OREGON REAL ESTATE ROUND TABLE

Tag: Bank of America

  • How Do You Keep Homeowners In Their Home When They Are Already Gone?, Housingdoom.com


    Half million dollar house in Salinas, Californ...
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    Once more Congress is trying to legislate the un-legislatable [It’s not a word, but it ought to be.] They want to force lenders to keep borrowers in homes: [Thanks L!]

    WASHINGTON/CHARLOTTE, North Carolina (Reuters) – Banks under fire over their foreclosure practices face twin hearings in Congress this week, at which they will come under renewed pressure to find ways to keep borrowers in their homes.

    The hearings on Tuesday and Thursday will include the first appearances by executives from major lenders like Bank of America and JPMorgan Chase since the furor over sloppy foreclosure paperwork erupted in September.

    Banks are accused of having used “robo-signers” to sign hundreds of foreclosure documents a day, a fiasco that has reignited public anger with banks that received billions of dollars in taxpayer aid during the financial crisis.

    Lenders will be pressed on whether the paperwork problems are further evidence that modifying loans is a better alternative to eviction.

    “Foreclosure should be the last option and we need to examine barriers to mortgage modifications,” Democratic Senator Tim Johnson, expected to lead the Banking Committee next year, said in an emailed response to Reuters.

    Here’s a couple of barriers that Congress needs to consider:

    1.  Many foreclosures are investor owned.  These homes do not qualify for loan mods.  Many of them were purchased at the peak, or close to it.  In many cases the owners are unable to find renters, or cannot find renters willing to pay enough to cover the mortgage.  A recent study showed that 33% of foreclosures are on investor owned properties, so that takes a lot of foreclosures out of the loan mod pool.

    2. Many homeowners in foreclosure pick up and leave.  Unemployment is now the leading cause of foreclosures.  Even with assistance to pay the mortgage, people often find themselves unable to pay their other expenses.  We know that household formation is down, but I’m unaware of any studies showing how many former homeowners are now living with friends or relatives because they can’t afford to keep the utilities paid.  L has told me that the vast majority of the foreclosures he sees are empty by the time the banks get them, and I’m certain that his experience is not unique.  We don’t know if these folks have downsized, moved in with relatives or are renting a comparable place for less, but for whatever reason, many folks are just picking up and leaving.  They aren’t interested in mods, or feel they don’t qualify.

    The loan mod programs have been a disaster, and could certainly be better managed.  However, Congress can legislate all it wants, but it’s unlikely that any loan mod program will make a significant dent in the foreclosure problem.  Too many of these homeowners can’t be saved with a loan mod.  So here’s the question for Congress: How do you keep homeowners in their homes when they are already gone?

     

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  • Jumbo Mortgages Easier to Come By, Thetruthaboutmortgage.com


    Jumbo mortgages, which seemed to go the way of the buffalo once the mortgage crisis set in, are starting to make a comeback, per data parsed by the Wall Street Journal.
    The publication said jumbo mortgage lenders originated $18 billion during the second quarter, up roughly 20 percent from the second quarter, using data from Inside Mortgage Finance.
    That might explain all those recent OneWest Bank (formerly Indymac) billboards touting “jumbo loans without the mumbo jumbo.”
    Chase Home Lending increased its jumbo loan lending by 146.2 percent in the first half of 2010, compared to last year.
    Wells Fargo increased its jumbo fundings by 47.5 percent, and PHH Corp. saw jumbo loan origination volume soar 64.6 percent during the same period.
    Of course, jumbo lending remains far below levels seen pre-boom and even early-crisis.
    Jumbo mortgages accounted for just five percent of total mortgage originations in 2009 and so far in 2010, down from about 20 percent during 2004-2007.
    Historically, jumbo loans capture about 18 percent of the market, according to Inside Mortgage Finance CEO Guy Cecala.
    Jumbo loans are those that exceed the conforming loan limit, which is currently set at $417,000, though it’s temporarily as high as $729,750, thanks to fairly recent legislation changes that created so-called jumbo-conforming mortgages.
    If you’re in the market for a jumbo loan, understand that underwriting guideline are still very tight, meaning full documentation is typically required, along with a hefty down payment.

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  • GMAC Foreclosures Included Treehouses, Forts, Crystalair.com


    HORSHAM, Penn. (CAP) – Internal memos and other documents covertly obtained by CAP News show that mortgage company GMAC‘s questionable foreclosure practices included not only the so-called “robo-signing” of tens of thousands of foreclosures on single family dwellings, but also children’s treehouses, public outhouses and in one case, an 8-year-old German Shepherd‘s dog house.

    “We’ve only audited less than one percent of GMAC’s September filings and already we’ve found so much fraudulent activity it would make Bernie Madoff roll over in his grave,” said Penn. State Attorney General Tom Corbett. “You know, if he were dead.”

    Corbett said his office uncovered one situation where a Philadelphia girl was told by her mother to go clean up her Barbies before dinner but upon arriving in the living room found the front door to her Barbie Pink World 3-Story Dream Townhouse locked and all the furniture strewn across the living room floor. “And to make matters worse, her Ken had run off with her best friend’s Barbie,” added Corbett.

    Other scenarios played out similarly. A Scranton man who asked not to be identified said his son came running into the house crying one Saturday because he tried to climb into his treehouse only to find that another boy he didn’t know was playing Matchbox cars there. Numerous attempts to bribe the boy with candy failed to get him to emerge from the treehouse.

    “And now my kid’s inside just sitting on the couch watching TV,” said the father. “If he becomes lazy and obese because of this, I’m gonna sue.”

    GMAC isn’t alone. Both Citigroup and Bank Of America have also come under fire for signing documents without fully reviewing them, which somehow extended beyond foreclosures to include other loan approvals, faked autographs on sports memorabilia, and a permission slip for one office worker’s child’s school field trip to Fred’s Museum Of Science.

    “Totally fraudulent – that science museum has been closed for months,” said Mass. Attorney General Martha Coakley. “And I’m pursuing a case against Super Duper Foreclosures, Inc. too. Something’s just not right about that.”

    Other state attorneys general are joining the fight with Corbett and vowing to put an end to the unscrupulous foreclosures, “if it’s the last thing we do” – which for many of the Democratic incumbents seeking re-election this fall, it may be.

    “What we need is a hard-target foreclosure check of every gas station, residence, warehouse, farmhouse, henhouse, outhouse and doghouse in the area,” said Iowa Attorney General Tom Miller. “Every duplicitous foreclosure means one less vote for me. Go get ’em!”

    Pundits note that President Obama has been noticeably absent from any of the foreclosure brouhaha, but administration sources say he’s still dealing with the long-term fallout from when the White House was foreclosed on President Bush in 2007. He also has reportedly stationed secret service agents inside the fort on Sasha and Malia’s play structure to ensure the first family “doesn’t fall victim to a middle-class problem.”

    “Who knew when we bailed out those people who couldn’t afford their mortgages a year and a half ago that they’d all end up in foreclosure now,” said Obama. “Not me, that’s for sure. Funny how it worked out like that.”

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  • Foreclosure Crisis Triggers Debate on Role of Mortgage Registry, by Thom Weidlich, Bloomberg.com


    On July 1, a federal judge took away Robert Bellistri’s house in Arnold, Missouri.

    Bellistri, who bought the house as an investment after it was seized for non-payment of taxes, failed to notify Mortgage Electronic Registration Systems Inc. of his purchase, the judge said. A state appeals court last year had ruled otherwise, finding Bellistri didn’t need to tell MERS, a company that lets banks electronically register their sales of home loans so they can avoid trudging down to the county land-records office.

    The case highlights a debate raging in courts on the role MERS has, if any, in home foreclosures. How it’s resolved will determine whether MERS’s involvement produced a defective process and clouded millions of property titles. A definitive ruling against MERS might slow any future bundling of mortgages into securities since the company played a role in that process.

    “MERS is the central device by which the banks have tried to opt out of the legal system and the real-property record system,” U.S. Representative Alan Grayson of Florida said in an interview. “They have taken it upon themselves, with the supposed consent of the borrowers, to violate a system of property record-keeping that we’ve had going back centuries.”

    Attorneys general of all 50 states opened a joint investigation into home foreclosures Oct. 13, saying they will seek an immediate halt to any improper practices at banks and mortgage companies. The announcement came after several banks, including Bank of America Corp., halted foreclosures in either all states or the 23 with judicial supervision of foreclosures.

    More Rounds

    MERS, whose parent company is Merscorp Inc., bills itself as a provider of “support services to the mortgage industry,” specifically tracking the servicing rights and ownership interests in mortgage loans on its electronic registry.

    Merscorp, based in Reston, Virginia, was created by industry leaders in 1995 to improve servicing after county offices couldn’t deal with the flood of mortgage assignments, Karmela Lejarde, a spokeswoman for MERS, said in an interview.

    “That bottleneck got mitigated,” she said. The company’s tagline is “Process Loans, Not Paperwork.”

    According to its Website, MERS is owned by the largest lenders in the country including Bank of America, Citigroup Inc., JPMorgan Chase & Co. and Wells Fargo & Co., in addition to Fannie Mae and Freddie Mac, which own or guarantee more than half of the $11 trillion U.S. mortgage market.

    The company’s net operating revenue last year was $32 million, she said.

    Nominee

    Under the MERS system, a borrower who takes out a loan agrees to allow the company to act as the lender’s nominee, or agent, on the mortgage or deed of trust securing the property. That means MERS holds the lien, according to the company.

    MERS continues to be the mortgagee of record as long as the note promising the borrower’s repayment is owned by a MERS member. If it’s sold to an outside entity, the assignment is recorded with the appropriate county.

    About 60 percent of newly originated loans are on the MERS system, Lejarde said. Since its inception in 1995, it has carried 66 million loans and currently has between 23 million and 25 million active loans, she said.

    “The problem with MERS is it takes a public function and puts it into a private entity that doesn’t seem to have any clear accountability,” said Alan White, a law professor at Valparaiso University in Indiana. “And it does it on legal grounds that seem tenuous.”

