Will new rules protect those facing foreclosure?

Will new rules protect those facing foreclosure?

Will foreclosure scandal lead to better laws or just a pause?

MILPITAS, Calif. - Ching Sun has been trying for nearly two years to renegotiate his mortgage and stave off foreclosure on his family's modest home in this San Jose suburb.
So he ought to feel heartened by a push for a national moratorium on foreclosures in the wake of a growing scandal involving some of the largest U.S. lenders.

But Mr. Sun, who fell behind on his mortgage payments after his import-export business collapsed in 2008, is skeptical that a moratorium would do much beyond provide borrowers like him a temporary “breather.” After six fruitless attempts to modify his loan, Mr. Sun received a notice from PNC Financial Services last month that his house is now formally in foreclosure. He and his wife don't know if and when they will have to leave.

“People need something like (a moratorium by Congress), because there is nothing we can do anymore,” Mr. Sun said. But ultimately, instead of merely delaying foreclosures, “we need legislation to prevent them. I think (the banks) should be mandated to do loan modifications. This will be most helpful.”

Calls for a national moratorium have grown louder in recent days, fueled by outrage over revelations that some of the nation's biggest financial institutions broke the law by failing to properly verify foreclosure filings. Court documents revealed the widespread practice by bank employees of rubber-stamping—“robo-signing”—foreclosure paperwork that they did not personally review.

Mr. Sun's lender, PNC Financial, as well as Bank of America, JPMorgan Chase, and Ally Financial Inc, are among the institutions that have joined in temporarily halting foreclosures while they review their procedures. (Bank of America said Oct. 18 that it will resume foreclosures in 23 states in coming weeks.)

Foreclosures approaching record levels
Meanwhile, foreclosures have been approaching record levels. From July through September, banks seized 288,345 properties around the country, the most ever in a three-month period, according to data released by RealtyTrac, a foreclosure listing service. In the same quarter, some 930,437 U.S. homeowners received a foreclosure-related warning—or approximately one in 139 households, up 4 percent from the April-June period.

Banks have repossessed more than 816,000 homes through the first nine months of 2010, RealtyTrac reported.

“If (the big banks) are concerned (about the foreclosure process), the rest of us should be, too,” Dean Baker, co-director of the Center for Economic and Policy Research, told TheHill.com's Congress Blog. “A (congressionally imposed) moratorium would give regulators an opportunity to review the procedures that each lender has in place. It would prevent them from moving forward until they could prove they were conducting foreclosures in compliance with the law. In this way, it would be very similar in purpose to the moratorium that President Obama imposed on deepwater drilling in the Gulf following the BP spill.”

A number of lawmakers—mainly Democrats—have also been pressing regulatory agencies to take action. Dean DeBuck, spokesperson for the Office of the Comptroller of the Currency, said in an email: “Immediately after concerns surfaced regarding Ally foreclosure processing issues, the OCC ordered large national bank servicers to review their procedures to ensure compliance with state and federal law before foreclosing on seriously delinquent borrowers.” The lenders targeted by the OCC include JPMorgan Chase, Bank of America, Citigroup, HSBC Finance Corp., PNC, and Wells Fargo.

Meanwhile, attorneys general of all 50 states have launched their own probes.

In California, prior to foreclosing on a property, banks are required to do due diligence and make a good-faith effort to contact homeowners, discuss the various options, and work out a solution, according to Jim Finefrock, spokesperson for the state Attorney General's Office. Jerry Brown, the current holder of that office, is locked in a tight race for governor against Republican Meg Whitman.

But the banks' actions in other states suggest that they might not be obeying California's foreclosure laws, Mr. Finefrock said. His office has sent letters to Ally Financial, previously known as GMAC, and JP Morgan Chase, both of which have acknowledged engaging in sham verifications of foreclosure filings, and has ordered them to prove that they are complying with state law “or stop doing foreclosures in California,” Mr. Finefrock added.

Mr. Finefrock said the state is also in discussion with other banks to ensure they comply with state law.

Too little, too late
While Ching Sun welcomes the investigations, he also sees them as too little, too late. “They should have done this a long time ago,” he said. In his effort to get his mortgage modified, he has consulted lawyers and written to Senator Dianne Feinstein, the Federal Reserve and the Better Business Bureau—all to no avail. “I have a better chance of winning the lottery than getting a loan modification,” he said.

Adding to Mr. Sun's frustration is the fact that PNC Financial—formerly National City Bank—has never explained why his applications have been denied. His wife is employed, so they have some income, and their house—which they purchased for $460,000 in 2004—is underwater (meaning the mortgage exceeds the current value) by only 20 to 30 percent.

“Banks will modify loans if they see that it's to their own benefit,” Mr. Sun said. “If you lose 50 percent of your (home's value) or more, they lose a lot of money, so they would never foreclose on you.” But in his case, he adds, “they would rather foreclose on us. … If (the lender resells) the property, anyway, why (not let) the former owner buy it back?”

Stringing borrowers along
Maeve Elise Brown, executive director of Housing and Economic Rights Advocates in Oakland, Calif., echoed Mr. Sun's concerns.

“A moratorium could be very helpful for people in our own state,” she said, “but you have to crack down on lenders for failing homeowners and stringing them along.”

As Mr. Sun has discovered, lenders are not obligated to explain why a loan modification was denied, which encourages many people to reapply even if their chances are nil, Ms. Brown said. “A moratorium doesn't fix the problem of false hope.”

Preeti Vissa, community reinvestment director with the Berkeley, Calif.–based Greenlining Institute, said homeowners would benefit most in the near term from options that reduce the total amount of their loan.

“We know today that principal reduction is the most sustainable part of a loan modification,” Ms. Vissa said. “We're seeing that without that, the homeowner is paying (perhaps just) $15 less a month (on their mortgage), and they end up defaulting in 90 days anyway.”

But she notes that homeowners face severe hurdles in trying to renegotiate their loan principal, because 80 percent of home loans are owned by investors, “and (banks) can't reduce principal without investor approval.”

Ms. Vissa said the current scrutiny on big lenders and a foreclosure moratorium could be opportunities for housing advocates, policymakers and bankers to step back and see what they could do to lessen the foreclosure crisis.

“I see the banks are doing a lot to contact the homeowner,” she said. “About a year ago, you wouldn't have seen that, but there still is a lot to be done. … They are discussing options, but are they really following through and aggressively pursuing the options that keep the homeowner in the home?”

Are you a renter and your landlord is in Foreclosure?

WHAT ARE YOUR RIGHTS?

Federal legislation signed in May 2009 gives important rights to tenants whose landlords have lost their properties through foreclosure.

Renters and tenants are now being affected by foreclosures almost as often as homeowners. The mortgage industry crisis that started in 2006 has resulted in thousands -- no, make that millions -- of foreclosed homes. Most of the occupants are the homeowners themselves, who must scramble to find alternate housing with very little notice. They're being joined by scores of renters who discover, often with no warning, that their rented house or apartment is now owned by a bank, which wants them out.
Who Are the Renters?

Renters who lose their homes to foreclosures don't fit a single profile. Many of them live in smaller buildings, condos, and single-family homes. They're located in cities and surrounding suburbs, in low-income and upscale neighborhoods. In short, foreclosed homes are everywhere, and they're rented by people with widely varying incomes, including some with "Section 8" (federal housing assistance) vouchers.
Who Are the Defaulting Owners?

The typical foreclosed home may have originally been owner-occupied, but more often it's owned by investors and speculators who were hoping to profit from the rents. Caught between the slump in housing values and the rise of mortgage interest rates, these owners could not feasibly sell or extract enough rent to cover their monthly costs. In droves, they lost their investments. For example, in Minneapolis and its surrounding suburbs, 38% of the 2006 foreclosures involved rental properties; in Minneapolis alone, 65% were rentals.
Who Are the New Landlords?

