Hi Folks! It's time to "kick it up a notch!". For more than 4 years I have been making boring, news oriented entries to this blog. Mostly other peoples words.
After reading Seth Godin's book Tribes, I have had an epiphany. I have realized that leadership is something to be relished, cultivated and shared. Leadership by yourself, and by others.
This blog will now be my version of leadership in the arena of Real Estate Investing.
Others may be greater successes, but none will get their passion across like I will.
Welcome to the Tribe!
Thursday, December 09, 2010
Wednesday, December 01, 2010
Defaulted Borrowers Sue Wells Fargo
From DSNews.com
By: Joy Leopold 11/30/2010
The law firm of Harwood Feffer, LLP announced last week that it has filed a class action lawsuit against Wells Fargo Bank and its servicer, America’s Servicing Company (ASC).
The lawsuit was filed in the United States District Court for the Northern District of California.
The case alleges that ASC induced borrowers to default on their mortgages by telling them they would not be eligible for a loan modification if they were current on payments.
Harwood Feffer claims ASC induced borrowers to default on their mortgages in order to charge penalty and fees associated with the late payments.
“As a loan servicer, ASC generates a significant portion of its revenue from fees, penalties, and interest collected on the non-performing loans it services,” said Harwood Feffer in a statement.
The statement continued, “Consequently, it is in ASC’s financial interest to avoid, delay, and deny loan modifications and to pursue foreclosures because doing so will lead to increased revenue.”
According to the Home Affordable Modification Program guidelines, a borrower who has not defaulted but is distressed and believed to be facing imminent default may be eligible for a loan modification if financial hardship can be demonstrated.
“By making loan default a prerequisite for modification, without regard to whether a borrower otherwise qualified for a modification due to financial hardship, ASC caused borrowers to unnecessarily suffer ruined credit and subjected them to significant fees, penalties and interest,” alleged Harwood Feffer.
A spokesperson for Wells Fargo said he could not comment specifically on the lawsuit as it is currently under review, but said, “We believe, as we have from the beginning of this crisis, that it is in our customers’ and the country’s best interests to assist customers who can afford their homes – with some help – to remain in them. And, it is our goal to exhaust all options before moving a home to foreclosure sale.”
By: Joy Leopold 11/30/2010
The law firm of Harwood Feffer, LLP announced last week that it has filed a class action lawsuit against Wells Fargo Bank and its servicer, America’s Servicing Company (ASC).
The lawsuit was filed in the United States District Court for the Northern District of California.
The case alleges that ASC induced borrowers to default on their mortgages by telling them they would not be eligible for a loan modification if they were current on payments.
Harwood Feffer claims ASC induced borrowers to default on their mortgages in order to charge penalty and fees associated with the late payments.
“As a loan servicer, ASC generates a significant portion of its revenue from fees, penalties, and interest collected on the non-performing loans it services,” said Harwood Feffer in a statement.
The statement continued, “Consequently, it is in ASC’s financial interest to avoid, delay, and deny loan modifications and to pursue foreclosures because doing so will lead to increased revenue.”
According to the Home Affordable Modification Program guidelines, a borrower who has not defaulted but is distressed and believed to be facing imminent default may be eligible for a loan modification if financial hardship can be demonstrated.
“By making loan default a prerequisite for modification, without regard to whether a borrower otherwise qualified for a modification due to financial hardship, ASC caused borrowers to unnecessarily suffer ruined credit and subjected them to significant fees, penalties and interest,” alleged Harwood Feffer.
A spokesperson for Wells Fargo said he could not comment specifically on the lawsuit as it is currently under review, but said, “We believe, as we have from the beginning of this crisis, that it is in our customers’ and the country’s best interests to assist customers who can afford their homes – with some help – to remain in them. And, it is our goal to exhaust all options before moving a home to foreclosure sale.”
Tuesday, October 26, 2010
Great Quote!
"...in an information-rich world, the wealth of information means a dearth of something else: a scarcity of whatever it is that information consumes. What information consumes is rather obvious: it consumes the attention of its recipients. Hence a wealth of information creates a poverty of attention and a need to allocate that attention efficiently among the overabundance of information sources that might consume it" -Herbert Simon (June 15, 1916 – February 9, 2001)
Sunday, October 24, 2010
Our Economic Waterloo
We've all done it. We have all made the mistake of overplaying our hand in a card game, then having our heads handed to us. We have all protested too loudly to make our point - to the detriment of the greater good. We have all been wrong at one time or another in our lives.
Folks, listen... and listen well. The Banks are WRONG. The media is WRONG. The politicians are WRONG. It is clear to me that the media is as blind in these matters as the banks themselves. Whether they are unable or unwilling to admit it, whether it is accidental or deliberate, one thing is undeniable. Our economy is in terrible shape and will not improve for a LONG time if we continue on the path we are on now.
As a specialist in distressed real estate transactions, I spend every day in the trenches with the average man and his family - the so called "Joe the Plumber"'s. These folks are going down in flames in greater and greater numbers every day. Multi-billion dollar corporations that are beating estimates mean nothing to the silent majority. Slight improvements in jobless claims, and upward GDP revisions are meaningless.
Our political leaders are systematically creating false hope and legacy, and are out of touch with the truth about the economic condition of our country. The recent rash of political back room sausage making is a symptom of the failure of the system. Uncle Sam is running wild with your credit card!
When you can't succeed by the rules, change the rules. Increase taxes. Kick the can as far down the road as you can. Or at least far enough to get your lying ass re-elected. It is criminal!
But take heart. There is money to be made in this market, as in any market. Those that can act fast, in a contrary manner to the majority, will make huge returns. Those that recognize this gathering storm and take "short" action will make exponential profit. Count on it.
Folks, listen... and listen well. The Banks are WRONG. The media is WRONG. The politicians are WRONG. It is clear to me that the media is as blind in these matters as the banks themselves. Whether they are unable or unwilling to admit it, whether it is accidental or deliberate, one thing is undeniable. Our economy is in terrible shape and will not improve for a LONG time if we continue on the path we are on now.
As a specialist in distressed real estate transactions, I spend every day in the trenches with the average man and his family - the so called "Joe the Plumber"'s. These folks are going down in flames in greater and greater numbers every day. Multi-billion dollar corporations that are beating estimates mean nothing to the silent majority. Slight improvements in jobless claims, and upward GDP revisions are meaningless.
Our political leaders are systematically creating false hope and legacy, and are out of touch with the truth about the economic condition of our country. The recent rash of political back room sausage making is a symptom of the failure of the system. Uncle Sam is running wild with your credit card!
When you can't succeed by the rules, change the rules. Increase taxes. Kick the can as far down the road as you can. Or at least far enough to get your lying ass re-elected. It is criminal!
But take heart. There is money to be made in this market, as in any market. Those that can act fast, in a contrary manner to the majority, will make huge returns. Those that recognize this gathering storm and take "short" action will make exponential profit. Count on it.
Thursday, October 14, 2010
Buy Gold and Real Estate - Quick!
I don't normally post non real estate rants, but this one is a home run...
From Charles Goyette...
Gold Market on U.S. Elections: So What?