    Securitization

    MERS played a key role in the bundling of mortgages into securities that reached a frenzy before the economic decline of 2008, critics including Grayson of Florida said. It allowed banks to sell and resell home loans faster, easier and cheaper, he said.

    “MERS was a facilitator of securitization,” said Grayson, a Democratic member of the House Financial Services Committee.

    MERS disagrees. It was created to provide clarity and transparency and not “to enable faster securitization,” it said in an Oct. 9 statement.

    “MERS probably served a necessary purpose given the volume of securitization that went on,”Talcott Franklin, a lawyer in Dallas who represents investors in mortgage-backed securities, said in a phone interview. “But for MERS, do you know how overwhelmed the county recorder offices would have been by the volume of assignments that had to go through there?”

    Fees

    A big selling point for the company is its cost savings. It charges $6.95 for every loan registered, Lejarde said. With an average cost of about $40 for filing a mortgage assignment with local counties, MERS has saved the industry about $2.4 billion, Merscorp Chief Executive Officer R.K. Arnold said in a September 2009 deposition in an Alabama suit.

    The company is accused in two whistleblower suits filed this year of cheating California and Nevada counties out of millions of dollars in recording fees. In 2006, New York State’s highest court told one county it had to record MERS mortgages against its wishes. The county said MERS cost it $1 million a year.

    Several courts have expressed confusion that MERS positions itself as both mortgage owner and representative of a mortgage owner. That stems from its use of mortgage language that typically states it is both the mortgagee and “acting solely as nominee for Lender and Lender’s successors and assigns.”

    Agent and Principal

    “It is axiomatic the same entity cannot simultaneously be both an agent and a principal with respect to the same property right,” Christopher Peterson, a law professor at the University of Utah in Salt Lake City, wrote in a law-review article about MERS this year.

    Peterson wrote that courts should look to the actual economics of the transaction, which some have done, finding that MERS has no standing in proceedings to seize delinquent borrowers’ homes.

    In a March 2009 ruling, U.S. Bankruptcy Judge Linda B. Riegle in Las Vegas decided MERS wasn’t a true beneficiary under a trust deed.

    “If it doesn’t walk like a duck, talk like a duck and quack like a duck, then it’s not a duck,” she wrote.

    Consumer advocates and bankruptcy attorneys who criticize MERS say it has no right to foreclose when it doesn’t hold both the promissory note and the security instrument — the mortgage or trust deed. The U.S. Supreme Court ruled in 1872 that a mortgage has no separate existence from the note, Peterson wrote.

    Legal Right

    “It appears that on a widespread and probably pervasive basis, they did not take the steps necessary to own the note,” Grayson said in a Sept. 30 video he recorded about MERS, “which means that in 45 out of the 50 states they lack the legal right to foreclose.”

    MERS says it has the right to foreclose because the borrower grants the company legal title to the mortgage and it forecloses as agent for the promissory-note holder. “Courts around the country have repeatedly upheld and recognized this right,” MERS said in an Oct. 4 e-mailed statement.

    Since March 2009, supreme courts in Arkansas, Kansas and Maine have found that MERS had no standing in foreclosure proceedings under their states’ laws. The company lends no money and suffers no injury, the panels said.

    MERS’s relationship to the bank that owned a loan in question was “more akin to that of a straw man than to a party possessing all the rights given a buyer,” the Kansas Supreme Court wrote. “What stake in the outcome of an independent action for foreclosure could MERS have?”

    Minnesota Victory

    MERS won a high-court victory last year when the Minnesota Supreme Court declared the company doesn’t have to record the sale of a promissory note, as opposed to a mortgage, at the county office before a foreclosure can begin.

    Citing a 2004 state law it called “the MERS statute,” the Minnesota court said “the legislature appears to have given approval to MERS’s operating system for purposes of recording.” A MERS lawyer helped draft the law, Arnold, the company CEO, said in the deposition last year.

    In response to the Kansas decision, the state legislature there changed court-procedure rules this year to require a “nominee of record” to be made part of such lawsuits.

    Eventually high courts in states with judicial oversight of foreclosures will have to review MERS’s role, Patrick A. Randolph, a professor at the University of Missouri-Kansas City specializing in real-estate law, said in an interview.

    “It’s a question of state law,” Randolph said. “The problem is simply confusion about a word the courts are not used to seeing in this context — the word ‘nominee.’”

    Lien Holder

    Under its contracts, MERS is the mortgage owner’s agent and has the right to foreclose, said Randolph, who is also affiliated with a St. Louis law firm, Husch Blackwell LLP, which works for MERS, though he doesn’t handle those cases he said.

    Complicating matters, MERS doesn’t handle foreclosures itself. Home-loan owners, including trustees of mortgage-backed entities, do so in its name. MERS Inc., which holds the liens, has no employees, and MERSCORP, the parent, has only about 50, Lejarde said.

    MERS has also come under fire for allowing members to appoint their employees as MERS certifying officers — as assistant secretaries or vice presidents of MERS — to sign documents, including assignments. MERS has deputized “thousands” of such certifying officers, Arnold said.

    Vexed

    New York Supreme Court Justice Arthur M. Schack, a trial- level judge in Brooklyn, is particularly vexed by the practice and has tossed foreclosure actions in part because of it.

    He has pointed out what he sees as a potentially serious conflict: The same person, as an “employee” of MERS — with duties owed to the entity selling a mortgage — assigns that mortgage to a bank at presumably market value, and then the same person, as the bank’s employee, swears an affidavit in the foreclosure case.

    Schack has demanded that two-hat-wearing signers provide him with their employment histories.

    Lejarde, the MERS spokeswoman, said the certifying officers are employees of the lenders, not MERS, and must follow both companies’ policies.

    MERS’s certifying officers represent for the company’s critics what they see as its role in muddying mortgage titles, to the point borrowers don’t know who owns their loans — a charge MERS strongly denies.

    Previous Lender

    In his case, Bellistri had notified BNC Mortgage Inc., the previous homeowner’s lender, that he bought the house in Arnold, about 18 miles southwest of St. Louis. He didn’t notify MERS, which was listed as BNC’s nominee on the trust deed.

    By that time, BNC had conveyed the note to Deutsche Bank AG, as trustee of a mortgage-backed investment vehicle, though Bellistri had no way of knowing that. MERS continued to hold “legal title to the beneficial interests in the deed of trust on behalf of Deutsche Bank,” according to the federal judge’s ruling.

    In the proceeding Bellistri initiated, a Missouri state court and the Missouri Court of Appeals in St. Louis named him the property’s rightful owner. Deutsche Bank had hired Ocwen Financial Corp. as servicer. MERS assigned the deed to Ocwen and said the note went with it.

    The appeals court disagreed, saying MERS had no right to grant Ocwen the note because records showed it was still owned by BNC. So Ocwen lacked standing to contest Bellistri’s deed, it said. Under Missouri law, the note and deed go together, and therefore Bellistri keeps the house, the appeals court said.

    Federal Suit

    MERS filed a federal suit at U.S. District Court for the Eastern District of Missouri, where judgeCharles A. Shaw ruled the other way. Shaw said that Bellistri failed to properly notify MERS of its redemption rights and that the state-court decision threatened MERS’s “overall business model — at least in Missouri.”

    Lawsuits elsewhere attack that business model. In Delaware federal court, homeowners accuse MERS of forcing them to pay inflated fees related to their foreclosures.

    MERS and its members have been sued this year for racketeering in New York, Florida and Kentucky federal courts, accused of conspiring to falsely foreclose on loans and “to undermine and eventually eviscerate long-standing principles of real-property law.”

    Dozens of lawsuits claiming MERS itself is a fraud have been consolidated for pretrial proceedings in federal court in Phoenix. The homeowners haven’t fared well there. In September 2009, U.S. District Judge James Teilborg threw out an earlier case with similar accusations. On Sept. 30, he tossed six proposed class-action, or group, lawsuits.

    Defaulting Owners

    Teilborg found the defaulting homeowners failed to sufficiently allege that MERS and its members conspired to commit fraud because it’s not a true beneficiary under the trust deed. They also fail to explain how MERS, as a “’sham’ beneficiary,” diminishes their need to pay back the money they borrowed, the judge said.

    “At most, plaintiffs find the MERS system to be disagreeable and inconvenient to them as consumers,” Teilborg wrote.

    The Bellistri case is Mortgage Electronic Registration Systems Inc. v. Bellistri, 09-cv-731, U.S. District Court, Eastern District of Missouri (St. Louis) and Bellistri v. Ocwen Loan Servicing LLC, ED91369, Missouri Court of Appeals, Eastern District (St. Louis).

    To contact the reporter on this story: Thom Weidlich in Brooklyn, New York, federal court attweidlich@bloomberg.net.

    To contact the editor responsible for this story: David E. Rovella at drovella@bloomberg.net.

     

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  • The Wheels Are Coming Off in MBS Land: All 50 State AGs Join Probe; Banks Abandoning MERS Foreclosures, by Nakedcapitalism.com


    I get on an airplane, and there are more dramatic developments by the time I land.

    Even though the headline item is the fact that the attorneys general in all 50 states are joining the mortgage fraud investigation, the real indicator that the banks are stressed is that they have started abandoning MERS, the electronic database that passes itself off as a registry for mortgages. JP Morgan has quit using it as an agent on foreclosures; it clearly can’t withdraw from it fully, given that it has become a central information service.

    Despite this being treated as a pretty routine event in the JP Morgan earnings call, trust me, it isn’t. The withdrawal of JP Morgan from the use of MERS as the face in foreclosures is a tacit admission that the past practice of using MERS as the stand -in for the trust is problematic. I’ve heard lawyers discuss the possibility of class action litigation to invalidate all MERS-initiated foreclosures in states with strong anti-MERS rulings; this idea no doubt will get more traction given JP Morgan’s move. (An attorney who is in the thick of this situation told me another major bank has made the same move as JPM, but I see no confirmation in the news as of this writing).

    The triggers for the sudden escalation appear to have been the release of a research note by Citigroup which included a grim assessment (which we did not consider to be dire enough) by Professor Levitin to Citi clients on likely path of the mortgage crisis. This was no doubt compounded among the cogoscenti by the research note published by Josh Rosner, that most if not all notes (which are the borrower IOU in a mortgage) were endorsed in blank, which creates near insurmountable problems in foreclosure, worse even for the RMBS ownership of them as de facto mere unsecured paper.

