-owned foreclosures in bulk to investors as rentals, according to administration officials.
There are currently about a quarter of a million foreclosed properties on the books of Fannie Mae, Freddie Mac and the Federal Housing Administration (FHA) and millions more are coming.
The foreclosure processing delays of last year created a mammoth backlog of properties yet to be processed, which are just now being re-started. One of the initiatives of this program is for the federal government to be in the position to mitigate and manage any new wave of foreclosures, sources say. Late stage delinquencies still in the pipeline number close to two million, according to a new report from Lender Processing Services. Foreclosure starts outnumber foreclosure sales by two to one, and, "the trend toward fewer loans becoming delinquent, which dominated 2010 and the first quarter of 2011, appears to have halted," according to LPS.
Knowing this all too well, the Treasury Department, Federal Reserve, HUD, FDIC, Fannie Mae and Freddie Mac, with their conservator, the Federal Housing Finance Agency (FHFA) at the helm, are engaged in a collaborative effort to face this new wave of foreclosures head on and figure out a way to keep these properties from sitting heavily on the books of the government and sitting empty in the nation's neighborhoods.
FULL STORY
As home prices fall, more borrowers walk away
By John W. Schoen, Senior Producer
When David Martin and his wife bought their north Seattle condo five years ago, they figured they had plenty of time to downsize if they needed to before they retired.
Now, with the property worth roughly $60,000 less than the balance of their mortgage, Martin, 68, has been giving serious thought to just walking away, a process lenders call "strategic default."
"Guilt and morality are one side, and objective financial analysis are on the other side," Martin said. "They're coming to two opposite conclusions. I wonder how many other people are struggling with the same question."
Strategic defaults like the one contemplated by Martin are on the rise. A survey last year by two Chicago-area finance professors, Paola Sapienza at Northwestern University and Luigi Zingales at the University of Chicago, found that roughly three out of 10 mortgage defaults in 2010 were by homeowners who could afford to make their payments, up from 22 percent in 2009.
FULL STORY
Bank of America Gets Pad Locked After Homeowner Forecloses On It
Collier County, Florida
Instead of Bank of America foreclosing on some Florida homeowner, the homeowners had sheriff's deputies foreclose on the bank.
It started five months ago when Bank of America filed foreclosure papers on the home of a couple, who didn't owe a dime on their home.
The couple said they paid cash for the house.
The case went to court and the homeowners were able to prove they didn't owe Bank of America anything on the house. In fact, it was proven that the couple never even had a mortgage bill to pay.
A Collier County Judge agreed and after the hearing, Bank of America was ordered, by the court to pay the legal fees of the homeowners', Maurenn Nyergers and her husband.
The Judge said the bank wrongfully tried to foreclose on the Nyergers' house.
So, how did it end with bank being foreclosed on? After more than 5 months of the judge's ruling, the bank still hadn't paid the legal fees, and the homeowner's attorney did exactly what the bank tried to do to the homeowners. He seized the bank's assets.
"They've ignored our calls, ignored our letters, legally this is the next step to get my clients compensated, " attorney Todd Allen told CBS.
Sheriff's deputies, movers, and the Nyergers' attorney went to the bank and foreclosed on it. The attorney gave instructions to to remove desks, computers, copiers, filing cabinets and any cash in the teller's drawers.
After about an hour of being locked out of the bank, the bank manager handed the attorney a check for the legal fees.
"As a foreclosure defense attorney this is sweet justice" says Allen.
Allen says this is something that he sees often in court, banks making errors because they didn't investigate the foreclosure and it becomes a lengthy and expensive battle for the homeowner.
CBS News
No end in sight to foreclosure quagmire
A special Nightly News/msnbc.com report on the mortgage mess
Four years after a wave of rogue mortgage lending sent the U.S. housing market into the worst collapse since the Great Depression, the devastating flood of resulting foreclosures shows no sign of abating. In some ways, the problem is getting worse.
House prices are falling again, forcing more homeowners “underwater” — owing more than their house is worth. Lenders’ shoddy document practices have brought widespread court challenges, slowing the process and leaving millions of homeowners in limbo.
And the foreclosure crisis continues to weigh heavily on the fragile economy.
“Right now, it’s the second-biggest drag on the economy after the surge in oil prices,” said Moody's Analytics chief economist Mark Zandi.
Already some 5 million homes have been lost to foreclosure; estimates of future foreclosures range widely. Zandi, who has followed the mortgage mess since the housing market began to crack in 2006, figures foreclosures will strike another three million homes in the next three or four years.
Congress and the White House have run out of ideas to save those homes, he said.
"There's no political appetite to do anything," he said. "So we're on our own."
