Foreclosure Help

Foreclosure Help Program Can Cut Lenders Losses

By admin

The Obama administration’s foreclosure help program can cut mortgage lenders’ losses from home loans, an Indiana law professor says. But he wonders why lenders are not modifying as many loans as they can under the federal foreclosure help program.

Alan M. White, law professor at Indiana’s Valparaiso University, said that in November last year, lenders’ losses from foreclosures averaged more than 56 percent of the loan balance while in February, lenders’ losses increased to more than 64 percent.

Last June, the average loss of lenders from foreclosures was nearly 65 percent of the loan balance.

White studied 3.5 million Alt-A mortgage loans and subprime loans in mortgage-backed securities managed by Wells Fargo. These were home loans originated from 2005 to 2007 and they include loans handled by five largest loan servicers in the country, including Chase Home Finance, Litton Loan Servicing and Bank of America.

White found that after loan modifications reached their highest level of nearly 24,000 home loans in February, loan modifications declined in all the following months except one month. In May, lenders modified 19,041 loans while in June, lenders modified 18,179 loans.

White said that lenders should have modified as many as they could in May and June to help give momentum to the federal foreclosure help program.

In the meantime, foreclosures were increasing sharply. In June, over 281,000 mortgages were in the foreclosure process, more than the nearly 278,999 foreclosure filings in May. In January, about 242,000 home loans were in line for foreclosure.

Despite the declaration by John C. Dugan, chief of the Office of the Comptroller of the Currency, that the number of loan modifications in the first quarter improved in the first quarter by 55 percent, White said that the Obama administration’s foreclosure help program has not achieved significant progress in helping distressed American homeowners.

Some housing analysts said that the home loan data studied by White was different from the home loan data analyzed by the Comptroller of the Currency. Data from Wells Fargo had no prime loans while the OCC data had both prime and subprime loans.

Using Wells Fargo data, White found that 58 percent of the loans modified in June reduced payments by an average of $173 a month.

In addition, White said lenders lost a staggering total of $4.59 billion from sales of foreclosures in June. He said he is perplexed why lenders prefer to lose such a staggering amount when they can modify loans under the federal foreclosure help program and help cut their losses and, more importantly, help Americans keep their homes.

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What You May Not Know about Nevada’s Foreclosure Help Plan

By admin

Many homeowners in Nevada were relieved to hear about the state’s foreclosure help program that was passed by the state assembly in June and which will take effect on July 1.

But homeowners need to know that there are restrictions and requirements for participants. They should approach a state HUD-certified foreclosure help counselor or visit the web site of the Nevada Supreme Court and check if they are eligible to participate in the program.

Basically, the program helps homeowners work out an affordable repayment scheme with their lenders through a court-supervised mediation.

Homeowners and lenders will each pay $200 for the mediation process and non-native English speakers need to bring their own translators.

The major limitation of the foreclosure help program is the scope of the program. It applies only to borrowers who receive a default notice starting July 1, which excludes many borrowers who have already defaulted.

Homeowners and advocates are sad about the restriction because many homeowners purposely defaulted when their lenders refused to modify their loans because they have not been delinquent.

In response to complaints about the scope of the program, the state Supreme Court advised homeowners who have defaulted before

July 1 that they can still participate in the program as long as they can get the consent of their lenders.

Bill Uffelman, president of the Nevada Bankers Association, said that many homeowners can still negotiate with their lenders even without the court mediation law.

Another limitation of the foreclosure help program is its application to owner-occupied homes only. Court mediation will not be provided for investors who speculated on home prices.

Unemployed homeowners are also exempted from the program. A bank representative said that any borrower who does not have a job can never be helped by the program. He added that only homeowners who have adequate monthly income and who did not buy houses beyond their financial capabilities will be helped by the program.

The other major limitation of the foreclosure help program is the voluntary nature of the loan modification part of the mediation process. The participation of the lender in the court-supervised mediation process is mandatory, but the achievement of a modified loan is not mandatory. Much of the process still depends on the lenders’ policies and their representatives in the mediation process.

Additionally, homeowners who have already filed for bankruptcy or who have already surrendered their houses to their lenders are not eligible for the foreclosure help program.

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Mayors Adopt City Government Foreclosure Prevention Program

By Johnny

One of the reasons why the Obama administration’s government foreclosure prevention program has not been helping as many distressed homeowners as expected is the voluntary nature of mortgage lenders’ participation.

Even if the Making Home Affordable program offers cash incentives to lenders and servicers to modify loans, the loans are not modified if the lenders or servicers choose not to participate in the program. There is no law that requires them to modify the loans.

