Archive for 'Foreclosure Help'

The Mortgage Foreclosure Diversion Pilot Program in Philadelphia, Pennsylvania has successfully helped a great number of homeowners avoid turning their properties into repo houses for sale.

According to city officials, nearly 60 percent of troubled homeowners were helped by the program. Since its inception in June 2008 up to May 31, 2009, the program helped 2,776 properties avoid becoming repo houses for sale. These figures were out of the 4,690 distressed properties referred to the city’s residential mortgage foreclosure prevention program.

The program, handled by the Philadelphia Court of Common Pleas, gives opportunity to troubled borrowers to meet with their lenders, housing advocates, lawyers and judges to try to work out solutions that will allow them to remain in their properties.

Lending institutions and banks are required to refer repossession cases to the Mortgage Foreclosure Diversion program in an effort to find ways to allow distressed homeowners to make their accounts current by modifying their mortgage payments to make them affordable.

Attorney Christopher DeNardo pointed out that under the program, all parties involved are winners. Delinquent homeowners get to avoid repo houses for sale and lenders would be able to avoid the expensive and time-consuming foreclosure proceeding.

Meanwhile, Pennsylvania Senator Arlen Specter cited Philadelphia’s program and initiated a law to emulate the initiative nationwide. Earlier this month, during the U.S. Conference of Mayors, Specter called on various states to approve laws that will require mortgage lending institutions to negotiate with troubled homeowners first before making steps towards foreclosure.

Volunteer lawyer Kari Samuels said that many troubled borrowers are delayed on their payments for as long as two years, representing a mortgage of between $20,000 and $100,000. She explained that she usually tries to create a settlement by convincing lending institutions to accept lower arrears in late fees or interest charges or to totally drop attorneys’ fees.

She added that lending institutions may seek settlements by offering to extend the outstanding loan, reducing interest rate or the principal. She claimed that lenders are willing to work things out with troubled homeowners to avoid costly foreclosure proceedings.

Nationwide market data in May showed that there were about 321,480 homes in the brink of foreclosure or one out of 398 properties were in danger of becoming repo houses for sale.

Some lawmakers are intensifying their efforts to help their constituents save their properties from being placed on Bank Forclosure List. Distressed homeowners whose lenders would not take their telephone calls have the option to call a member of Congress for help.

Hundreds of calls from distressed constituent/homeowners were fielded by the staff of Senator Saxby Chambliss. Chambliss press secretary Ashley Nelson said that most of the calls received were from homeowners who are having difficulty making their monthly mortgage payments.

However, she explained that privacy issues and legal restrictions limit the amount of help that Chambliss can give directly to troubled homeowners to save their properties from Bank Foreclosure List.

But they were able to refer homeowners to available federal resources and sometimes, make inquiries on their behalf to federal agencies, such as the U.S. Department of Housing and Urban Development (HUD), Nelson said.

The office of Representative Jim Marshall has also received calls from homeowners struggling to make mortgage payments. However, most lenders do not mind what members of Congress may suggest and so they end up referring distressed homeowners to HUD.

Meanwhile, lawmakers, especially those whose districts have many homes on Bank Foreclosure List, have taken unprecedented actions to help their constituents remain in their properties, including calling the lenders themselves to negotiate on behalf of homeowners.

Representative Maxine Waters said that she herself called lenders to seek reduced payments for her troubled constituents. She described the process as frustrating, being put on hold for hours and her calls being transferred to various departments.

She recalled one case in which she talked and appealed directly to chief executive officers of Wells Fargo and the Bank of America.
She added that the process is especially frustrating to homeowners who are a few months behind in their loan payments. She claimed that homeowners who are far behind their mortgage may get a chance to be helped by specialists to modify their loans.

On the other hand, Representative Elijah Cummings was able to convince 19 banks to establish shops at the Morgan State University to help deal with homeowners who are struggling to pay their loans.