    But the stunner is the withdrawal of JP Morgan from the purported mortgage registry system, MERS. 60% the mortgages in the US are registered through MERS, and not at the local courthouse as was the long established, well settled custom in the US. Countries that have moved to central databases (such as Australia) have them operated by the government, and they are transparent and run with sound standards of data integrity. As noted, banks like JP Morgan can’t fully withdraw; MERS has become too integral, but its announcement is an admission that all is not well.

    The fact that major MERS members are suddenly resigning from MERS is a sign that tectonic plates are moving. MERS has become central in mortgage securitization; Freddie and Fannie have required its use since early in this decade.

    From the Associated Press:

    JPMorgan Chase’s CEO says the bank has stopped using the electronic mortgage tracking system used by major financial institutions.

    Lawyers have argued in court proceedings that the system is unable to accurately prove ownership of mortgages.

    JPMorgan Chase & Co. and other banks have suspended some foreclosures following allegations of paperwork problems in thousands of cases.

    The trigger may have been the publication of a simply devastating analysis at the end of September, “Two Faces: Demystifying the Mortgage Electronic Registration System’s Land Title Theory” by Christopher L. Peterson. Even though I have read the critical MERS unfavorable opinions, this is the first time I am aware of that someone has looked at the operation of MERS from a broader legal perspective. It finds fundamental flaws in virtually every aspect of its operation. To give a partial list: the language used by MERS in its registry at local courthouses is contradictory (it claims to be both the owner of the mortgage and as well as a nominee; legally, a single party can’t play two roles simultaneously), rendering it unenforcable; MERS has employees of servicers and law firms become “MERS vice presidents” or secretaries when fit none of the criteria that fit those roles, and also have clear conflicts of interest given that they are also full time employees of other organizations; MERS record keeping has the hallmarks of being poorly controlled (there have been cases of mortgages basically being stolen from other MERS members; some contacts have suggested that a single MERS member can assign a mortgage, meaning checks are weak; MERS members are not required to update records). And most important, every state supreme court that has looked at the role of MERS has ruled against it.

    As much as I have heard the case against MERS in bits and pieces, and regarding it as very problematic, seeing it assembled in one place (with solid references to judicial decisions) makes for a overwhelming case. The best resolution the author can come up with is that lenders with MERS registered mortgages would be granted an equitable mortgage as a substitute for the flawed MERS registered mortgages:

    While awarding equitable mortgages is surely a better approach for financiers and their investors than simply invalidating liens, it would not solve all their problems. Replacing legal mortgages with equitable mortgages would give borrowers significant leverage. Historically, state law has not uniformly treated equitable mortgagees vis-à-vis other competing creditors. Generally, the holder of an equitable mortgage had priority against judgment creditors. But, it is likely that an equitable mortgage could be avoided in bankruptcy. Moreover, it is likely that financiers would have less luck seeking deficiency judgments when foreclosing on equitable mortgages.

    In Florida, the so-called rocket docket has apparently slowed to a crawl, between some banks suspending foreclosures and at least some judges starting to take borrower allegations of fraud seriously. From Bloomberg:

    Home to more foreclosures than 47 U.S. states, Florida sought to clear out its backlog with a system of special court hearings that dispensed with cases quickly, sometimes in less than a minute.

    Homeowners like Nicole West now threaten to slow that system, Florida’s so-called rocket docket, to a crawl. West, who has been fighting to save her Jensen Beach house from foreclosure, has leveled a new allegation in her three-year battle: the entire process is based on fraud.

    West said her case is rife with the kind of flawed mortgage documents that have caused lenders including Bank of America Corp. and JPMorgan Chase & Co. to stop the process of foreclosures and evictions across the country. The banks said they are investigating homeowner charges like West’s that signatures were forged and documents were backdated…..

    The bank moratoriums are already thwarting the initiative by Florida officials to clear jammed court dockets. Now, efforts by homeowners such as West to bring claims of fraud to the attention of judges are further prolonging evictions, and in turn slowing purchases of foreclosed properties.

    The focus so far has been on what the foreclosure mess means for borrowers. Not enough media attention has been given to the implications for the major banks, particularly their trust businesses, and RMBS investors. Neither the facts nor the law are on the financiers’ side, but they are either in denial or doing a full bore job of obfuscation.

     

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    http://www.nakedcapitalism.com

  • Is Residential Real Estate Recovering?, by Jeff Harding, Dailycapitalist.com


    I recently published an article on the commercial real estate market, Is Commercial Real Estate Recovering?” In this article I will examine residential real estate.

    It is difficult to forecast a bottom of the housing market because of the “shadow” market and government and legal issues which thwart foreclosures.

    While markets are firming up, and foreclosure sales are trending down, there is this:

    Lender Processing Services (LPS) tracks performance on 40 million mortgage loans in the country. According to a preview of the LPS mortgage report, 9.22% of those loans are more than 30 days delinquent. A total of 6,984, 885 loans were non-current. They report that foreclosures registered their first YoY decline since 2006. “January 2009 the percent of seriously delinquent loans that were current six months prior peaked at 2.92% vs. 1.65% in August 2010.”

     

     

    In data published by Dr. Housing Bubble, CoreLogic is quoted as reporting that 11 million US homes are underwater.  Other articles have said 25% of all mortgages are underwater. Dr. Housing Bubble presents the following chart to show the distribution of negative equity among that 11 million base:

     

     

    On the other side of the equation, foreclosure sales are declining. LPS reported that “The August delinquency rate on U.S. mortgages fell 5.1% from last year …” This is borne out by other data:

    CoreLogic (CLGX: 18.29 -0.76%) said tax credit-induced sales helped push distressed sales to a seven-month low in June, but the share of distressed sales is expected to bounce back in coming months, according to the firm’s inaugural U.S. Housing and Mortgage Trends report. The bi-monthly report will track housing sales, valuation, negative equity and foreclosure activity. In June, the distressed sale share fell to 24% of overall sales, down from a peak of 35% in early 2009, according to CoreLogic. …

    “Since the peak in home sales in 2005, non- distressed sales have dramatically declined and there is a clear relationship between the decline in non-distressed sales and the level of negative equity.”

    The firm said non-distressed sales fell nearly twice as much in high-negative equity zip codes in comparison to low-negative equity zip codes.

    Las Vegas with 61% and Riverside, Calif., with 59% continue to lead the nation in distressed sales for the largest 25 metropolitan markets, according to CoreLogic. Phoenix , Sacramento, Calif., and Orlando, Fla., were the only other markets to have distressed sales account for more than 50% of home sales.

    Also, from RealtyTrac:

    [F]oreclosure filings in August fell 5% from a year ago, the third straight month of declines,.

    The last time foreclosure filings increased was a 1% uptick in May, when 322,920 properties received either a default notice, scheduled auction or bank repossession. Since then, foreclosures have dropped 6.9% in June, and 10% in July. …

    “On the front end, seriously delinquent loans are rolling into foreclosure at an unusually slow rate, while on the back end the dammed-up inventory of properties already in foreclosure is moving to REO in steady stream rather than a flood — presumably to prevent further erosion of home prices,” James Saccacio, CEO of RealtyTrac said.

    Florida notices fell 46% from last year but still held the second highest foreclosure rate in the country. In Arizona, one in 165 properties had a foreclosure filing, the third highest. California foreclosures accounted for 20% of the national total in August with more than 69,000 receiving a foreclosure filing in the month. It’s a 9% drop from last year.

    These data came in before the news about banks, i.e., BofA, suspending its mortgage foreclosures in order to review documentation validity. The class action lawyers will make a killing on this one. No one loves banks (as in, “The bank took my home.”). But that doesn’t change the underlying reality of the market.

    One in 10 mortgages in 100 largest metropolitan area were seriously delinquent as of March 2010, according to a study done by the nonprofit Center for Housing Policy.

    Working with the Local Initiatives Support Corp., and the Urban Institute gathered and analyzed delinquency data on 366 U.S. metro areas. Seriously delinquent mortgages are behind on payments by 90-plus days or in foreclosure. According to the study 10.2% of all mortgages in the top-100 populated areas were in this category, up from 7.7% in March 2009.

    According to this latest study, the severity of delinquencies vary widely across the nation. Austin, Texas had the lowest share of seriously delinquent mortgages in March at 4.4%, while Miami had 26% of its mortgages in serious delinquencies.

    As the above paragraph tells us, it depends where you are. If you are in Miami, Phoenix, Las Vegas, or the Inland Empire (California’s desert counties: Riverside, San Bernardino, Imperial) then the excess supply of homes is still being worked off. But, I think that is changing. More in a moment.

    The other reality is that sales are increasing:

    [T]he National Association of Realtors’ index for pending sales of used homes in August increased 4.3% to 82.3, the industry group said Monday. Economists surveyed by Dow Jones Newswires had expected pending home sales would increase 3.8% in August. Year over year, the pending sales index was 20.1% below its level of 103 in August 2009.

    Home prices rose for the fourth-straight month in July, but at a slower pace than in previous months, and they could start falling again as the expiration of government home-buying incentives has put a brake on sales.

    The S&P/Case-Shiller 20-city home-price index rose 0.6% in July from the prior month and was up 3.2% from a year earlier. That marks the sixth time in a row prices rose, compared with the same month a year earlier, an important distinction in an industry where sales vary sharply according to the time of year.

    The index is based on a three-month moving average, and analysts noted May and June saw larger price increases than July.

    Again, look at this chart which appears to be a dramatic rise in prices, but the YoY index was only up 3.2% YoY.

     

    The table below clearly shows where the action is. As you can see coastal California is doing well. People still want to live there and there is lots of money floating around. Quite a bit of the money flowing into the coastal California market is from speculators who have put a floor under the foreclosure market. This causes competition for homes, and prices have been rising, also bringing in other buyers who think we’ve hit the bottom.

     

    This is not the case elsewhere.

