Real Estate News

"Operation Loan Lies"

2009-07-17T09:52:00.000-07:00

Federal and State Agencies Target Mortgage Foreclosure Rescue and Loan Modification Scams

FTC Leads “Operation Loan Lies” to Stop Fraud and Help Distressed Homeowners

Federal Trade Commission Chairman Jon Leibowitz, joined by California Attorney General Jerry Brown, today announced Operation Loan Lies, a coordinated national law enforcement effort to crack down on mortgage modification scams. The operation involves 189 actions by 25 federal and state agencies against defendants who deceptively marketed foreclosure rescue and mortgage modification services. The FTC actions, which affect consumers throughout the nation, are being announced in southern California, where the scams originated.

“These con artists see the high foreclosure rates as an opportunity to prey on people in distress,” FTC Chairman Jon Leibowitz said. “They promise to rescue homeowners in troubled financial waters, but after they take their money they throw them an anchor instead of a lifeline. People facing foreclosure should avoid any company or individual that requires a fee in advance, guarantees to stop a foreclosure or modify a loan, or advises the homeowner to stop paying the mortgage company.”

The FTC announced four lawsuits, bringing to 14 the number of mortgage foreclosure rescue and loan modification scam cases the Commission has brought since April. Twenty-three state attorneys general and other agencies are participating in the operation, taking action against 178 companies engaged in these types of deception. The FTC also announced a settlement in a lawsuit filed last November.

The FTC charged that the defendants falsely claimed that they would either obtain a mortgage loan modification or stop foreclosure, or both, and that some of the defendants falsely represented that they would give consumers refunds if they failed to do so. After charging consumers the equivalent of one month’s mortgage payment or more in advance, these companies often did little or nothing to help homeowners renegotiate their mortgages or stop foreclosure. After failing to provide the promised services, the defendants that promised refunds did not honor those promises. In each case the FTC is asking the court for consumer redress and a permanent bar on the deceptive practices. The FTC would like to thank the Financial Crimes Enforcement Network (FinCEN) of the Department of the Treasury and the Special Inspector General of the Troubled Asset Relief Program (SIG-TARP) for their invaluable assistance in these cases.

CA State Attorney General Requires Foreclosure Consultants to Register & Post $100,000 Bond

2009-07-16T13:35:00.000-07:00

Continuing his fight against scam artists who "prey on" vulnerable Californians, Attorney General Edmund G. Brown Jr. issued a directive forcing foreclosure consultants to register with his office and post a $100,000 bond by July 1, 2009.

Those who fail to do so will be in violation of state law, subject to criminal penalties of up to a year in jail and fines ranging from $1,000 to $25,000 per violation.

"California is awash with con artists who prey on vulnerable families facing foreclosure," Brown said. "By forcing foreclosure consultants to submit detailed information to my office and post a $100,000 bond, this registry will help bring long-overdue transparency to this shadowy world."

Up and down the state, scam artists pose as legitimate foreclosure consultants, promising homeowners they will prevent foreclosure. In reality, these scam artists charge huge up-front costs, but don't provide an ounce of help.

Earlier this month, Brown's office prosecuted a scam artist who provided hundreds of homeowners with forged bank documents and directed them to send their mortgage payments to accounts she had created, instead of the homeowners' lender.

Additionally, Brown's office has seen a significant increase in the number of complaints from homeowners regarding foreclosure consultants.

The registry unveiled today will provide Californians with information about potential consultants and recourse in the event that a consultant violates the law.

All foreclosure consultants operating in California must post a $100,000 bond and register with Brown's office by July 1, 2009 and submit the following information:
- Name, address, and telephone number;
- All names, addresses, telephone numbers, websites, and e-mail addresses used or proposed to be used in connection with their business;
- Copies of all advertising;
- Copies of each different contract the consultant will use with consumers; and
- A copy of its $100,000 bond.

Foreclosure consultants who provide proper information will receive a Certificate of Registration. Brown's office, however, may refuse to issue, or revoke, a Certificate of Registration if the foreclosure consultant has made any misstatement in its registration form, has been convicted of fraud or misrepresentation, has been convicted of a violation of the state's foreclosure consultant laws, California's false advertising, unfair or deceptive practices laws or other laws dealing with mortgages.

If the company violates the law, a court may order restitution to victims out of proceeds from the $100,000 bond.

In order to obtain a Certificate of Registration by July 1, 2009, foreclosure consultants should send in their registration application and materials as soon as possible so they can be reviewed prior to July 1.

The registry was established through legislation sponsored by Speaker of the Assembly Karen Bass, AB 180, which was signed into law last year.

A copy of the registration forms may be found at http://ag.ca.gov/register.php under the "Foreclosure Consultant Registry."

After July 1, 2009, consumers can call the Attorney General's office to determine whether the company they are considering dealing with has been issued a Certificate of Registration.

Tips for Homeowners

DON'T pay money to people who promise to work with your lender to modify your loan. It is unlawful for foreclosure consultants to collect money before (1) they give you a written contract describing the services they promise to provide and (2) they actually perform all the services described in the contract, such as negotiating new monthly payments or a new mortgage loan. However, an advance fee may be charged by an attorney, or by a real estate broker who has submitted the advance fee agreement to the Department of Real Estate, for review.