He called on people to attend his anti-foreclosure fair which aims to convince the Obama Administration that federal funds is necessary to directly help homeowners save their properties from being placed on Bank Foreclosure List.

The Foreclosure Mediation Program in Nevada is now making progress as the state Supreme Court scheduled hearings and sought public comments.

The program comes at a time when Nevada was ranked as the state with the highest foreclosure rate in May. In Washoe County, the number of bank REO properties surged by 18 percent last month compared with figures in April.

Chief Justice James Hardesty believes that the mediation program and the law that gave birth to the foreclosure prevention effort are going to help thousands of homeowners save their homes and provide relief to some lenders. He pointed out that many residents in the state are seeing their homes turned into bank REO properties.

One of the major sponsors of the Assembly Bill 149, Assemblywoman Sheila Leslie said that the legislation will make sure that access will be provided to homeowners to negotiate with their lenders to try to work out efficient and effective solutions to the foreclosure problem.

She added that everybody wins if bank REO properties can be avoided, particularly the homeowners, lenders and communities. Under the Assembly Bill, distressed homeowners, who received notices of foreclosures not later than July 1 may request for mediation meetings and discussions with their lenders.

The meetings will be supervised by a hearing master, senior judge or other designee. The mediation program covers only houses that are owner-occupied.

Under the bill, mortgage lenders or servicers are required to join and provide a notice of default and contact information of the individual who is authorized to negotiate the modification of a loan.

Meanwhile, the bill specifically noted that no further action shall be made to sell the property until such time when the mediation has been completed. Furthermore, if a representative or trustee failed to join the mediation or did not provide the required documents, he might be sanctioned, including a loan modification approved and ordered by the court.

Hardesty expected that the statewide mediation program would handle up to 1,500 cases monthly. Meanwhile, the Supreme Court is seeking public comment on the draft guidelines of its mediation process rules.
Nevadans have until June 22 for sending comments regarding the foreclosure mediation program.

The draft rules are scheduled for two public hearings, while voting will be held by justices about the new rules on how to avoid bank REO properties on June 29.

Nationwide, realtors and brokers have been advising and helping others to take advantage of lower-priced units in foreclosure home lists.

Now many of them have been taking advantage of investment opportunities in foreclosure home inventories, and they have different preferences and strategies in making their investments work.

Carl Williams, a broker and CEO of Detroit-based Saturn Group, has bought two foreclosure homes earlier this year for only about $10,000 each. He made some repair work and then rented them out.

Another real estate agent, Mike Rosen, who is working with Fairfax, Virginia-based Frankly Real Estate, has bought a foreclosure home in February. He has just completed the renovation work and has listed the property for rental.

Rosen said that his February purchase was his second rental property in the same community. He plans to maintain them as rental houses for five years and then sell them to make a profit. He expects to break even or earn some money by renting them out.

Because of the expected further decline in home prices in Fairfax, Rosen is planning to buy his third foreclosure home.

Houston-based home inspector Frank Schulte-Ladbeck said that more and more realtors are requesting his home inspection services for homes bought for investment purposes.

Iverson Moore, a National Association of Realtors spokesperson, affirmed the rising number of realtors investing in lower-priced foreclosed homes.

Meanwhile, Bob Foust of Foust Team Real Estate in Fullerton, California, has been focusing on foreclosed condos. He said that the most important factor that he considers is location, such as Orange County, which will affect rental levels and the condo’s long term value.
He said the rentals can become sources of retirement money once the mortgage loans are paid off.

A realtor who initially bought a foreclosure home not for investment purposes but for his own use was Erion Shehaj, founder of Houston-based Signature Real Estate. But after having seen income opportunities in foreclosure properties, he joined other agents in acquiring foreclosed properties for investment.

Shehaj observed that rental properties in Houston are usually occupied within a month of being listed for rent.

One issue that sometimes crops up in discussions in the real estate business sector is whether investor agents can represent fairly their clients if they are also looking out for investment opportunities.