For those of us who recognize the complicity of both Republicans and Democrats in our economic calamity, it has been satisfying to see the party establishments of each pummeled this election season. But as far as averting the currency crisis I describe in The Dollar Meltdown, the gold market says it’s too little, too late.
It’s no surprise that politicians hear only what they want to hear, but the Democrats take a new world indoor record for tone-deafness into the election. As the year opened with real unemployment at double-digit levels, all the President and the Democrat establishment could think about was passing Obamacare. They may be proud that they stayed on message, never mind that for most people a health care plan starts with a job and some savings.
With polls suggesting Republicans are set to re-take the House, it looks like the Democrats have a glass jaw to go along with that tin ear. And while scattered tea party victories gave the Republican establishment the thrashing it so richly deserved, the bad news is that none of it matters to our financial prospects. At least that’s the message from the gold market.
Who can disagree? Unless you think that Republicans will want to go into the next election cycle having taken on Social Security, Medicare, Medicaid and other entitlements, there is not much hope that they will do anything meaningful about fiscal policy. Announced on September 23, the Republican Pledge to America promised to save “at least $100 billion in the first year alone.” $100 billion a year? They can’t be serious. By the end of September, just a week later, the federal debt had already grown by another $100 billion. Of course Republicans will tinker with the hated Obamacare just enough to deliver up some form of Boehner-care. Sorry, but the chance to earn lobbyist affection and future campaign contributions trumps any thoughts about simply facing up to federal insolvency and getting government out of health care.
Some real money could be saved rolling back the American empire. Congressman Ron Paul and others calculate total war and foreign spending at about $1 trillion a year. In this context, a return of the Republicans reminds us of Talleyrand’s comment on the Bourbon dynasty that returned to the throne of France after the abdication of Napoleon: They “had learned nothing and forgotten nothing." Republicans seemed to have learned nothing and forgotten everything. Betraying a hubris not seen since Bush set off to “rid the world of evil,” the pledge from November’s likely winners includes “bringing certainty to an uncertain world.” Republicans do take their military Keynesianism seriously. Just months ago Republican congressmen came together to support President Obama’s surge in Afghanistan with a $59 billion emergency spending bill. Now they are campaigning about a “robust defense,” one category of spending that even the new members from the tea parties aren’t inclined to resist.
On the monetary front, Federal Reserve officials, having forgotten at least the French Revolution and probably the 1970’s as well, are counting on inflation to kick start economic growth. Money printing is the Fed’s old time religion, but at least they are going to the trouble of bottling it under new names: liquidity operations, deficit accommodating, and quantitative easing. When chairman Bernanke said something euphemistic last week about “additional purchases,” gold shot up again, joined by silver and oil. And the dollar moved decisively lower. It’s now down 12 percent since June, resuming its long-term slide. Markets are said to be pretty good at discounting future events. Haven’t they heard that the fiscal conservatives will re-take Washington?
It is clear that the rest of the world is similarly unimpressed by Fed euphemisms or the dollar’s prospects, no matter who wins. Like the picnic ramada at the park where people take cover for a while when it begins to rain, investors take cover with the dollar briefly during a crisis. They did so in the 2008 mortgage meltdown and again during the Euro debt crisis. But like a ramada, nobody wants to live there. Or wait out a really bad storm.
Where does one weather a currency crisis? Take a look around. Reuters reported this week on a Swiss private banker who handles clients with at least $50 million to invest that they are buying gold, sometimes by the ton, and moving it out of the financial system. According to the Financial Times, JPMorgan, having recently built a vault in Singapore, has reopened an underground gold vault in New York, while Deutsche Bank and Barclays may be opening new vaults in London. India illustrates the trend: investment demand in India has grown to 92.5 tons in the first six months of this year, compared to 25.4 tons a year earlier; this time last year India’s central bank lightened its dollar reserves substantially, taking down 200 tons of gold in one move. They aren’t alone.
Central banks around the world, long net sellers of gold reserves, have become buyers, among them China and Russia. Gold keeps making new all-time highs. And it doesn’t seem to care about the Republican’s prospects this fall.
From Charles Goyette...
Gold Market on U.S. Elections: So What?
For those of us who recognize the complicity of both Republicans and Democrats in our economic calamity, it has been satisfying to see the party establishments of each pummeled this election season. But as far as averting the currency crisis I describe in The Dollar Meltdown, the gold market says it’s too little, too late.
It’s no surprise that politicians hear only what they want to hear, but the Democrats take a new world indoor record for tone-deafness into the election. As the year opened with real unemployment at double-digit levels, all the President and the Democrat establishment could think about was passing Obamacare. They may be proud that they stayed on message, never mind that for most people a health care plan starts with a job and some savings.
With polls suggesting Republicans are set to re-take the House, it looks like the Democrats have a glass jaw to go along with that tin ear. And while scattered tea party victories gave the Republican establishment the thrashing it so richly deserved, the bad news is that none of it matters to our financial prospects. At least that’s the message from the gold market.
Who can disagree? Unless you think that Republicans will want to go into the next election cycle having taken on Social Security, Medicare, Medicaid and other entitlements, there is not much hope that they will do anything meaningful about fiscal policy. Announced on September 23, the Republican Pledge to America promised to save “at least $100 billion in the first year alone.” $100 billion a year? They can’t be serious. By the end of September, just a week later, the federal debt had already grown by another $100 billion. Of course Republicans will tinker with the hated Obamacare just enough to deliver up some form of Boehner-care. Sorry, but the chance to earn lobbyist affection and future campaign contributions trumps any thoughts about simply facing up to federal insolvency and getting government out of health care.
Some real money could be saved rolling back the American empire. Congressman Ron Paul and others calculate total war and foreign spending at about $1 trillion a year. In this context, a return of the Republicans reminds us of Talleyrand’s comment on the Bourbon dynasty that returned to the throne of France after the abdication of Napoleon: They “had learned nothing and forgotten nothing." Republicans seemed to have learned nothing and forgotten everything. Betraying a hubris not seen since Bush set off to “rid the world of evil,” the pledge from November’s likely winners includes “bringing certainty to an uncertain world.” Republicans do take their military Keynesianism seriously. Just months ago Republican congressmen came together to support President Obama’s surge in Afghanistan with a $59 billion emergency spending bill. Now they are campaigning about a “robust defense,” one category of spending that even the new members from the tea parties aren’t inclined to resist.
On the monetary front, Federal Reserve officials, having forgotten at least the French Revolution and probably the 1970’s as well, are counting on inflation to kick start economic growth. Money printing is the Fed’s old time religion, but at least they are going to the trouble of bottling it under new names: liquidity operations, deficit accommodating, and quantitative easing. When chairman Bernanke said something euphemistic last week about “additional purchases,” gold shot up again, joined by silver and oil. And the dollar moved decisively lower. It’s now down 12 percent since June, resuming its long-term slide. Markets are said to be pretty good at discounting future events. Haven’t they heard that the fiscal conservatives will re-take Washington?
It is clear that the rest of the world is similarly unimpressed by Fed euphemisms or the dollar’s prospects, no matter who wins. Like the picnic ramada at the park where people take cover for a while when it begins to rain, investors take cover with the dollar briefly during a crisis. They did so in the 2008 mortgage meltdown and again during the Euro debt crisis. But like a ramada, nobody wants to live there. Or wait out a really bad storm.