So the mayors of Los Angeles, New York, Philadelphia, Miami, Saint Louis and other cities have been working with the national nonprofit Association of Community Organizations for Reform Now (ACORN) to learn from Philadelphia’s city mandatory settlement program.

According to Bertha Lewis, CEO of ACORN, Philadelphia’s government foreclosure prevention program, which uses mandatory mediation as its main armor, has helped save the houses of about 78 percent of distressed homeowners who participated in the program.

Lewis explained that Philadelphia’s government foreclosure prevention program works because it is mandatory in nature. Mortgage lenders are required to first participate in a court-supervised mediation session to work out an affordable repayment scheme with borrowers before filing a foreclosure action.

Aside from mandatory mediation, the program also uses community outreach, housing counselors and fair valuation methods to carry out the program. It is also supported by other local agencies such as the Philadelphia Unemployment Project, Community Legal Services and the office of Mayor Michael Nutter.

The program uses funds from the city and money raised from private donors.

Mayors wish that funds from the Neighborhood Stabilization Program could be used to help fund local government foreclosure prevention programs, but unfortunately, they are not allowed to divert NSP funds.

NSP funds were designed to help rehabilitate foreclosure-battered neighborhoods by buying foreclosure properties, fixing them and selling them to low-income families.

The Senate, through Senators Bob Casey and Kirsten Gillibrand, tried to amend the NSP rules so that cities can use NSP funds for their own government foreclosure prevention programs, but House legislators did not approve the amendment.

ACORN has been helping mayors to urge their state legislators to pass laws that require mortgage lenders to participate in mandatory settlement sessions with troubled homeowners. It has been promoting Philadelphia’s mandatory mediation program which it helped implement.

Next year and the following year, more foreclosures are expected because of the scheduled adjustment of adjustable-rate home loans. A mandatory government foreclosure prevention program is needed to help the federal program more effective in preventing foreclosures.

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NCL: Beware Bogus Bank Foreclosure Property Rescue Schemes

By admin

Bank foreclosure property is at an unprecedented high, ruining thousands of lives and creating an opportunity for some unscrupulous people who take advantage of the desperation of homeowners to save their properties from foreclosure.

The National Consumers League (NCL) has warned homeowners about bogus foreclosure prevention schemes and mortgage fraud. The NCL’s Fraud Center has been tracking fraudulent activities and called on state and federal governments to intensify their consumer education campaign to help homeowners and consumers avoid fraudulent mortgage and foreclosure prevention schemes.

According to data from the Prieston Group, the lending industry incurred an estimated annual loss of $4 to 6 billion due to mortgage fraud. This is because in their desperation to remain in their homes and avoid foreclosure, homeowners would grab any help that comes on their way.

Desperate homeowners would be more than willing to do anything if it means keeping their properties which they have worked hard to acquire. Unfortunately, in their desperation to save their properties from foreclosure, they become careless on whom they are dealing with and often end up losing their money and homes and damaging their credit.

NCL Executive Director Sally Greenberg said that the organization welcomes the efforts of federal and state governments to curb the growing fraudulent mortgage and foreclosure prevention schemes.

However, she believed that intensified enforcement actions to combat fraudulent mortgage and foreclosure prevention schemes will not be enough to prevent homeowners from losing their properties to fraud. She added that the efforts must be combined with consumer education to help homeowners identify and avoid fraudulent schemes.

There are several ways fraudsters commit their bogus mortgage modification and foreclosure prevention schemes. Some may promise desperate homeowners that they will negotiate with banks to scale down arrears or change the terms of their loans. But they will ask for upfront fees for their services. And once homeowners pay the fees, that would be the last time they are going to see the so-called foreclosure prevention expert.

Some con artists operate by promising a homeowner that they would pay his mortgage and lease back his property to him if he signs over the title to them. However, once the homeowner signs the title to the con artists, they will raise the rental fee, sell the house, or worst, evict the homeowner.

These are just some of the fraudulent schemes that distressed homeowners may fall into in their desperation to avoid bank foreclosure property. And NCL believed that an intensified consumer education campaign would go a long way in preventing bogus foreclosure prevention schemes.

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Freddie Mac Cuts Down Government Foreclosures

By Mary

Freddie Mac showed its commitment to help ensure the success of President Obama’s Home Affordable program by suspending government foreclosures on defaulting loans that qualify for one of the government’s housing initiatives.

With the previous suspension of government foreclosures already expired last March 6, Freddie Mac again reached out to distressed homeowners by ordering its counselors and servicers to find a scheme for these borrowers out of the available workout initiatives before putting their loans to foreclosure folders. These include Freddie Mac’s refinancing schemes, the Federal Housing Finance Agency’s Streamlined Modification Program, Fannie Mae’s refinancing schemes and the HOPE NOW Alliance scheme.

