Posts Tagged ‘Obama’
NAR: Bill could speed up short sales
Homeowners underwater on their mortgage may find relief through a bill strongly supported by the National Association of Realtors®. The bill, if passed by Congress and signed by President Obama, would force lenders to respond to a short sale request within 45 days. The legislation, H.R. 6133, “Prompt Decision for Qualification of Short Sale Act of 2010,” was filed yesterday in Congress by U.S. Reps. Robert Andrews (D-N.J.) and Tom Rooney (R-Fla.). “The short sale, which requires lender approval, is an important instrument for homeowners who owe more than their home is worth,” says NAR President Vicki Cox Golder. “While the lending community has worked to improve the size and training of their short sales staffs, they still have a long way to go on improving response times. As the leading advocate for homeownership issues, NAR believes that quicker attention to the short sales process is vital to help homeowners … as well as the nation’s economy.” The number of potential short sale properties is rising across the country. According to NAR data, in the second quarter of 2010, four states have a significant share of properties with short-sale potential: Florida has 27 percent, Nevada 32 percent, California 28 percent, and Arizona 24 percent. “Unfortunately, homeowners who need to execute a short sale are severely hampered because lenders (loan servicers) are unable to decide whether to approve a short sale within a reasonable amount of time,” Golder said. “Potential homebuyers are walking away from purchasing short sale property because the lender has taken many months and still not responded to their request for an approval of a proposed short sale price. Many consumers have mentioned that the delay in short sale price approval exceeds 90 days, and in many cases never arrives.” Golder says she commends Reps. Andrews and Rooney for their efforts on the bill and urges Congress to pass the bill quickly. © 2010 Florida Realtors®
Loan modification snags spark suits
Anthony and April Soper’s financial troubles were only starting last October when they applied for a mortgage adjustment through the Obama administration’s Home Affordable Modification Program. Bank of America, their mortgage servicer, put them on a HAMP trial payment plan in December that cut their monthly payment by more than half from almost $4,000 to about $1,826. They say they made their reduced monthly payments early and did everything else that was asked of them. But they didn’t get a permanent modification, and they say they don’t know why. Instead, according to a lawsuit they’ve brought against Bank of America, they are now more than $8,000 behind on a mortgage that had been current 12 months ago. Each of their credit scores has dropped by nearly 100 points. And, they allege, Bank of America has threatened them with foreclosure. “We jumped through all their hoops, and they did nothing but cause us heartache,” says April, 41. Whether the Lake Stevens, Wash., couple keep their home may hinge on the outcome of a legal strategy that aims to join struggling homeowners with similar experiences in the HAMP program in a class-action lawsuit against the nation’s largest bank. On Sept. 30 in Nashville, a federal court hearing is scheduled to consider consolidating the Sopers’ case with more than a dozen others against Bank of America. Similar lawsuits, also seeking class-action status, are pending against other major servicers such as JPMorgan Chase and Wells Fargo. Taken together, the cases threaten to amplify a growing public frustration with mortgage servicers’ treatment of HAMP borrowers and HAMP’s modest results. Permanent modifications, which lower mortgage payments to 31 percent of a borrower’s pretax monthly income for five years, have been given to only about a third of the 1.3 million borrowers in trial plans since the program’s launch in April 2009. Most of the lawsuits allege that the three- or four-month trial payment plans are contracts, and that Bank of America and other servicers broke them by not giving permanent modifications to homeowners who made their trial payments on time and provided the necessary documentation. Servicers have asked courts to dismiss some of the cases, saying the trial plans are not contracts. Bank of America, which says it plans to seek dismissal of the Soper case, argues in a court filing in a similar case that it must consider borrowers for a HAMP modification, but that it has discretion in granting permanent modifications. The bank also argues that homeowners have no case because courts have dismissed earlier HAMP-related lawsuits against mortgage servicers. Those