Archive for 'Stop Foreclosures'

The Marquette University Law School in Milwaukee, Wisconsin has launched a mediation program designed to help distressed borrowers avoid bank REO properties. The mediation program is available for lenders and distressed homeowners who are at risk of foreclosures. The foreclosure prevention program is funded with money that came from the successful case against the mortgage lending company, Countrywide Financial Corp.

Joseph Kearney, dean of the Marquette Law School and Wisconsin Attorney General J.B. Van Hollen have announced a funding amounting to $310,000 for the law school to hold the Milwaukee Foreclosure Mediation Program.

Aside from this, Milwaukee Mayor Tom Barrett also announced the availability of $100,000 for the mediation program from the city.

The mediation program aimed at preventing foreclosures is voluntary in nature. It is a court-based and independent mediation program for distressed homeowners and lending institutions.

The program, based at the Milwaukee County Courthouse, will seek to ease the current pile of repossessed homes cases in the county’s court system by providing a mediation option to troubled homeowners who are living in owner-occupied houses.

A statement issued by the law school said that successful mediations will serve as venues to modify loan terms to make payments affordable and allow distressed homeowners save their properties from foreclosures.

Aside from loan modification, the mediation program can also offer short sale, refinancing or other solutions that may help homeowners avoid bank REO properties. The mediation program will help execute final agreements that are mutually agreeable between concerned parties.

The funding for the mediation program partly comes from a settlement of the case with Countrywide. The mortgage company was accused of misrepresentation involving the benefits and quality of its products.

Under the settlement, Countrywide agreed to a $1.6 million payment for repossession relief benefits. Additionally, the lender agreed to forego various mortgage loan fees and to modify loans for delinquent homeowners. This agreement is expected to result to a settlement with a total value of $41.1 million.

Wisconsin has been experiencing a surge of bank REO properties since the start of this year. Foreclosure filings were made on 8,910 properties, an increase of 58 percent from the last quarter of 2008 and 57 percent higher compared with figures in the first quarter of 2008.

Last March, a total of 3,812 homeowners were served with foreclosure filings, representing a 28 percent rise in the total number of bank REO properties in February and 84 percent higher from the March 2008 total.

Chicago, Illinois-based troubled borrowers who want information on how to avoid foreclosed homes foreclosure may have another venue to go. Citibank and Westside Ministers Coalition have collaborated to provide an information service to help distressed homeowners make an informed decision on how to save their properties from foreclosure.

Citibank and Westside Ministers will hold an outreach day for troubled borrowers seeking foreclosure prevention information. Borrowers will have a chance to work with Citibank to modify their mortgage loans.

The event, which was originally intended for Citibank mortgage borrowers, will be opened to anyone at risk of foreclosure. This is to help reduce the number of foreclosed homes foreclosure in Illinois.

Otis Monroe of Monroe Foundation explained that the event aims to help stabilize neighborhoods and communities by identifying at-risk homeowners and protect them from foreclosure scams and predatory lenders.

He insisted that distressed homeowners need help and they should be informed of legitimate foreclosure prevention options that are available for them. He also pointed out that the event will focus on the need to create a housing resource center in the area.

He believed that there is a great need for a housing resource center that is staffed with Housing and Urban Development (HUD)-certified counselors who are dedicated to handle community development, housing and preservation needs.

The foundation, together with the Nobel Neighbors and the Spanish Coalition for Housing are facilitators for the program.

Meanwhile, Citibank’s Vice President of public affairs Mark Rodgers said that the outreach event is part of the financial institution’s national foreclosure prevention program. He explained that Citibank wants to help troubled homeowners avoid foreclosure and remain in their homes. He said that it does not bode well on the bank if it foreclosed on properties because the process is too expensive.

Citibank also has other programs that aim to help delinquent homeowners make their accounts current, including an unemployment assistance program which allows jobless homeowners to have their mortgage loans lower to as much as $500 a month for three months.

Meanwhile, Westside Minister Chairman Reverend Lewis Flowers praised Citibank for being proactive in its foreclosure prevention effort and for partnering with local organizations to identify homeowners who are at-risk of foreclosure.