Home foreclosures sank to three-year low in January
Lenders took longer to move against homeowners behind on loan payments
LOS ANGELES — Fewer U.S. homes entered the foreclosure process in January than in any month in more than three years, the latest sign lenders are taking longer to move against homeowners who have fallen behind on mortgage payments.
The number of homes that received an initial default notice fell 1 percent last month from December and tumbled 27 percent from January last year, foreclosure listing firm RealtyTrac Inc. said Thursday.
Scheduled foreclosure auctions also fell to the lowest level in two years, the firm said.
The delays stem partly from foreclosure paperwork problems that came to light last fall, leading many lenders to revisit thousands of foreclosure cases, especially in states such as Florida that require foreclosures to be approved by a judge.
Some lenders that put foreclosure actions on hold temporarily last year have since resumed, but at a more measured pace, causing a decline in the foreclosure-related notices sent to households last month. Banks also have been letting borrowers who have missed payments stay in their homes longer so they can delay adding to their backlog of bad loans.
Banks repossessed 1 million homes last year — and 2011 will be worse
First quarter of the year will likely show a rebound in foreclosure activity
By JANNA HERRON
The Associated Press
NEW YORK — The bleakest year in foreclosure crisis has only just begun.
Lenders are poised to take back more homes this year than any other since the U.S. housing meltdown began in 2006. About 5 million borrowers are at least two months behind on their mortgages and more will miss payments as they struggle with job losses and loans worth more than their home's value, industry analysts forecast.
"2011 is going to be the peak," said Rick Sharga, a senior vice president at foreclosure tracker RealtyTrac Inc.
The outlook comes after banks repossessed more than 1 million homes in 2010, RealtyTrac said Thursday. That marked the highest annual tally of properties lost to foreclosure on records dating back to 2005.
One in 45 U.S. households received a foreclosure filing last year, or a record high of 2.9 million homes. That's up 1.67 percent from 2009.
FULL STORY
U.S. foreclosures jumped in the third quarter
Newly initiated foreclosures up more than 30 percent
By Dave Clarke
WASHINGTON — U.S. home foreclosures jumped in the third quarter and banks' efforts to keep borrowers in their homes dropped as the housing market continues to struggle, U.S. bank regulators said on Wednesday.
The regulators said one reason for the increase in foreclosures is that banks have "exhausted" options for keeping many delinquent borrowers in their homes through programs such as loan modifications.
Newly initiated foreclosures increased to 382,000 in the third quarter, a 31.2 percent jump over the previous quarter and a 3.7 percent rise from a year ago, the Office of the Comptroller of the Currency and the Office of Thrift Supervision said in their quarterly mortgage report.
The number of foreclosures in process increased to 1.2 million, a 4.5 percent increase from the second quarter and a 10.1 percent increase from a year ago, according to the regulators.
The report, which covers 33 million loans serviced by national banks and federally regulated thrifts, also shows a sharp drop in the amount of loan modifications processed through the Home Affordable Modification Program (HAMP), the Obama administration's leading foreclosure prevention effort. HAMP loan modifications fell by almost 46 percent in the third quarter, according to the report.
Regulators noted, however, that loan modifications done by servicers outside of HAMP increased by 10 percent in the the third quarter.
Overall home retention actions taken by banks to keep borrowers in their homes dropped by 17 percent compared to the second quarter.
Rush to foreclose by Fannie, Freddie helped feed problems with legal paperwork
By Zachary A. Goldfarb and Ariana Eunjung Cha
Washington Post Staff Writers
Thursday, December 23, 2010; 12:00 AM
As the housing market came crashing down in 2008, the giant mortgage company Fannie Mae took an unprecedented step to help tackle the rising tide of foreclosures. It named an exclusive group of law firms that would help rapidly carry out the unsavory task of filing legal paperwork to remove homeowners from their homes.
Today, problems with documents handled by firms on Fannie's list - and a similar one created by its smaller rival Freddie Mac - are at the heart of federal and state probes over faulty foreclosure practices that now threaten to further undermine the housing market.
Fannie and Freddie, the largest mortgage companies, shaped the practices being challenged in courtrooms around the country. They picked law firms that could foreclose fast and paid them based on how many foreclosures they could process. Speed was essential because delays cost the companies money - and, after they were taken over by the government two years ago, meant losses for taxpayers, too.
Not only did the companies urge swift foreclosures, but in at least one case Fannie executives also greenlighted working with a firm that they knew firsthand had engaged in legally questionable practices, according to documents and interviews with lawyers and industry officials.
FULL STORY
Homeowners use 'show me the note' to fight foreclosure
By Julie Schmit, USA TODAY
Steven and Tamara Gewecke are three years behind on their mortgage payments, but they've fought off foreclosure.
The Minnesota couple refinanced in 2006 to start a business. It failed. Debts mounted. The Geweckes went bankrupt and failed to win a loan modification. But they bought time.