DO call your lender yourself. Your lender wants to hear from you, and will likely be much more willing to work directly with you than with a foreclosure consultant.

DON'T ignore letters from your lender. Consider contacting your lender yourself, many lenders are willing to work with homeowners who are behind on their payments.

DON'T transfer title or sell your house to a "foreclosure rescuer." Fraudulent foreclosure consultants often promise that if homeowners transfer title, they may stay in the home as renters and buy their home back later. The foreclosure consultants claim that transfer is necessary so that someone with a better credit rating can obtain a new loan to prevent foreclosure. BEWARE! This is a common scheme so-called "rescuers" use to evict homeowners and steal all or most of the home's equity.

DON'T pay your mortgage payments to someone other than your lender or loan servicer, even if he or she promises to pass the payment on. Fraudulent foreclosure consultants often keep the money for themselves.

DON'T sign any documents without reading them first. Many homeowners think that they are signing documents for a new loan to pay off the mortgage they are behind on. Later, they discover that they actually transferred ownership to the "rescuer."

DO contact housing counselors approved by the U.S. Department of Housing and Urban Development (HUD), who may be able to help you for free. For a referral to a housing counselor near you, contact HUD at 1-800-569-4287 (TTY: 1-800-877-8339) or www.hud.gov.

Why Lenders Don't Want to Modify Loans

2009-07-07T10:16:00.000-07:00

The Federal Reserve Bank of Boston just published an abstract ominously entitled Why Don’t Lenders Renegotiate More Home Mortgages? Redefaults, Self-Cures, and Securitization. As frightening as the title is, the results are worse.

The authors analyzed 665,410 loans originated between 2005 and 2007 that were over 60 days delinquent. Here are the results:

3% received modifications that resulted in lower monthly payments;
5.5% received modifications, but these did not result in lower monthly payments;
30% were able to fix their delinquency issues without any help from the lenders; and
45% of the approximately 150,000 borrowers who received some kind of aid ended up in arrears again.

The bottom line, according to Boston Fed senior economist Paul S. Willen, is that “loan modification is not profitable for lenders....A lot of people you give assistance to would default either way or won’t default either way. They (the banks) are trying to maximize profits, and at this point maximizing profits does not mean modifying loans.’’

So what's the solution? According to Willen, the feds should give the money directly to the borrower. “You have more money going to the banks and the servicers than you do to the homeowners,’’ he said. “It would make more sense to just give money to the borrowers.’’

Major Change in Government's Foreclosure Prevention Plan

2009-07-01T10:38:00.001-07:00

In February, President Obama announced the Home Affordability Program. Under this program, borrowers with loans owned or guaranteed by Fannie Mae or Freddie Mac who had loan-to-value ratios of 80% to 105% and were not delinquent on their loan payments, could refinance at lower rates without buying mortgage insurance, or paying for more insurance than they already had.

Effective today, that top limit has been increased to 125%. This change is an acknowledgment that at least one in five homeowners now has negative equity in their homes. It also is intended to stimulate the home refinance market which has seen a slow-down in the past few weeks as interest rates creep over 5.5%

From the Trenches

2009-06-29T18:29:00.000-07:00

Want to know what it's like to be a Realtor these days? Take a look at this New York Times article:

http://www.nytimes.com/2009/06/29/business/29loanmod.html?em

Fraud Alert - Loan Scams

2009-06-24T16:31:00.000-07:00

California Department of Real Estate ** CONSUMER ALERT ** (Issued 3/2009) 1 FRAUD WARNINGS FOR CALIFORNIA HOMEOWNERS IN FINANCIAL DISTRESS

I. HOME LOAN MODIFICATIONS.
Because of the current economic situation, you may not be able to afford your mortgage payment. If you are also not able to refinance your home loan, an option that may be available to you is a Loan Modification.

What is a Loan Modification? That is where you and your lender agree to modify one or more of the terms of your home loan. The terms could be a lower interest rate, an extension of the length of the loan (like making a 30 year loan into a 40 year loan), a conversion of an adjustable rate loan (called an ARM) to a fixed rate, the deferring of some of your payments, or any other modification of loan terms.

The goal of a Loan Modification is to help you keep your home and to give you a real, meaningful, sustainable, and long-term adjustment to your current home loan that works for your financial situation.

II. BEWARE OF LOAN MODIFICATION SCAMS AND CON ARTISTS, WHO USUALLY DEMAND THE PAYMENT OF UPFRONT FEES.
Just like after a hurricane hits, where unscrupulous contractors and repair people may collect money for repairs and then not do anything, there are numerous rogue and dishonest operators and companies (many of whom are unlicensed) that have appeared in the wake of the current economic downturn -- and more are popping up every day. They make false promises about their abilities to help get you a loan modification, collect money up front, and then do nothing or next to nothing. They are predators who take advantage of those who are or may be vulnerable.

III. THINGS TO DO TO PROTECT YOURSELF FROM BECOMING A LOAN MODIFICATION OR FORECLOSURE RESCUE SCAM VICTIM.

A. Do It Yourself (and Do It As Soon As Possible) -- You can contact your mortgage servicer and/or lender directly and request a Loan Modification that works for you and your lender. Don’t wait to call if you cannot make or believe you will not be able to make your mortgage payments. Be persistent! - call back many times. Make detailed notes about your attempts to call, when you have left messages, who you speak with, what was said, and what offers are discussed and/or made.