Nevertheless, realtors argue that their purchases of properties from foreclosure home inventories are contributing to the recovery of the housing market.

The Federal Emergency Management Agency (FEMA) in Florida is exploring ways to help hurricane evacuees and at the same time find a use for the burgeoning REO properties for sale in the state.

A plan has been proposed to house storm victims in REO properties for sale in the event that another hurricane devastates the region and hotels, shelters and other housing options are scant.

Florida FEMA officials said that the proposal is a way to find some uses for the increasing foreclosure properties in the state and keep residents near their homes and neighborhoods instead of relocating them in various parts of the country.

They recalled that some victims of Hurricane Katrina, which devastated Louisiana and Mississippi, find alternative places to live in other parts of the country and many of them never returned to their states. They pointed out that the Louisiana city of New Orleans is slow to recover from the effects of the hurricane because of population lost.

Federal coordinating officer for FEMA Florida Jeff Bryant said that it is necessary to prevent people from permanently living the state and all efforts should be exhausted to keep them from staying in their local communities.

FEMA is planning to contact lenders and banks to put a list of available REO properties for sale in the region. The idea is still under development but it is most likely that evacuees would be assigned to a foreclosed property near their homes.

FEMA Florida’s individual assistance branch director Jon Arno said that a contractor would be hired by the agency to act as its agent who will be responsible for paying the rent directly to owners of REO properties for sale used by evacuees.

Bryant explained that the plan will likely be implemented in a very large catastrophic event and in places where housing options are limited.

In April, Florida foreclosures rose by 36 percent compared with the first quarter figures a year ago. Filings of foreclosures were made on 119,220 properties during the first quarter of 2009, representing an increase of 12 percent from the last quarter of 2008 and a 36 percent rise from the 2008 first quarter level.

Filings for REO properties for sale in Florida reached 47,131 in March, a rise of 2 percent from February and 56 percent from the March 2008 total.

A company, run by former executives of Countrywide Financial, will try to clean up the housing mess which the lender helped create by purchasing and modifying loans to reduce the number of REO properties.

Countrywide Financial became a contributor in the housing market crisis when it issued risky mortgage loans to many homeowners who, in the end, could not afford them which led to foreclosures.

The crisis cost Countrywide Financial Chief Executive Officer Angelo Mozilo his position in the company which was acquired by the Bank of America last year.

But Stanford Kurland, who worked as chief operating officer and chief financial officer under Mozilo at Countrywide, together with other executives established PennyMac which will operate by purchasing troubled mortgage loans that have been piling up to alleviate the foreclosure crisis.

PennyMac announced that it plans to raise about $750 million in an initial public offering. Under its filings with the U.S. Securities and Exchange Commission (SEC), PennyMac will start its operation by purchasing distressed loans and modifying them.

Since the value of mortgage loans took a dive, financial institutions were forced to make massive write-downs. These losses have caused banks to streamline their lending operations which severely affected the country’s economy.

Once PennyMac acquired and owns the loans, it will approach distressed homeowners with an offer to modify these mortgages to make them affordable. Modifying may mean reducing interest rates or the loan principal.

The company will purchase distressed loans at big discounts. It will earn profits when a loan has been modified provided that the homeowner remains current on his reworked loan. In the event that the credit market makes a recovery and loan values increase, Pennymac will try to sell these mortgages.

For example, PennyMac could purchase a troubled mortgage from a failed bank for about 20 centavos on the dollar, which is well below the 70 centavos that the bank had on its portfolio. PennyMac will then contact the delinquent owners of the loans and offer to reduce their mortgage payments by about 50 percent. This will reduce the value of the trouble loans by 35 centavos on the dollar.

Its SEC filings stated that the company plans to purchase troubled loans from failed banks, insurance and mortgage companies. It also plans to take advantage of a government program that will use federal funds to help finance acquisition of distressed assets.

Some industry experts hope that PennyMac will be able to make a difference in the effort to curb the number of REO properties by stopping loan defaults and foreclosures.

