Matt Weidner – Fighting With The American People

Posts Tagged ‘deed in lieu’

The legal and legislative deck is, for now, stacked severely against the borrower and homeowner in foreclosure proceedings.  Some things are slowly changing and an experienced foreclosure attorney can provide real assistance to help a homeowner keep their home or at least stay in it long enough to work on some better solution.

Tenants and Foreclosure The New Rights Provided in the Helping Families Save Their Home Act of 2009! The full text of this piece of legislation can be found here. The important part of the legislation is as follows…The lender cannot evict a tenant from the property when that tenant is living under a valid lease.  So how can this help the homeowner?  Well, let’s say you live in a neighborhood with similar homes.  You and your neighbor “switch” homes with each living in the other person’s similar or comparable home. 

Even if the lender files foreclosure, that lender could not evict either party from their new home!

I’m certain the lenders were not thinking of the potential constructive use of this provision when this section of the law passed, but just think of the consequences if everyone in America converted from an owner to a tenant….and all the lenders were stuck holding the bag, forced to accept the significantly-reduced amount of rent from their new tenant…Beautiful!

I currently have several files in my office where buyers with cash or with solid financing have made solid offers on properties that are in foreclosure. By solid I mean offers that will net the mortgage lender something like 75-80% of the balance of the mortgage on the home.  It is absolutely maddening that I cannot get an approval from the mortgage holders for any of these properties.

Bank of America- The Evil Wizard Behind Them All?

I had some hope that Bank of America’s new short sale processing interface, called “Equator” was going to be a more efficient processor of short sale transactions, but my hope is starting to fade.  While the system does seem to more efficiently process the paperwork (at least now BofA acknowledges receipt of paperwork), the problem is the same old bad decision making is in the system, (“Our appraisal says the home is worth $500,000.”) Problem is your appraisal is just dead wrong, oh and by the way your appraiser didn’t even make it in the neighborhood to inspect the home.

After waiting months for an approval on a second mortgage payoff from Bank of America, we were pounding the phones at CitiMortgage trying desperately to get approval on a first mortgage held by Citi.  After weeks of frustration, the monsters at Citi informed us that they were waiting approval from their investor….Bank of America.  We finally got an answer back…after three months and after we had already brought a higher contract in…BofA changed the terms, refused to pay fees and is now demanding a higher payoff price? Why, because the market’s gotten better?

The irony about this particular file  is neither Bank of America or Citi have a good mortgage on the property.  Both used the wrong legal description when they closed and fixing the mistake will take at least a year.  Like their mortgages, the entire system is broken down in a big, big way.  It will undoubtedly take years to fix….if ever?

Think a Short Sale Or Deed in Lieu Will Work?  The Numbers Do Not Look Good.

The State Foreclosure Prevention Working Group consists of 12 state attorneys general (Arizona, California, Colorado, Florida, Illinois, Iowa, Massachusetts, Nevada, North Carolina, Ohio, Texas and Washington), bank regulators for New York, North Carolina, and Maryland, and the Conference of State Bank Supervisors.  Their report, issued just this January and which can be found here confirms that the short sale process is broken as the numbers of filed foreclosures continues to rise, and the number of “stalled” foreclosures continues to increase.  Put simply a “stalled” foreclosure is one that has not been completed in a timely basis.  The report indicates that short sales account for just 12% of foreclosure resolutions while deed in lieu’s account for less than one percent.

The State Foreclosure Prevention Working Group consists of 12 state attorneys general (Arizona, California, Colorado, Florida, Illinois, Iowa, Massachusetts, Nevada, North Carolina, Ohio, Texas and Washington), bank regulators for New York, North Carolina, and Maryland, and the Conference of State Bank Supervisors.  They are a relatively objective group that offers solid data on the foreclosure crisis that bears careful consideration.  A copy of the group’s January report can be found here.

A summary of the findings is as follows:

• One in four homeowners with a mortgage owes more than their home is worth.

• The unemployment rate is 10% nationally, with millions of additional Americans either out of the workforce or underemployed.  Hundreds of thousands of homeowners have “pay option” ARM mortgages that are ticking time bombs for payment shock, when these loans reset to much higher payments.  Despite efforts of servicers, homeowners, and the government, the foreclosure crisis continues to worsen.

• The federal Home Affordable Modification Program (HAMP) has led to offers of loan modification assistance to over 1.1 million homeowners; however, early indications are that servicers have been unable to implement the program effectively and many homeowners with trial modifications are not yet qualified to transition to a permanent loan modification.

• The total number of struggling homeowners not on track for any foreclosure prevention assistance continues to grow.  Only four out of ten seriously delinquent borrowers are involved in loss mitigation efforts.

• While the HAMP program has increased the percentage of borrowers in the process of getting a loan work-out, the rising tide of delinquent loans has outpaced servicer outreach efforts.  HAMP has helped to slow down the foreclosure crisis, but current efforts have been insufficient to get ahead of the foreclosure problem.