B. Other Free and Safe Options -- If you don’t believe you can negotiate a Loan Modification yourself, or if you do not want to, there are free and safe options available to you.

1. The U.S. Department of Housing and Urban Development ("HUD") offers Foreclosure Avoidance Counseling through non-profit agencies in California. Go to HUD’s web site at www.hud.gov, or call 800-569-4287, to find counselors. HUD also offers information to homeowners facing the loss of their home.

2. HOPE NOW Alliance - this is a cooperative effort of home loan counselors and lenders, and it consists of HUD intermediaries. Go to the HOPE NOW web site at www.hopenow.com or call 888-995-HOPE.

C. Locate and Work with a Legitimate, Licensed, and Qualified person or company ("Log on, Look em up, and Check em out")

1. California licensed real estate brokers can perform loan modification work, and licensed real estate salespersons can do such work under the supervision of their employing broker.

While it is legal for a real estate broker to charge you in advance of performing the loan modification services before a Notice of Default is recorded, you do not have to pay anything in advance of a successful loan modification, and all broker fees are negotiable. If a real estate broker wishes to charge an advance fee, he or she must submit an Advance Fee Agreement and all supporting materials to the Department of Real Estate ("DRE"). If the agreement and materials meet the requirements under the law, DRE issues a no-objection letter. All fees collected in advance must be properly handled as trust funds, which require special handling and must be deposited into the broker’s trust account. A licensee must refund to you any unearned portion of the advance fee(s) collected if any of the promised services are not completed.

But please understand that a no-objection letter does not mean that DRE recommends, approves or endorses the agreement or the services of the real estate licensee. You should go to DRE’s web site at www.dre.ca.gov, review and check the information on advance fees and loan modification services, carefully review the public license information on the real estate broker (that information will include any disciplinary history), and look for any Desist and Refrain Orders (D&Rs) that have been issued against companies and individuals. If a D&R has been issued, that means that DRE has determined the individual and/or company is unlicensed and/or has operated unlawfully.

2. California licensed lawyers can also perform loan modification work, but only when such lawyers render those loan modification services in the course and scope of their practice as an attorney at law.

Lawyers can also charge fees in advance (typically called a retainer), and even after a Notice of Default has been recorded. But lawyers must have a written fee agreement with you. And as is the case with real estate licensees, you do not have to pay anything in advance of a successful loan modification, and all legal fees are negotiable. Any fees that you pay to the lawyer(s) in advance do not have to be placed in their trust accounts.

Just as you should do with real estate licensees, check out lawyers by going to the website of the California State Bar, www.calbar.ca.gov. Check the lawyer‘s bar membership records and look for any discipline.

Unfortunately, some loan modification business models have claimed lawyer involvement but they are just unlawful schemes to avoid the prohibition against the collection of advance fees by a real estate licensee after a Notice of Default is recorded. In others, lawyers are just a "front" or non-participating "magnet" for business from desperate homeowners.

****Be on Guard and Check Them Out -- Do Your Own Homework**** In addition to looking at the license records, contact the Better Business Bureau to see if they have received any complaints about the person or company. But please understand that this is just another resource for you to check, and the loan modification provider might be so new that the Better Business Bureau may have little or nothing on them (or something positive because of insufficient public input).

Also, and very importantly, ask the loan modification "specialists" (whether they are real estate licensees or lawyers) about their financial, mortgage and real estate experience, the options and methods they use to renegotiate home loans, when they were first licensed, whether their license is still active, whether they have ever been disciplined, where they got their experience, and also ask them to define a loan modification and the process that they will undertake and the time that they will spend to negotiate a long-term, affordable and sustainable modification for you.

D. Signals of Fraud/Red Flags to Watch Out For

1. Demand for payment up front (advance fee payment). While not unlawful if paid to licensed persons in the certain limited situations discussed above, the demand or request for advance payment should alert you to the possibility of fraud.

2. Promises or guarantees of success, such as "We Can Save Your Home. We Have Saved Thousands. Free Consultation. Money Back Guarantee". No such guarantees are possible, and there are no assurances of a successful loan modification.

3. Too good to be true testimonials, such as "We Modified Terri G’s Adjustable Rate Loan, Which Had Spiked to 8 Percent, to a 3.5 Percent Fixed Rate Loan".

4. Claims that a loan modification company is attorney-backed, attorney-affiliated, or attorney-based -- especially where no lawyer or law firm is identified or mentioned. Many of these entities are simply using the name of an attorney (the name might be for show only, and/or there might not even be a lawyer involved) and scams skirting the law.

5. Claims that a loan modifier is operating under a California Finance Lender‘s (CFL) license issued by the California Department of Corporations. This is not lawful according to the Commissioner of the Department of Corporations.

6. A request that you grant a "power of attorney" to the loan modifier. The scammer may use the power of attorney to sell the home right out from under you.

7. A request that you transfer title to your home to the loan modifier or some third party. This is likely evidence of a scam where these scam artists will strip all of the remaining equity in your home.

8. Promises that you can repair your credit history by the payment of rent to the loan modifier or some third party.

9. Lease/rent-back scams, where you are told to transfer title to a third party, rent the home from that party, and then buy it back later. Transferring your deed gives the con artists the ability to evict you and sell the home.