When an owner defaults on a mortgage, the mortgage holder, often a bank, either becomes the new owner or sells the property at a public sale. If the bank becomes the owner, it may pay a servicing company to handle the property. But don't expect close attention -- these companies are focused on financial matters, not mundane things like maintenance.

Some renters find themselves with a new owner even before the foreclosure. Lawyers in Massachusetts, for example, contend that many new rental property owners are investment trusts that specialize in purchasing troubled loans directly from banks, then foreclosing, evicting, and selling.
New Owners Means No Maintenance

Many tenants have no idea that their building has been taken at foreclosure. They continue to pay rent to the former owner, who often pockets the money but is hardly inclined to maintain the building it no longer owns. In the meantime, the new owners simply refuse to be landlords, never making repairs or even paying utility bills. Because the banks are stuck with increasing numbers of foreclosed properties that they can't sell, they remain non-landlords for some time, making life impossible for their tenants until those tenants are evicted.
Renters in Foreclosed Properties No Longer Lose Their Leases

Before May 20, 2009, most renters lost their leases upon foreclosure. The rule in most states was that if the mortgage was recorded before the lease was signed, a foreclosure wiped out the lease (this rule is known as "first in time, first in right"). Because most leases last no longer than a year, it was all too common for the mortgage to predate the lease and destroy it upon foreclosure.

These rules changed dramatically on May 20, 2009, when President Obama signed the "Protecting Tenants at Foreclosure Act of 2009." This legislation provided that leases would survive a foreclosure -- meaning the tenant could stay at least until the end of the lease, and that month-to-month tenants would be entitled to 90 days' notice before having to move out (this notice period is longer than any state's non-foreclosure notice period, a real boon to tenants).

An exception was carved out for the buyer who intends to live on the property -- this buyer may terminate a lease with 90 days' notice. Importantly, the law provides that any state legislation that is more generous to tenants will not be preempted by the federal law. These protections apply to Section 8 tenants, too.

Importantly, tenants who live in cities with rent control "just cause" eviction protection are also protected from terminations at the hands of an acquiring bank or new owner. These tenants can rely on their ordinance's list of allowable, or "just causes," for termination. Because a change of ownership, without more, does not justify a termination, the fact that the change occurred through foreclosure will not justify a termination.
Does It Make Sense to Evict Tenants?

New owners may want to terminate existing tenants because they believe that vacant properties are easier to sell. Common sense suggests otherwise. In many situations a building full of stable, rent-paying tenants will be more valuable (and command a higher price) than an empty building. Emptied buildings are also prone to vandalism and other deterioration -- after all, no one is on site to monitor their condition. When entire neighborhoods become a wasteland of empty foreclosed multifamily buildings, their value drops even further. It's hard to understand why new owners choose to pay lawyers to start eviction procedures instead of paying a modest fee to a management company to collect rent and manage the property while they wait to sell.
"Cash for Keys"

To encourage tenants to leave quickly and save on the court costs associated with an eviction, banks offer tenants a cash payout in exchange for their rapid departure. Thinking that they have little choice, many tenants -- even Section 8, protected tenants -- take the deal. It doesn't help them much as they join the swelling ranks of newly displaced tenants (and former homeowners) who are competing to find an affordable new rental.
What Can a Foreclosed-Upon Tenant Do?

Thanks to the 2009 federal legislation, most tenants with leases will keep their leases, and month-to-month tenants will have at least 90 days to relocate. Tenants with leases have no legal recourse against their former landlords, because they are in the same position vis a vis the new owner as they were with the old: The lease survives and ends as it would had there been no foreclosure. Similarly, month-to-month tenants always know that they can be terminated with proper notice, and 90 days is longer than any state's termination period.

However, a lease-holding tenant whose rental has been bought by a buyer who want to move in to the property ends up less fortunate than before the new law -- he may lose his lease with 90 days' notice, a result that probably would not have happened had the owner simply sold the property to a buyer who intended to occupy the property. (Normally, the new owner has to wait until the lease ends, absent a lease clause providing for termination upon sale, though such clauses may not be legal in all situations.)
Suing in Small Claims Court

A lease-holng tenant who has to move out so that new owners may move in might consider suing their former landlord in small claims court. Here's how it works.

After signing a lease, the landlord is legally bound to deliver the rental for the entire lease term. In legalese, this duty is known as the "covenant of quiet enjoyment." A landlord who defaults on a mortgage, which sets in motion the loss of the lease, violates this covenant, and the tenant can sue for the damages it causes.

Small claims court is a perfect place to bring such a lawsuit. The tenant can sue the original landlord for moving and apartment-searching costs, application fees, and the difference, if any, between the new rent for a comparable rental and the rent under the old lease. Though the former owner is probably not flush with money, the awards in these cases won't be very much, and the court judgment and award will stay on the books for many years. A persistent tenant can probably collect what's owed eventually.


If you are renting and your landlord is in Foreclosure and you are afraid that you and your family will be evicted;We can help you keep your place of residence.
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Dubai: Real Estate Crash Sends Prices, Rents Falling

There's a half-off sale in the world's tallest building.

Even with an address at the iconic Burj Khalifa, rents for residences in the tower are not immune from Dubai's real estate crash. Indeed, nearly a year after it was inaugurated with a massive water-and-fireworks display, about 825 of the tower's 900 ultra-luxury apartments remain unoccupied, according to Better Homes, a real estate brokerage in Dubai.

The cost of renting a studio with floor-to-ceiling windows, marble fixtures and wooden floors has dropped to $1,815 a month from $3,025, while a one-bedroom apartment is available for $2,722 (it used to be $4,536), the brokerage says. Two-bedroom residences are expected to get $4,310, down from $7,183. Interested parties "call every few days and go for a viewing," says Imad Ben Khadra, a Moroccan expatriate who owns two 1,000-sq.-ft. one-bedroom apartments he purchased in late 2008 for about $950,000, both of which he is trying to rent out. "We got some offers [from prospective tenants], but nobody confirms.
Varun Chaudhary bought two two-bedroom residences in the Burj for about $1.5 million in 2005 even before construction began. He saw the value leap from $762 per sq. ft. to $3,811 per sq. ft. at the heights of the boom. Today, those values hover just above his purchase price. But he says he isn't worried about his investment. "These properties will recuperate faster than other properties because it's an icon, because it's only one in the world," he says. "You just have to say 'Burj Khalifa.' That's the address; you don't have to explain. It's a style statement in itself.

Still, the Burj, with its one-of-a-kind address and amenities like the first-ever Armani Hotel, is only the most high-profile example how Dubai's once flying real estate market has crashed. Overall in the emirate, property prices have dropped an average of 50%. Some half-built projects, located away from the main highway that runs through the city, may never be completed because their values have dropped too much, analysts say.

But it's the units that will be completed that are looming as a problem. The Dubai economy must still digest a flood of housing units coming on line or soon to be opened, which will further dampen prices. Through September, 27,000 residential units have been put on the market, and another 9,000 are expected to be completed by the end of the year, according to real estate firm Jones Lang LaSalle. For 2011, the firm forecasts that about 30,000 new units will come on line. A glut in commercial property has forced landlords to offer previously unheard-of incentives such as free rent and allowances to finish out shell construction space. "They built the infrastructure for a much larger economy than it can [now] attract," says Wissam Haroun, a Syrian expatriate who owns entertainment and technology companies in Dubai.