cases claimed that in denying some homeowners modifications, the servicers had breached the contracts they made with the Treasury Department when they agreed to participate in HAMP. Courts said homeowners could not sue on those grounds because they weren’t parties to the contracts between the government and the servicers. Lawyers for homeowners say they are now making a different legal argument: that Bank of America and others broke contracts made directly with homeowners. “Borrowers have said we should be able to enforce the contract between Treasury and mortgage servicers, and many courts have rejected that. Our cases are the first filed that touch on a contract between servicers and borrowers,” says Kevin Costello, a lawyer with Roddy Klein & Ryan in Boston, which represents homeowners in cases against Bank of America, JPMorgan Chase and Wells Fargo. “This litigation is spreading all across the country. People have been relying on a promise all along, and then they get a denial. Then they find themselves in that much worse of a hole,” he says. Many homeowners could be affected: Nearly 620,000 trial modifications since spring 2009 have been canceled, according to an Aug. 20 Treasury report. Chronicles of delays The lawsuits allege servicers are purposely denying permanent modifications and keeping loans in default so lenders can profit from heftier late fees and other charges. Court filings provide detailed chronologies of borrowers who allege that over periods of months, they repeatedly sent banks requested documents that the banks said they didn’t receive, made inquiries that went unanswered, and received promises of help that were later contradicted or denied by other representatives. “Bank of America has serially strung out, delayed, and otherwise hindered the modification processes that it contractually undertook to facilitate when it accepted” billions of dollars in government bailout funds in 2008, the Sopers’ complaint alleges. By failing to live up to its obligations, according to the court filing, “Bank of America has left thousands of borrowers in a state of limbo – often worse off than they were before they sought a modification from Bank of America.” The Sopers’ complaint alleges that Bank of America customer service representatives are instructed to mislead homeowners who call to inquire about loan modifications they’ve applied for. The complaint, citing information provided by unnamed former employees, says “representatives regularly inform homeowners that modification documents were not received on time or not received at all when, in fact, all documents have been received.” When homeowners are denied permanent modifications, even those who were current before going on reduced-payment trials are considered in default, and servicers tell them they must immediately pay the difference between their trial payments and their higher former payments to avoid foreclosure, according to the Sopers’ complaint and others. Borrowers’ mortgage debt in default rises further the longer they stay in trial plans. By making trial payments during and after the plan’s scheduled end, the Sopers’ complaint alleges, they “forgo other remedies that might be pursued to save their homes” such as restructuring their debt by filing for bankruptcy, or pursuing other ways to deal with their default, such as selling their homes. Foreclosure proceedings have started against some borrowers while they were on trial plans, violating a Treasury directive, according to the lawsuits. Homeowners’ credit scores have also been damaged when servicers cancel trial plans, then report the amounts in default to credit bureaus. Some court filings claim bank employees have demanded upfront fees to start consideration of a modification – in violation of HAMP rules – or told homeowners to stop paying mortgages in order to start a trial modification. The Sopers’ complaint alleges an unnamed homeowner was illegally asked to pay $1,400 upfront to Bank of America to be considered for a modification. In another case, Alex Lam of New York alleges he was told he could only be considered for a HAMP trial modification if he stopped paying his mortgage for several months, according to a lawsuit filed in U.S. District Court in Brooklyn against JPMorgan. He skipped two months of payments in 2009 and says he was denied a permanent modification. JPMorgan declined to comment. Homeowners’ lawyers say there is no effective way to appeal mortgage servicers’ decisions because Treasury has no ability to overturn a decision. Watchdogs’ criticisms Government watchdogs, too, have raised similar criticisms about the HAMP program, as well as about servicers’ performance