10. Instructions to pay someone or some company other than your home loan lender or servicer.
11. Claims that a loan modification company will file a bankruptcy or other frivolous case for you to "force" a lender to negotiate a loan modification. So-called "forensic loan reviews" may fall into this category.

12. Assertions by the so-called loan modifier that you should just sign documents that they have filled out, without reviewing them first. You must carefully read and understand all of the documents you sign. Be especially wary of promises by salespeople that they will "take care of everything" and you just need to sign "a bunch of forms with boring legalese".

13. Lawyers or real estate licensees who tell you that they have no time to meet with you face-to-face.

14. Unlicensed people or companies.

15. Instructions from a loan modification provider that you should not contact your home loan lender or servicer, a lawyer, an accountant, or a non-profit housing counselor.

16. Being advised to miss payments in order to improve your chances of getting a loan modification.

17. High-pressure sales tactics or warnings that "you must act today" or "tomorrow may be too late".

It is impossible to list all of the Red Flags that might suggest fraud, since the scammers and con artists continue to modify and refine their stories, pitches and cons. They are ruthless and clever. Please be alert, be skeptical, and do your own homework.

And remember, Don’t Rush! You are always able to "slow down" or "pause", and you should tell the provider of loan modification services that you want to check out their license status with the DRE or the California State Bar. Any service provider who objects to that request may have something to hide, like no credentials or license (or bogus credentials) – so be wary!!! Log on, Look em up, and Check em out!!! www.dre.ca.gov

IV. WHAT YOU CAN DO IF YOU HAVE BEEN SCAMMED (OR BECOME AWARE OF A LOAN MODIFICATION SCAM)? REPORT FRAUD AND FILE COMPLAINTS WITH

1. The DRE if a real estate licensee is involved, or if the person or company is unlicensed. If the person or company is unlicensed, the DRE will file a Desist and Refrain Order. If the person or company is licensed, the DRE will commence disciplinary action, http://www.dre.ca.gov/cons_complaint.html .

2. The District Attorney, Sheriff, local police and local prosecutor in your community.

3. The California Attorney General, at www.ag.ca.gov/consumers/general.php .
4. The California State Bar if a lawyer is involved, or if an unlicensed person claims to be a lawyer at www.calbar.ca.gov .

5. The California Department of Corporations, at www.corp.ca.gov , if a loan modification claims to be operating under a California Finance Lender License.

6. The Federal Trade Commission, at www.ftc.gov . They have an excellent fact sheet on Foreclosure Rescue Scams.

7. Federal Bureau of Investigation (FBI), at www.fbi.gov .

8. HUD, at www.hud.gov .

9. The Federal Deposit Insurance Corporation (FDIC), at www.fdic.gov .

10. The Better Business Bureau in your community.

11. The Chamber of Commerce in your community.

12. File a Small Claims Court action. These are informal courts where disputes are resolved quickly and inexpensively by a judge. Since 2008, you can recover up to $7,500 in Small Claims Court. You represent yourself, and can request a judgment for money damages. If your judgment is based on fraud, misrepresentation, or deceit, or conversion of trust funds, and the judgment is against a real estate licensee, DRE has a Recovery Fund that may be able to pay your claim. Go to the DRE web site at www.dre.ca.gov , and look under the tab for "Consumers". Also, the California Secretary of State has a "Victims of Corporate Fraud Compensation Fund" that provides restitution to victims of corporate fraud. Go to the Secretary of State’s web site at www.sos.ca.gov/vcfcf for more information.

FHA Announces Loan Modifications Increase

2009-06-23T13:25:00.000-07:00

FEDERAL HOUSING FINANCE AGENCY NEWS RELEASE

FANNIE MAE AND FREDDIE MAC LOAN MODIFICATIONS UP BY MORE THAN 50 PERCENT IN FIRST QUARTER
MONTHLY PAYMENTS REDUCED FOR HOMEOWNERS

Washington, DC – Fannie Mae and Freddie Mac modified nearly 37,000 loans during the first quarter of 2009. It is an increase of 57 percent over the fourth quarter of 2008 and more than double the number of modifications in the first quarter of last year. The data were released by James B. Lockhart, Director of the Federal Housing Finance Agency, as part of the Foreclosure Prevention Report for the first quarter of 2009.

The FHFA report details the actions Fannie Mae and Freddie Mac have taken to prevent foreclosures and keep people in their homes. The report reflects loan modification volumes under the Streamlined Modification Program initiated in November 2008 but does not include volumes from the Home Affordable Modification program (HAMP) announced in March 2009 which was still in development in March.

"The use of serious loan modifications by Fannie Mae and Freddie Mac has risen dramatically," said Director Lockhart. "As a result, more homeowners are seeing payments significantly reduced and fewer people will lose their homes."

The report shows that as of March 31, 2009, of the Enterprises’ 30 million residential mortgages:

• Modifications represented 43 percent of all completed foreclosure prevention actions in the first quarter of 2009, up from 33 percent in the prior quarter.

• Modifications with more than 20 percent reduction in monthly payments rose from 2 percent in the first quarter of last year to 52 percent in the first quarter of this year

• Completed actions to prevent foreclosure- including modifications, forebearance, repayment plans and other measures-- rose substantially in the first quarter. Approximately 87,000 of these actions were completed in the quarter, an increase of 20 percent over the prior quarter and more than double the volume of the first quarter 2008.