Worried about the glut, Dubai's Real Estate Regulatory Agency recently said it was canceling or in the process of canceling about half of all projects registered with the authority. Of about 980 developments, 495 are on the chopping block, according to a Dubai sovereign-bond prospectus made public last week.

Some, however, see opportunity in the depressed prices. "It's a massive change in terms that it's no longer the man on the street or the lady on the street buying property on spec or off plan," says Paul Devonshire, a director with Pramerica Real Estate Investors who specializes in the Middle East and North Africa region. Now, he explains, institutions or more savvy investors are moving in, eyeing distressed or repriced assets.

But the buzz was decidedly subdued at the recent Cityscape Global, the annual real estate exhibition that in the past featured the launch of glitzy projects like the Palm Trilogy, the world's largest man-made islands. The name of the event itself had been changed from Cityscape Dubai in order to expand the focus beyond the city-state. Only a fraction of exhibitors - 200, down from around 1,000 during the boom -showed up to participate.

With speculators gone and credit still tight, Dubai is going about the hard work of adjusting to its new economic reality. Top of the list is paying back creditors that helped finance the boom. Over the past decade, Dubai amassed $109 billion in debt, with about $15.5 billion due this year, the International Monetary Fund estimates. Dubai World, one of the three main holding companies controlled by Dubai's ruler, Sheik Mohammed bin Rashid al-Maktoum, said last month that 99% of its creditors had agreed to alter the terms on $24.9 billion of its debt. Last November, Dubai World sent stock markets around the world tumbling when it announced it wanted a moratorium of its debts. "We are back. Of course we are back," Sheik Mohammed said in a Bloomberg TV interview last month while attending the Alltech FEI World Equestrian Games in Lexington, Ky.

But, having been through the financial volatility, few seem to want to part with their cash just yet. The Syrian expatriate Haroun, who has lived in Dubai most of his life and plans to raise his family there, says he would like to buy a home. But his forays into the market so far have left him unsatisfied. "People got stupid rich and stupid poor at the same time," he says. "I'm glad I stayed out of it."

Officials in 50 states launch foreclosure probe

WASHINGTON – Officials in 50 states and the District of Columbia have launched a joint investigation into allegations that mortgage companies mishandled documents and broke laws in foreclosing on hundreds of thousands of homeowners.

The states' attorneys general and bank regulators will examine whether mortgage company employees made false statements or prepared documents improperly.

Alabama initially did not sign on to the investigation. It reversed course after the joint statement was released.

Attorneys general have taken the lead in responding to a nationwide scandal that's called into question the accuracy and legitimacy of documents that lenders relied on to evict people from the homes. Employees of four large lenders have acknowledged in depositions that they signed off on foreclosure documents without reading them.

The allegations raise the possibility that foreclosure proceedings nationwide could be subject to legal challenge. Some foreclosures could be overturned. More than 2.5 million homes have been lost to foreclosure since the recession started in December 2007, according to RealtyTrac Inc.

The state officials said they intend to use their investigation to fix the problems that surfaced in the mortgage industry.

"This is not simply about a glitch in paperwork," said Iowa Attorney General Tom Miller, who is leading the probe. "It's also about some companies violating the law and many people losing their homes."

Ally Financial Inc.'s GMAC Mortgage Unit, Bank of America and JPMorgan Chase & Co. already have halted some questionable foreclosures. Other banks, including Citigroup Inc. and Wells Fargo & Co. have not stopped processing foreclosures, saying they did nothing wrong.

In a joint statement, the officials said they would review evidence that legal documents were signed by mortgage company employees who "did not have personal knowledge of the facts asserted in the documents. They also said that many of those documents appear to have been signed without a notary public witnessing that signature — a violation of most state laws.

"What we have seen are not mere technicalities," said Ohio Attorney General Richard Cordray. "This is about the private property rights of homeowners facing foreclosure and the integrity of our court system, which cannot enter judgments based on fraudulent evidence."

lllinois sheriff scolds banks for evictions of 'innocent' renters

-- An outraged sheriff in Illinois who refuses to evict "innocent" renters from foreclosed homes criticized mortgage companies Thursday and said the law should protect victims of the mortgage meltdown.
Cook County, Illinois, Sheriff Thomas J. Dart says too many renters are being evicted for landlords' problems.

Cook County, Illinois, Sheriff Thomas J. Dart says too many renters are being evicted for landlords' problems.
Sheriff Thomas J. Dart said earlier he is suspending foreclosure evictions in Cook County, which includes the city of Chicago.

The county had been on track to reach a record number of evictions, many because of mortgage foreclosures.

Many good tenants are suffering because building owners have fallen behind on their mortgage payments, he said Thursday on CNN's "American Morning."

"These poor people are seeing everything they own put out on the street. ... They've paid their bills, paid them on time. Here we are with a battering ram at the front door going to throw them out. It's gotten insane," he said. Video Watch Dart slam mortgage companies »

Mortgage companies are supposed to identify a building's occupants before asking for an eviction, but sheriff's deputies routinely find that the mortgage companies have not done so, Dart said.

"This is an example where the banking industry has not done any of the work they should do. It's a piece of paper to them," Dart said.
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"These mortgage companies ... don't care who's in the building," Dart said Wednesday. "They simply want their money and don't care who gets hurt along the way.

"On top of it all, they want taxpayers to fund their investigative work for them. We're not going to do their jobs for them anymore. We're just not going to evict innocent tenants. It stops today."

Dart said he wants the courts or the state Legislature to establish protections for those most harmed by the mortgage crisis.

In 1999, Cook County had 12,935 mortgage foreclosure cases; in 2006, 18,916 cases were filed, and last year, 32,269 were filed. This year's total is expected to exceed 43,000.

"The people we're interacting with are, many times, oblivious to the financial straits their landlord might be in," Dart said. "They are the innocent victims here, and they are the ones all of us must step up and find some way to protect." Video Watch sheriff announce he won't evict innocent tenants »

The Illinois Bankers Association opposed the plan, saying that Dart "was elected to uphold the law and to fulfill the legal duties of his office, which include serving eviction notices."

The association said Dart could be found in contempt of court for ignoring court eviction orders.

"The reality is that by ignoring the law and his legal responsibilities, he is carrying out 'vigilantism' at the highest level of an elected official," it said. "The Illinois banking industry is working hard to help troubled homeowners in many ways, but Sheriff Dart's declaration of 'martial law' should not be tolerated."

Dart was undeterred Thursday.

"I think the outrage on my part with them [is] that they could so cavalierly issue documents and have me throw people out of homes who have done absolutely nothing wrong," Dart said. "They played by all the rules.
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"I told them, 'You send an agent out, you send somebody out that gives me any type of assurance that the appropriate person is in the house, I will fulfill the order.' iReport.com: How hard have foreclosures hit your neighborhood?

"When you're blindly sending me out to houses where I'm coming across innocent tenant after innocent tenant, I can't keep doing this and have a good conscience about it."

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Government Backed Lender Will Impose 7 Year Loan Sanctions on Those Who Strategically Default

corporations that provides home loans is now backed by the federal government, is taking step to prevent homeowners from walking away from their mortgages.

In Duval County there are more than 5,700 homes with mortgages in default.

In many cases, owners simply cannot pay what they owe. However, others make a decision to walk away and let the bank take the home because it is not longer considered a good investment.

Come October, Fannie Mae is going to punish those who can afford their mortgages but walk, by banning them from getting new loans through their corporation for seven years.

"These people are looking at homes that are so far underwater they realize that in their lifetime they will never realize any equity out of their investments," said Chip Parker, a foreclosure defense and bankruptcy attorney.

Parker has a different take than one might expect when it comes to homeowners who strategically default on their mortgages.