     

    Things are changing in the poor markets as well:

     

    The Viceroy, a swanky condominium complex in downtown Miami, gives the impression that the United States is in another real estate boom. The sales office is strangely exuberant. Buyers gush about the glam condos — designed by hipster tastemaker Kelly Wearstler — and their hotel-like amenities: poolside libations, daily housekeeping and room service food stirred up by a celebrity chef.

    Since January, 262 of the Viceroy’s 372 units have sold. But there’s a twist: Almost 90 percent of the buyers are foreigners. And they all paid cash.

    The Viceroy’s story is playing out across Miami. Individual investors from as far as Argentina, Canada, Colombia, France, Israel, Italy, Norway and Venezuela are swarming the city’s sales offices to get in on what they see as one of the greatest real estate fire sales in the history of the United States.

    There are two factors to this. One is cheap prices. The other is a cheap dollar. For example the Canadian dollar is at parity with the USD:

    For foreigners with cash, the deals can make them money from day one. Jim Chuong, a 38-year-old Novartis sales manager from Toronto, buys two-bedroom condos [in Phoenix] for less than $40,000 [$50sf] in low-crime areas. He only picks up units that already have renters. After paying association fees and taxes, he walks away with $300 a month, pre-tax, on each. The deals are now easy to do, thanks to the cottage industry of companies that has grown up to manage virtually everything for foreign buyers, down to badgering renters for the monthly check.

    Another bit of data worth watching is the status of RMBS from Alt-A and subprime mortgages. Moody’s just downgraded tens of billions of dollars of these residential mortgage-backed securities:

    The lower ratings are due to the rapidly deteriorating performance of the mortgage pools that back the securities, in conjunction with macroeconomic conditions that remain under duress, according to Moody’s. In February, the ratings agency updated the loss expectations on Alt-A and subprime pools issued in 2005 to 2007.

    Of the 2005 vintage alone, Moody’s rates more than 5,600 tranches of MBS and has adjusted ratings on nearly 2,000 tranches already this year with another 119 on review for possible downgrade.

    Moody’s also now expects housing prices to continue to fall until the third quarter of 2011, analysts said in the most-recent ResiLandscape report from the firm’s structured finance group. The agency previously expected housing prices to stabilize in the first quarter of next year.

    You should understand that Moody’s was spectacularly deficient, along with S&P and Fitch, in rating these securities in the first place.

    This is all supply and demand stuff. I thought things were going along well down the foreclosure path at last, despite HAMP, HARP andlegal issues to delay the process. And then the BofA robo-signing scandal hit last week and they suspending foreclosures. MAC Home Mortgage, Inc., a unit of Ally Financial Inc., and J.P. Mortgage Chase & Co.’s home-loan unit followed suit.

    This will impact the market by reducing the quantity of homes on the market. Ivy Zelman expected big price declines in Q4 2010. In Florida one estimate is that it will reduce supply by 15%.

    All this does is to delay the inevitable. I’m even reading mainstream articles that agree with me that:

    But economists say the delays impede recovery of the U.S. housing market.

    They argue the best way to heal the market is to let banks foreclose quickly, allowing homes to be resold at lower prices to qualified borrowers. That would clear the market and help stabilize prices.

    “If foreclosures slow down dramatically now, from a months supply perspective, the length of time it takes to work through all of it gets longer, ” said Sam Khater, senior economist with CoreLogic, a real estate research firm.

    And, even from the New York Times!:

    Some economists and analysts are now urging a dose of shock therapy that would greatly shift the benefits to future homeowners: Let the housing market crash.

    When prices are lower, these experts argue, buyers will pour in, creating the elusive stability the government has spent billions upon billions trying to achieve.

    “Housing needs to go back to reasonable levels,” said Anthony B. Sanders, a professor of real estate finance at George Mason University. “If we keep trying to stimulate the market, that’s the definition of insanity.”

    One wonders why this recession is lasting so long and unemployment stays so high. The government has done everything it could to delay the corrective market forces in a failed attempt to make things better. They have failed on all fronts and now fellow Democrats are even attacking the Obama Administration (well, he is a Clinton man):

    “The administration made a bet that a rising economy would solve the housing problem and now they are out of chips,” said Howard Glaser, a former Clinton administration housing official with close ties to policy makers in the administration. “They are deeply worried and don’t really know what to do.”

    Of course, we all know that.

    The bottom line for the housing market?

    Areas which are firming up will continue to firm up. We’ve not hit bottom in problem markets, and, while the suspension of foreclosures may give a but of a temporary price bump, prices will stall out  or continue to decline (depending where you are) until we’ve worked through the bad loans. Unfortunately this could take some time. I look at the overall economy to make my forecasts here because a rising tide would help many home owners who are upside down but don’t wish to move. I see stagnation ahead, so it could be several more years before the weak housing markets turn around.

     

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  • After Foreclosure, a Focus on Title Insurance, Ron Lieber, Nytimes.com


    When home buyers and people refinancing their mortgages first see the itemized estimate for all the closing costs and fees, the largest number is often for title insurance.

    This moment is often profoundly irritating, mysterious and rushed — just like so much of the home-buying process. Lenders require buyers to have title insurance, but buyers are often not sure who picked the insurance company. And the buyers are so exhausted by the gauntlet they’ve already run that they’re not interested in spending any time learning more about the policies and shopping around for a better one.

    Besides, does anyone actually know people who have had to collect on title insurance? It ultimately feels like a tax — an extortionate one at that — and not a protective measure.

    But all of the sudden, the importance of title insurance is becoming crystal-clear. In recent weeks, big lenders likeGMAC Mortgage, JPMorgan Chase and Bank of Americahave halted many or all of their foreclosure proceedings in the wake of allegations of sloppiness, shortcuts or worse. And a potential nightmare situation has emerged that has spooked not only homeowners but lawyers, title insurance companies and their investors.

    What would happen if scores of people who had lost their homes to foreclosure somehow persuaded a judge to overturn the proceedings? Could they somehow win back the rights to their homes, free and clear of any mortgage? But they may not be able to simply move back into their home at that point. Banks, after all, have turned around and sold some of those foreclosed homes to nice young families reaching out for a bit of the American dream. Would they simply be put out on the street? And then what?

    The answer to that last question may depend on whether those new homeowners have title insurance, because people who buy a home without a mortgage can choose to go without a policy.

    Title insurance covers you in case people turn up months or years after you buy your home saying that they, in fact, are the rightful owners of the house or the land, or at least had a stake in the transaction. (The insurance may cover you in other instances as well, relating to easements and other matters, but we’ll leave those aside for now.)

    The insurance companies or their agents begin any transaction by running a title search, sifting through government filings related to the property. They do this before you buy a home or refinance your mortgage to help sort out any problems ahead of time and to reduce the risk of your filing a claim later.

    But sometimes they miss things, and new issues can arise later.

    For instance, the person doing the title search may not notice that a home equity loan is still outstanding or that a contracting firm filed a lien against the owner years ago. That could create problems for you later, when you try to sell the home.

    Then there are the psychodramas that can ensue. The previous owner’s long-lost heirs or a previously unknown love child could show up, saying that they never agreed to the sale of the property. Or perhaps there was fraud against a seller who was elderly or had a mental disability, or forgery of an estranged spouse’s signature. It’s rare, but it happens, and when it does, your title insurance company is supposed to provide legal counsel or settle with whomever is making a claim.

    Title insurance companies would like you believe that they are the good guys standing behind you. After all, you are the customer who owns the policy.

    In fact, many of the title insurance companies are more concerned about the real estate agents, lawyers and lenders who can steer business their way. The title insurance companies are well aware that most people do not shop around for title insurance, even though it’s possible to do so — say through a Web site like entitledirect.com.

    While the title insurers are not supposed to kick back money directly to companies or brokers that send business their way, various government investigations over the years have turned up all sorts of cozy dealings that make you shake your head in disgust.

    But since you have to buy the insurance if you need a mortgage, there is not much you can do except hold your nose.

    That’s what John Kovalick did in January when he bought a foreclosed house in Deltona, Fla., for $102,000 from Deutsche Bank. But in recent weeks, he’s seen the headlines about other banks halting foreclosures and wondered whether something might have gone wrong with the foreclosure on his new house. A spokesman for Deutsche Bank declined comment.

    Mr. Kovalick is not the only one pondering what could go wrong. While the banks were pressing the pause button on many foreclosures, some title insurers were growing concerned as well.

    On Oct. 1, Old Republic National Title Insurance Company released a notice forbidding any agents or employees to issue new policies on homes that had been recently foreclosed by GMAC Mortgage or Chase.

    Clearly, the title insurer was also worried about a situation in which untold numbers of former homeowners have their foreclosures overturned. At that point, those individuals might claim the right to take back their old homes, but they’d also be responsible for, say, a $400,000 loan on a home that is worth half that.

    So what would happen next? The banks that foreclosed might start the process over again. At that point, lawyers for the people who had been foreclosed upon might take the next logical step and try to show that the banks never had the documents to prove ownership of the mortgage in the first place. The banks might settle at that point, writing checks to everyone who had gone through a disputed foreclosure in exchange for each of them giving up the title.

    But if banks did not settle, or the evicted homeowners refused to settle and fought on and won, they might end up owning their homes once again and not owing the bank either.

    Or banks might agree to slice a big chunk off the remaining balance in exchange for a release from any liability for the errors it made.

    At that point — and again, this is what Old Republic and investors in other title insurers fear — those homeowners might actually want to move back in. But some foreclosed homes were sold by the banks to others who now live there. And those new residents would have big, fat title insurance claims if their predecessors ever turned up at their doorsteps, proclaimed them trespassers and told them to leave.

    “All of these Joe Schmos who did everything legally would then be in the middle of it, too,” said Mr. Kovalick, who manages an auto repair shop and is now hoping not to be one of those Schmos.

    “Now, you’d have two total disasters,” he said. “How would you like to be the judge to get that first case?”

    While homeowners like Mr. Kovalick may have title insurance, it generally covers them only for the purchase price of the home. When you buy a home out of foreclosure, however, it often needs a lot of work. “If I bought it at $200,000 and it’s a steal but I had to gut it and sink $100,000 more in, my recovery is limited if there is a problem,” said Matthew Weidner, a lawyer in St. Petersburg, Fla.