• Home retention actions – actions that result in a borrower keeping his or her home – accounted for 90 percent of these actions completed during the first quarter consistent with the proportions of foreclosure prevention actions completed over the past year.

• Fannie Mae and Freddie Mac own or guarantee 56 percent of all mortgages outstanding but only 22 percent of all seriously delinquent loans.

• Although the Enterprises’ mortgage delinquencies continued to increase during the first quarter of 2009, the rate of delinquency is consistently lower than the industry average. As of March 31, 2009, the percentage of Enterprises’ mortgage loans that were at least two payments past due (60 plus days delinquent) was 3.6 percent, compared with 6.1 percent for VA loans, 10.2 percent for FHA loans and 9.2 percent for the industry average.

"We encourage servicers to work aggressively to continue to identify borrowers who are willing and able to make affordable mortgage payments," said Lockhart. "These efforts at modifying mortgages and refinancing homeowners into safer mortgages are important elements of the stabilization of the housing market and the U.S. economy. "

Is Your Home's Assessed Value Too High?

2009-06-21T16:36:00.000-07:00

Please Note: This article is specific to California property valuation. Please check with your local property tax assessor if you live in another state.

Since the passage of Proposition 13, Californians pay property tax based on the price of the home when they bought it. Every year there after, the assessor may increase that value by the rate of inflation, but never more than 2% per year. The assessor may also increase the value if the homeowner does a major renovation or addition, but otherwise, the property tax increase is predictable from year to year.

Until recently, this has been a great deal for California homeowners. As they watched home values in their neighborhoods climb, their tax rate remained stable. But now that values have dropped throughout the state, many homeowners are complaining that their homes are worth less than what they paid.

Thanks to the passage of Proposition 8, homeowners can ask for a temporary reduction in their valuation. If you have owned your home for many years, even in this real estate downturn, your assessment may still be below current market value. But for people who bought in the past few years, the assessed value as reflected on their 2009-2010 tax bill may be too high.

Starting July 2, if you think the market value of your home as of January 1, 2009, is less than its assessed value for 2009-10, you may ask the assessor to revise it downward. Depending on the county in which your property is located, you have until September 15 or November 30 to file a formal appeal.

If you want to have your assessment revised, go to your county property assessor's website. There you should find information on filing an appeal. Sometimes the assessor will ask for data to back up your claim of decreased valuation. Ask your local Realtor for assistance in providing this information. Beware of companies who offer to file the appeal for a fee. The process is simple and there is no need to pay a third party.

If you do get a reduction, remember that it is temporary. Every January 1, the assessor will review your home value to see if it has increased. If the housing market bounces back, your assessed value could go up by more than 2% a year, but it can never go higher than it would have been if you had never received the temporary reduction.

White House Plan for Regulatory Reform

2009-06-18T12:47:00.000-07:00

THE WHITE HOUSE

Office of the Press Secretary
__________________________________________________________________
For Immediate Release June 17, 2009

President Obama to Announce Comprehensive Plan for Regulatory Reform

WASHINGTON – President Obama will lay out a comprehensive regulatory reform plan this afternoon to modernize and protect the integrity of our financial system. While this crisis has had many causes, it is clear now that the government could have done more to prevent these problems from growing out of control and threatening our overall economy.

The President will be joined by Treasury Secretary Tim Geithner, representatives from the regulatory community, consumer groups, the financial industry and members of Congress for an event in the East Room later this afternoon.

The President’s plan will:

•Require that all financial firms that pose a significant risk to the financial system at large are subjected to strong consolidated supervision and regulation
•Increase market discipline and transparency to make our markets strong enough to withstand system-wide stress and the potential failure of one or more large financial institutions
•Rebuild trust in our markets by creating the Consumer Financial Protection Agency to focus exclusively on protecting consumers in credit, savings, and payment markets.
•Provide the government with the tools needed to manage financial crises so it is not forced to choose between bailouts and financial collapse
•Raise international regulatory standards and improve international coordination
Below are links to the White Paper and Fact Sheets:

White Paper: Financial Regulatory Reform:

http://www.financialstability.gov/docs/regs/FinalReport_web.pdf

Fact Sheets:

http://www.financialstability.gov/docs/regulatoryreform/requiring_strong_supervision_reg_finfirms.pdf Requiring Strong Supervision And Appropriate Regulation Of All Financial Firms

http://www.financialstability.gov/docs/regulatoryreform/strengthening_reg_core-markets_infrastructure.pdf Strengthening Regulation Of Core Markets And Market Infrastructure

http://www.financialstability.gov/docs/regulatoryreform/strengthening_consumer_protection.pdf Strengthening Consumer Protection

http://www.financialstability.gov/docs/regulatoryreform/providing_govt_tools_manage_fincrisis.pdf Providing The Government With Tools To Effectively Manage Failing Institutions

http://www.financialstability.gov/docs/regulatoryreform/improving_internatl_reg_standards_co-op.pdf Improving International Regulatory Standards And Cooperation

More Government Money for Loan Modifications

2009-06-17T13:10:00.000-07:00

In March, the federal government put aside $50 billion. This money was to entice lenders into allow borrowers to modify their loans so as to be more affordable. But the program has been less than successful.