and Treasury’s oversight. The Congressional Oversight Panel, which oversees the government fund that pays for HAMP, said in an April report it “is deeply concerned about the unacceptable quality of the denial and cancellation reasons, and strongly urges Treasury to take swift action.” A Government Accountability Office report in June found servicers were erroneously denying permanent modifications to some homeowners because servicers were inaccurately applying a formula used to determine if the value of modifying the mortgage was greater than the proceeds from foreclosing. The number of homeowners who had been wrongly denied could “range from a handful to thousands.” When errors have been found, Treasury says, it has made servicers go back and fix problems, and re-do their work as a check on their decision-making. It also says that 45 percent of those who started trials but were ineligible for permanent adjustments received an alternative modification through their servicer. Fewer than 2 percent have gone to foreclosure sale, according to Treasury. Some homeowners say they’ve already lost their homes to foreclosure because a permanent HAMP modification was denied to them. Jennifer Voltaire, 33, of Medford, Mass., alleges Wells Fargo approved her for a trial HAMP modification, which lowered her payments starting in December 2009, according to court filings in U.S. District Court in Massachusetts. Voltaire is a co-plaintiff in the case. But after making regular payments, Voltaire was told in May that she was being taken out of the HAMP program and was $40,000 in default, the lawsuit alleges. After she protested, Wells Fargo agreed to reconsider her for a HAMP modification, according to the complaint, but in July, the bank took possession of the home. “I was literally crying my eyes out,” Voltaire says. “I put everything I have into this house, into getting my kids out of the projects. That’s the part that really hurts. My kids could look at me like I failed.” Wells Fargo agreed not to sell her house pending further court action. Voltaire is still staying there and making her trial plan payments. In its motion to dismiss the lawsuit brought by Voltaire and others, Wells Fargo said the plaintiffs have not adequately shown that their trial modifications were contracts to enter into permanent modifications. It says homeowners benefited from being able to make reduced monthly payments while [...]
New mortgage-oversight bureau will need time to settle in
The financial reform bill signed into law by President Obama may look like a giant cornucopia of helpful changes for homebuyers and loan applicants, not the least of which will be the creation of a powerful Consumer Financial Protection Bureau to ride herd on the mortgage lending industry. But how soon will anyone see hard, tangible results of the law? When will the bureau begin writing new rules and cracking down on problems and abuses in everything from home real-estate settlements to credit scores to “truth in lending” and equal credit opportunity? At the moment, it looks like it will be a while, even if the president nominates a director for the consumer protection bureau quickly and the Senate confirms her or him without partisan bloodletting or a filibuster. On the other hand, mortgage industry leaders say some of the core changes promised by the legislation are either already in effect, such as stricter underwriting and documentation practices, or should be soon. Here is a quick overview of what to expect and when: The reform law itself contains deadlines for action, but they may not be as immediate as some consumers would prefer. Treasury Secretary Tim Geithner is carrying the ball, and he has had a team at work for weeks drafting the basic structure of the new consumer bureau, which will eventually be housed inside the Federal Reserve. Under the law, Geithner has a deadline of Sept. 19 to designate a “transfer date” when key legal and regulatory authorities shift from such agencies as the Federal Trade Commission, the Department of Housing and Urban Development, and the Fed to the new consumer bureau. In effect, that will be the date the bureau, with initial funding projected at $500 million a year, springs to life with a staff and full set of teeth. By law it must be no earlier than next Jan. 17. At a White House briefing, Deputy Treasury Secretary Neal Wolin asked for understanding about the huge task ahead of creating an entirely new agency that must take over responsibility for consumer protection statutes on the books for decades. “This will take some time,” he said, “but it’s worth it.” Consumer advocates say they get Wolin’s point but still expect the White