    Indeed, this possibility has occurred to Mr. Kovalick, who has plans to put an addition on his home and is asking how he could extract that investment if someone ever turned up on his doorstep and asked him to leave. “What do I do, take the paint off the walls and the custom blinds off the windows?”

    Chances are, it will not come to that. After all, title insurers could settle with the previous residents, allowing them to walk away with a big check to restart their lives elsewhere.

    Still, for anyone considering buying a bargain home out of foreclosure anytime soon, consider asking your title insurer if any special riders are available that can cover appreciation on your home in the event of a total loss.

    That said, if you can possibly help it, stay away from foreclosed homes until the scene shakes out a little bit.

    Some people will undoubtedly make a fortune investing in these properties in the next few months. But if your down payment represents most of what you have in the world, it’s hard to justify betting it all on a situation like this one.

     

     

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  • BofA Extends Freeze on Foreclosures to All 50 States, by Michael J. Moore, Lorraine Woellert and Dakin Campbell, Bloomberg.com


     

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    Bank of America Corp., the biggest U.S. lender, extended a freeze on foreclosures to all 50 states as concern spread among federal and local officials that homes are being seized based on false data.

    “We just want to clear the air,” Bank of America Chief Executive Officer Brian T. Moynihan said today in a speech to the National Press Club in Washington.

    Bank of America, JPMorgan Chase & Co. and Ally Financial Inc. already froze foreclosures in 23 states where courts supervise home seizures amid allegations that employees used unverified or false data to speed the process. Bank of America’s new policy extends its moratorium to the entire nation, and the announcement spurred more demands from public officials and community groups for other banks to follow suit.

    “All mortgage providers should follow the example of Bank of America and review their practices to ensure that they are not unfairly targeting homeowners in Nevada and across the nation,” Senate Majority Leader Harry Reid, a Democrat from Nevada, said today in a statement.

    PNC Financial Services Group Inc. halted sales of foreclosed homes for a month to review documents in its mortgage servicing procedures, according to an Oct. 4 memo the Pittsburgh-based bank sent to lawyers handling the lender’s foreclosures.

    Bank of America fell 13 cents, or 1 percent, to $13.18 at 4 p.m. in New York Stock Exchange composite trading. The shares have lost 12 percent this year.

    States Investigating

    “We will stop foreclosure sales until our assessment has been satisfactorily completed,” the Charlotte, North Carolina- based company said today in a statement. “Our ongoing assessment shows the basis for foreclosure decisions is accurate.”

    At least seven states are investigating claims that home lenders and loan servicers took shortcuts to speed foreclosures. Attorneys general in Ohio and Connecticut have said some of the practices used by banks to take away homes may amount to fraud. Acting Comptroller of the CurrencyJohn Walsh last week asked the nation’s seven biggest lenders to review foreclosures for defective documents, spokesman Bryan Hubbard said.

    “Bank of America has done the right thing by stopping foreclosures in all 50 states,” North Carolina Attorney General Roy Cooper said today in a statement. “Other banks that have questionable procedures should do the same while the investigation continues.”

    President Barack Obama’s administration didn’t pressure the bank to enact the freeze, Moynihan said.

    Record Foreclosures

    Lenders took possession of a record 95,364 homes in August and issued foreclosure filings to 338,836 homeowners, or one of every 381 U.S. households, according to RealtyTrac Inc., an Irvine, California-based data vendor.

    Wells Fargo spokeswoman Vickee Adams said the lender is still processing foreclosures and referred to a statement the bank put out earlier this week, saying “our affidavit procedures and daily auditing demonstrate that our foreclosure affidavits are accurate.”

    Thomas Kelly, a spokesman for New York-based JPMorgan, and Gina Proia, spokeswoman for Detroit-based Ally, declined to comment.

    “Bank of America has made the right choice given the circumstances of this scandal,” said Kevin Stein, associate director of the California Reinvestment Coalition in San Francisco. “The primary concern for all of these banks should be to figure out where they are handling foreclosures illegally before they erroneously and unfairly take another family’s home.”

    Lawmakers React

    In Washington, dozens of lawmakers in Congress have called for a freeze on foreclosures and are seeking investigations. House Oversight and Government Reform Committee ChairmanEdolphus Towns yesterday demanded a moratorium and asked New York State Attorney General Andrew Cuomo to investigate allegations of fraud. Towns, a New York Democrat, led hearings last year into Bank of America’s federal bailouts.

    “The implications of ignoring the foreclosure problems are far too great to be ignored,” Towns said in a statement. “Bank of America did the right thing today and I expect to see every other responsible banking institution follow their lead.”

    On Wednesday, two members of the House Financial Services Committee, Luis Gutierrez of Illinois and Dennis Moore of Kansas, asked the Special Inspector General of the Troubled Asset Relief Program to investigate foreclosure practices.

    ‘Unwarranted Foreclosures’

    “There is already enough evidence of unwarranted foreclosures and irregularities by lenders and servicers to warrant full investigations into the practices of these financial institutions,” the lawmakers wrote in a letter.

    A coalition of community organizer groups and labor unions, including the National People’s Action and the Service Employees International Union, called for a national freeze on foreclosures.

    “It is unconscionable that Wall Street banks continue to use a corrupt and fraudulent procedure to flood the housing market with illegal foreclosures that are throwing millions of American families out of their homes,” the groups said in a statement today. “It’s the latest example of a predatory industry.”

    To contact the reporters on this story:
Michael J. Moore in New York at
mmoore55@bloomberg.net;
Lorraine Woellert in Washington at
lwoellert@bloomberg.net;
Dakin Campbell in San Francisco at
dcampbell27@bloomberg.net.To contact the editors responsible for this story:
Alec D.B. McCabe in New York at
amccabe@bloomberg.net;
Rick Green in New York at
rgreen18@bloomberg.net.
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  • U.S. Justice Dept. probing foreclosure processes, Yahoo.com


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    WASHINGTON (Reuters) – The U.S. Justice Department said on Wednesday it was probing reports the nation’s top mortgage lenders improperly evicted struggling borrowers from their homes as part of the devastating wave of foreclosures unleashed by the financial crisis.

    Amid mounting political outrage over the U.S. mortgage mess, key members of U.S. congressional banking committees joined calls for probes into the foreclosure activities of banks accused of tossing homeowners out without proper review.

    At least three banks have already halted eviction proceedings, and various lawmakers have called for an industry-wide moratorium on home repossessions until the problems are fixed. Attorney General Eric Holder said the Justice Department would look into media reports that loan servicers improperly have used “robo-signers” to push through thousands of foreclosure orders.

    Holder’s move, and the rising chorus of fury among lawmakers, comes ahead of November congressional elections and takes aim at one of the most visible signs of the U.S. economic crisis as hundreds of thousands of families have lost their homes as unemployment surged.

    The moves on foreclosures risk further slowing the U.S. economic recovery, leaving banks unsure whether they will ever claw back losses and the housing market overshadowed by a mounting inventory of homes still likely to face foreclosure in future.

    U.S. House of Representatives Speaker Nancy Pelosi and fellow Democrats wrote to Holder earlier this week asking the Justice Department to look into banks’ actions after receiving reports from thousands of homeowners about their foreclosure woes.

    On Wednesday, the lead Republican on the Senate Banking Committee, Senator Richard Shelby, called on federal regulators to review the foreclosure practices of JPMorgan Chase and Co (JPM.N), Bank of America Corp (BAC.N) and Ally Financial Inc, formerly known as GMAC, and said a congressional investigation should also be started.

    Two senior Democratic members of the House Financial Services Committee also said it was time to examine whether the banks broke the law based on their participation in the law that governed the Troubled Asset Relief Program, the $700 billion bailout of financial firm.

    “The American people helped out these companies and the least they deserve is a guarantee of due process and fairness,” Representatives Luis Gutierrez and Dennis Moore said.

    Banks are expected to take over a record 1.2 million homes this year, up from about 1 million last year, according to real estate data company RealtyTrac Inc.

    Federal and state officials have pushed to suspend foreclosures after reports that banks signed large numbers of foreclosure affidavits without conducting proper reviews.

    Banks and loan servicers, companies that collect monthly mortgage payments, reportedly have used “robo-signers” — middle-ranking executives who signed thousands of affidavits a month claiming they were knowledgeable of the cases.

    Separately on Wednesday, Wells Fargo & Co (WFC.N) agreed to pay eight states $24 million after allegations of deceptive marketing practices at its home loan unit. The firm said it would also alter its foreclosure prevention practices that could benefit struggling homeowners by more than $700 million.

    Wells Fargo Home Mortgage‘s chief financial officer, Franklin Codel, told Reuters that his unit did not cut corners to speed the foreclosure process. He said he was “confident that the paperwork is being properly produced.”

    STATES TAKE ACTION

    The issue on improper handling of foreclosures came to the fore last month when Ally Financial said officials had signed thousands of affidavits without having personal knowledge of borrowers’ situations.

    Ally suspended evictions and post-foreclosure proceedings in 23 states last month, followed by similar moves by JPMorgan Chase & Co and Bank of America.

    The foreclosure issue and the battered state of the U.S. housing market have weighed on the Obama administration ahead of the November congressional elections in which the Democrats already face the possibility of big losses.

    Any broader push to solve the foreclosure crisis, such as the wholesale forgiveness of principal debt of struggling homeowners, is unlikely to find support among lawmakers because of the cost and the potential for political backlash from any move seen as rewarding reckless behavior by banks or borrowers.

    The focus on bank procedures has thrown a new twist into the saga.

    North Carolina Attorney General Roy Cooper on Wednesday became the latest state official to ask lenders to suspend home repossessions as he probes foreclosure practices.

    Democratic Senator Robert Menendez earlier this week raised the idea of a national foreclosure moratorium.

    Ally Financial and its GMAC Mortgage unit also were targeted by Ohio’s attorney general, Richard Cordray, on Wednesday, who announced a lawsuit alleging fraud and violations of Ohio’s consumer law.