Where does one weather a currency crisis? Take a look around. Reuters reported this week on a Swiss private banker who handles clients with at least $50 million to invest that they are buying gold, sometimes by the ton, and moving it out of the financial system. According to the Financial Times, JPMorgan, having recently built a vault in Singapore, has reopened an underground gold vault in New York, while Deutsche Bank and Barclays may be opening new vaults in London. India illustrates the trend: investment demand in India has grown to 92.5 tons in the first six months of this year, compared to 25.4 tons a year earlier; this time last year India’s central bank lightened its dollar reserves substantially, taking down 200 tons of gold in one move. They aren’t alone.
Central banks around the world, long net sellers of gold reserves, have become buyers, among them China and Russia. Gold keeps making new all-time highs. And it doesn’t seem to care about the Republican’s prospects this fall.
Monday, September 20, 2010
Congress trying to Speed up Short Sales
From the Desk of... " This Time They are Gonna Listen to Us!"
Distressed homeowners looking for a way out of their mortgage that doesn’t involve foreclosure may find relief is on the way from a new bill introduced in the U.S. House.
The legislation would impose a deadline on lenders to respond to short sale requests, requiring them to return an answer to the borrower within 45 days.
The bipartisan bill, Prompt Decision for Qualification of Short Sale Act of 2010 (H.R. 6133), is sponsored by Reps. Robert Andrews (D-New Jersey) and Tom Rooney (R-Florida).
Lenders have taken a lot of heat for the elongated timelines it takes to get an approval on a short sale proposal.
“I have heard from many short sellers in Florida whose potential homebuyers have walked away because they couldn’t get a ‘yes’ or ‘no’ from their lenders,” Rep. Rooney said. “This bill would spur growth in the housing market by helping sellers and buyers complete short sales quickly.”
The number of potential short sale properties is rising across the country. According to data from the National Association of Realtors (NAR), in the second quarter of
2010, Nevada, California, Florida, and Arizona are states where significant shares of all properties on the market are potential short sales: 32 percent, 28 percent, 27 percent, and 24 percent, respectively.
NAR President Vicki Cox Golder, owner of Vicki L. Cox & Associates in Tucson, Arizona, says her organization and Realtors across the country strongly support the Andrews-Rooney bill, and are urging Congress to pass the legislation quickly.
“Unfortunately, homeowners who need to execute a short sale are severely hampered because lenders (loan servicers) are unable to decide whether to approve a short sale within a reasonable amount of time,” Golder said.
“Potential homebuyers are walking away from purchasing short sale property because the lender has taken many months and still not responded. Many consumers have mentioned that the delay in short sale price approval exceeds 90 days, and in many cases never arrives,” Golder said.
According to Rep. Rooney, the lending community has worked to improve the size and training of their workforce that handles short sales, but “progress has been extremely slow,” he says.
Rooney argues that for homeowners who owe more than their home is worth and are in real danger of losing their home, the short sale can help relieve them of the overwhelming financial burden of their mortgage.
Golder agrees. “NAR believes that quicker attention to the short sales process is vital to help homeowners who are underwater and their communities, as well as the nation’s economy,” she said.
Distressed homeowners looking for a way out of their mortgage that doesn’t involve foreclosure may find relief is on the way from a new bill introduced in the U.S. House.
The legislation would impose a deadline on lenders to respond to short sale requests, requiring them to return an answer to the borrower within 45 days.
The bipartisan bill, Prompt Decision for Qualification of Short Sale Act of 2010 (H.R. 6133), is sponsored by Reps. Robert Andrews (D-New Jersey) and Tom Rooney (R-Florida).
Lenders have taken a lot of heat for the elongated timelines it takes to get an approval on a short sale proposal.
“I have heard from many short sellers in Florida whose potential homebuyers have walked away because they couldn’t get a ‘yes’ or ‘no’ from their lenders,” Rep. Rooney said. “This bill would spur growth in the housing market by helping sellers and buyers complete short sales quickly.”
The number of potential short sale properties is rising across the country. According to data from the National Association of Realtors (NAR), in the second quarter of
2010, Nevada, California, Florida, and Arizona are states where significant shares of all properties on the market are potential short sales: 32 percent, 28 percent, 27 percent, and 24 percent, respectively.
NAR President Vicki Cox Golder, owner of Vicki L. Cox & Associates in Tucson, Arizona, says her organization and Realtors across the country strongly support the Andrews-Rooney bill, and are urging Congress to pass the legislation quickly.
“Unfortunately, homeowners who need to execute a short sale are severely hampered because lenders (loan servicers) are unable to decide whether to approve a short sale within a reasonable amount of time,” Golder said.
“Potential homebuyers are walking away from purchasing short sale property because the lender has taken many months and still not responded. Many consumers have mentioned that the delay in short sale price approval exceeds 90 days, and in many cases never arrives,” Golder said.
According to Rep. Rooney, the lending community has worked to improve the size and training of their workforce that handles short sales, but “progress has been extremely slow,” he says.
Rooney argues that for homeowners who owe more than their home is worth and are in real danger of losing their home, the short sale can help relieve them of the overwhelming financial burden of their mortgage.
Golder agrees. “NAR believes that quicker attention to the short sales process is vital to help homeowners who are underwater and their communities, as well as the nation’s economy,” she said.
Friday, September 17, 2010
Sunday, August 15, 2010
Former Bank Regulator William Black: U.S. Using "Really Stupid Strategy" to Hide Bank Losses - Will Produce Japanese Style Lost Decade
Folks - William Black tells is like it is. Proof again that the big banks have manipulated the system for their own survival, at the expense of the American Citizen. This article contains a short video that explains it all...
http://globaleconomicanalysis.blogspot.com/2010/08/former-bank-regulator-william-black-us.html
http://globaleconomicanalysis.blogspot.com/2010/08/former-bank-regulator-william-black-us.html
---
Thursday, August 12, 2010
Obamanomics
I read this afternoon that the drunken sailor has authorized more money to individual states for foreclosure prevention measures.
When will this madness end? Does everyone understand that the lunatic is loose with your credit card - and he's charging up a storm?
God help my kids and grandkids. We will be living with 50% + plus Tax Rates for decades to come.
Come November, vote the criminals out.
When will this madness end? Does everyone understand that the lunatic is loose with your credit card - and he's charging up a storm?
God help my kids and grandkids. We will be living with 50% + plus Tax Rates for decades to come.
Come November, vote the criminals out.
Tuesday, July 13, 2010
Short Sale Market Changes
They always say not to speak out in anger. My horoscope today said whatever happens, let it go. Well, too bad. Here goes...
The short sale business is a tough one. Lately there have been lender changes that have made it even tougher. For starters, the lenders/negotiators on the bank side have decided that the truth is optional. While this is no surprise to anyone in the business, it should not be allowed. When a family's financial destiny is on the line, the truth is mandatory. However, the lenders are now in full blown, lying, bait and switch mode.
What can we do about it? Well we can't control their actions from this side. However, we can manage expectations from our side. With that said, here is my Short Sale WARNING:
Lenders are out to get the most money they can. They don't care about the homeowners, buyers, agents, investors or anyone but themselves.