House to move the new agency into functional shape fast. Travis Plunkett, legislative director for the Consumer Federation of America, said, “Yes, they need to do this right. But the sooner they can get the doors open, the sooner the public will feel the tangible benefits.” What sort of tangible benefits might begin to flow once the bureau takes official form? One of the earliest and most widely anticipated changes in the real estate field will involve appraisals on homes. The law requires the agency to quickly come up with new interim rules on appraisal accuracy and independence designed to replace the controversial “Home Valuation Code of Conduct” rules imposed by Fannie Mae and Freddie Mac in 2009. That alone should bring relief to buyers, sellers, realty agents and builders who have complained about inept, deal-breaking appraisals fostered by the code. In a companion move, the reform law also sets standards for appraisal management companies that function as third-party vendors for many lenders, and who have been criticized for assigning valuations to inexperienced appraisers who are unfamiliar with local conditions and willing to work for low fees. Another early tangible benefit: A national hotline system that will allow aggrieved mortgage borrowers and others to lodge complaints and alert the bureau to unfair and deceptive practices. The new agency will also assume control of a key consumer protection statute known as RESPA (the Real Estate Settlement Procedures Act) that seeks to prevent under-the-table kickbacks and padded fees by lenders, title companies, realty agents and builders. RESPA governs the transaction cost disclosures that millions of borrowers receive at application the “good faith estimates” as well as the standard closing form known as the HUD-1. Among the early projects expected from the new bureau will be a rewrite and streamlining of the existing home purchase disclosures and a tie-in with a revised truth-in-lending disclosure, possibly all wrapped up in a single plain-language package. Also high on the to-do list: Rules requiring all loan officers to make good faith verifications that mortgage applicants possess the ability to repay the loans they’re seeking. This may sound pretty basic, but it was an alien concept inside some mortgage companies during the heydays of the boom. Not only did they not worry about who could afford what. There was no federal watchdog on the scene to make sure they did. Now there will be. © 2010 Chicago Daily Herald, Ken Harney, via ProQuest Information and Learning Company; All Rights Reserved. kenharney@earthlink.net
$656.8 million to help struggling homeowners on hold
Florida has $656.8 million to help struggling homeowners, but distribution of the federal aid is likely on hold statewide until early 2011. The money, awarded through the Obama administration’s “Hardest Hit” program will pay the mortgage of unemployed or underemployed borrowers for up to 18 months as they seek new jobs or training. Originally announced in February, Florida got another infusion of hardest hit money last week that will increase those helped from 12,000 to 20,000. The Florida Housing Finance Corporation is now working to amend its plan for the money and hopes to submit it to the Treasury Department for approval by Sept. 1. The original plan had relied on lenders to waive or delay nine months of mortgage payments if a homeowner received nine payments from Florida’s hardest hit money. On Thursday, Florida housing officials said they could not get lenders to sign on for the state program. A federal plan that requires banks to forgive, temporarily or permanently, 90 days worth of mortgage payments for unemployed homeowners who seek a loan modification was announced after Florida had developed its plan. Banks didn’t want to agree to both mortgage forgiveness plans. “With that intervening federal program, we were unable to get the match from the lenders we were looking for,” said David Westcott, director of homeownership programs for the Florida Housing Finance Corporation. Florida’s new plan will pay up to the full 18 months for eligible borrowers, but the delay to get approval means a required 90-day trial program is also being pushed back. That trial, expected to begin this fall, will be held in Lee County, with only Lee County residents eligible. Despite the holdups, Westcott said the state is happy to have the money. “This means more money to help more people for a longer period of time,” he said. For information on the hardest hit fund, go to www.floridahousing.org. Copyright © 2010 The Palm Beach Post, Fla., Kimberly Miller. Distributed by McClatchy-Tribune Information Services.