In 2009, the Geweckes filed a lawsuit to block their foreclosure. At the heart of their case is this question: Who owns their mortgage?
They allege the investor trust that claims to doesn't because there's no proper record of the mortgage's transfer to the trust. Their complaint also alleges that the mortgage didn't get to the trust until 18 months after the trust closed to new loans. If US Bank, the trustee, can't prove ownership, it can't foreclose, the Geweckes say.
FULL STORY
More see walking on mortgage as a viable plan
'Strategic default' losing stigma as homes go deeper underwater
By Jane Hodges
More Americans than ever are showing a willingness to walk away from their underwater homes, according to a recent survey. Chris Kelly is a perfect example of someone who never thought she would send the bank “jingle mail.” But she did.
Until last year Kelly, a 46-year-old administrative assistant, was living in a 3,000-square-foot home she owned with her ex-husband in the Seattle suburbs.
FULL STORY
Mortgage modifications may lead to foreclosure
Owners thought banks were helping with terms, only to lose their homes
By JACOB ADELMAN - The Associated Press 2010-11-07
LOS ANGELES — Grocery store owners William and Esperanza Casco were making enough money to stay current on their mortgage, but when JPMorgan Chase & Co. offered a plan that reduced their payments, they figured they could use the extra cash and signed up.
The Cascos say they never missed a subsequent payment, so they were horrified when the bank decided the smaller payments weren't enough and foreclosed on their modest Long Beach home.
Their story is echoed across the country by people who claim — some in lawsuits — that banks didn't live up to their end of the deal when they agreed to trial mortgage modifications.
FULL STORY
Treasury Links Foreclosure Ills to Lower Housing Prices
By SEWELL CHAN October 27, 2010
WASHINGTON — The uncertainty over the legal status of foreclosed homes in the nation could further depress home prices and delay the recovery of the housing market, the Obama administration said on Wednesday.
Phyllis Caldwell of the Treasury said Wednesday that the government believed the overall risks to the financial system were slim.
The warning came at the first Congressional hearing since the magnitude of the problem gained wide attention. Distressed properties make up one quarter of all home sales.
Revelations about paperwork shortcuts and so-called robo-signed affidavits, as well as the likelihood of protracted legal battles by homeowners and inquiries by state and federal officials, will hinder foreclosure proceedings and discourage prospective buyers, a Treasury Department official said.
“Together, these two factors may exert downward pressure on overall housing prices both in the short and long run,” said the official, Phyllis R. Caldwell, chief of the homeownership preservation office at the Treasury.
FULL STORY
Fed throws its weight into foreclosure probe
By Jeannine Aversaand Alan Zibel • The Associated Press • October 26, 2010
WASHINGTON — Raising pressure on banks, the Federal Reserve is wading into the investigation of whether mortgage lenders cut corners and used flawed documents to foreclose on homes.
Major banks are already under investigation by state officials with subpoena power, who could force them to detail how they handled hundreds of thousands of foreclosure cases.
Federal Reserve Chairman Ben Bernanke added weight to those efforts Monday by saying the central bank would look "intensively" at policies and procedures that might have allowed banks to seize homes improperly.
FULL STORY
Fannie Mae Halts Law Firm's Foreclosure Work
By NICK TIMIRAOS
Fannie Mae and Freddie Mac said on Monday that the mortgage giants had suspended all activity on foreclosure cases that had been referred to a Florida attorney under investigation by state officials.
Fannie and Freddie had previously stopped referring new cases to the Law Offices of David J. Stern, of Plantation, Fla., earlier this month. On Monday, Fannie said its latest move would affect all cases that "are not already subject to a foreclosure pause" by banks and other firms that service mortgages owned by Fannie, said a company spokeswoman. Freddie Mac said late Monday it had also suspended new referrals and current activity.
Calls to Mr. Stern's firm weren't immediately returned on Monday evening.
The law firm has been at the center of allegations by the Florida attorney general's office, which has released depositions of former law-firm employees who have alleged that the firm forged notarized documents and that employees signed files without reviewing them in a bid to speed through foreclosure filings.
"In instances where we learn that a firm is not adhering to our requirements or to applicable law, we immediately engage and take appropriate action, which may include suspending or terminating the firm, and notifying appropriate law enforcement and regulatory authorities," said Fannie Mae spokeswoman Amy Bonitatibus.
Speaking to an industry convention in Atlanta on Monday, Fannie Chief Executive Michael Williams said it was important for the industry to ensure that mortgage-document problems were "fixed quickly so it doesn't create an overhang" of bank-owned property.
The Florida firm is one of nine in the state that is approved by Fannie for its servicers to use on behalf of the company. The Florida firm processed more than 70,000 foreclosures last year, and Mr. Stern was named "attorney of the year" by Fannie in 1998 and 1999, according to his biography.