Lenders are not bound by honor or honesty. They will change the rules on you right after they make a commitment. That you can count on. While their actions are truly fraudulent and criminal, there is nobody to police them. Our government has failed us.
Lenders are owned by stockholders. The policymakers and decision makers at the lenders don't have a pot to pee in - yet they have the power to wreak havoc on the financial lives of millions of people. The owners of the lenders, the stockholders, are just along for the ride and ultimately will suffer the losses these idiot lenders have brought upon themselves.
So, in closing, if you are doing a short sale, this is what to expect. The commitments and guarantees of the lenders are worthless. All we can do is see it through to the end. Be prepared for anything. You have been warned...
Rich
The short sale business is a tough one. Lately there have been lender changes that have made it even tougher. For starters, the lenders/negotiators on the bank side have decided that the truth is optional. While this is no surprise to anyone in the business, it should not be allowed. When a family's financial destiny is on the line, the truth is mandatory. However, the lenders are now in full blown, lying, bait and switch mode.
What can we do about it? Well we can't control their actions from this side. However, we can manage expectations from our side. With that said, here is my Short Sale WARNING:
Lenders are out to get the most money they can. They don't care about the homeowners, buyers, agents, investors or anyone but themselves.
Lenders are not bound by honor or honesty. They will change the rules on you right after they make a commitment. That you can count on. While their actions are truly fraudulent and criminal, there is nobody to police them. Our government has failed us.
Lenders are owned by stockholders. The policymakers and decision makers at the lenders don't have a pot to pee in - yet they have the power to wreak havoc on the financial lives of millions of people. The owners of the lenders, the stockholders, are just along for the ride and ultimately will suffer the losses these idiot lenders have brought upon themselves.
So, in closing, if you are doing a short sale, this is what to expect. The commitments and guarantees of the lenders are worthless. All we can do is see it through to the end. Be prepared for anything. You have been warned...
Rich
Friday, July 09, 2010
1 in 7 Million Dollar Mortgages headed to Default
The Rich are biggest defaulters
According to the real estate analytics firm CoreLogic, more than 1 in 7 homeowners with mortgage loans in excess of a million dollars are seriously delinquent. Whether it's their residence, a second home or a house bought as an investment, the rich have stopped paying mortgages at a rate that greatly exceeds the rest of the population. By contrast, homeowners with cheaper housing are much more likely to keep on top of their mortgage. Only about 1 in 12 mortgages below the million-dollar mark is delinquent. CoreLogic data suggest that many of the well-to-do are purposely dumping their financially draining properties, just as they would any sour investment. “The rich are different: they are more ruthless,” said Sam Khater, CoreLogic’s senior economist.
Lenders are fearful that many of the 11 million or so homeowners who owe more than their house is worth will walk away from them, especially if the real estate market begins to weaken again. The so-called strategic defaults have become a matter of intense debate in recent months. The delinquency rate on investment homes where the original mortgage was more than $1 million is now 23 percent. For cheaper investment homes, it is about 10 percent. With second homes, the delinquency rate for both types of owners was rising in concert until the stock market crashed in September 2008. That sent the percentage of troubled million-dollar loans spiraling up much faster than the smaller loans.
According to the real estate analytics firm CoreLogic, more than 1 in 7 homeowners with mortgage loans in excess of a million dollars are seriously delinquent. Whether it's their residence, a second home or a house bought as an investment, the rich have stopped paying mortgages at a rate that greatly exceeds the rest of the population. By contrast, homeowners with cheaper housing are much more likely to keep on top of their mortgage. Only about 1 in 12 mortgages below the million-dollar mark is delinquent. CoreLogic data suggest that many of the well-to-do are purposely dumping their financially draining properties, just as they would any sour investment. “The rich are different: they are more ruthless,” said Sam Khater, CoreLogic’s senior economist.
Lenders are fearful that many of the 11 million or so homeowners who owe more than their house is worth will walk away from them, especially if the real estate market begins to weaken again. The so-called strategic defaults have become a matter of intense debate in recent months. The delinquency rate on investment homes where the original mortgage was more than $1 million is now 23 percent. For cheaper investment homes, it is about 10 percent. With second homes, the delinquency rate for both types of owners was rising in concert until the stock market crashed in September 2008. That sent the percentage of troubled million-dollar loans spiraling up much faster than the smaller loans.
Wednesday, June 23, 2010
Another Argument for Short Sales!
Courtesy Mortgage News Daily...
Fannie Mae announced today policy changes designed to encourage borrowers to work with their servicers and pursue alternatives to foreclosure.
Defaulting borrowers who walk-away and had the capacity to pay or did not complete a workout alternative in good faith will be ineligible for a new Fannie Mae-backed mortgage loan for a period of seven years from the date of foreclosure. (anyone want to bet whether Fannie Mae will be around in 7 years?)
"We're taking these steps to highlight the importance of working with your servicer," said Terence Edwards, executive vice president for credit portfolio management. "Walking away from a mortgage is bad for borrowers and bad for communities and our approach is meant to deter the disturbing trend toward strategic defaulting. On the flip side, borrowers facing hardship who make a good faith effort to resolve their situation with their servicer will preserve the option to be considered for a future Fannie Mae loan in a shorter period of time."
Fannie Mae will also take legal action to recoup the outstanding mortgage debt from borrowers who strategically default on their loans in jurisdictions that allow for deficiency judgments. In an announcement next month, the company will be instructing its servicers to monitor delinquent loans facing foreclosure and put forth recommendations for cases that warrant the pursuit of deficiency judgments.
Troubled borrowers who work with their servicers, and provide information to help the servicer assess their situation, can be considered for foreclosure alternatives, such as a loan modification, a short sale, or a deed-in-lieu of foreclosure. A borrower with extenuating circumstances who works out one of these options with their servicer could be eligible for a new mortgage loan in three years and in as little as two years depending on the circumstances
Here is the verbiage from the FN Bulletin:
Currently, the waiting period that must elapse after a borrower experiences a foreclosure is seven years. However, Fannie Mae allows a shorter time period – five years – if certain additional requirements are met (e.g., minimum down payment and credit score, and occupancy requirements).
These requirements are being modified to remove the five year option. Unless the foreclosure was the result of documented extenuating circumstances, which only requires a three-year waiting period (with additional requirements), all borrowers will now be required to meet a seven-year waiting period after a prior foreclosure to be eligible for a new mortgage loan eligible for sale to Fannie Mae.
Fannie Mae announced today policy changes designed to encourage borrowers to work with their servicers and pursue alternatives to foreclosure.
Defaulting borrowers who walk-away and had the capacity to pay or did not complete a workout alternative in good faith will be ineligible for a new Fannie Mae-backed mortgage loan for a period of seven years from the date of foreclosure. (anyone want to bet whether Fannie Mae will be around in 7 years?)
"We're taking these steps to highlight the importance of working with your servicer," said Terence Edwards, executive vice president for credit portfolio management. "Walking away from a mortgage is bad for borrowers and bad for communities and our approach is meant to deter the disturbing trend toward strategic defaulting. On the flip side, borrowers facing hardship who make a good faith effort to resolve their situation with their servicer will preserve the option to be considered for a future Fannie Mae loan in a shorter period of time."