"It should be insulting to the middle class that Fannie Mae, who has been given $145 billion dollars from our government to keep it afloat, would turn around and threaten middle class America," said Parker.

Currently, homeowners who have mortgages through Fannie Mae and who strategically default, cannot take out a loan again with Fannie Mae for five years. In October, it will be extended to seven.

"So it is attention getting. If they go from the five years to seven years, it does put some teeth into it. So it will make some homeowners think twice before walking away," said Carol Hill, president of the Northeast Florida Association of Realtors.

A spokesperson for Fannie Mae tells First Coast News that while this policy is meant to discourage homeowners from walking away from their financial responsibilities, it won't affect homeowners who can prove "financial hardships" that keep them from paying bills, like an illness.

Hill urges homeowners to get financial counseling before making any big mortgage decisions.

"We certainly encourage financial responsibility. It is in everyone's best interest to strive towards a workable solution for all parties," said Hill.

A spokesperson for Fannie Mae would not specify how many of the properties it helps finance have been abandoned by homeowners who walked away. The company said the numbers are not shared publicly.

The Foreclosure Chasm

For two decades, Tyrone Banks was one of many African-Americans who saw his economic prospects brightening in this Mississippi River city.

A single father, he worked for FedEx and also as a custodian, built a handsome brick home, had a retirement account and put his eldest daughter through college.

Then the Great Recession rolled in like a fog bank. He refinanced his mortgage at a rate that adjusted sharply upward, and afterward he lost one of his jobs. Now Mr. Banks faces bankruptcy and foreclosure.

“I’m going to tell you the deal, plain-spoken: I’m a black man from the projects and I clean toilets and mop up for a living,” said Mr. Banks, a trim man who looks at least a decade younger than his 50 years. “I’m proud of what I’ve accomplished. But my whole life is backfiring.”

Not so long ago, Memphis, a city where a majority of the residents are black, was a symbol of a South where racial history no longer tightly constrained the choices of a rising black working and middle class. Now this city epitomizes something more grim: How rising unemployment and growing foreclosures in the recession have combined to destroy black wealth and income and erase two decades of slow progress.

The median income of black homeowners in Memphis rose steadily until five or six years ago. Now it has receded to a level below that of 1990 — and roughly half that of white Memphis homeowners, according to an analysis conducted by Queens College Sociology Department for The New York Times.

Black middle-class neighborhoods are hollowed out, with prices plummeting and homes standing vacant in places like Orange Mound, Whitehaven and Cordova. As job losses mount — black unemployment here, mirroring national trends, has risen to 16.9 percent from 9 percent two years ago; it stands at 5.3 percent for whites — many blacks speak of draining savings and retirement accounts in an effort to hold onto their homes. The overall local foreclosure rate is roughly twice the national average.

The repercussions will be long-lasting, in Memphis and nationwide. The most acute economic divide in America remains the steadily widening gap between the wealth of black and white families, according to a recent study by the Institute on Assets and Social Policy at Brandeis University. For every dollar of wealth owned by a white family, a black or Latino family owns just 16 cents, according to a recent Federal Reserve study.

The Economic Policy Institute’s forthcoming “The State of Working America” analyzed the recession-driven drop in wealth. As of December 2009, median white wealth dipped 34 percent, to $94,600; median black wealth dropped 77 percent, to $2,100. So the chasm widens, and Memphis is left to deal with the consequences.

“This cancer is metastasizing into an economic crisis for the city,” said Mayor A. C. Wharton Jr. in his riverfront office. “It’s done more to set us back than anything since the beginning of the civil rights movement.”

The mayor and former bank loan officers point a finger of blame at large national banks — in particular, Wells Fargo. During the last decade, they say, these banks singled out blacks in Memphis to sell them risky high-cost mortgages and consumer loans.

The City of Memphis and Shelby County sued Wells Fargo late last year, asserting that the bank’s foreclosure rate in predominantly black neighborhoods was nearly seven times that of the foreclosure rate in predominantly white neighborhoods. Other banks, including Citibank and Countrywide, foreclosed in more equal measure.

In a recent regulatory filing, Wells Fargo hinted that its legal troubles could multiply. “Certain government entities are conducting investigations into the mortgage lending practices of various Wells Fargo affiliated entities, including whether borrowers were steered to more costly mortgage products,” the bank stated.

Wells Fargo officials are not backing down in the face of the legal attacks. They say the bank made more prime loans and has foreclosed on fewer homes than most banks, and that the worst offenders — those banks that handed out bushels of no-money-down, negative-amortization loans — have gone out of business.

“The mistake Memphis officials made is that they picked the lender who was doing the most lending as opposed to the lender who was doing the worst lending,” said Brad Blackwell, executive vice president for Wells Fargo Home Mortgage.
Not every recessionary ill can be heaped upon banks. Some black homeowners contracted the buy-a-big-home fever that infected many Americans and took out ill-advised loans. And unemployment has pitched even homeowners who hold conventional mortgages into foreclosure.

Federal and state officials say that high-cost mortgages leave hard-pressed homeowners especially vulnerable and that statistical patterns are inescapable.

“The more segregated a community of color is, the more likely it is that homeowners will face foreclosure because the lenders who peddled the most toxic loans targeted those communities,” Thomas E. Perez, the assistant attorney general in charge of the Justice Department’s civil rights division, told a Congressional committee.

The reversal of economic fortune in Memphis is particularly grievous for a black professional class that has taken root here, a group that includes Mr. Wharton, a lawyer who became mayor in 2009. Demographers forecast that Memphis will soon become the nation’s first majority black metropolitan region.
As the subprime market heated up, she said, the bank pressure to move more loans — for autos, for furniture, for houses — edged into mania. “It was all about selling your units and getting your bonus,” she said.

Articles in this series will examine the struggle to recover from the widespread strains of the Great Recession.

Ms. Thomas and three other Wells Fargo employees have given affidavits for the city’s lawsuit against the bank, and their statements about bank practices reinforce one another.

“Your manager would say, ‘Let me see your cold-call list. I want you to concentrate on these ZIP codes,’ and you knew those were African-American neighborhoods,” she recalled. “We were told, ‘Oh, they aren’t so savvy.’ ”

She described tricks of the trade, several of dubious legality. She said supervisors had told employees to white out incomes on loan applications and substitute higher numbers. Agents went “fishing” for customers, mailing live checks to leads. When a homeowner deposited the check, it became a high-interest loan, with a rate of 20 to 29 percent. Then bank agents tried to talk the customer into refinancing, using the house as collateral.

Several state and city regulators have placed Wells Fargo Bank in their cross hairs, and their lawsuits include similar accusations. In Illinois, the state attorney general has accused the bank of marketing high-cost loans to blacks and Latinos while selling lower-cost loans to white borrowers. John P. Relman, the Washington, D.C., lawyer handling the Memphis case, has sued Wells Fargo on behalf of the City of Baltimore, asserting that the bank systematically exploited black borrowers.

A federal judge in Baltimore dismissed that lawsuit, saying it had made overly broad claims about the damage done by Wells Fargo. City lawyers have refiled papers.

“I don’t think it’s going too far to say that banks are at the core of the disaster here,” said Phyllis G. Betts, director of the Center for Community Building and Neighborhood Action at the University of Memphis, which has closely examined bank lending records.

Former employees say Wells Fargo loan officers marketed the most expensive loans to black applicants, even when they should have qualified for prime loans. This practice is known as reverse redlining.

Webb A. Brewer, a Memphis lawyer, recalls poring through piles of loan papers and coming across name after name of blacks with subprime mortgages. “This is money out of their pockets lining the purses of the banks,” he said.

