June 2010 Entries
Freddie Mac CEO Ed Haldeman said the company has seen the number of its short
sales increase 600% from 2008 as lenders look to dampen the impact of
foreclosures hitting the marketplace. In a statement put out this week, Haldeman
said Freddie Mac is doing everything it can to prevent more foreclosures, and
that short sales are becoming an ever-popular tool in situations where
foreclosure is imminent and modifications have failed. That number could
increase as the Home Affordable Foreclosure Alternatives (HAFA) program takes
hold. The Treasury Department launched it in April to provide cash incentives to
servicers for conducting...
The courts will now come to the mortgage giant’s plans to take on those who
decide not to make their payments. It also will limit their access to future
loans. Foreclosures continue at a rate of 2.5 million a year, Federal Deposit
Insurance Corp. Chairwoman Sheila Bair said, and some 11 million households owe
more on their mortgage than their home is worth. Taking aim at homeowners who
are able to pay their mortgage but decide it's not worth it, Fannie Mae plans to
go after them in court and to limit their access to home loans for seven years....
Borrowers who are determined to have the ability to make their monthly payments
but walk away from their homes will not be able to secure a Fannie Mae backed
mortgage for seven years after the foreclosure, according to a new policy
announced by the mortgage giant this week. Fannie Mae will also take legal
action against borrowers who strategically default in order to recoup mortgage
debt. These would be limited to locations that allow deficiency judgments.
According to the University of Chicago Booth School of Business, one-third of
all defaults are strategic. Fannie will instruct its servicers in an
It's a common theme...people always claim they "want" to invest in short sales
or income producing property but they "can't". Another common complaint is they
"intend" to invest but the timing "isn't right". Oddly enough, for every person
who provides a laundry list of why they "can't" invest...someone else in their
same situation already has. What is the difference between those that "can't"
and those that "do"...let's find out by taking a long look at the top reasons
most people cite as the source of their current failure to invest in their
1. Housing costs are too high.
Over the past year, the mortgage risk analysis firm Clayton Holdings says it has
witnessed an overall increase in short sale activity. Because of the growing
emphasis on keeping borrowers out of foreclosure, servicers are becoming more
inclined to employ alternative loss mitigation strategies. And Clayton says the
added benefit to servicers is that loss severities for properties sold through
short sale are 13 percent lower than loss severities for REO sales. The
analysts at Clayton Holdings examined performance indicators across nine
servicers’ internal proprietary short sale programs, from October 2009 to March
2010. In addition, the data showed that...
The national news is plastered with articles about people losing their homes due to delinquent mortgage payments. Fred Schulte from the Huffington Post reports on another way people are losing their homes to foreclosure for much smaller amounts of money.
When people fail to pay property taxes, city liens etc, the municipalities sell these liens to investors. Investors earn a certain percentage when the liens are redeemed or paid off. If the liens are not paid off, the investor has the right to foreclose, oftentimes securing the title to the house for very little money (i.e. for the price they...
Borrowers Representing one of the largest judgments imposed in a Federal Trade
Commission (FTC) case, two Countrywide mortgage servicing companies, now part of
Bank of America Home Loans, have been ordered to pay $108 million to settle
charges that they collected excessive fees from cash-strapped borrowers who were
struggling to keep their homes. In a statement released Monday, the FTC said the
$108 million settlement will be used to reimburse overcharged homeowners whose
loans were serviced by Countrywide before it was acquired by North
Carolina-based Bank of America in July 2008. Bank of America said it agreed to
“Thanks to a slightly bizarre story about a New Jersey couple putting their
almost-finished home on the market for $68 million, I decided to take a look at
the luxury home market. It's hard to get data exclusive to this segment of the
market, since the $1 million+ homes make up just 1 percent of all existing home
sales. The National Association of Realtors breaks out sales by price and does
show that sales of $1 million+ homes are up 54.4% in April from a year ago. The
Institute for Luxury Home Marketing, which operates out of Dallas, runs run...
Chris Herring from the Wall Street Journal reports on a foreclosure fraud scheme that was cracked in New York City. While the scheme took advantage of people in common ways (read the article), one part of it really stuck out. The thieves were targeting properties that had legitimate equity in them but were also in preforeclosure. If you are reading this you need to understand that some houses can solve their own problems. In this case, houses with equity that are in pre foreclosure can typically be sold and settle the existing debt (obviously it depends on how much equity,...
Pressures continue to drive up commercial mortgage defaults. The economic
downturn has choked off demand for retail and office space, with vacancy rates
rising and prospects of new occupants limited by the duress of today’s job
market. At the same time, commercial real estate (CRE) values have dropped more
than 40 percent in some markets, pushing a growing number of property owners
severely underwater. According to new data from Real Capital Analytics, the
default rate for commercial real estate loans owned by the nation’s FDIC-insured
banks increased from 3.83 percent in the fourth quarter of 2009 to 4.17 percent
“Bank of America rolled out their new "Principal Reduction Enhancement" program,
which is an earned principal forgiveness plan for borrowers behind on their
mortgages and whose loans are at least 20 percent underwater in value. The plan
is in conjunction with the government's Home Affordable Modification Program,
but the government's principal reduction plan isn't in place yet. What makes
BofA's plan so proactive is that it employs, "a principal reduction as the first
step toward reaching HAMP’s affordable payment target of 31 percent of household
income when modifying certain NHRP-eligible mortgages — ahead of lowering the
interest rate and extending...
Greg Kaufman reports on what Chase has done to 3 homeowners that have played by the rules. The article highlights 3 people that applied for and met all of the requirements for a permanent loan modification but were denied by Chase. Mr. Kaufman surmises that the reason behind these (and may others I'm sure) rejections revolves around the fact the loan modifications are purely voluntary.
The particular homeowners that are highlighted in this article were also awarded foreclosures by Chase! How nice of Chase to do so! The home owners are not laying down, though. They are suing Chase. Can anyone...