Just like in previous years, some homebuyers are still having difficulty finding REO properties for sale. Most of the time, they find a property to buy only to find out that they have been snatched up by other buyers from the market.

Industry experts observed that investors have been outbidding homebuyers because they have an immediate cash to pay for the property that took their interest.

According to Ed Evans, a broker at RE/MAX, in some cases, investors purchase a property and pay with cash more than the sale amount just to ensure that they will get the home. Evans noted that this trend has been going on for awhile as the availability of REO properties for sale decreases.

However, a second wave of foreclosure is expected to hinder the recovery of the housing market in California. In the first quarter of this year, about 230,915 foreclosure filings were made in the state, an increase of 35 percent from the last quarter of 2008 and 36 percent higher compared with figures in the first quarter the previous year.

In March, the state ranked number 3 nationwide in terms of foreclosure rate as filings increased by 33 percent from February and 67 percent higher than the March 2008 total.

In the city of Visalia, about 448 properties are facing the risk of foreclosure in April, an increase from the 428 reported in March. Evans said that the increasing foreclosure rate has not yet affected sales of properties in the city. However, he is concerned that foreclosures would slow the housing market recovery. He hopes that the supply for properties to buy will be able to keep up with the growing demand.

Meanwhile, Jordan Link Century 21’s Bill Jordan agreed that the inventory for foreclosed properties is down and lots of investors are still looking for good bargains. In fact, he noted that foreclosed sales or short sales declined.

He pointed out that first-time homebuyers accounted for a big percentage of home purchasing activity in California.

On the other hand, Evans said that home sellers would prefer to sell their properties to individuals who pay cash rather than a typical homebuyer who have to wait for a Federal Housing Administration (FHA) loan. He noted that it is not unusual for a foreclosed home to have multiple buyers, adding that if REO properties for sale are priced attractively, they would be sold immediately.

A rising number of the more than two million American homeowners threatened with foreclosure in 2009 are actively finding foreclosure help and fighting their lenders to save their homes.

Many of them are getting foreclosure help from online sites like Livinglies and Consumer Warning Network that offer samples of motions, letters, summaries of related court rulings and glossaries of applicable legal terms. Some of them are getting foreclosure help from HUD counselors and other nonprofit foreclosure prevention agency workers.

Eighty-one year-old doctor Louis Manley is one of them. Manley’s lender Deutsche Bank has already foreclosed his condo unit, but Manley is still fighting the foreclosure in court. He has researched, applied and taken advantage of every foreclosure help that he could get to save his unit.

There are also paid seminars such as the one conducted by former banker Brad Keiser to provide foreclosure prevention information in exchange of a fee of $149. Keiser offers the seminars in partnership with lawyer Neil Garfield, the founder of the Livinglies online site. They said they initially offered their seminars only to lawyers offering foreclosure help to paying clients, but they started including lay people when they got a lot of inquiries from homeowners looking for foreclosure help.

Keiser and Garfield’s main contention is that many borrowers who took out loans from 2001 to 2008 were victims of the greed of bankers and investors who speculated in securitized mortgage loans. The financiers’ demand for mortgage loans to securitize caused the loosening of loan screening standards, pushing lenders to entice financially unqualified borrowers with initially very low monthly payments and no down payments without telling borrowers that the monthly payments would balloon into unaffordable levels in the next years.

Garfield tells distressed borrowers that they have the right to challenge every move of their lenders so that their lenders would negotiate with them and agree to loan modifications.

Vladimir Diaz is one homeowner who challenged the foreclosure action of his lender IndyMac Bank in court. He said he equipped himself with legal knowledge by studying whatever foreclosure information he can find on the web site Livinglies.

During the foreclosure hearing, Diaz told the judge that IndyMac had no right to file a foreclosure action on his house because IndyMac is not the owner of his mortgage note. Previously, he was able to trace that IndyMac no longer owns the mortgage note on his property.