    Cordray also said he has sought meetings with Citibank (C.N), Bank of America, JPMorgan Chase and Wells Fargo to try to ascertain whether their foreclosure processes include any of the “mass” signing of official papers that are the subject of the suit against GMAC Mortgage.

    Gina Proia, a spokeswoman for Ally Financial, said there was nothing fraudulent or deceitful about GMAC Mortgage’s practices. She said the company will “vigorously defend” itself, and expects to be fully vindicated by the Ohio courts.

    GMAC Mortgage said in a statement it “believes there was nothing fraudulent or deceitful about its foreclosure practices. If procedural mistakes were made in the completion of certain legal documents, GMAC Mortgage reacted proactively to the issue and immediately undertook steps to remedy the situation.”

    (Writing by Corbett B. Daly and Andrew Quinn; Editing by Leslie Adler)

     

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  • Wells Fargo Curtailing Short Sale Extensions, by Kate Berry, Americanbanker.com


    In a move that will expedite some foreclosures, Wells Fargo & Co. has stopped granting extensions for certain distressed homeowners to complete short sales.

    The change last month preceded recent revelations of faulty documentation at two major mortgage servicers — JPMorgan Chase & Co. and Ally Financial Inc. — that suspended thousands of foreclosure actions to review their processes. Wells said it does not have the same problems as those servicers.

    The company said it changed its policy on short sales at the behest of investors for whom it services mortgages, including the government-sponsored enterprises.

    Early last month, Fannie Mae told its servicers to stop unnecessarily delaying foreclosures. The GSE said it would hold servicers responsible for unexplained delays to foreclosures with fines and on-site reviews.

    In a memo e-mailed to short sale vendors last month and obtained by American Banker, Wells said it will no longer postpone foreclosure sales for those who do not close short sales by the date in their approval letter from the company. Only extension letters dated Sept. 14 or earlier would be honored, Wells said.

    Mary Berg, a spokeswoman for Wells, confirmed that the memo was genuine. But she said it had “caused confusion,” and stressed that Wells still grants extensions on loans in its own portfolio (including those it acquired with Wachovia Corp.) and in cases where investors allow it. For those two categories, Berg said, Wells allows one foreclosure postponement, provided these conditions are met: a short sale has been approved by Wells, by junior lienholders and by mortgage insurers; the buyer has proof of funds or approved financing; and the short sale can close within 30 days of the scheduled foreclosure sale.

    Berg would not say how often Wells’ investors allow extensions.

    The new policy on short sales was put in place “over the past couple of months … in response to various investor changes,” Berg said. Those investors “would include the GSEs, HUD and those investing in private-label” mortgage-backed securities.

    In a short sale, a home is sold for less than the amount owed on the mortgage and the lender accepts a discounted payoff. The transactions are often less costly to the lender than seizing and liquidating the home.

    “As long as there is a short sale possibility, the loss will always be less,” said Rayman Mathoda, the president and chief executive of AssetPlan USA, a Long Beach, Calif., provider of short sale training and education. “Basically foreclosure sales should be delayed for any responsible homeowner that has a real buyer available.”

    Wells’ decision also follows efforts by the Obama administration to encourage short sales for borrowers who do not qualify for loan modifications.

    “It makes no business sense why they are doing this, since it’s wrong for the borrowers and for the government,” said Eli Tene, the CEO of IShortSale Inc., a Woodland Hills, Calif., firm that advises distressed borrowers.

    But experts on short sales said that in recent months servicers have been reluctant to approve the transactions out of concern that they will fall through, further prolonging the process.

    “There is also a growing issue with the new buyer and financing issues, either losing their jobs ahead of closing or the new lender not being ready to close, which then gives rise to the buyer running out of patience and walking,” said Jim Satterwhite, executive vice president and chief operating officer of Infusion Technologies LLC, a Jacksonville, Fla., provider of short sale services.

    Satterwhite said many servicers have reached the point where they know which borrowers do not qualify for a modification and are moving those borrowers through to foreclosure to deal with the backlog of inventory. “A lot of servicers are just falling in line with Fannie,” he said.

    Moreover, the expectation that housing prices will fall further is forcing servicers — and the GSEs — to push for a quicker resolution through foreclosure, since short sales can involve further delays. “Values are dropping faster and that also means the losses on short sales are going up,” Satterwhite said.

    Of course, the recent reports of “robo-signing” at Ally Financial’s GMAC Mortgage and at JPMorgan Chase could gum up the foreclosure works again. For example, on Friday, Connecticut Attorney General Richard Blumenthal asked state courts to freeze all home foreclosures for 60 days to “stop a foreclosure steamroller based on defective documents.” The day before, Acting Comptroller of the Currency John Walsh said he had told seven major servicers, including Wells, to review their foreclosure processes.

    Another Wells spokeswoman, Vickee J. Adams, said the company’s “policies, procedures and practices satisfy us that the affidavits we sign are accurate.”

  • Multnomahforeclosures.com: Updated Notice of Default Lists and Books for the Week of September 24th, 2010


    Multnomahforeclosures.com was updated today with the largest list of Notice Defaults to date. With Notice of Default records dating back nearly 2 years. Multnomahforeclosures.com idocuments the fall of the great real estate bust of the 21st century.

    All listings are in PDF and Excel Spread Sheet format.

    Multnomah County Foreclosures
    http://multnomahforeclosures.com

  • Low FICOs Bar One-Third of Prospective Borrowers , Nationalmortgagenews.com


    Approximately one-third of Americans are unlikely to qualify for a mortgage because their credit scores are too low, an analysis of 25,000 loan quotes during the first half of September on Zillow Mortgage Marketplace found.

    The lead generation website found that those consumers with a credit score under 620 who entered data on the site were unlikely to have even one quote returned, even if they were willing to make a down payment in the 15% to 25% range.

    Zillow cited statistics from MyFICO.com that found over 29% of Americans have a score under 620.

    The study also found that for every 20-point increase in one’s credit score, the average low annual percentage rate offered to these consumers fell by 0.12%.

    Those consumers who had a credit score over 720 had an average low APR of 4.3% on a conventional 30-year fixed-rate mortgage. For borrowers whose score was between 620 and 639, the average low APR was 4.9%.

    Zillow chief economist Stan Humphries said homes are more affordable than in years, plus mortgage interest rates are at record lows. “But the irony here is that so many Americans can’t qualify for these low rates, or can’t qualify for a mortgage at all.”

  • Low FICOs Bar One-Third of Prospective Borrowers , Nationalmortgagenews.com


    Approximately one-third of Americans are unlikely to qualify for a mortgage because their credit scores are too low, an analysis of 25,000 loan quotes during the first half of September on Zillow Mortgage Marketplace found.

    The lead generation website found that those consumers with a credit score under 620 who entered data on the site were unlikely to have even one quote returned, even if they were willing to make a down payment in the 15% to 25% range.

    Zillow cited statistics from MyFICO.com that found over 29% of Americans have a score under 620.

    The study also found that for every 20-point increase in one’s credit score, the average low annual percentage rate offered to these consumers fell by 0.12%.

    Those consumers who had a credit score over 720 had an average low APR of 4.3% on a conventional 30-year fixed-rate mortgage. For borrowers whose score was between 620 and 639, the average low APR was 4.9%.

    Zillow chief economist Stan Humphries said homes are more affordable than in years, plus mortgage interest rates are at record lows. “But the irony here is that so many Americans can’t qualify for these low rates, or can’t qualify for a mortgage at all.”

  • GMAC Halts Evictions Related to Foreclosures in 23 States When News of Forged and Robo-Signed Documents Comes Out, by Mandelman


    I’m sorry, but is GMAC… no, wait… Ally Financial… I keep forgetting they’re my “ally” now… run by a 40 Mule Team of morons?  Don’t answer that, it was clearly rhetorical.

    Okay, so here’s the story… some attorneys representing homeowners in foreclosure noticed that GAMC was saying things that weren’t true, which is sometimes referred to as “lying,” and then in a deposition it came out that a middle manager at GMAC was actually signing 10,000 foreclosures a month without reading the paperwork like he was supposed to… or, one might consider… like any normal human being would do given they had a job signing 10,000 of anything each month.  I mean… what the… can you even imagine?

    Well, here’s your job.  We’ll need you to sit here and sign your name roughly 10,000 times a month.  So, if there are 21.67 work days per month, which there are, according to Amswers.com, then that would mean signing your name about 462 times per day, or 58 per hour, assuming one were to work eight hours a day without breaks of any kind.  That’s one per minute, and it assumes there’s some sort of catheter involved.

    No problem you say.  Except how will I be able to read what I’m signing? “Oh, no need for that, silly rabbit,” your boss says… “kicks are for trids.”  What in the world was going on here, pray tell?  Why, it’s time to play “Fraudulent Foreclosure Mill,” of course.  It’s the game where laws don’t matter and all the houses go back to the bank no matter what!  I’m not sure, but it sounds like something that might have been developed by Saddam Hussein, no?  Or, maybe Vikram Pandit and Jamie Dimon, I suppose.

    NPR reported: “The company recently halted evictions in dozens of states, after news of the robo-signer came to light.”

    Oh come on… I HATE it when people treat me like I’m six.  Is this “news” to GMAC, or any of the other banksters?  That’s what I’m to believe?  Really?  Well I don’t usually say what I’m about to say but this is my blog and I don’t work for anyone but me, so… GMAC… F#@k you.

    I worked in corporate America for some 20 years, and quite a few of those years I even worked for banksters, including JPMorgan, and there’s absolutely NO CHANCE whatsoever that this is “news” to anyone there.  I absolutely guarantee you that there are secretaries at GMAC that know about this practice… they’ve been having meetings about it for years.  There are enough CYA memos floating about at GMAC that if you stacked them on top of each other they’d be taller than Shaquille O’Neal standing on Lord Blankcheck’s throat in a pair of 4” stilettos while on the roof of a Yukon, an image that I’d go pay-per-view to see, I don’t know about you.

    No, it’s not “news,” although I guess I have to be happy that the lamebrain media has finally caught on that something might be amiss in Foreclosure Land.  And it’s about damn time.  As I recently said to a producer at American Public Television: “Thanks for coming, media people, you’re a little late, but come on in, there’s still plenty of food.”