During first quarter, 2009, 4 millions borrowers were delinquent on their loan payments, but only 50,000 were enrolled in the modification program.

Much of the blame lies with the lenders, who were not prepared for the onslaught of modification applications.

In response, the government has increased their incentive by another $3.1 billion to get banks to streamline their approval process.

Former Countrywide CEO Charged With Fraud

2009-06-05T10:42:00.000-07:00

Countrywide Financial CEO and co-founder Angelo Mozilo has been charged with securities fraud and insider trading. The Securities and Exchange Commission (SEC) also hit former Chief Operating Officer David Sambol and ex-Chief Financial Officer Eric Sieracki with similar charges.

The SEC said the men deliberately misled investors, leading them to believe that riskier subprime and option adjustable-rate mortgages were safe. It said the executives ignored the warnings of the company’s risk officer about the firm’s precarious underwriting practices.

The SEC claims Mozilo acknowledged privately that the company was unsure about the performance of option mortgages, but publicly spoke about their soundness. Mozilo is also accused of selling $140 million of his Countrywide shares even though he knew the firm was near collapse.

Lawyers for the men say they are innocent and are being charged because the SEC is looking for scapegoats.

Source: The Wall Street Journal, Liz Moyer (06/04/09)

New Tenancy Rules for Foreclosures

2009-05-22T11:38:00.000-07:00

The Helping Families Save Their Homes Act of 2009 signed into law this week by President Obama has a provision that allows a tentant to remain in a home 90 days after it sells in a foreclosure sale.

Effective immediately, an REO lender or buyer who acquires title through a foreclosure sale must give a month-to-month tenant at least a 90-day notice. 90-day notice is also sufficiant to terminate if a new owner will occupy the property as a primary residence at the end of the 90 days. Otherwise, a tenant with a one year or other fixed-term lease with a remaining lease term exceeding 90 days can stay in the premises until the remaining lease term ends.

Uniform Process for Short Sales Announced

2009-05-16T11:19:00.000-07:00

From:
National Association of REALTORS® Government Affairs Division
500 New Jersey Avenue, NW, Washington DC, 20001

Responding to the call of the National Association of REALTORS®, on May 14, 2009, the Obama Administration announced incentives and uniform procedures for short sales under its new Foreclosure Alternatives Program (FAP). For borrowers who do not qualify to have their loans modified on a permanent basis under the Making Home Affordable Loan Modification Program, the servicer may consider a short sale or, if that is not successful, a deed-in-lieu of foreclosure.

Borrowers (Homeowners). Borrowers/homeowners qualify under the FAP if they meet minimum eligibility requirements for the Home Affordable Modification program but don’t qualify for a modification or do not successfully complete the three month trial period.Before proceeding with a foreclosure, servicers must determine if a short sale is appropriate. Incentives.

Incentives include: (1) $1,000 for servicers for successful completion of a short sale or deed-in-lieu of foreclosure; (2) $1,500 for borrowers/homeowners to help with relocation expenses; and (3) up to $1,000 toward the cost of paying junior lien holders to release their liens (one dollar from the government for every $2 paid by the investors to the second lien holders).

Standardized Documents. The program will include streamlined and standardized documents, including a Short Sale Agreement and an Offer Acceptance Letter. The goal is to minimize complexity and increase use of the short sale option.

Property Valuation by Appraisal or BPO. Servicers will independently establish both property value and minimum acceptable net return, in accordance with investor requirements. The price may be determined based on an appraisal or one or more broker price opinions (BPOs), issued no more than 120 days before the date of the short sale agreement.

Timeline. In the Short Sale Agreement, servicers must give borrowers/homeowners at least 90 days to market and sell the property, or up to one year, depending on market conditions. Property must be listed with a licensed real estate professional with experience in the neighborhood. No foreclosure may take place during the marketing period (at least 90 days) specified in the Short Sale Agreement.

Commissions. The Short Sale Agreement must specify the reasonable and customary real estate commissions and costs that may be deducted from the sales price. The servicer must agree not to negotiate a lower commission after an offer has been received.

No Borrower Fees. Servicers may not charge fees to borrowers/homeowners for participating in the FAP.

Program Expiration. The program is in effect through 2012.

DIL Option. Servicers have the option to require the borrower/homeowner to agree to deed the property to the servicer in exchange for a release from the debt if the property does not sell within the time allowed in the Short Sale Agreement (plus any extensions).

Tax Credit May Be Used for Down Payment

2009-05-15T11:30:00.000-07:00

Shaun Donovan, secretary of the U.S. Department of Housing and Urban Development, on Tuesday said that the Federal Housing Administration is going to permit its lenders to allow home buyers to use the $8,000 tax credit as a down payment.

Previously, most buyers wouldn't receive the funds until after they filed their tax return, and that deterred some people from using the credit. The NATIONAL ASSOCIATION OF REALTORS® has been calling for the change.

“We all want to enable FHA consumers to access the home buyer tax credit funds when they close on their home loans so that the cash can be used as a down payment,” Donovan says.

He says FHA’s approved lenders will be permitted to “monetize” the tax credit through short-term bridge loans. This will allow eligible home buyers to access the funds immediately at the closing table.