—Robbie Whelan contributed to this article.
Foreclosure-document mess growing, FBI now involved
Agency looking into whether industry has broken criminal laws
WASHINGTON — The foreclosure-document crisis just keeps on growing, and now the FBI is getting into the fray.
A federal law enforcement official told the Associated Press that the agency is in the initial stages of trying to determine whether the financial industry may have broken criminal laws in the mortgage foreclosure crisis.
The official said the question is whether some in the industry were acting with criminal intent or were simply overwhelmed by events in the wake of the housing market's collapse. The official spoke on condition of anonymity because the investigation is just getting under way.
Big lenders are trying to move past the foreclosure-document crisis, saying they are now confident their paperwork is accurate. But they are facing so much organized resistance that they can't just snap up their briefcases, declare the crisis over and move on.
Consider the opposition:
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Attorneys general in all 50 states are jointly investigating whether lenders violated state laws.
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Lawyers for evicted homeowners are preparing lawsuits against major lenders.
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State judges have signaled they will review the banks' foreclosure documents with skepticism.
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Lawmakers on Capitol Hill plan to hold hearings.
The document crisis, in other words, appears far from over.
FULL STORY
Flawed Foreclosure Documents Thwart Home Sales
By ANDREW MARTIN and DAVID STREITFELD October 7, 2010
OCALA, Fla. — Amanda Ducksworth was supposed to move in to her new home this week, a three-bedroom steal here in central Florida with a horse farm across the road. Instead, she is camped out with her 7-year-old son at her boss’s house.
Like many buyers across the country, Ms. Ducksworth was about to complete the purchase of a foreclosed house when it suddenly went off the market. Fannie Mae, the giant mortgage holding company that buys loans from commercial lenders, is pulling back sales of homes that might have been foreclosed in bad faith.
“I gave up my rental thinking I would have a house,” said Ms. Ducksworth, a 28-year-old catering assistant. “Now I’m sharing a room with my son. What the hell is up with that?”
With home sales this past summer at the lowest level in more than a decade, real estate is ill-prepared to suffer another blow. But as a scandal unfolds over mortgage lenders’ shoddy preparation of foreclosure documents, the fallout is beginning to hammer the housing market, especially in states like Florida where distressed properties are abundant.
“This crisis takes a situation that’s already bad and kind of cements it into place,” said Joshua Shapiro, chief United States economist for MFR Inc., an economic consulting firm.
Three major mortgage lenders — Bank of America, GMAC Mortgage and JPMorgan Chase — have said they are suspending foreclosures in the 23 states where they first need a judge’s approval. They are also waving off Fannie Mae from selling any of the foreclosed homes whose loans they sold to Fannie.
Fannie Mae to penalize homeowners who walk away
By EILEEN AJ CONNELLY
The Associated Press
Wednesday, June 23, 2010; 3:11 PM
WASHINGTON -- Government-sponsored mortgage purchaser Fannie Mae is trying to encourage distressed homeowners to find alternatives to foreclosure by banning those who walk away from getting new loans for seven years.
Troubled borrowers who do not try in good faith to work out a deal, but have the capacity to pay, are targeted by the policy announced Wednesday.
"Walking away from a mortgage is bad for borrowers and bad for communities and our approach is meant to deter the disturbing trend toward strategic defaulting," said Terence Edwards, executive vice president for credit portfolio management.
A strategic default occurs when a homeowner stops making payments on a mortgage despite being able to do so. It has become increasingly common in communities where housing values fell sharply and homeowners are "underwater," or owe more than their houses are worth.
Fannie Mae said that in locations where the law allows, it also plans to take legal action to recoup outstanding mortgage debt from borrowers who strategically default. The company plans to instruct its servicers to monitor delinquent loans facing foreclosure and recommend cases to pursue for such judgments.
A spokesman for Freddie Mac, the other government-sponsored mortgage buyer, could not immediately say if it will institute a similar policy. Freddie Mac's current policy requires at least a five-year wait.
Fannie and Freddie were created by Congress to buy mortgages from lenders and package them into bonds that are resold to investors. Together, they own or guarantee almost 31 million home loans worth about $5.5 trillion. That's about half of all mortgages.
In announcing the new policy, Fannie Mae said homeowners who make a good faith effort to resolve their situation with their mortgage services, and those who have extenuating circumstances, will be eligible for new loans in a shorter time period, but did not detail how long the wait might be.
In afternoon trading, Fannie Mae shares fell 2.1 percent to 41 cents. Fannie Mae shares were unchanged at 48 cents. Both companies plan to delist their shares from the New York Stock Exchange because they don't meet listing requirements that they remain above $1 per share.