    No, even though NPR, the Washington Post, the New York Times, and just about every news site, publication and blog on the planet reported on the story, it’s not “news,” except that perhaps because it’s us the taxpayers that actually own most of GMAC, it is.  Yep, it’s “us” that are paying that robo-signer to sign his name a gazillion times a month, thus creating fraudulent documents that are then used by lawyers with fewer ethics than pond scum to throw “US” our of our homes illegally.

    We, the taxpayers, have given GMAC $17.2 billion in TARP funds, none of which have been repaid, by the way.  And I love the way the media reports that the “Treasury invested” in GMAC.  The U.S. Treasury doesn’t have any money, folks.  That’s U.S. citizen paid or borrowed tax payer money they’re “investing”.  And if we the tax payers are going to invest in companies, why do we have to invest in all the shitty ones?  (I apologize for my language in this article, but it’s just not a good day for me to play nice.)

    NPR also reported that:

    “The case — which could allow thousands of homeowners to challenge their evictions — has triggered other reports this week of sloppy foreclosure practices.”

    Now I happen to like NPR, I’ve been listening to them on the radio for years.  But, “sloppy foreclosure practices?”  “SLOPPY?”  “SLOPPY?”  What the hell, have we all forgotten how to use the English?

    Fraudulent, forged, bogus, fake, illegal, spurious, sham, false, phony, suppositious, illicit, unlawful, criminal, immoral, sinful, vicious, evil, iniquitous, peccant, wicked, wrong, vile, in violation of the law… damn it, don’t make me go find my thesaurus.

    It reminds me of when that Senator was molesting that 16 year-old boy… the White House page, by at the very least, sending him repulsive, repugnant emails, and Newt Gingrich referred to them as “naughty emails”.  I mean… OH MY GOD!  “Naughty,” Newt?

    Even the venerable Financial Times chimed in a couple of days ago saying:

    “An official at JPMorganChase said in a deposition earlier this year that she signed off on thousands of foreclosures without verifying the details.”

    Wow, really?  Who could have possibly known about that?  Oh wait… ME, among God-only-knows-how-many-others.  Here’s my story on the JPMorganChase robo-signer from LAST JUNE 4th, 2010.  Yepsiree… they call me “Scoop Mandelman,” yes they do… Oh, please.

    And the Washington Post had their two cents to add:

    “And an employee of a Georgia document processing company falsely claimed to work for dozens of different lenders while signing off on tens of thousands of foreclosure documents over the course of several years.”

    Here’s what GMAC… oh, that’s right they’re my “ally,” had to say:

    “Ally says that its review of the GMAC Finance issue has ‘revealed no evidence of any factual misstatements or inaccuracies’ in the documents that weren’t properly reviewed. And the company says it has fixed its process for reviewing foreclosure documents.”

    Pardon me?  Did you just… I mean, what the… I can’t believe I just heard you say… what the… somebody oughta give you such a…  And what about the other 27 states?  Are they all fine and dandy?  People have lost homes here… God damn it…

    Alright… STOP.

    Look, there’s more to this story and you can bet your boots that I’m going to write about it all weekend… in great detail.  I’m going to tell you WHY they’re having to forge documents in order to foreclose on homes all over the country.  And you’re going to hate this even more than the forgeries themselves.

    (Attorney Max Gardner and attorney April Charney, of Jacksonville Legal Aid, are the country’s leading experts on this and related injustices, and they’ve been gracious enough to give me enough information to write a book covering this topic on a scale of Gone With the Wind, the Next Ten Years.  I’m going to run my next piece by them before I post, but it’ll be up this weekend if it kills me.  Don’t miss it.)

    But not right now, because right now I’m going to head down to my local watering hole to toss back a couple of pints.  Then I’m going to ask a friend of mine to back over me with his car to make the pain go away.

    Oh, and what follows is GMAC’s “CONFIDENTIAL” memorandum… they labeled it “privileged & confidential,” but anyone want to guess how much I care about that?  Read it and weep… I know I did.

    Mandelman out.

    Urgent: GMAC Preferred Agents

    Privileged & Confidential 9/17/10

    Attorney/Client Privilege

    Dear GMAC Preferred Agents:

    GMAC Mortgage has determined that it may need to take corrective action in connection with some foreclosures in the following states:

    Connecticut
    Florida
    Hawaii
    Illinois
    Indiana
    Iowa
    Kansas
    Kentucky
    Louisiana
    Maine
    Nebraska
    New Jersey
    New Mexico
    New York
    North Carolina
    North Dakota
    Ohio
    Oklahoma
    Pennsylvania
    South Carolina
    South Dakota
    Vermont
    Wisconsin

    As a result of the above, effective immediately and until further notice, please take the following actions only in the states identified above:

    Evictions:

    Do not proceed with evictions, cash for keys transactions, or lockouts. All files should be placed on hold, regardless of occupant type.

    REO Closings:

    Do not proceed with REO sale closings. GMAC Mortgage will communicate instructions to the assigned agent regarding the management of the properties in Pending status. If the contract has already been executed by both parties, the Asset Manager will request an

    amendment to extend the closing date by 30 days or as otherwise designated by the Asset Manager. Please provide appropriate notice to the REO purchaser that, pursuant to Section

    1 of the GMAC Mortgage Addendum to Standard Purchase Contract, GMAC Mortgage is exercising its sole discretion to extend the Expiration Date of the Agreement by 30 days at this time. If the REO purchaser wishes to cancel the contract, GMAC Mortgage will terminate the Agreement and return the earnest money deposit.

    You will receive further instructions regarding the status and handling of these assets from your asset manager. There could be asset level exceptions and you will receive direct communication from GMAC on the handling of those exceptions. Please send any questions or concerns regarding these matters to your asset manager.

    Please ensure your staff is aware of these requirements immediately.

    GMAC Mortgage

    GMAC Mortgage LLC 2711 N. Haskell Ave, Suite 900, Dallas, TX 75204

    http://mandelman.ml-implode.com/

  • The Art of the ReFi, by Jason Hillard, Home Loan Ninjas Blog


    I was asked by Portland Realtor Fred Stewart recently if I wanted to write an article on refinancing for his blog, Oregon Real Estate Round Table. This became a challenge that I was not expecting.

    I set out to see what the competition is “blogging” about the topic of refinancing. What I found is more of the same: advertisements disguising themselves as blog posts. I guess I should keep in mind that my blood pressure usually skyrockets when I read other mortgage blogs.

    So let me walk you through how/why to refinance in the current mortgage environment. The first step is admission, and is perhaps the hardest thing to come to grips with:

    You do not own your home.

    If you have a home loan, then the bank owns your home. You own the equity. You may not have equity. You may just own a mortgage. This idea may sound counter-intuitive, but once you accept it and move on, your view on refinancing may change. You should now be thinking, “how can I leverage the portion of my home’s worth that I actually own?”

    If you’re still having trouble, consider this. You are thinking about your “home”. I am talking about your “house”, and the debt instrument against it, which is owned by a bank. Separate your emotions from this exercise.

    Now, I am a firm believer in the concept of Mortgage Planning, which has at its core a very simple concept:

    Untapped equity does you no good.

    Let me give you an example. If you own $60,000 in home equity, well then let’s start by saying that you are in much better shape than most. However, if you choose to leave that equity in the “untapped ether”, it is nothing more than the theoretical result of a process that you may or may not engage in. In other words, if you are not selling your home in the next 3 years, who cares how much equity you have? Who knows what your home will be worth in 3 years?

    Now let’s take it one step further: what if you lose your job? What if you could really use that $60,000 while you look for a new job? Well, good luck qualifying for a refinance without any income. It won’t happen. So, having $60,000 in untapped equity, which is the percentage of the house you ACTUALLY own, is completely useless. Had you taken that equity out when it was readily available, you would have a $60,000 slush fund for a rainy day.

    This method of managing equity requires restraint and discipline, but you can see that it illustrates the outdated concept of homeownership. We are all for people “owning” homes, but you have to understand that while you may be a home “owner”, the bank actually owns the lion’s share of the four walls that comprise your house.

    So, when I hear some mortgage agent saying “rates are at historic lows” and “now is a great opportunity”, my stomach does a backflip. We agree, rates are low. But that is an awfully generic statement. And yes, now is a great opportunity, but for who? The fact is that when it comes to refinancing, the circumstances which need to be considered are highly individualized. What if you can’t get the “lowest rate” because of credit score?

    Well, maybe you shouldn’t be so hung up on the rate.

    Well, now what in the world would I say that for? Let’s break it down. Say you have a rate of 5.5% on your current mortgage and $40,000 in equity available (“equity available” in this case refers to the portion of your equity which you could actually pull out by refinancing, not the total amount of equity). You also happen to have about $800 a month in credit card payments.

    You call up a mortgage professional to inquire about a refinance. Your credit score and LTV (loan-to-value) conspire against you though. The rate you would qualify for is less than .375 lower than your current rate. You ask yourself, “why would I pay $6000 in closing costs for what is essentially the same rate I have now?”

    The answer is that by doing so, you have leveraged your available equity to save something like $600 a month on your total monthly “out-go”. This is the equivalent of getting a $600/mo raise in your salary. Also, you have transferred all of the interest from your credit cards to your mortgage, which is tax deductible. This saves you more money. The lesson: don’t get so hung up on the rate. Focus on the outcome.

    Time for disclosure: I have avoided using “exact numbers” and precise monthly payments because that requires all kinds of math and figures, which people hate reading and would only serve to muddy the point. You can get exact numbers for your situation by contacting us, or any other mortgage professional.

    Let’s review one more situation; one which is much more common for the current market. You have a pretty good rate from a couple years ago, but don’t want to miss out on this “historic opportunity” because it’s all you have heard on the radio for the last 2 years. Of course, since your last refinance was a couple of years ago, you probably don’t have a lot of available equity. So you aren’t looking for any cash out, just a simple rate & term refinance.