Fannie Mae will also take legal action to recoup the outstanding mortgage debt from borrowers who strategically default on their loans in jurisdictions that allow for deficiency judgments. In an announcement next month, the company will be instructing its servicers to monitor delinquent loans facing foreclosure and put forth recommendations for cases that warrant the pursuit of deficiency judgments.
Troubled borrowers who work with their servicers, and provide information to help the servicer assess their situation, can be considered for foreclosure alternatives, such as a loan modification, a short sale, or a deed-in-lieu of foreclosure. A borrower with extenuating circumstances who works out one of these options with their servicer could be eligible for a new mortgage loan in three years and in as little as two years depending on the circumstances
Here is the verbiage from the FN Bulletin:
Currently, the waiting period that must elapse after a borrower experiences a foreclosure is seven years. However, Fannie Mae allows a shorter time period – five years – if certain additional requirements are met (e.g., minimum down payment and credit score, and occupancy requirements).
These requirements are being modified to remove the five year option. Unless the foreclosure was the result of documented extenuating circumstances, which only requires a three-year waiting period (with additional requirements), all borrowers will now be required to meet a seven-year waiting period after a prior foreclosure to be eligible for a new mortgage loan eligible for sale to Fannie Mae.
Wednesday, June 16, 2010
Fannie and Freddie
Courtesy DSNews.com
6_16_10
FHFA Orders Fannie, Freddie to Delist Stock from NYSE
The Federal Housing Finance Agency has directed Fannie Mae and Freddie Mac to delist their common and preferred stock from the New York Stock Exchange (NYSE) and any other national securities exchange.
“A voluntary delisting at this time simply makes sense and fits with the goal of a conservatorship to preserve and conserve assets,” said FHFA Acting Director Edward J. DeMarco.
Both companies’ common stock price has hovered near the NYSE minimum average closing price requirement of $1 for more than 30 trading days for most months since Fannie and Freddie were placed into conservatorships in September 2008.
For the past 30 trading days, Fannie Mae’s closing stock price has dropped below the required $1 average price. Per NYSE rules, a company in that condition must either drop from the exchange or undertake a ‘cure’ to restore the stock price above the $1 mark. But FHFA says the alternatives for such a cure do not assure that the minimum price level will be maintained or shareholder value will not be lost.
Freddie Mac’s share price has been treading very close to the $1 mark, and FHFA says because both GSEs are operating under its conservatorship and relying on taxpayer support, the agency decided that Freddie Mac should also initiate delisting procedures.
"FHFA’s determination to direct each company to delist does not constitute any reflection on either enterprise’s current performance or future direction, nor does delisting imply any other findings or determination on the part of FHFA as regulator or conservator," DeMarco said. “The determination to direct delisting is related to stock exchange requirements for maintaining price levels and curing deficiencies.”
The GSEs’ stock will continue to trade, but through a different trading mechanism, FHFA said. Once the delisting is completed, each company’s common and preferred stock is expected to be quoted on the Over–the-Counter Bulletin Board (OTCBB).
Both GSEs’ stock prices dropped more than 40 percent in early morning trading.
6_16_10
FHFA Orders Fannie, Freddie to Delist Stock from NYSE
The Federal Housing Finance Agency has directed Fannie Mae and Freddie Mac to delist their common and preferred stock from the New York Stock Exchange (NYSE) and any other national securities exchange.
“A voluntary delisting at this time simply makes sense and fits with the goal of a conservatorship to preserve and conserve assets,” said FHFA Acting Director Edward J. DeMarco.
Both companies’ common stock price has hovered near the NYSE minimum average closing price requirement of $1 for more than 30 trading days for most months since Fannie and Freddie were placed into conservatorships in September 2008.
For the past 30 trading days, Fannie Mae’s closing stock price has dropped below the required $1 average price. Per NYSE rules, a company in that condition must either drop from the exchange or undertake a ‘cure’ to restore the stock price above the $1 mark. But FHFA says the alternatives for such a cure do not assure that the minimum price level will be maintained or shareholder value will not be lost.
Freddie Mac’s share price has been treading very close to the $1 mark, and FHFA says because both GSEs are operating under its conservatorship and relying on taxpayer support, the agency decided that Freddie Mac should also initiate delisting procedures.
"FHFA’s determination to direct each company to delist does not constitute any reflection on either enterprise’s current performance or future direction, nor does delisting imply any other findings or determination on the part of FHFA as regulator or conservator," DeMarco said. “The determination to direct delisting is related to stock exchange requirements for maintaining price levels and curing deficiencies.”
The GSEs’ stock will continue to trade, but through a different trading mechanism, FHFA said. Once the delisting is completed, each company’s common and preferred stock is expected to be quoted on the Over–the-Counter Bulletin Board (OTCBB).
Both GSEs’ stock prices dropped more than 40 percent in early morning trading.
Friday, June 04, 2010
It's Official: Moody's is Clueless Too
After watching Warren Buffet and the CEO of Moody's testify in front of Congress this week - i sort of thought they got it. Now this story comes out to prove even Warren Buffet is drinking the Kool-Aid. Come-on! With near 7 million properties yet to be recognized as bad assets - WHO ARE THEY KIDDING? Of course, what did you expect from a company that stamped Triple A on bad market paper long after the handwriting was on the wall.
By: Carrie Bay - DSNews.com06/03/2010
Banks Have Recognized 60% of Expected Loan Charge-Offs: Moody’s
By: Carrie Bay - DSNews.com06/03/2010
In its latest quarterly report on credit conditions of the U.S. banking system, Moody’s Investors Service says banks’ asset quality issues are “past the peak” butcharge-offs and non-performers continue to eat away at profitability and sheer fundamentals.
Based on Moody’s market data, banks’ non-performing loans stood at 5.0 percent of total loan assets at March 31, 2010.
Moody’s says U.S. rated banks have already charged off or written-down $436 billion of loans in 2008, 2009, and the first quarter of 2010. That leaves another $307 billion to reach the rating agency’s full estimate of $744 billion of loan charge-offs from 2008 through 2011.
In aggregate, the banks have recognized 60 percent of Moody’s estimated total charge-offs and 65 percent of estimated residential mortgage losses, but only 45 percent of projected commercial real estate losses.
In the first quarter of this year, the banking industry’s collective annualized net charge-offs came to 3.3 percent of loans, versus 3.6 percent of loans in the fourth quarter
of 2009, Moody’s said. Despite two consecutive quarters of improvement in charge-offs, the ratings agency notes that the figures still remain near historic highs, dating back to the Great Depression.
According to Moody’s analysts, the decline in aggregate charge-offs was driven by commercial real estate improvement, which “we believe is likely to reverse in coming quarters,” they said in the report. A similar commercial real estate decline was experienced in the first quarter of 2009 before charge-offs accelerated through the rest of the year.
“The return to ‘normal’ levels of asset quality will be slow and uneven over the next 12 to 18 months,” said Moody’s SVP Craig Emrick.
But Emrick added that “Although remaining losses are sizable, they are beginning to look manageable in relation to bank’s loan loss allowances and tangible common equity.”