He said that moratoriums may have served their purpose but they do not stop foreclosed homes foreclosure.

In February of this year, President Barack Obama announced a federal housing rescue plan with loan modification as the core tool to stop the increase in the number of foreclosed home. However, the effort has failed to produce the desired effect because of several hindrances, foremost of these is the emergence of scammers who take advantage of the desperation of homeowners.

Under Obama’s modification scheme, a distressed homeowner and lender will work out a scheme to alter terms of the former’s loan. These modifications may include lower interest rates or principal.

To support the loan modification scheme, free counseling services are made available to help distressed homeowners negotiate with their lenders. Scammers, seeing an opportunity to gain profit, have joined the fray by offering fraudulent services that aim to prevent foreclosures.

The scam artist will promise the troubled homeowner a way to save his property from repossession in exchange for upfront payment. However, the last time the homeowner will ever see the scam artist again is when he made the payment for a bogus service.

Industry experts believed that scams can be prevented if reforms will be made on federal and state regulations covering the loan modification scheme. They also believed that notable changes will be made in existing loan modification regulations, particularly in areas of appraisal guidelines, lending oversight, real-estate deal disclosures and loan-officer licensing.

Most of loan modification services that Arizona regulators receive complaints are operated like a call center with telemarketers bombarding a distressed homeowner with calls offering to help stop foreclosed home.

Some scam artists will falsely portray government counselors certified by the Department of Housing and Urban Development. Most of these fraudulent firms operate with business names similar to non-profit organizations in the housing market to confuse distressed homeowners.

Scam artists find their victims in scheduled foreclosure auction listings. After identifying their victims, they would contact them by telephone, emails or mails. They would offer their fraudulent services and make themselves sound as if they have the only solution to their foreclosure problem.

Scammers, who usually claim to have close contacts with lending institutions, target specific groups, including ethnic groups, elderly or soldiers.

To avoid becoming victims of scams, industry experts advise a distressed homeowner of foreclosed home to visit a government Web site and answer some questions that will determine if he is a potential candidate for a loan modification.

Another option for a distressed homeowner of foreclosed home is to contact his lender and negotiate for a loan modification himself.

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As times get more financially difficult for many Americans because of mass layoffs and foreclosure homes, the Senate and the House passed separate bills aimed at helping consumers manage their credit card debts and helping homeowners protect themselves from mortgage fraud.

On Thursday, the House easily passed the Credit Cardholders’ Bill of Rights that would protect credit cardholders from sudden interest rate increases, hidden charges and excessive fees. A number of mortgage borrowers whose homes are in danger of becoming foreclosed homes can have more leeway if they are also helped with their credit card debts.

The House legislators passed the bill despite strong opposition from the banking industry, which argued that the bill would cut the amount of available credit and would increase the cost of completing credit card transactions.

Nearly 77 percent of the country’s credit card market in 2007 was controlled by major banks, including Bank of America, Citigroup, J.P. Morgan Chase and Capital One Financial Corp.

President Obama is expected to approve the Senate version of the bill after senators discuss the bill next week. Obama has been campaigning for and supporting legislative efforts to revamp the financial industry, including initiatives that compel the financial sector to help cut down the number of foreclosed homes nationwide.

In a White House meeting with the top executives of the country’s largest credit card issuers, President Obama stated that credit cards are important for consumers and are their major source of convenient credit. He said the credit card sector should be preserved in ways that eliminate abuses.

During his campaign last year, the president advocated for a bill of rights for credit cardholders, in addition to his call for immediate solutions to large numbers of foreclosed homes battering communities nationwide.

Meanwhile, in the Senate, legislators also approved by an overwhelming vote of 92 to 4 a bill that would allot $490 million to fight mortgage loan fraud and other types of deception related to housing and foreclosed homes. The money would be spent to hire more fraud prosecutors, government investigators and law enforcement personnel.

The legislation would distribute the funding among the Secret Service, the Housing and Urban Development and the Postal Inspection Service.