    Let’s say that your loan amount is such that lowering your rate about .75% on a new refinance only saves you about $120 a month. The old school mentality says “why pay $6275 in closing costs to only save $120 a month?”

    After all, that would mean that it would take 52.29 months to pay off your refinancing costs. ($6275/$120 = 52.29)

    You’re probably thinking you are losing $6275 in future earnings, which seems like a lot to trade for $120 a month now. However, what if you don’t sell your home? What if the value drops further, and that $6275 isn’t there in the future? What if your salary gets cut at your job? The $6275 is theoretical. The $120 a month savings is tangible. You need to frame the question this way:

    Which is more valuable to me? The tangible savings now, or the possibility of return in the future?

    We are not recommending you tap yourself out just to save a few bucks every month. That’s the point. The answer to this question should be as unique as the person asking it.

    However, you do need to start thinking about your mortgage in this way. It’s a brave new world, and it is likely here to stay.

    http://www.homeloanninjas.com/2010/09/23/mortgageblog-the-art-of-the-refi/

  • Refinance Boom or Bust: The Scoop from Melissa Stashin of Pacific Residential Mortgage LLC


    Melissa Stashin, Pacific Residential MortgageMelissa Stashing

    Pacific Residential Mortgage, LLC
    4949 Meadows Road, Suite 150
    Lake Oswego, OR  97035

    (503) 699-LOAN (5626)
    (503) 905-4999    Fax

    Over the last few months refinancing has seen what could be deemed a “boom” in our current lending climate; yet, according to the Bloomberg report, the refinance index decreased 3.1 % in the beginning of September, so why the recent slow? When I turn on the radio, open a paper or see a pop-up in my email, I am bombarded with phrases like; “Lowest Levels on Record! Historic Lows! Lower Your Payment! Rates as Low As.”  Mortgage companies are using confidence boosting words to create hype in their marketing strategies, and this is important, but more crucial is providing information and education to consumers so they understand their options.  In a time when we have some of the best rates in history, getting the word out about refinancing options is fundamental.

    One of the best things you can do is dig through your file cabinet, find your mortgage statement and check your current interest rate. If it’s anything over 4.5% it’s worth a phone call. Just like your mom said, “you won’t know until you ask” and really, there are a lot of options. Many consumers who refinanced two years ago may have an incentive to refinance again and this is a good thing. From a local perspective, when consumers seek a lower monthly payment it increases disposable income which creates consumer spending and helps Oregon’s economy as a whole.

    So here’s the scoop, there are programs that allow you to refinance without equity in your property or very little. There are options for large loan amounts and those for small. Each program has its own set of guidelines which we, the mortgage banker, will walk you through. Credit issues may not disqualify you if they can be resolved; it’s just a matter of looking at everything carefully. It’s our job to determine the best program for your situation and your ability to repay. The magic recipe for low rate bliss requires four basic ingredients from you: assets, income, credit and property. Although this may seem daunting, if you tell us what your situation is and we can verify it, you may be able to save a significant amount of money. The reality is that rates still are historically low and there is a lot of opportunity for consumers to improve their interest rates. Choosing a local company like Pacific Residential Mortgage helps make for a smart consumer because we have the skills and local expertise to educate our borrowers. In this new mortgage market, the difficulty isn’t in qualifying our consumers it’s simply a matter of gathering information, stirring the ingredients together, and you may be the one that takes the cake!

    ~ Melissa Stashin

    Sr. Mortgage Banker/Branch Manager

    NMLS# 40033

  • Fixed rate home loans are history, by Sarbajeet K Sen


    The fight may be intense among the top housing finance lenders to woo customers with special offers and teaser rates even as festive season is round the corner. But, if you are someone looking for a home loan that bears a fixed rate of interest for its entire tenure, you may not be as welcome.

    While the State Bank of India and LIC Housing Finance do not offer products with interest rate remaining fixed for its entire tenure, HDFC and ICICI Bank are pricing their offering at a level that would discourage consumers to opt for it, prompting housing finance experts to say the offers are virtually not on the shelf.

    While HDFC’s fixed rate loan comes at 14 per cent rate of interest, against its teaser rate home loan offering that starts at 8.5 per cent up to March 31, 2011, ICICI Bank has priced its offering a shade higher at 14.5 per cent, while its teaser rate begins at 8.25 per cent for the first year.

    “The rate that the lenders are offering on their fixed rate product for the entire tenure essentially means that there is no such product available. The pricing appears to be aimed at discouraging borrowers to opt for the offer,” RV Verma, executive director of National Housing Bank, said.

    Out of the total home loan providers including all banks and housing finance companies, the four largest players — HDFC, SBI, ICICI Bank and LIC Housing Finance, between them accounted for nearly 53 per cent of the market at the end of 2009, according to Icra report on the mortgage loan market in the country.

    According to data available on the NHB website for interest rates on housing finance as on September 1, Axis Bank and DFHL Vysya Housing Finance have similar high rates of 14 per cent and 13.75 per cent, respectively on their fixed rate products, while the likes of Punjab National Bank and IDBI Bank have comparatively lower rates. IDBI Bank’s offer comes at 11 per cent, PNB has the lowest rate of 10.50 per cent among the 15 primary lenders.

    The remaining eight lenders in the list do not have such fixed rate offers.

    A senior official of SBI felt that the fact that providers are actively discouraging fixed rate products is a sign of the market coming of age. “It is a sign of the market maturing. When most housing loan providers were offering fixed rates for the entire tenure some years ago, many of them were new to the whole concept of retail banking and did not know of its intricacies. The competition for drawing in fresh borrowers was making them offer such products,” the official said.

    So, what is it that is forcing the major lenders to discourage borrowers from taking a fixed offer or deciding to not offer such a product at all? Lenders say that the sole reason is their inability to raise long-term funds to match such lending.

    “Cost of funds keeps varying over the longer term. Hence, it is rather risky to take a long-term call on the lending rate and deciding to keep it fixed for the entire tenure,” the SBI official said.

    Srinivas Acharya, managing director of Sundaram BNP Paribas Home Finance, said inability to raise long-term funds makes designing of long-term fixed rate products difficult. “We don’t offer a fixed interest rate product over the entire tenure because it is risky proposition. It is difficult to pattern fixed rate products over a 20-year period, since there is no matching funding available in the market,” he said.

    Verma says besides the difficulty of raising long-term funds, such funds often come at a higher cost, if available. “It is difficult for lenders to take a call because of uncertainties. Long-term fund raising has become difficult or comes at a price that is not attractive,” Verma said.

    ICICI Bank and HDFC did not want to comment on the issue. “Yes we do offer fixed interest for the entire tenure of the home loan,” was all that an ICICI Bank spokesperson said, without willing to discuss the subject when probed further.

    sarbajeetsen

    @mydigitalfc.com

  • Reverse Mortgage Applications Rise to Highest Level Since September 2009, Reversemortgagedaily.com


    The number of reverse mortgage applications increased 8.1% to 9,686 in August according to the latest report from the Federal Housing Administration.

    While down 12.4% from the same period last year, the application totals for August are the highest since September 2009.
    The run up in applications before the end of FHA’s fiscal year is normal and is likely to increase as reverse mortgage borrowers rush to complete the process before the Department of Housing and Urban Development lowers the principal limit factors in October.

    The total amount of FHA applications for the month was 200,907 with a significant rise in prior FHA refinance cases. This included 86,569 purchase transactions, 104,652 refinance cases and 9,686 reverse mortgage cases. Included in the refinance count were 55,103 prior FHA’s (46.9% over last month), and 49,549 conventional conversions. In addition, 39 H4H cases were included in the refinance total.

    There were also 6,645 HECM’s insured in August and 6,175 were the traditional reverse mortgage type.

    As of the end of August, FHA has 558,316 mortgages in a serious delinquency category, yielding a seriously default rate of 8.5 percent. This includes all mortgages in bankruptcy, in foreclosure and 90 days or more delinquencies.

    So far this fiscal year 270,964 claims have been paid. The bulk of these were for loss mitigation retention (164,744) and property conveyance (87,807).

  • Multnomahforeclosures.com: Updated Notice of Default Lists and Books for the Week of September 17th, 2010


    Multnomahforeclosures.com was updated today with the largest list of Notice Defaults to date. With Notice of Default records dating back nearly 2 years. Multnomahforeclosures.com idocuments the fall of the great real estate bust of the 21st century.

    All listings are in PDF and Excel Spread Sheet format.

    Multnomah County Foreclosures
    http://multnomahforeclosures.com

  • Ally’s GMAC Mortgage Halts Home Foreclosures in 23 States, Bloomberg.com


    Ally Financial Inc.’s GMAC Mortgage unit told brokers and agents to halt foreclosures on homeowners in 23 states including Florida, Connecticut and New York.

    GMAC Mortgage may “need to take corrective action in connection with some foreclosures” in the affected states, according to a two-page memo dated Sept. 17 and obtained by Bloomberg News. Ally Financial spokesman James Oleckiconfirmed the contents of the memo. Brokers were told to stop evictions, cash-for-key transactions and lockouts, regardless of occupant type, with immediate effect, according to the document, addressed to GMAC preferred agents.

    The company will also suspend sales of properties on which it has already foreclosed. The letter tells brokers to notify buyers that the company will extend the closing date on all sales by 30 days. Buyers will be able to cancel their agreement to purchase and get their deposit back, according to the letter.

    GMAC Mortgage ranked fourth among U.S. home-loan originators in the first six months of this year, with $26 billion of mortgages, according to industry newsletter Inside Mortgage Finance. Wells Fargo & Co. ranked first, with $160 billion, and Citigroup Inc. was fifth, with $25 billion.

    GMAC was created in 1919 to provide financing for buyers of General Motors Co.’s vehicles. GMAC converted into a bank holding company in 2008 as it received more than $17 billion of government funds during the financial crisis. It rebranded itself Ally Financial last year, and continues to offer auto loans and mortgages.

    Following is a table of the affected states.

    Connecticut
Florida
Hawaii
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Nebraska
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Pennsylvania
South Carolina
South Dakota
Vermont
Wisconsin

    To contact the reporter on this story: Denise Pellegrini in New York atdpellegrini@bloomberg.net.