For a $150,000 mortgage, a difference of three percentage points — the typical spread between a conventional and subprime loan — tacks on $90,000 in interest payments over its 30-year life.

Wells Fargo officials say they rejected the worst subprime products, and they portray their former employees as disgruntled rogues who subverted bank policies.

“They acknowledged that they knowingly worked to defeat our fair lending policies and controls,” said Mr. Blackwell, the bank executive.

Bank officials attribute the surge in black foreclosures in Memphis to the recession. They say that the average credit score in black Census tracts is 108 points lower than in white tracts.

“People who have less are more vulnerable during downturns,” said Andrew L. Sandler of Buckley Sandler, a law firm representing Wells Fargo.

Mr. Relman, the lawyer representing Memphis, is unconvinced. “If a bad economy and poor credit explains it, you’d expect to see other banks with the same ratio of foreclosures in the black community,” he said. “But you don’t. Wells is the outlier.”

Whatever the responsibility, individual or corporate, the detritus is plain to see. Within a two-block radius of that porch in Soulsville, Wells Fargo holds mortgages on nearly a dozen foreclosures. That trail of pain extends right out to the suburbs.

Begging to Stay

To turn into Tyrone Banks’s subdivision in Hickory Ridge is to find his dream in seeming bloom. Stone lions guard his door, the bushes are trimmed and a freshly waxed sport utility vehicle sits in his driveway.

For years, Mr. Banks was assiduous about paying down his debt: he stayed two months ahead on his mortgage, and he helped pay off his mother’s mortgage.

Two years ago, his doorbell rang, and two men from Wells Fargo offered to consolidate his consumer loans into a low-cost mortgage.

“I thought, ‘This is great! ’ ” Mr. Banks says. “When you have four kids, college expenses, you look for any savings.”

What those men did not tell Mr. Banks, he says (and Ms. Thomas, who studied his case, confirms), is that his new mortgage had an adjustable rate. When it reset last year, his payment jumped to $1,700 from $1,200.

Months later, he ruptured his Achilles tendon playing basketball, hindering his work as a janitor. And he lost his job at FedEx. Now foreclosure looms.

He is by nature an optimistic man; his smile is rueful.

“Man, I should I have stayed ‘old school’ with my finances,” he said. “I sat down my youngest son on the couch and I told him, ‘These are rough times.’ ”

Many neighbors are in similar straits. Foreclosure notices flutter like flags on the doors of two nearby homes, and the lawns there are overgrown and mud fills the gutters.

Wells Fargo says it has modified three mortgages for every foreclosure nationwide — although bank officials declined to provide the data for Memphis. A study by the Neighborhood Economic Development Advocacy Project and six nonprofit groups found that the nation’s four largest banks, Wells Fargo, Bank of America, Citigroup and JPMorgan Chase, had cut their prime mortgage refinancing 33 percent in predominantly minority communities, even as prime refinancing in white neighborhoods rose 32 percent from 2006 to 2008.

For Mr. Banks, it is as if he found the door wide open on his way into debt but closed as he tries to get out.

“Some days it feels like everyone I know in Memphis is in trouble,” Mr. Banks says. “We’re all just begging to stay in our homes, basically.”


That prospect, noted William Mitchell, a black real estate agent, once augured for a fine future.

“Our home values were up, income up,” he said. He pauses, his frustration palpable. “What we see today, it’s a new world. And not a good one.”

“You don’t want to walk up there! That’s the wild, wild west,” a neighbor shouts. “Nothing on that block but foreclosed homes and squatters.”

To roam Soulsville, a neighborhood south of downtown Memphis, is to find a place where bungalows and brick homes stand vacant amid azaleas and dogwoods, where roofs are swaybacked and thieves punch holes through walls to strip the copper piping. The weekly newspaper is swollen with foreclosure notices.

Here and there, homes are burned by arsonists.

Yet just a few years back, Howard Smith felt like a rich man. A 56-year-old African-American engineer with a gray-flecked beard, butter-brown corduroys and red sneakers, he sits with two neighbors on a porch on Richmond Avenue and talks of his miniature real estate empire: He owned a home on this block, another in nearby Whitehaven and another farther out. His job paid well; a pleasant retirement beckoned.

Then he was laid off. He has sent out 60 applications, obtained a dozen interviews and received no calls back. A bank foreclosed on his biggest house. He will be lucky to get $30,000 for his house here, which was assessed at $80,000 two years ago.

“It all disappeared overnight,” he says.

“Mmm-mm, yes sir, overnight,” says his neighbor, Gwen Ward. In her 50s, she, too, was laid off, from her supervisory job of 15 years, and she moved in with her elderly mother. “It seemed we were headed up and then” — she snaps her fingers — “it all went away.”

Mr. Smith nods. “The banks and Wall Street have taken the middle class and shredded us,” he says.

For the greater part of the last century, racial discrimination crippled black efforts to buy homes and accumulate wealth. During the post-World War II boom years, banks and real estate agents steered blacks to segregated neighborhoods, where home appreciation lagged far behind that of white neighborhoods.

Blacks only recently began to close the home ownership gap with whites, and thus accumulate wealth — progress that now is being erased. In practical terms, this means black families have less money to pay for college tuition, invest in businesses or sustain them through hard times.

“We’re wiping out whatever wealth blacks have accumulated — it assures racial economic inequality for the next generation,” said Thomas M. Shapiro, director of the Institute on Assets and Social Policy at Brandeis University.

The African-American renaissance in Memphis was halting. Residential housing patterns remain deeply segregated. While big employers — FedEx and AutoZone — have headquarters here, wage growth is not robust. African-American employment is often serial rather than continuous, and many people lack retirement and health plans.

But the recession presents a crisis of a different magnitude.

Mayor Wharton walks across his office to a picture window and stares at a shimmering Mississippi River. He describes a recent drive through ailing neighborhoods. It is akin, he says, to being a doctor “looking for pulse rates in his patients and finding them near death.”

He adds: “I remember riding my bike as a kid through thriving neighborhoods. Now it’s like someone bombed my city.”

Banking on Nothing

Camille Thomas, a 40-year-old African-American, loved working for Wells Fargo. “I felt like I could help people,” she recalled over coffee.
As the subprime market heated up, she said, the bank pressure to move more loans — for autos, for furniture, for houses — edged into mania. “It was all about selling your units and getting your bonus,” she said.
Ms. Thomas and three other Wells Fargo employees have given affidavits for the city’s lawsuit against the bank, and their statements about bank practices reinforce one another.

“Your manager would say, ‘Let me see your cold-call list. I want you to concentrate on these ZIP codes,’ and you knew those were African-American neighborhoods,” she recalled. “We were told, ‘Oh, they aren’t so savvy.’ ”

She described tricks of the trade, several of dubious legality. She said supervisors had told employees to white out incomes on loan applications and substitute higher numbers. Agents went “fishing” for customers, mailing live checks to leads. When a homeowner deposited the check, it became a high-interest loan, with a rate of 20 to 29 percent. Then bank agents tried to talk the customer into refinancing, using the house as collateral.

Several state and city regulators have placed Wells Fargo Bank in their cross hairs, and their lawsuits include similar accusations. In Illinois, the state attorney general has accused the bank of marketing high-cost loans to blacks and Latinos while selling lower-cost loans to white borrowers. John P. Relman, the Washington, D.C., lawyer handling the Memphis case, has sued Wells Fargo on behalf of the City of Baltimore, asserting that the bank systematically exploited black borrowers.

A federal judge in Baltimore dismissed that lawsuit, saying it had made overly broad claims about the damage done by Wells Fargo. City lawyers have refiled papers.

“I don’t think it’s going too far to say that banks are at the core of the disaster here,” said Phyllis G. Betts, director of the Center for Community Building and Neighborhood Action at the University of Memphis, which has closely examined bank lending records.