Included in the bill is a provision that would set up two independent commissions that will investigate the causes of the economic crisis and the collapse of the housing and mortgage sectors that led to the avalanche of foreclosed homes across the country.

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Nationwide, the housing market has lost about 12 percent of its home values because of hundreds of thousands of houses in foreclosure listings. In places which rank high on lists of state foreclosures, such as Florida, California, Nevada and Arizona, home prices have declined to bottom levels.

Similarly, homes have lost much of their values in the manufacturing states, such as Michigan, Wisconsin, Ohio, Indiana and Pennsylvania, because of the collapse of the steel and automobile industries.

According to the U.S. Federal Housing Finance Agency’s home price index report released on March 24, home prices dropped by 6.3 percent for the 12 months ended January 2009. The national home price index fell to 9.6 percent below its peak level in April 2007.

Based on RealtyTrac’s foreclosure data, there were 2,330,483 residential properties which were included in foreclosure listings in 2008. Nevada and Florida posted the highest foreclosure rates while California and Florida had the most number of residential properties in foreclosure listings. Arizona was third in both foreclosure rates and foreclosure totals.

With the continuous addition of homes to foreclosure listings and continued decline of home prices, the Obama administration’s foreclosure prevention program has not yet shown its impact on the housing market. Some analysts are giving the foreclosure prevention program about two months to show its effect, as many mortgage lenders have not yet put their loan modification and loan refinancing procedures in place. They also need to train their staff on how to handle various mortgage cases.

Even so, there are areas which did not suffer so much in home price declines, such as Georgia. Based on the Federal Housing Enterprise Oversight’s data, the average home price decline in metropolitan Atlanta is only 3.82 percent. The price decline was relatively low despite Georgia’s top ranking in RealtyTrac’s list of states with the most homes in foreclosure listings.

Housing analysts are not certain if home prices have bottomed out. Many real estate investors and potential home buyers are still waiting for prices to decline further. Perhaps they are still seeing lots of residential properties being added to foreclosure listings.

Some housing experts say that the keys to the recovery of the housing sector are the reduction of foreclosures and the reduction of banks’ foreclosure listings. They recommend higher federal tax credits for buyers of properties from foreclosure listings in foreclosure-laden areas and inclusion of investors in the tax credit incentives. They say limiting the tax incentives to owner occupants would make only a small dent on foreclosure listings.

The Obama administration’s program to avert foreclosures has two prongs: a loan refinancing plan for homeowners whose mortgages are owned or guaranteed by Freddie Mac or Fannie Mae and the other, a loan modification plan for owners of homes that have dropped in value significantly. The first prong targets about 5 million homeowners in danger of foreclosures while the second targets about 4 million.

Loan refinancing with Fannie Mae or Freddie Mac has the following requirements: The mortgage must be owned or guaranteed by Freddie Mac or Fannie Mae; borrowers must not be in default; monthly payments have been on time for the previous 12-month period; and the new loan can not be five percent more than the home’s current value. Under this loan refinancing scheme, borrowers can reduce their annual loan payments by over $2,300 by refinancing to a rate hovering around 5.16 percent.

The loan modification scheme aims to modify mortgage loans so that homeowners afford monthly payments and avoid foreclosures. It provides cash incentives to mortgage lenders and services and also rewards homeowners who keep up with the reduced monthly payments and stay away from foreclosures.

The requirements for this scheme are the following: The borrowers must be staying in the homes described in the mortgage they are paying for; the mortgages must have been taken before January 1, 2009; and the loan amounts must not be higher than the limits established by Freddie Mac and Fannie Mae.

Cash incentives are given to mortgage holders, servicers and borrowers if they cooperate to sustain modified mortgage loans to avoid foreclosures. For every successful loan modification, the mortgage servicer receives $500 and the mortgage holder receives $1,500. The mortgage servicer will also receive $1,000 for every year that the borrower keeps up with the modified payments for up to three years. Borrowers are also rewarded for their efforts to avoid foreclosures. They receive $1,000 for every year that they keep up with payments for up to five years.