U.S. banks’ allowances for loan losses stood at $221 billion as of March 31, 2010, which is equal to 4.1 percent of loans, Moody’s reported. Although this can be used to offset a sizable portion of remaining charge-offs, banks will still require substantial provisions in 2010, the agency said.
Moody’s says its negative outlook for the U.S. banking system is driven by asset quality concerns and effects on profitability and capital. The agency’s ratings outlook is also influenced by the potential for a worse-than-expected macroeconomic environment, Moody’s said.
“More severe macroeconomic developments, the probability of which we place at 10 percent to 20 percent, would significantly strain U.S. bank fundamental credit quality,” Moody’s analysts wrote in their report.
Monday, May 31, 2010
More than Half of Foreclosures Triggered by Job Loss
Courtesy DSNews.com
According to a study released Friday by NeighborWorks America, 58 percent of homeowners who’ve received assistance through its national foreclosure counseling program reported the primary reason they were facing foreclosure was reduced or lost income.
NeighborWorks was created by Congress in 1991 as a nonprofit organization to support local communities in providing its citizens with access to homeownership and affordable rental housing. In January 2008, with the foreclosure crisis raging, Congress implemented the National Foreclosure Mitigation Counseling (NFMC) Program and made NeighborWorks the administrator.
The organization says that over the course of the NFMC program, the percentage of homeowners who’ve cited wage cuts or unemployment as the primary reason they were facing foreclosure has steadily increased.
In November 2009, 54 percent of NFMC-counseled borrowers reported reduced or lost income as the main reason for default. Six months earlier in June 2009, it was 49 percent; in February 2009, 45 percent; and in October 2008, 41 percent.
These steady increases parallel the nation’s unemployment rate, which until the November 2009 employment report, had marched upward since October 2008.
“With unemployment numbers not likely to dip below nine percent in 2010, our report proves what many already believed to be true. Unemployment and reduced income are having a devastating effect on our nation’s homeowners,” said Ken Wade, CEO of NeighborWorks America.
The administration recently announced changes to its Making Home Affordable program to provide assistance to unemployed homeowners by temporarily reducing or suspending mortgage payments for a minimum of three months. The initiative becomes effective July 1, 2010.
The federal government has also awarded additional funding to states where unemployment is high to support localized mortgage relief programs for homeowners who are out of work.
Lawmakers too are on a push to help homeowners who’ve lost their jobs. Congress’ financial reform package includes a measure that uses $3 billion from the Troubled Asset Relief Program (TARP) fund to make loans of up to $50,000 to unemployed homeowners to be used to make their mortgage payments for up to 24 months while they are looking for a new job.
Wade said, “While Congress and state governments have stepped up and extended unemployment benefits to help families survive this tough economic climate, it’s time for mortgage servicers and investors to make meaningful accommodations for homeowners facing foreclosure. If they don’t, we’ll see even more empty houses and devastated neighborhoods in our communities.”
NeighborWorks also noted in its report that 62 percent of all NFMC clients held a fixed-rate mortgage, and 49 percent were paying on a fixed-rate mortgage with an interest rate below 8 percent.
Nearly one million families have received foreclosure counseling as a result of NFMC Program funding. According to NeighborWorks, NFMC clients are 60 percent more likely to avoid foreclosure than homeowners who do not receive foreclosure counseling.
According to a study released Friday by NeighborWorks America, 58 percent of homeowners who’ve received assistance through its national foreclosure counseling program reported the primary reason they were facing foreclosure was reduced or lost income.
NeighborWorks was created by Congress in 1991 as a nonprofit organization to support local communities in providing its citizens with access to homeownership and affordable rental housing. In January 2008, with the foreclosure crisis raging, Congress implemented the National Foreclosure Mitigation Counseling (NFMC) Program and made NeighborWorks the administrator.
The organization says that over the course of the NFMC program, the percentage of homeowners who’ve cited wage cuts or unemployment as the primary reason they were facing foreclosure has steadily increased.
In November 2009, 54 percent of NFMC-counseled borrowers reported reduced or lost income as the main reason for default. Six months earlier in June 2009, it was 49 percent; in February 2009, 45 percent; and in October 2008, 41 percent.
These steady increases parallel the nation’s unemployment rate, which until the November 2009 employment report, had marched upward since October 2008.
“With unemployment numbers not likely to dip below nine percent in 2010, our report proves what many already believed to be true. Unemployment and reduced income are having a devastating effect on our nation’s homeowners,” said Ken Wade, CEO of NeighborWorks America.
The administration recently announced changes to its Making Home Affordable program to provide assistance to unemployed homeowners by temporarily reducing or suspending mortgage payments for a minimum of three months. The initiative becomes effective July 1, 2010.
The federal government has also awarded additional funding to states where unemployment is high to support localized mortgage relief programs for homeowners who are out of work.
Lawmakers too are on a push to help homeowners who’ve lost their jobs. Congress’ financial reform package includes a measure that uses $3 billion from the Troubled Asset Relief Program (TARP) fund to make loans of up to $50,000 to unemployed homeowners to be used to make their mortgage payments for up to 24 months while they are looking for a new job.
Wade said, “While Congress and state governments have stepped up and extended unemployment benefits to help families survive this tough economic climate, it’s time for mortgage servicers and investors to make meaningful accommodations for homeowners facing foreclosure. If they don’t, we’ll see even more empty houses and devastated neighborhoods in our communities.”
NeighborWorks also noted in its report that 62 percent of all NFMC clients held a fixed-rate mortgage, and 49 percent were paying on a fixed-rate mortgage with an interest rate below 8 percent.
Nearly one million families have received foreclosure counseling as a result of NFMC Program funding. According to NeighborWorks, NFMC clients are 60 percent more likely to avoid foreclosure than homeowners who do not receive foreclosure counseling.
Monday, May 24, 2010
The Magic of Compounding!
Here is an absolutely Mind Boggling post from a friend, Gary Johnston! Adults - make your children take heed!
Good morning!
Graduates….
Yesterday, one of my jobs was to shake the hands and congratulate high school graduates as they received their diplomas. They were ready to tackle the world and full of smiles. One of the many thoughts that ran across my mind as they walked across the stage was the lesson they probably didn’t learn while they were in school. Oh how I wish that they understood the power of compounding and the big influence that time has on the equation. My friend, Danny Williams, calls them compounding periods. The vast majority of these young kids have a significant number of compounding periods.
If they can earn 12% on their money, it will double every 6 years. In 48 years (18 to 66), invested money would double 8 times (48 / 6). If they started out with $1000 from graduation and a summer job, it would grow-up to be $256,000 over those 48 years. If they would add $100 a month over that same 48 years to the initial $1000, they would have $3.38M! (They would contribute $58,600.) Time is a great ally in their financial future. It can be powerfully harnessed or let slip by.
No matter how old we are, we have compounding periods in front of us that can be harnessed. Are you taking advantage of them? Would you do a favor for me today? Please find a graduate or young person in your life and share the power of compounding and the big influence time has with them? It is one of the most critical lessons they will ever learn.
Good morning!
Graduates….
Yesterday, one of my jobs was to shake the hands and congratulate high school graduates as they received their diplomas. They were ready to tackle the world and full of smiles. One of the many thoughts that ran across my mind as they walked across the stage was the lesson they probably didn’t learn while they were in school. Oh how I wish that they understood the power of compounding and the big influence that time has on the equation. My friend, Danny Williams, calls them compounding periods. The vast majority of these young kids have a significant number of compounding periods.