Letter from Senator Boxer

2009-05-12T08:37:00.000-07:00

Dear Friend:

The Senate recently passed an amendment (SA 1035) I authored requiring that homeowners be alerted within 30 days if their lender sells or transfers their home mortgage loan. The amendment is good news for America’s homeowners.

My amendment provides transparency and gives homeowners another tool to fight illegitimate foreclosures and negotiate loan modifications to help keep families in their homes. Under the measure, if a loan is sold or transferred, the new note holder would have 30 days to notify the homeowner with the following information:

the identity, address, and telephone number of the new creditor;
the date of the transfer;
how to reach an agent or party with the authority to act on behalf of the new creditor;
the place where the transfer is recorded; and
any other relevant information regarding the new creditor.
This is just common sense: If you have a mortgage on your home, you should know who actually holds that mortgage. But too often, homeowners are not able to modify their mortgages to avoid foreclosure simply because they cannot find out who holds their mortgage.

My measure has been endorsed by the National Consumer Law Center, the National Association of Consumer Advocates, Consumer Action, the Consumer Federation of America, Consumers Union, the National Association of Neighborhoods, the National Council of La Raza and the National Fair Housing Alliance.

Sincerely,

Barbara Boxer
United States Senator

Short-Sales Not Without Risk

2009-05-04T11:32:00.000-07:00

More people are choosing to do a short sale on their homes. The benefit of a short-sale over a foreclosure is that the homeowner walks away from the sale with their credit intact, and free from mortgage debt.

Or do they?

Some lenders are going after borrowers for the repayment of the balance still owed on the loan. A PMI Group Inc. spokesman says the mortgage insurer "primarily target[s] borrowers who are not experiencing hardship – but those who simply elected to walk away from the property due to its decline in value."

So if you plan to do a short-sale, make sure your lender agrees to eliminate the debt after the sale. If not, you could find yourself owing a mortgage without owning a home.

Do You Feel Lucky?

2009-05-01T11:52:00.000-07:00

Do you enjoy bidding on Yahoo or EBay? Do you like the thrill of winning that great pair of earrings, or those 1950's salt and pepper shakers?

Now you can bid on mortgages! That's right - you, too, can become an investor in loans, just like the big Wall Street firms.

Interested? Check out LoanMarket.net. You can search for loans that meet your criteria such as amount, position (first loan or second loan), location, interest rate, etc. You can see information on the borrower to determine the risk. And, if you find something that looks appealing, you can make an offer to the owner of the note. Loanmarket handles all the paperwork, and fees are paid by the seller of the note.

Let me be very clear. I am NOT suggesting you invest in loans and I am NOT recommending Loanmarket. I am simply keeping you informed as to new options in the lending and investing environment.

U.S. to Offer Incentives to Modify Seconds

2009-04-28T12:42:00.000-07:00

The Obama administration is announcing incentives today for mortgages servicers to modify home equity loans and other second mortgages.

Servicers must agree to modify second mortgages when the first mortgage has been modified. They must extend the term of the second mortgage and match the rate of the first mortgage. Then the government will share the cost with the servicer of cutting the rate to 1 percent for amortizing loans and 2 percent for interest-only loans.

Under the program, the government will pay mortgage servicers $500 upfront and $250 a year for three years for the modifications. Borrowers will receive payments of up to $250 a year for five years if they stay current on the modified loan.

There will also be a schedule of incentives for holders of second liens to drop their claims altogether.

The Department of Housing and Urban Development and Treasury will make the announcement jointly.

Bank of America, Wells Fargo, and JPMorgan Chase have already agreed to participate in the program.

A separate announcement will include changes to the Hope for Homeowners program, which helps homeowners refinance into more affordable government-backed loans. To get this program moving, the administration is announcing a $2,500 upfront payment to servicers. Lenders will receive $1,000 a year for three years if the loan stays current.

Source: The Wall Street Journal, Jessica Holzer (04/28/2009)

Is NACA Right For You?

2009-04-26T09:00:00.000-07:00

NACA, or the Neighborhood Assistance Corporation of America, is a non-profit community activist organization dedicated to helping people buy and keep their homes. Everyone who participates gets the same loan which includes:

no down payment;
no closing costs;
no fees;
no requirement for perfect credit; and
a below-market interest rate.

This is a terrific deal, but it comes with some very long strings.

First, be aware that the approval process can take many months. So if you need to purchase your home now, this may not be the program for you. Second, in order to get the loan, you must attend a workshop as well as meet with a NACA counselor.

But perhaps the most important condition to consider is that you are not just getting a loan from NACA, you are becoming a member of their organization. And as such, you must agree to do volunteer work for them. They take this participation very seriously, so if you are not prepared to make the commitment, you may not wish to consider this loan.

Are You Eligible For Loan Help?

2009-04-17T13:17:00.001-07:00

Here is another website designed to help homeowners determine if they're eligible for loan modifications or loan refinancings under the Obama administration's Making Home Affordable program.

Mortgage Relief Online

Banks Sign On To Obama Housing Plan

2009-04-17T10:25:00.000-07:00

Six of the nations largest banks have agreed to participate in the Obama administration's plan to try and keep homeowners in their homes. These are JPMorgan Chase, Wells Fargo, Citigroup, GMAC Mortgage, Saxon Mortgage Services, and Select Portfolio Servicing.