Ingrid Beckles, default asset management executive at Freddie Mac, said Freddie Mac has ordered its servicers and counselors not to proceed with government foreclosures unless they have contacted the homeowner and the homeowner did not show interest or did not have the financial capacity to participate in any of the loan modification or refinancing schemes.

Additionally, Freddie Mac has also launched a new modification strategy that targets high risk loans. It will hire third party servicers to focus on borrowers who took alternative mortgage loans and other highly risky mortgage loans. It has also prepared counselors and specialists trained to help borrowers with high risk loans and to handle the expected high volume of callers.

Meanwhile, Faith Schwartz, executive director of HOPE NOW, reported that HOPE NOW has modified 123,000 in January, an increase of 4 percent from repayment and modification plans in December 2008. HOPE NOW is an alliance of private-sector mortgage servicers, investors and nonprofits aimed at reducing lender and government foreclosures. Schwartz also reported that HOPE NOW processed 125,000 loan payment plans in January.

As the foreclosure prevention programs are being implemented, lender and government foreclosures continued to increase as shown in the February foreclosure data collected by RealtyTrac and foreclosures.com. According to RealtyTrac, there were 290,631 foreclosure filings in February. These include notices of default, bank repossessions and auction sale notices. During the month, one house in every 440 housing units nationwide was given a foreclosure notice.

Foreclosures.com’s data showed that lender and government foreclosures in February increased by over 67 percent from January data. Alexis McGee, head of foreclosures.com, said that if nothing is done on a national scale, lender and government foreclosures will reach 1.2 million housing units by the end of 2009.

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Tips on Purchasing on a Short Sale

By Mary

A short sale prevents foreclosure as it makes the lender agree to take less of what is originally owed to them by the distressed homeowner.

Having a short sale does not only help the homeowner facing foreclosure, but it can also offer a great deal for a home buyer. Since the house is being sold for an amount less than what is owed, it is definitely a bargain. Also the house you can buy is not the worn-out type.

Here are some helpful tips to land a good deal on a short sale:

Know where you are putting yourself into. Here, you are dealing with the distressed homeowner, the lender, and their agents. This means the process can take about 2 to 6 months, unlike a typical sale with about only 30 days. So before buying such a property, have a budget for apartment rental for several months.
Fin the right expert. Do not go solo. Find an agent who is more experienced or who has closed several deals already.
Eliminate candidates. It takes more time to negotiate houses with more than one lender. Also, avoid those homes with a seller that has other offers. It is again, time consuming.
Set a good price. Let your agent submit your price offer to the seller. Have your agent identify that home’s fair market value by searching for comparable sales within the area. If it is lower than the list price, make an offer that is 10% lower than that.
Be safe. Know if the lender will cover the charges. Do not make an appraisal of the property until the offer is approved.
Do not put a deposit more than $3,000 before your bid gets accepted.
Keep in touch to make sure your offer is being processed.
Watch the market.

With your short sale purchase, there is definitely no more foreclosure for the troubled borrower.

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Obama Administration Promises to Stem Foreclosure, Strategy Still Unknown

By Mary

Although the administration of President Obama promised to fight the foreclosure crisis aggressively, officials are yet to find and decide on which course of action to take.

In addition to pushing for a foreclosure moratorium that will last for six (6) months, other possible actions include doubling the deduction in mortgage interest rates, additional tax credit to be enjoyed by home buyers and launching a program involving mortgage refinancing sponsored by the federal government.

For the past two years, there have been numerous plans to stop foreclosure that were discussed by both the financial industry and the government. However, the challenge lies in agreeing on one that will divide the losses between the lenders and borrowers.

With such a consideration, the White House is bent on designing a foreclosure rescue program as well as a prevention package that will basically promote refinancing. However, it is focused on making sure that the irresponsible lenders and borrowers will not benefit from the said program.

In a letter written to congressional leaders by Lawrence Summers – Obama’s choice to head the National Economic Council, a commitment was made by the government to set aside as much as $100 billion to be used in making sure that the enduring foreclosure crisis is finally addressed.

However, in the fine print, the letter stated that the Obama administration has no plans of helping every distressed homeowner. The ones which are targeted by the refinancing program are only those who are responsible and burdened by a “preventable foreclosure”. Determining who will be worthy or not is yet to be discussed and finalized.

For now, it is still too early to tell which course of action Obama’s administration will take. In the meantime, officials are thinking of declaring a bank owned foreclosure moratorium in order to give them time to come up with criteria for separating the mortgages that can be and cannot be saved as well as finalize the refinancing program for the worthy borrowers and the tax credit for the home buyers.