If they can earn 12% on their money, it will double every 6 years. In 48 years (18 to 66), invested money would double 8 times (48 / 6). If they started out with $1000 from graduation and a summer job, it would grow-up to be $256,000 over those 48 years. If they would add $100 a month over that same 48 years to the initial $1000, they would have $3.38M! (They would contribute $58,600.) Time is a great ally in their financial future. It can be powerfully harnessed or let slip by.
No matter how old we are, we have compounding periods in front of us that can be harnessed. Are you taking advantage of them? Would you do a favor for me today? Please find a graduate or young person in your life and share the power of compounding and the big influence time has with them? It is one of the most critical lessons they will ever learn.
Friday, April 23, 2010
Fraud in the Financials
Please watch this Bill Moyers Journal segment on the depth and breadth of the financial fraud perpetrated by the large financial institutions, and the actual government officials themselves. The segment starts mild and slow, and closes with such horrifying facts and charges that I must admit I was nauseated. These fuckers should ALL GO TO JAIL.
http://www.pbs.org/moyers/journal/04232010/watch.html
Warning! This may cause you to lose faith in our financial system. I am not kidding.
http://www.pbs.org/moyers/journal/04232010/watch.html
Warning! This may cause you to lose faith in our financial system. I am not kidding.
Wednesday, April 21, 2010
Bank of America Buys Itself More Time...
From the Category of... What can we do to save our asses and make it look like we are helping out the homeowner? comes this little jewel... (Courtesy DSNews.com)
BofA Proposes Nine-Month Forbearance Plan for Unemployed
Bank of America says it is considering giving unemployed homeowners nine months of no mortgage payments while they search for a new job.
If during the nine-month forbearance period, the customer is successful in finding employment, Bank of America would structure a mortgage loan modification based on the borrower’s new income. (You'll Still Owe Twice what it is worth!)
Customers who enter the program must be willing to relinquish the home through a deed-in-lieu arrangement (translation - sign away your right to due course of law)if they haven’t found new employment during the nine-month time frame, and would be given a minimum of $2,000 to help with the transition.
(Does a job at McDonalds or Wal-Mart count? I ain't gonna be able to make any kind of payment on that wage - and those are the only jobs out there)
The North Carolina-based bank stressed that the proposal must be approved by regulators before it can be implemented, but market observers are calling it a positive step in the fight against foreclosure.
A Bank of America spokesperson told DSNews.com, “Sustained recessionary impacts and their affect on the unemployed, in particular, demand we consider creative solutions above and beyond what is currently available to put these customers in the best possible position to sustain home ownership. We continue to evolve our home retention programs to meet the changing needs of our customers and to reflect the insights we are gaining through our experience in assisting our customers.”
According to the local Charlotte Observer, some experts say the plan could become an industry model and is the most substantial, creative approach yet to addressing the foreclosure fallout from stubbornly high unemployment.
©2010 DS News. All Rights Reserved.
BofA Proposes Nine-Month Forbearance Plan for Unemployed
Bank of America says it is considering giving unemployed homeowners nine months of no mortgage payments while they search for a new job.
If during the nine-month forbearance period, the customer is successful in finding employment, Bank of America would structure a mortgage loan modification based on the borrower’s new income. (You'll Still Owe Twice what it is worth!)
Customers who enter the program must be willing to relinquish the home through a deed-in-lieu arrangement (translation - sign away your right to due course of law)if they haven’t found new employment during the nine-month time frame, and would be given a minimum of $2,000 to help with the transition.
(Does a job at McDonalds or Wal-Mart count? I ain't gonna be able to make any kind of payment on that wage - and those are the only jobs out there)
The North Carolina-based bank stressed that the proposal must be approved by regulators before it can be implemented, but market observers are calling it a positive step in the fight against foreclosure.
A Bank of America spokesperson told DSNews.com, “Sustained recessionary impacts and their affect on the unemployed, in particular, demand we consider creative solutions above and beyond what is currently available to put these customers in the best possible position to sustain home ownership. We continue to evolve our home retention programs to meet the changing needs of our customers and to reflect the insights we are gaining through our experience in assisting our customers.”
According to the local Charlotte Observer, some experts say the plan could become an industry model and is the most substantial, creative approach yet to addressing the foreclosure fallout from stubbornly high unemployment.
©2010 DS News. All Rights Reserved.
Tuesday, April 13, 2010
California Tax Law Change Helps Short Sales
(Story Courtesy CAR legal)
4/13/2010
NO MORE STATE TAX ON FORGIVEN DEBT
Distressed homeowners no longer have to pay California state income tax on debt forgiven in a short sale, foreclosure, or loan modification. Enacted into law yesterday, Senate Bill 401 generally aligns California's tax treatment of mortgage debt relief income with federal law. For debt forgiven on a loan secured by a "qualified principal residence," borrowers will now be exempt from both federal and state income tax consequences. The existing federal exemption is for indebtedness up to $2 million, whereas the new California exemption is for indebtedness up to $800,000 and forgiven debt up to $500,000.
"Qualified principal residence" indebtedness is defined as debt incurred in acquiring, constructing, or substantially improving a principal residence. It includes both first and second trust deeds. It also includes a refinance loan to the extent the funds were used to payoff a previous loan that would have qualified.
The tax breaks apply to debts discharged from 2009 through 2012. Californians who have already filed their 2009 tax returns may claim the exemption by filing a Form 540X amendment.
Taxpayers who do not qualify for the above exemptions (e.g., second home or rental property) may nevertheless be exempt under other provisions. Most notably, taxpayers who are bankrupt are exempt from debt relief income tax. Also, taxpayers who are insolvent are exempt from debt relief income tax to the extent their current liabilities exceed current assets.
For more information about mortgage forgiveness tax consequences, go to California Franchise Tax Board's Mortgage Forgiveness Debt Relief Extended webpage and the Internal Revenue Service's Mortgage Forgiveness Debt Relief Act and Debt Cancellation webpage. The full text of Senate Bill 401 is available at www.leginfo.ca.gov.
Monday, April 12, 2010
It's Official - Hamp is Too Little - Too Late
Courtesy DSNews.com
A new poll by market research firm Harris Interactive provides some unpleasant numbers about the housing crisis and the collapse of the house price bubble. The company found that 24 percent of people with mortgages believe they owe more on the loan than their homes are worth.
The U.S. Treasury Department recently announced that it is expanding the administration’s Home Affordable Modification Program (HAMP) to provide some mortgage relief to underwater borrowers.
Participating servicers will be required to consider an “Alternative Modification Waterfall” in their evaluations, which includes writing down the principal for loans that are over 115 percent of the current value of the property. This alternative modification approach will include incentive payments for each dollar of principal write-down by servicers and investors.
But some market observers worry that the help may be too little too late for many struggling homeowners, since Treasury officials say “it will take time” – no earlier than the fall – before the new program enhancements are up and running.
We know you need a life preserver - Please wait 6 months and then we'll throw you one!