Former employees say Wells Fargo loan officers marketed the most expensive loans to black applicants, even when they should have qualified for prime loans. This practice is known as reverse redlining.

Webb A. Brewer, a Memphis lawyer, recalls poring through piles of loan papers and coming across name after name of blacks with subprime mortgages. “This is money out of their pockets lining the purses of the banks,” he said.

For a $150,000 mortgage, a difference of three percentage points — the typical spread between a conventional and subprime loan — tacks on $90,000 in interest payments over its 30-year life.

Wells Fargo officials say they rejected the worst subprime products, and they portray their former employees as disgruntled rogues who subverted bank policies.

“They acknowledged that they knowingly worked to defeat our fair lending policies and controls,” said Mr. Blackwell, the bank executive.

Bank officials attribute the surge in black foreclosures in Memphis to the recession. They say that the average credit score in black Census tracts is 108 points lower than in white tracts.

“People who have less are more vulnerable during downturns,” said Andrew L. Sandler of Buckley Sandler, a law firm representing Wells Fargo.

Mr. Relman, the lawyer representing Memphis, is unconvinced. “If a bad economy and poor credit explains it, you’d expect to see other banks with the same ratio of foreclosures in the black community,” he said. “But you don’t. Wells is the outlier.”

Whatever the responsibility, individual or corporate, the detritus is plain to see. Within a two-block radius of that porch in Soulsville, Wells Fargo holds mortgages on nearly a dozen foreclosures. That trail of pain extends right out to the suburbs.

Begging to Stay

To turn into Tyrone Banks’s subdivision in Hickory Ridge is to find his dream in seeming bloom. Stone lions guard his door, the bushes are trimmed and a freshly waxed sport utility vehicle sits in his driveway.

For years, Mr. Banks was assiduous about paying down his debt: he stayed two months ahead on his mortgage, and he helped pay off his mother’s mortgage.

Two years ago, his doorbell rang, and two men from Wells Fargo offered to consolidate his consumer loans into a low-cost mortgage.

“I thought, ‘This is great! ’ ” Mr. Banks says. “When you have four kids, college expenses, you look for any savings.”

What those men did not tell Mr. Banks, he says (and Ms. Thomas, who studied his case, confirms), is that his new mortgage had an adjustable rate. When it reset last year, his payment jumped to $1,700 from $1,200.

Months later, he ruptured his Achilles tendon playing basketball, hindering his work as a janitor. And he lost his job at FedEx. Now foreclosure looms.

He is by nature an optimistic man; his smile is rueful.

“Man, I should I have stayed ‘old school’ with my finances,” he said. “I sat down my youngest son on the couch and I told him, ‘These are rough times.’ ”

Many neighbors are in similar straits. Foreclosure notices flutter like flags on the doors of two nearby homes, and the lawns there are overgrown and mud fills the gutters.

Wells Fargo says it has modified three mortgages for every foreclosure nationwide — although bank officials declined to provide the data for Memphis. A study by the Neighborhood Economic Development Advocacy Project and six nonprofit groups found that the nation’s four largest banks, Wells Fargo, Bank of America, Citigroup and JPMorgan Chase, had cut their prime mortgage refinancing 33 percent in predominantly minority communities, even as prime refinancing in white neighborhoods rose 32 percent from 2006 to 2008.

For Mr. Banks, it is as if he found the door wide open on his way into debt but closed as he tries to get out.

“Some days it feels like everyone I know in Memphis is in trouble,” Mr. Banks says. “We’re all just begging to stay in our homes, basically.”

HAMP Modifications Have Just a 50% Success Rate: Moody's

The most recent Home Affordable Modification Program (HAMP) report released by the U.S. Treasury shows “extremely low conversion rates” from trial to permanent modifications, with success just a 50/50 gamble, according to commentary from Moody’s Investors Service.

As of the end of April, servicers participating in HAMP had converted almost 300,000 permanent modifications. However, they had also canceled 277,640 trial modifications. Moody’s says this represents approximately a 50 percent success rate. The report also shows 3,744 permanent modifications have been canceled.
According to Moody’s, the biggest culprits keeping conversions low are insufficient paperwork and negative equity.
“We believe the low conversion rate is a combination of two issues: borrowers failed to provide the documents they promised, and the rate reduction and principal forbearance used under HAMP were not enough to motivate severely underwater borrowers to start paying again,” Moody’s analysts wrote in their report.
The ratings agency says it expects recently announced program changes to produce higher conversion rates by allowing principal forgiveness. However this piece of the new HAMP directives are not expected to be ready for implementation before fall.
Moody’s notes that the lion’s share of HAMP modifications, 56 percent, has been on GSE-held loans, as expected. However, more than a third, 35 percent, occurred in the non-GSE or “private-label” sector.
“If servicers can increase modifications in the private-label sector and extend principal forgiveness under HAMP 2.0, default rates for mortgage loans backing private-label securities can be reduced significantly,” the analysts at Moody’s said.
“So far we assume that modifications will lower losses on pools backing private-label securities by approximately 5 percent,” they wrote in the report.

59% of Borrowers Would Not Walk Away if underwater in Foreclosure

A survey released Thursday by Trulia.com and RealtyTrac shows that only 1 percent of homeowners with a mortgage say walking away would be their first choice if they were unable to make their payments.

If their mortgage were to go underwater – meaning the property value drops below the amount still owed on the loan – 41 percent would at least consider a strategic default, while 59 percent would not consider walking away no matter how much their mortgage was underwater.

The latest data from CoreLogic reveals that nearly one in every five borrowers with a mortgage owes more than their home is currently worth, and as Pete Flint, Trulia’s co-founder and CEO, stressed on a call with reporters, the greater the negative equity, the higher the chances of strategic default.

But Flint says the new survey results show that “While it may not make the most sense to keep paying for this undervalued asset, many homeowners, at least for now, are holding on.”

With walking away from their mortgage obligation off the table for most homeowners, Flint broke down for reporters the avenues borrowers are leaning toward to prevent a foreclosure should they find themselves in that situation. He says only 5 percent of those surveyed say they would opt for a short sale as their first choice, while 69 percent would pursue a loan modification to save their home.

The study conducted by the two California-based companies also found that while the stigma around owning a foreclosure has subsided, interest in purchasing a foreclosure is significantly down compared to a year ago.

Currently, 45 percent of U.S. adults age 18 and above are at least somewhat likely to consider purchasing a foreclosed home in the future, compared to 55 percent this time last year, the survey results showed.

“For every borrower who avoided foreclosure through HAMP last year, another 10 families lost their homes,” said Flint. “It now seems clear that government programs will not reach the overwhelming majority of homeowners in trouble,” leading to a larger number of foreclosed homes on the market, he explained.

“Combined with decreased consumer interest around purchasing a foreclosure and it may take even longer than anticipated to see true health return to the real estate market,” Flint said.

While fewer may be in the market for a foreclosed home, Flint says people are becoming more realistic about the discounts they can expect on a distressed property. Eighteen percent expect bank-owned homes to come with a discount of less than 25 percent off the value of a similar home that was not in foreclosure – an expectation Flint called “realistic.” However, not all consumers are in line with market nuances, with 36 percent citing that they expect to receive a discount of 50 percent or more when purchasing a bank-owned property.

“Although fewer consumers expressed interest in buying a foreclosed home than a year ago, the actual sales of bank-owned properties (REOs), along with sales of properties in the foreclosure process, continue to increase — accounting for more than 30 percent of total sales in the first quarter of 2010 according to our data,” said Rick Sharga, SVP for RealtyTrac. “We anticipate that there will be an increased number of both REO purchases and short sales throughout the rest of the year as the most active buying segments – first-time homebuyers and investors – continue to look for bargains.”