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New Short Sale Program Expected To Help Distressed Homeowners Prevent Foreclosure

By Mary

One option which foreclosure troubled homeowners can resort to is short sale. Under the said method, although homeowners would not be able to keep their property, they would be able to prevent foreclosure.

Fannie Mae, one of the biggest mortgage companies in the country, has devised a system so that homeowners can take advantage of the short sale option. The company is working on a new program in which short sales would be pre-approved. The program targets the areas which are greatly affected by the housing crisis, two of which are Orlando and Phoenix.

The program is expected to speed up the process of a short sale which normally takes a long time. Fannie Mae will agree on a sales price of a property about to be foreclosed and the expected loss before a transaction is settled.

A short sale is one option when a homeowner is no longer capable of repayment. Upon approval of the lender, the homeowner would sell their property for a price lower than their debt the lender to prevent foreclosure. Most of the time, the remaining obligation of the homeowner is forgiven.

The Valley has experienced an increase in foreclosure incidence over the previous year. Short sale efforts of owners of distressed homes and real estate agents have always fallen short because homeowners and lenders would not agree on a sale price, not to mention the long time that a short sale usually takes.

The short sale program is expected to be launched soon through the joint efforts of Fannie Mae and the Arizona Regional Multiple Listing Service. It will focus on properties under Countrywide Financial and which are expected to sell for an amount lower than the mortgage balance.

If the short sale program turns out to be a success, it will be implemented across the country. This is but another measure to combat the foreclosure crisis.

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Three Ways to Solve the Foreclosure Problem

By Shanon

Thus far, federal loan modification schemes and state foreclosure prevention initiatives have largely failed in averting the foreclosure of homes and in helping troubled homeowners.

The following three schemes have been recommended by experts to help solve the foreclosure crisis and revitalize the housing market:

Mortgage bond guarantees
This scheme was proposed by Jack Guttentag, emeritus professor of finance at the University of Pennsylvania Wharton School. Guttentag explained that the goal of his scheme is to persuade owners of mortgage-backed securities to allow loan modifications to prevent further foreclosures. Mortgage-backed securities would be insured by private mortgage insurance firms, which in turn would be backed by the federal government. The government would cover part of insurance losses incurred by private insurers that would ensure bond owners get their payments in cases of defaults.
Mortgage interest subsidies
This strategy was proposed by James Grosfeld, former chief executive officer of Pulte Homes. Grosfeld asks the federal government to subsidize the monthly amortizations of homeowners who took out mortgage loans from 2005 to 2007. Grosfeld said that the loans released during these years were mostly subprime, adjustable-rate mortgages and Alternative-A paper mortgages, which are highly risky types that ultimately led borrowers to defaults and foreclosures. He said that if the government rescued financial institutions which involved themselves in highly risky investments, it should also rescue individual homeowners who took out risky types of loans that they did not fully understand.
Policy of allowing home prices to fall to sustainable levels
This approach was forwarded by Dean Baker, co-chairperson of the Washington, D.C.-based Center for Economic and Policy Research. Baker explained that allowing house prices to drop to sustainable levels will increase demand for houses and reduce the number of foreclosed homes languishing in the market. According to the Standard and Poor Case-Shiller National Index, home prices across the U.S. are still more than 50 percent above their levels in January 2000.

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Foreclosure Seller Tip: Enhance Curb Appeal

By Shanon

When buying a home, you can expect buyers to rely on their first impression. For this reason, it is absolutely vital that your home will make a good one. But if your fence is somehow distracting the home buyer from the real beauty of your property, it is certainly crucial that you do something about it.

Homeowners should understand that the fence does not only serve as a security measure. You will be surprised to learn that they could actually add to a home’s market value. Since you are facing bank owned home and needs to sell your home as soon as possible, you might want to consider how your fence looks.

If you have a wooden fence, you should check it for any signs of rotting as well as termite infestation. In case there are, make sure you replace the rotten wood. Some home building experts recommend that homeowners request for galvanized post to be placed in the ground, to prevent the termite from eating the new wooden fence.

The ornamental fences will require some major touch up especially if they are of the traditional wrought-iron kind. This will involve sanding and painting. On the other hand, ornamental fences made from aluminum will not require much repair or maintenance.

If you have a vinyl fence, you are in luck for it requires minimal maintenance work. The only problem with this fence is that they could not be as appealing to home buyers especially if your home is made up of wood.

Improving how your fence looks is just the start. You should also make sure that the rest of your home is attractive. Considering the tough competition in the housing market today, it will be wise if you try your best in improving your home’s curb appeal in order to attract more buyers.

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