In the meantime, 81-year-old Manley’s case is not yet over, but he is glad he is able to receive some foreclosure help to fight his own battle against foreclosure.

Direct-to-consumer Federal Housing Administration (FHA) lender, Lend America has launched the first phase of its national advertising campaign designed to educate troubled homeowners facing foreclosed homes HUD about the Obama Administration’s HOPE for Homeowners (H4) foreclosure rescue program.

A National Mortgage Banking organization, Lend America is the pioneer lending institution to receive the U.S. Department of Housing and Urban Development’s (HUD) approval to underwrite, finalize and insure H4H loans without HUD review.

Lend America’s national advertising campaign, which has a tagline of “Relief comes in the form of hope”, will include print advertisements on several national newspapers. Furthermore, Lend America plans to introduce a series of television commercials in a 60-second format as part of its program to educate distressed homeowners about the H4H foreclosure rescue program.

On October 1, 2008, the Obama Administration launched its HOPE for Homeowners housing recovery program. It allows lending institutions to refinance delinquent or current loans provided that first lien loan holders write the mortgage down to not more than the current market value of properties.

The program also requires lenders to forgive any prepayment penalties and late fees. The refinance loan will be insured by the FHA and holders of subordinate liens will receive a share in any future appreciation of mortgage loans.

Lend America Chief Business Strategist Michael Ashley said that the organization supports President Barack Obama’s program to help troubled homeowners avoid foreclosed homes HUD. Ashley believed that the H4H, despite being a complex program, would gain significant momentum.

He explained that the national advertising campaign will increase awareness of troubled borrowers on available refinancing solution that will help them prevent foreclosed homes.

Meanwhile, Ashley pointed out that the campaign is a way for the organization to show its commitment to maintain its leadership in the Obama Administration’s foreclosure rescue program. He pointed out that the organization is committed on fulfilling its promise to save about 10,000 struggling homeowners from foreclosure, the easiest and fastest way possible.

Distressed homeowners in South Florida who are facing foreclosure or who owe more than the value of their properties are provided hope by the enlarged $75 billion forclosed homes prevention program announced by the Obama Administration.

The forclosed homes prevention plan has offered additional incentives to lenders who work with distressed homeowners who have difficulty refinancing or qualifying for loan modifications.

The housing rescue plan aims to simplify the short sales process. Short sale involves selling a property for less than the total mortgage owed by the homeowner and the transfer of property ownership to lenders without foreclosing. The effects of short sale is said to be less devastating and damaging than foreclosure. However, homeowners who opt for the short sale method to avoid foreclosure should expect to have a ruined credit score.

Troubled homeowners in South Florida would be happy to note that the Obama Administration intended to shell out funds to motivate lenders to alter loan terms.

Housing counselors have complained that lenders are having difficulty implementing the new guidelines on loan modification. In South Florida, foreclosures continue to rise despite efforts to alter loans.

RealtyTrac’s April data showed that the number of forclosed homes in both Broward and Miami-Dade counties increased by over 90 percent compared with figures for the same month a year ago. In Miami-Dade, about 11,299 homeowners received foreclosure notices and were scheduled for repossession or auctions by lenders.

In Broward, the total number of homeowners who received foreclosure notices in April reached 10,305.

According to Esslinger Wooten Maxwell Realtors President Ron Shuffield, short sales accounted for nearly 35 percent of forclosed homes listed in the Multiple Listing Service for sale on the open market.

On the other hand, Neighborhood Housing Services director of homeownership Michael van Zalingen noted that employees at lending institutions are either driving away distressed homeowners from the Obama Administration’s Making Home Affordable program or are clueless or unaware of the foreclosure prevention plan.

Foreclosure defense lawyer Dennis Donet pointed out that South Florida homeowners are facing unique challenges when trying to modify their loans.

He explained that lenders are requiring South Florida borrowers to provide a full documentation of their income, which is a difficult requirement to comply with especially by distressed self-employed homeowners who want to avoid forclosed homes.