According to the Harris poll, nearly half of the borrowers who believe they are underwater say they are currently having difficulty paying their mortgage. Twenty-six percent report having “a great deal of difficulty.” Another 23 percent are having “some difficulty.”
Thursday, March 25, 2010
Hamp an "Abject Failure"
Courtesy DSNEWS
The Home Affordable Modification Program (HAMP) will fall far short of the administration’s promise to prevent foreclosure for 3 to 4 million homeowners, according to one federal watchdog.
Neil Barofsky, special inspector general for the Troubled Asset Relief Program, says HAMP’s “disappointing results have raised questions about program effectiveness.” He’s determined that the Treasury Department has set targets that aren’t “meaningful” and that HAMP is “particularly vulnerable to re-defaults,” which will mean throngs of borrowers will end up facing foreclosure anyway and the program’s success rate will go even lower.
These conclusions come after Barofsky initiated an audit of the federal program last week upon prompting from lawmakers.
A year into the program, and Treasury officials have changed their tune about the numbers. According to Barofsky, the administration now says that 3 to 4 million troubled homeowners will be “offered” assistance through HAMP, but only 1.5 to 2 million will actually be given permanent relief over the course of the four-year program.
The special inspector general says the latter will be “only a small fraction of the total number of foreclosures that will occur during that period.”
In his report, Barofsky questions “whether HAMP is worth the resources being expended or whether the program needs to be re-vamped to actually help more borrowers.”
GOP lawmakers, too, have been relentless in their criticism of HAMP, going so far as to call the program outright, “an abject failure.”
In a March 16th letter to Treasury Secretary Timothy Geithner, Republican Reps. Darrell Issa (California) and Jim Jordan (Ohio) echoed Barofsky’s conclusions, saying the administration “continues to widely overstate” HAMP’s impact.
“Rather than acknowledge the program’s failure, Treasury is trying to confuse the American people by counting HAMP’s higher number of temporary modifications — fewer than one-third of which are successfully converting to permanent ones — toward the goal,” the lawmakers wrote.
As of the end of February, only 170,000 borrowers had received permanent HAMP modifications.
In response to Barofsky’s report, the Treasury said “at launch there were a number of unknowns … that made it difficult to set appropriate targets.”
According to Herbert Allison, assistant Treasury secretary for financial stability, the success of the program should not be based solely on permanent mods, but should take into account the administration’s multi-pronged approach to foreclosure avoidance, including its Home Affordable Foreclosure Alternatives (HAFA) short sale program.
On top of the diminished count of homeowners to receive actual help through HAMP, Barofsky says the program is fundamentally engineered to have a high re-default rate. By Treasury’s own estimates, four out of every 10 homeowners – in either a trial or permanent HAMP mod – will eventually turn delinquent again.
Barofsky says this is because of several inherent flaws in the program:
- Non-mortgage debt is not factored into the equation, which can affect a borrower’s ability to pay;
- The HAMP mod period only lasts for five years, after which a borrower’s payments will start to go up automatically;
- Treasury has been unsuccessful in getting servicers to modify second liens, which saddle 50 percent of at-risk borrowers;
- And of course, that “walk-away” trigger – negative equity.
The House Committee on Oversight and Government Reform is holding a hearing Thursday to discuss the government’s foreclosure prevention efforts and examine whether HAMP is truly preserving homeownership. Both Barofsky and Allison are scheduled to testify.
Wednesday, March 24, 2010
Bank of America Principal Write-Downs
Listening to this guy from Bank of America just confirms what we all already know... They just don't hear the 100 ton freight train bearing down on them. The Taxpayers WILL NOT BAIL YOU OUT! Fix all the loans, and fix 'em fast, B of A. Your time is at hand...
Wednesday, February 10, 2010
The New Sub-Prime...Courtesy of Uncle Sam!
From DSNews.com
The latest numbers from the Federal Housing Administration (FHA) show that the percentage of loans it backs that are at least 90 days past due hit 9.12 percent at the end of 2009. That figure is up from 6.82 percent one year earlier – a 34 percent increase.
FHA officials have repeatedly cited a rise in loan defaults as inevitable given the agency’s exponential growth in market share. The FHA currently backs about 30 percent of all new loans for home purchases and 20 percent of refinanced loans. Those figures represent an increase of nearly 1,000 percent since 2006, when private lenders began to pull back and the credit crunch set in.
According to the agency, the bulk of its problem loans stem from originations made in 2007 and 2008. Officials say tighter underwriting standards make more recent and new loans less likely to default. In fact, HUD said in its fiscal year 2011 budget that it expects new business from FHA to generate a $6 billion overall profit, although that number will be eclipsed by projected losses of $19 billion from insuring soured loans.
In the fourth quarter of 2009, lenders originated $86.1 billion in FHA single-family loans, up 21 percent compared to the same period in 2008. Sixty percent, or $51.8 billion, of the fourth-quarter financing was used to fund home purchases.
For the full 2009 year, FHA insured 5.8 million loans, with an aggregate balance of $752.6 billion – a 24 percent increase compared to 2008’s business.
Foreclosures on loans guaranteed through FHA soared 41 percent in the fourth quarter from year-ago levels, to 20,650. The agency also reported that 2,925 short sale transactions were completed during the three-month period – that’s a 140 percent increase compared to one year earlier.
FHA announced extensive policy changes last month to get a better handle on default risk and minimize problem loans. The agency has raised homebuyers’ up-front costs for mortgage insurance, tripled downpayment requirements for borrowers with low credit scores, and cut seller concessions in half. Officials say they will also be keeping a close eye on FHA lenders to ensure the agency’s standards are being followed and plan to institute new rules that force mortgagees to assume liability.
Tuesday, February 02, 2010
Short Sales Work - Believe it!
Over this past year, I have been helping a young lady sell 3 condos she owned.
Purchased in 2005 and 2006, these units had declined in value over 50%! Combined with a loss of employment and difficult tenants, Jessica was driven into financial ruin and was headed for 3 devastating foreclosures!
On the advice of a mutual friend, she called Short Sale Group for help. Over the next year, we sold each unit and settled short with a total of 4 different lenders.
Total discounts received was over $300,000!
Soon, Jessica will be hiring a credit repair agency to help remove the mortgage dings from her credit record, within a year will have her credit score back up over 700!
Here is a snippet from the email she sent just after the last unit closed escrow...
"Whoo hooo! Thank you for all of your hard work! You have been a God send in this situation. I would absolutely appreciate any help with re-building you have to offer. Thank you Again! Jessica"
Believe me - we feel as good about it as she does!
Purchased in 2005 and 2006, these units had declined in value over 50%! Combined with a loss of employment and difficult tenants, Jessica was driven into financial ruin and was headed for 3 devastating foreclosures!
On the advice of a mutual friend, she called Short Sale Group for help. Over the next year, we sold each unit and settled short with a total of 4 different lenders.
Total discounts received was over $300,000!
Soon, Jessica will be hiring a credit repair agency to help remove the mortgage dings from her credit record, within a year will have her credit score back up over 700!
Here is a snippet from the email she sent just after the last unit closed escrow...
"Whoo hooo! Thank you for all of your hard work! You have been a God send in this situation. I would absolutely appreciate any help with re-building you have to offer. Thank you Again! Jessica"
Believe me - we feel as good about it as she does!
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