Fewer Blacks believe home ownership is attainable

Many Blacks still see owning a home as a primary way to achieve the American dream. But a majority of Blacks believe that this dream is currently unattainable and will only be harder to achieve in the future, according to a Fannie Mae survey.
According to BlackAmericaweb.com, nearly 62 percent of Blacks surveyed said they still preferred to own a home, despite the recent recession and ongoing economic downturn, but 19 percent of those currently renting said the economy will force them to postpone purchasing a home. According to the survey, 73 percent of Blacks also believe that it would be more difficult for Black buyers to get a loan than the general population, and 61 percent said it will be harder for their children to buy a home. Most respondents believed it will be harder for them to own a home than it was for their parents.

The survey also found that 66 percent of Black homeowners have refinanced their homes, compared to 46 percent of the general population who have never done so. The survey of 3,051 citizens in the U.S. included mortgage borrowers, homeowners, renters and borrowers who owe more on their mortgage than their home is worth.

Survey respondents described difficulty in affording a home, poor credit and a complicated purchase process as their primary reasons for not owning a home. Many homeowners having trouble making their mortgage payments said they are considering defaulting on their loan.

While 83 percent of respondents in 2003 said they believed a home was a safe investment, that number declined to 70 percent in the recent survey.

Mortgage Fraud Continues to Climb, Up 7% in 2009

Reported incidents of mortgage fraud and misrepresentation by professionals in the residential mortgage industry continue to climb. According to a

report released Monday by the LexisNexis Mortgage Asset Research Institute (MARI), such cases increased 7 percent for the 2009 fiscal year when compared to the previous 12 months.

The pace has slowed since the 2007-2008 increase of 26 percent thanks to improvements in industry reporting and policing, but MARI says the continued increase means fraudsters are taking advantage of desperate and confused homeowners during a time of crisis. Foreclosure rescue and loan modification scams are on the rise, and now the company is seeing a significant increase in short sale scams.

“Lenders are facing hurdles with compliance, loss mitigation, and staving off additional financial losses due to poor loan performance,” said Denise James, LexisNexis’ director of real estate solutions and co-author of the report. “This is not to say that mortgage fraud is going away; it is still a serious problem, and new trends continue to emerge.”

James says it remains critical for those in the mortgage industry to reassess their processes, share information and fraud incidence reports, and ready themselves for more complex schemes in order to continue the fight against mortgage fraud.

The top fraud incident type in 2009 – representing 59 percent of all reported fraud types – was application misrepresentation. This is the sixth year in a row it has topped the list.

In second place were frauds related to appraisal and valuation misrepresentation, an area experts say is particularly vulnerable in short sale transactions. Property valuation fraud increased 11 percent from 2008 to 2009, representing 33 percent of all reported incidences last year. MARI says this is the most notable increase in reported fraud types in 2009.

Additional documented fraud types included verifications of deposit, verifications of employment, escrow or closing costs, and credit reports.

“The information contained in LexisNexis Mortgage Asset Research Institute’s 2009 Report serves as yet another wakeup call for the industry on the status and continued presence of mortgage fraud,” said Darius Bozorgi, president and CEO of Veros, an analytics and risk mitigation firm in California. “Fraud increases risk exponentially, and the industry must meet this threat head on using all available intelligence and tools.”

According to MARI’s study, Florida has moved back into first place among the top states for mortgage fraud and misrepresentation. The company’s analysis shows that Florida has close to three times the expected amount of reported mortgage fraud and misrepresentation for its origination volume.

New York moved into second place in terms of the highest mortgage fraud rates, followed by California. At No. 4, Arizona claimed a spot among the top five for the first time in the history of MARI’s study.

Michigan had the fifth highest mortgage fraud rate. Rounding out MARI’s top ten list were Maryland, New Jersey, Georgia, Illinois, and Virginia.

Although eight of the top 10 states for mortgage fraud overall are in the eastern half of the country, MARI found that the states with the highest concentration of appraisal fraud nationwide are all Midwestern states – Ohio, Illinois, and Michigan.
If you feel like you are a victim please call Lee @ 678.532.7028

Foreclosure Activity Increases 7%

The foreclosure tide is still rising. RealtyTrac reported Thursday that foreclosure filings were brought against nearly 1 million properties during the first three months of 2010. That’s a 7 percent increase from the previous quarter, 16 percent higher than a year ago, and equates to one in every 138 homes in the United States.

Altogether, foreclosure filings – including default notices, scheduled auctions, and bank repossessions – were reported on 932,234 properties from January to March of 2010. According to RealtyTrac, the number of scheduled auctions and bank repossessions hit new quarterly records.

All foreclosure types spiked in March. Filings were reported on 367,056 properties last month, an increase of nearly 19 percent from the previous month and the highest monthly total since RealtyTrac began issuing its report in January 2005.

“Foreclosure activity in the first quarter of 2010 followed a very similar pattern to what we saw in the first quarter of 2009: a shallow trough in January and February followed by a substantial spike in March,” explained James J. Saccacio, RealtyTrac’s CEO. “One difference, however, is that the increases were more tilted toward the final stage of foreclosure,” with REOs increasing in the first quarter of this year, compared to a decrease during the same period last year, he said.

“This subtle shift in the numbers pushed REOs to the highest quarterly total we’ve ever seen in our report and may be further evidence that lenders are starting to make a dent in the backlog of distressed inventory that has built up over the last year as foreclosure prevention programs

and processing delays slowed down the normal foreclosure timeline,” Saccacio said.

During the first three months of this year, RealtyTrac’s data shows there were 257,944 properties repossessed by the lender – an increase of 9 percent from the previous quarter and an increase of 35 percent compared to the first quarter of 2009.

As it has for the past 13 quarters, Nevada continued to document the nation’s highest state foreclosure rate in the first quarter of 2010. One in every 33 Nevada homes received a foreclosure filing during the three-month period, more than four times the national average and an increase of nearly 15 percent from the previous quarter. Still, Nevada’s total of 34,557 properties receiving a foreclosure filing in the first quarter was down 16 percent from the first quarter of 2009.

Arizona’s foreclosure activity increased on both a quarterly and annual basis, helping the state to post the nation’s second highest state foreclosure rate for the third consecutive quarter. One in every 49 Arizona properties received a foreclosure filing during the quarter – nearly three times the national average.

With one in every 57 Florida properties in some stage of foreclosure, the state posted the nation’s third highest state foreclosure rate for the second straight quarter. Florida’s Q1 foreclosure activity also increased on both a quarterly and annual basis.

California foreclosure activity decreased 6 percent from the first quarter of 2009, but the state still documented the nation’s fourth highest foreclosure rate, with one in every 62 homes receiving a filing.

Utah’s foreclosure activity increased 75 percent from the first quarter of 2009, the highest annual rise among top-10 states, giving it the nation’s fifth highest foreclosure rate. Foreclosure filings were reported on 10,756 Utah properties, a rate of one in every 88 housing units and an increase of 21 percent from the previous quarter.

Other states with foreclosure rates ranking among RealtyTrac’s top 10 in the first quarter of 2010 were Michigan, Georgia, Idaho, Illinois, and Colorado.

Foreclosure relief plan still coming up short

The government’s foreclosure relief program just isn’t working.

That was the assessment Thursday of two reports from government watchdogs and a panel of witnesses at a congressional hearing trying to find out why the Obama administration is falling far short of its goal of preventing millions of Americans from losing their homes.