Gov’t likely to keep big mortgage market role
Keeping Fannie Mae and Freddie Mac in business will cost taxpayers billions. But getting the federal government out of the mortgage business would cost homebuyers dearly in the form of higher interest rates. The Obama administration began tackling the dilemma last week at a public conference on the future of the mortgage system. Fannie and Freddie lost a combined $9 billion in the April-to-June quarter and have needed more than $148 billion to stay afloat since the government rescued them nearly two years ago. Figuring out what to do with Fannie and Freddie could take years and involves a more difficult question: How much should the government do to subsidize the housing market? The government has helped make mortgages attractive to Americans for decades with a range of policies, from allowing homeowners to deduct mortgage interest payments to backing loans that make long-term fixed-rate mortgages widely available. Now, Fannie and Freddie are facing scrutiny for the billions that taxpayers have covered for the bad loans made during the housing boom. And the administration and Congress are under pressure to address Fannie and Freddie’s role that contributed to the mortgage crisis after leaving that out of the broader financial regulatory overhaul. Some would like the government to scale back its support for Fannie and Freddie to give the private sector a chance to compete. But others say ending it is unrealistic because it would make the 30-year fixed rate mortgage less available or more expensive. “When Congress overhauls the housing finance system, it’s going to have to preserve something close to the status quo,” said Jaret Seiberg, an analyst with Concept Capital’s Washington Research Group. “Our whole housing system is built upon the ability of borrowers to get 30-year fixed-rate mortgages. You just can’t remove that product from the market.” Without the government’s backing, banks would prefer not to make loans that leave interest rates fixed for more than five years. They don’t want to take the risks that interest rates will skyrocket, leaving them with an unprofitable loan a decade later. Fannie and Freddie buy home loans from lenders, package them into bonds with a guarantee against default, and sell them to investors. The pair nearly collapsed two years ago under the weight of soaring foreclosures and defaults. On Monday, Freddie said it lost $6 billion, or $1.85 per share, in the April-to-June period. The company lost $840 million, or 26 cents a share, in the same quarter last year. And it asked for an additional $1.8 billion from the federal government, bringing its total request to $63.1 billion. There are numerous ways to restructure the mortgage system, ranging from a fully privatized system to one totally controlled by the government. Here’s a look at some of the options: • A fully private system: Fannie and Freddie would be eliminated and private lenders would take over, either holding loans on their books or selling mortgage bonds. But the market for mortgage securities issued without any government backing has been virtually dead since the housing bust. It’s unclear whether it can come back. • A semi-private system: Fannie and Freddie would be dissolved. Their function would be assumed by private companies, which would apply for permission to issue government-backed mortgage securities. They would pay the government for the ability to do so, creating a government-run insurance fund to absorb losses if the market went bad. This arrangement would ensure 30-year loans are available even during bad economic times and limit the damage to taxpayers for future meltdowns. Still, mortgage rates could rise under this scenario, and smaller banks might not like this because it could increase the power of the nation’s biggest banks. • A hybrid system: Fannie and Freddie would continue to exist, but would compete against other companies that would issue government-backed mortgage securities. • A government-run system: Fannie and Freddie would be folded into the government. This option is unlikely because it would further balloon the already-expanding federal debt. Experts say Congress is likely to choose a semi-private or hybrid system. “In the end, the politics are going to dictate that some sort of guarantee remains,” said Republican economist Douglas Holtz-Eakin, a former adviser to Sen. John McCain’s presidential campaign. Obama administration officials are giving only vague hints about where they stand. Treasury Secretary Timothy Geithner said last month the administration wants to “bring fundamental change” to the mortgage market but offered few specifics. But he hinted that he sees some role for the government. Copyright © 2010 The Associated Press, Alan Zibel, AP real estate writer. All rights reserved. This material may not be published, broadcast, rewritten or redistributed. Related Topics: Mortgages
Administration’s Housing Bailout: The Big Disconnect
I spent the bulk of the morning sweltering outside the Washington DC Convention Center, as a few thousand sign-wielding housing advocates waited for President Obama's motorcade.
Congress extends homebuyer tax credit and flood insurance
The U.S. Senate passed two bills last evening previously passed by the House. Both bills still need President Obama's signature to become law, but that's expected to happen quickly. Homebuyer tax credit The Senate passed HR 5623, which extends the mandatory closing date to qualify for the homebuyer tax credit. The contract deadline does not change - homebuyers must have a contract signed by April 30, 2010 (an exception for active duty military) - but the previous closing deadline of June 30, 2010, has been extended to Sept. 30, 2010. The National Association of Realtors estimates that the approved bill will benefit more than 14,000 deals in Florida. National Flood Insurance Program Congress once again reauthorized a short-term extension for the National Flood Insurance Program to Sept. 30, 2010. The bill, HR 5569, makes the program retroactive to May 31, 2010, the date the program went on hiatus.
Obama Administration’s Housing Scorecard
Is the U.S. Department of Housing and Urban Development's new "Monthly Housing Scorecard," released this morning, really a true assessment of all the administration's work this year, and the current grade level of the housing recovery?