• Both loss mitigation and foreclosure efforts appear backlogged.  While the number of homeowners in the work-out process is at an all time high, the number of loans resolved has dipped since the implementation of HAMP.

• The ratio of loans “in process” of loss mitigation to loans with loss mitigation resolutions has ballooned from nearly three-to-one in October 2008 to seven-to-one in October 2009.

• The average time to complete a loan modification for some servicers is over six months.

• The number of loans in the foreclosure process dwarfs the number of foreclosures completed.

• Most modifications result in payment reductions but principal reductions remain rare. Despite the growing number of loans that are “underwater” (where the homeowner owes more than the property is worth), only 9 percent of loan modifications in October 2009 involved reducing the unpaid balance by more than 10 percent.

• More troubling, more than 70 percent of modifications result in an increase in the principal amount owed.

• Prime loans are increasingly driving the rising delinquency rates.  While the State Working Group reporting has focused on subprime and Alt-A performance, we note the rate of seriously delinquent prime loans in our data is rising significantly.  The foreclosure problem is broad-based and not isolated to poorly-

From an article in the Wall Street Journal…

Number of Foreclosed Homes Will Continue to Soar

Since the start of the recession in 2007, more than five million homes have been taken back by lenders. The Center for Responsible Lending estimates that as many as 13 million more homes could fall into foreclosure over the next five years.

To combat the foreclosure epidemic, the Obama administration created the Home Affordable Modification Program (HAMP) last February. As part of this program, the Treasury Department plans to spend up to $75 billion in financing mortgage “modifications” for struggling homeowners.

Since the program began, more than three million homeowners have become eligible for assistance. In turn, mortgage servicers have reached out to these borrowers, initiating the modification process. Roughly 760,000 homeowners have received loan modifications on a trial basis. But just 31,000 modifications have been made permanent.

That’s a success rate of just 1%. This means that up to 99% of eligible homeowners struggling with their mortgage payments have been unable thus far to modify their loans.

Here’s Why:

A big reason for HAMP’s limited success is that the government is suffocating banks with counterproductive accounting rules. Under current law, if a bank modifies a mortgage it must record the write-down as an expense on its books. For example, if a homeowner’s monthly mortgage payment is reduced by $400 per month for 24 months, the bank has to report that it “lost” $9,600 ($400 times 24 months).

Does a bank need to prove they own a note/mortgage in order to foreclose?  No.  Does a bank need to prove how much they are owed if they try to foreclose?  No.  In fact, they don’t need courts, just let them bust down doors, and throw people and their property out.  Although numbers are difficult to pin down because this phenomenon goes largely unreported, type in “trashed out” and “foreclosure” for a list of examples.  In yet another shocking example of complete disregard for that most basic and protected American legal right….property right, banks are literally knocking down doors and throwing people and their property out on the street…..From “The Boston Channel” click here or read on…..

A Massachusetts couple says their son’s homecoming from Iraq was spoiled when Bank of America/Countrywide foreclosed on their Florida home, which they owned free and clear.  (Full Text of Article Here.)

Homeowner Charlie Cardoso, of New Bedford, was shocked to hear that the bank, with whom he never had a mortgage, foreclosed on his Spring Hill, Fla., home, despite telling the bank it had the wrong house.The Cardoso’s tenant was forced to leave the Florida home, and the bank seized the home, changed the locks and removed personal property from the house and garage, the family claims.They said Bank of America’s foreclosure spoiled the couple’s plans to welcome home Cardoso’s wife’s son, who had just completed his third tour of duty in Iraq.

Upon notice of the seizure, Charlie Cardoso drove to Florida to protect his house, missing the homecoming.The lawsuit to be filed in Federal Court in Boston alleges that Bank of America, which now owns Countrywide, intimidated the Cardoso’s tenant into vacating the property, trespassed and seized the Cardoso’s property and changed the locks to the house.The complaint also alleges that Bank of America/Countrywide was notified prior to the foreclosure that it was the wrong house by both the Cardosos and the realtor who held the listing for the foreclosure sale, yet Bank of America/ Countrywide still proceeded to foreclose.

I rattle on with all these dry numbers and boring information about the current and future collapse of our country and the meltdown of the financial system in general.  Bottom line is the average American has gotten totally hosed and we’ve all been handed a monster bill for the collapse of the financial system.

Even if you pay your mortgage and all your bills, through tax dollars and blatant money grabs, every single American is going to be paying hundreds of thousands of dollars for generations to come.  It’s a naked, arrogant and absurd fleecing the likes of which no country has ever seen.

Click on the link below for a hilarious (if it wasn’t so scary true) explanation of how we’ve all been screwed and how we’re continuing to be screwed

Steven Colbert Honor Bound