Treasury officials at the hearing acknowledged problems in the year-old mortgage-modification program and announced changes designed to address issues that have limited its effectiveness. Only 170,000 homeowners have completed the process to get their monthly payments reduced out of 1.1 million who began it over the past year.

A failure of the government's latest effort to stem the tide of foreclosures would threaten more than the roughly 8 million homeowners at risk of losing their homes in the next two years, according to John Taylor, president of the National Community Reinvestment Coalition.

"If we have another 8 million homes to go into foreclosure it will have a devastating effect on our economy, and job losses will continue to rise," Taylor told the House Committee of Government Oversight and Reform.
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Three years after the housing bubble burst, the number of homeowners falling behind on their mortgages continues to rise. A separate report Thursday from U.S. banking regulators showed that the number of seriously delinquent mortgages jumped in the fourth quarter, led by a sharp increase among the most creditworthy borrowers. Some 13.6 percent of all homeowners with mortgages — more than one in seven — are behind in their payments, according to the Office of the Comptroller of the Currency. It was the seventh consecutive quarterly rise.

A Treasury official at Thursday's hearing acknowledged that the government's Home Affordable Modification Program had encountered a series of unforeseen roadblocks. But he also announced changes designed to speed the modification of loans to more affordable terms.

“We've been learning as we went along,” said Assistant Treasury Secretary Herbert Allison Jr. “We want to continue to improve this program."

The HAMP program is designed to head off foreclosures by lowering borrowers' monthly payments through a series of voluntary concessions from lenders. Guidelines call for cutting mortgage rates to as little as 2 percent for five years, with the difference subsidized by the government, and extending the loan’s term to 40 years. More than 100 lenders have agreed to follow the guidelines, but the decision to modify an individual loan is entirely up to the lender or investors holding the mortgage.

The program has been riddled with problems from the beginning, drawing fire from homeowners, housing counselors, consumer advocates and attorneys working with borrowers. Many report long wait times getting through to lenders, multiple requests for paperwork, lost documents and little or no explanation when applications are denied.

The Treasury also said it will make changes in response to one of the most frustrating complaints. In many cases, lenders are moving to foreclose on a property — even after homeowners get approved for loan modification.

"The new guidelines will make clear that if the homeowner enters into a fully verified modification plan, all pending foreclosure actions must be stopped," Allison told the congressional panel.

But such changes have been a major source of "confusion and delay," according to a report from Neil Barofsky, the special inspector general for the Troubled Asset Relief Program, who testified Thursday. He criticized the Treasury for not setting clear targets for how many homeowners are expected to get help under the $75 billion program.

"We believe it is unacceptable that one year into the program Treasury has yet to identify its goals," he said.

The program also has yet to tackle the issue of millions of homeowners who have second mortgages that must also be modified to make their first mortgage affordable. A year into the program, those guidelines still have not been established, according to Gene Dodaro, acting comptroller general of the Government Accountability Office, which issued a report Thursday critical of HAMP.
A lot of program details aren’t very clear yet,” Dodaro told the panel. “Until the details are established (mortgage) servicers are going to be reluctant, understandably, to sign up for the program.”

Housing counselors and attorneys say those servicers — companies that handle mortgage payments on behalf of lenders — have been slow to add enough staff to cope with the flood of calls and mail from distressed homeowners. Allison acknowledged the bottleneck.

“I’m not cutting them any slack but they’ve had to get up to speed and they’ve had teething problems along the way,” he said. “All of us know we have more to do, and they have more to do.”

Members of the panel told of constituents who have faced numerous hurdles trying to get their mortgages modified. Reps. William Lacy Clay, D-Mo., and Diane Watson, D-Calif., expressed concerns about what they said was a disproportionately higher foreclosure rate for African-Americans than for whites.

“We have a dual system of mortgage finance in this country — one for whites and one for blacks,” Taylor said. “Black and brown communities were targeted by subprime lenders after banks had closed their branches in those.”

Allison said the current disparity in foreclosure rates between blacks and whites is a reflection of “widespread predatory lending practices during the the mid-part of the decade.”

“The damage already exists," he said. "And we want to make sure that in our program there is no discrimination as people are considered for modifications."

Pressed for details about what measures are being taken, Allison said the Treasury is collecting data on the modification program and will “confront servicers" if they are discriminating against homeowners.

Foreclosure Help Hotline for all 50 states

Join us on our weekly on our Foreclosure Hotline to obtain an answer to all your foreclosure questions
Every Saturday@10am EST FREE (605) 475-4825 Participant Access Code: 497311#
Please call Lee 678.532.7028 or email hipharambee.inc@gmail.com
in advance to reserve your spot on the conference call

Mortgage Restructuring System VS. Loan Modification

In today's credit crisis, many of us feel as though we might lose the American Dream, home ownership. We might be forced to sell our home or without doubt lose our home to foreclosure.
Now Loan Modification are a great tool to help homeowners out. A loan modification provides a financial solution worked out between the homeowner and the current investor. But Loan modifications are difficult to achieve. You see at the end of the day, most homeowners will never be able to communicate with the end investor. So most homeowners will stress day and night for months only to find out that they will still be denied a loan modification. Even if they do approve you for that 3.5% interest rate, you will still owe all of that negative loan balance. What do homeowners do when they have nowhere else to turn?
Fortunately for today's homeowners, we have the program available to overcome all of those obstacles.
The Bedrock to our entire program is who we approach. Most homeowners have approached loss mitigation, customer service, or collections in hopes to achieve a solution to their financial hardships.
As you have all probably experienced, nothing ever gets achieved by speaking with these departments, because they never communicate so nothing ever gets done properly.
We differ in the fact that we approach Wealth/Asset Management. This allows The Motion Group’s, Hedge Fund Partners to package up notes to make a note acquisition at a very reasonable price.
Once the notes are secured, we will refinance the note to the homeowner at 90% of current market value. Without any repercussions. So you will get all of the negative equity reduce, receive 10% instant equity, a lower monthly payment and a 30 year fixed rate mortgage. The best part is, you will be considered regardless of you credit.
Lee
888.349.6030 ext.110
The M Group inc
http://www.themotiongroup.net

Mortgage Restructuring Process

You may have been hearing more and more about this and with good reason. As millions of homeowners have become saddled with mortgage issues and no longer have the ability to refinance into a new loan, there may be only one solution for these stressed borrowers: Mortgage Restructuring. What does it mean? It is when the lender of the note modifies the existing mortgage to make it more reasonable, the interest rate, term, balance, late fee maybe modified by the lender. Until recently this was only done for delinquent borrowers, however with such extraordinary circumstances it will now be used before borrowers reach this stage. This is often the right choice for borrowers looking to avoid foreclosure.

A Fresh Start
Mortgage Restructuring helps borrowers change their note and have a chance to start over as accounts are brought to date right away.
By modifying your loan you change your interest rate and payments to change to a fixed rate that will be more practical for borrowers. You won't have to pay new closing costs and fees, but if you refinance you will be responsible for the normal closing costs, taxes and fees.
Lenders Negotiate

We will negotiate with your lender to purchase your note, at a discount and then we will pass these savings on to you the Homeowner(s).

Do Lenders want to Foreclose on my house?
No! It is very common for lenders to lose money on foreclosures. This is worse if they are forced to claim ownership of a property. In areas hit hardest by foreclosures, lenders lose even more. This is good news for you since lenders and their investors do not want to lose on your loan.

But unfortunately you are often just a number in their spreadsheet. While you can negotiate on your own behalf often times you may hear that there is nothing you can do to modify your loan, however this isn't always true. By using our expertise we can often help turn no into yes

If you would like to see if we can help click below
http://www.themotiongroup.net/lmApp.php
Call Lee 888.349.6030 ext.110