The plan is designed to provide incentives to the lenders and loan servicers to modify loans that are more affordable. It also provides incentives to the homeowners to continue to make their payments, For program details, look at Understanding the New Housing Plan.

Tax Relief for Home Buyers

2009-04-15T13:10:00.000-07:00

Here are the highlights of the Federal Tax Credit for home buyers:

Amount of Tax Credit - 10% of purchase price not to exceed $8,000.

Principal Residence - Property purchased must be the taxpayer’s principal residence which is generally the home the taxpayer lives in most of the time (26 U.S.C. § 121).

Type of Property - House, condominium, townhome, manufactured home, apartment cooperative, houseboat, housetrailer, or other type of property located in the U.S.

First-time Homebuyer - The buyer (and buyer’s spouse if any) must not have owned a principal residence during the three-year period before date of purchase.

Unoccupied Property - Property may have been previously occupied or not.

Minimum Occupancy Requirement - Must be the buyer’s principal residence for 36 months after purchase, otherwise credit must be repaid.

Income Restriction - Tax credit begins to phase out if modified adjusted gross income is over $75,000 (or $150,000 for joint filers). No tax credit at all if modified adjusted gross income is over $95,000 (or $170,000 for joint filers).

Date of Purchase - January 1, 2009 to November 30, 2009, inclusive. (Note: A repayable $7,500 tax credit is available for purchases from April 9, 2008 to December 31, 2008.)

Refundable - Any amount of the tax credit not used to reduce the tax owed may be added to the taxpayer’s tax refund check.

Repayment - The buyer need not repay the tax credit if the buyer owns and occupies the property for at least 36 months after the purchase.

Multiple Buyers (not married to each other) - The $8,000 tax credit may be allocated between eligible taxpayers in any reasonable manner.

When to Claim - Full tax credit may be claimed on 2008 or 2009 tax returns.

How to File - (IRS Form 5405) to be filed with 2008 or 2009 tax returns

When to File Form - Form 5405 must be filed with 2008 or 2009 tax returns.

Exceptions - Acquisitions by gift or inheritance, acquisitions from related persons as defined, and buyers who are nonresident aliens.

For more information go to IRS website

HOPE NOW Trying To Offer More Hope

2009-04-08T17:52:00.000-07:00

HOPE NOW, the government organization designed to offer homeowners foreclosure prevention assistance, has been up and running for about six months. But there have been growing pains. Many complained that the organization was not prepared to handle the number of requests for assistance, and hope turned to frustration for many seeking help.

But now their newly designed website is much more efficient. Troubled borrowers now can apply online for help, and a confirmation that the application process has been started is promised within five to seven business days of submission. Borrower may also call the HOPE NOW hot line, (888) 995-4673.

Foreclosure Help Coming to a Theater Near You!

2009-04-07T16:48:00.000-07:00

The Federal Reserve will start showing ads at movie theaters in 14 cities with high foreclosure rates. The ads are meant to try and warn people about foreclosure scam artists.

The 30 second ads open by asking “Are you facing foreclosure?". It stresses that “it shouldn’t hurt to get help!” and ends with foreclosure tips.

"Everyone goes to the movies at some point," says Sandra Braunstein, director of the Fed's Division of Consumer and Community Affairs "The more attention we can put on this, the more consumers can protect themselves from scam artists."

Homeowners Should Be Aware of Asbestos Hazards

2009-04-03T17:25:00.000-07:00

Submitted by www.mesothelioma.com

As a new homeowner or potential seller, it is not likely that you are acquainted with the inner materials of a home. However, most buyers seek an updated home inspection before closing on a new property. It is important to reassure buyers that the home is safe and does not contain any potential health hazards. These inspections are critical to clearing hurdles down the road that may slow the sale of property.

One of the most common surprises new homeowners and sellers confront is asbestos in older structures. Indeed, asbestos containing materials (ACMs) are now banned for use in the United States but many older buildings still contain these products, which are generally safe, but homeowners should be aware of where they are and when they become hazardous.

Asbestos was included in thousands of construction products and still exists in nearly 80% of homes built prior to 1978. Common asbestos materials include attic insulation, ceiling tiles, and pipe lining. Asbestos was particularly adept at insulation and prevention of temperature transfer and was used extensively until adverse health effects began to manifest in those who worked with the material frequently.

It is only when asbestos containing materials are compromised or very old that they become hazardous. Asbestos products under these conditions are rendered “friable.” Home inspection companies should be able to identify these circumstances and advise you on a course of action. When asbestos material is friable, asbestos fibers can be released into the air, potentially endangering those in the area.

Inhaled asbestos fibers lodge in the body’s inner tissue and have been conclusively linked to the rare cancer, mesothelioma, commonly referred to as asbestos cancer, in addition to many other respiratory disorders. There are few options for mesothelioma treatment or curative therapies for other conditions caused by sustained asbestos exposures. Homeowners need to be aware of potential hazards that may exist so they may be able to avoid potentially harmful effects of hazardous asbestos.

Again, most asbestos containing materials will not pose an immediate hazard and an informed buyer will not be turned off by their presence if they’re reassured of their safety by a professional opinion. These simple precautions can be taken to assure that both sides know that they and their families will be happy and healthy in their new home.