To accomplish the loan modification, mortgage lenders need to agree to lower mortgage rates, reducing borrowers’ monthly payments to not over 38 percent of their monthly income. Lenders will then agree to reduce further the rates so that borrowers’ monthly payments become only 31 percent of their monthly income. For this second rate reduction, mortgage lenders will be subsidized by the federal government. The program will match whatever lenders give off to reach the 31 percent payment-income ratio and help avert further foreclosures.

Finally, most of the details of President Barack Obama’s foreclosure plan, now called Homeowner Affordability and Stability Plan, have been released. One of the plan’s big distinctions from foreclosure programs carried out during the previous administration is its pressure on mortgage lenders to offer as many loan modifications as they can to save as many troubled homeowners as they can from foreclosure.

Under the previous administration, the mortgage industry was called upon to work out loan restructurings with borrowers in danger of foreclosure. But the industry failed to respond to the call. More foreclosures occurred and more homeowners lost their homes.

The Obama administration seek to arrest the continuing foreclosures by helping troubled homeowners avoid going into foreclosure. It recognizes the reality that helping responsible homeowners will rebuild the housing market and ultimately contribute to economic recovery. It also believes that helping American homeowners is as important to economic rehabilitation as helping financial corporations and other large job-creating enterprises.

The neighborhoods of Lancaster and Plano in North Texas are just two of thousands of neighborhoods devastated by continuing foreclosures as the recession worsens. These are the neighborhoods that would be rehabilitated by the foreclosure program.

Obama’s foreclosure plan will be funded from the remaining $350 billion bailout fund approved by Congress in 2008. Up to $75 billion will be spent for anti-foreclosure initiatives and $200 billion will be spent to strengthen the finances of government-controlled mortgage firms Fannie Mae and Freddie Mac.

The additional funding for the two mortgage giants will enable them to acquire and sell mortgage securities and thereby energize both the mortgage industry and the housing market.

To encourage more mortgage lenders to participate in the foreclosure plan, the government will offer a cash incentive of $1,000 to lenders for each loan modification worked out. It will also offer additional cash incentives for up to three years for every borrower that will sustain payments.

Lenders will also receive help when they reduce the monthly payments of troubled borrowers to 31 percent of their gross monthly income. The government will pay part of the reductions that they will offer to deserving borrowers. For eligible borrowers that the lenders will help through the reduction of their remaining principal balance, the Treasury will also fund part of the cost.

As lenders are given incentives, borrowers who faithfully keep up with their mortgage payments will also be rewarded with cash incentives that can be used to reduce their remaining principal balance.

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Top economic adviser of President Barack Obama and National Economic Council head Lawrence Summers is open to the possibility that more money will be allocated to bailout financial institutions and reduce the number of foreclosed homes in the country.

Summers had promised to spend up to $100 billion of the financial bailout money to help homeowners avoid foreclosure.

Meanwhile, Obama is planning to meet with Congress to try to gain access to the remaining second half of the $700 billion Troubled Asset Relief Program (TARP) bailout money.

Obama’s economic team is also preparing to meet with members of the Senate to discuss whether to allocate a portion of the TARP money for foreclosure prevention.

On his part, Summers had sent a letter to the Democratic leaders in the Senate assuring them that he will spend $50 to $100 billion of the bailout fund to reduce the number of distressed properties.

He said that Obama and Treasury Secretary nominee Timothy Geithner believed that the $825 billion economic stimulus package pending before the Congress will greatly help in the country’s economic recovery.

Summers added that Obama is committed to spending more than half of the $825 billion within one year and six months after its release to various programs such as state aid, local government aid, tax cuts and foreclosure prevention.

Furthermore, Obama has pledged to reduce taxes on households by 95 percent. According to Summers, there is a need to repeal the tax cut approved by former U.S. President George W. Bush because of the worsening budget gap and massive spending in the country.

Meanwhile, House Speaker Nancy Pelosi said that additional money is needed more than the approved $700 billion funds if it will be used to help banks and reduce the number of foreclosed properties.

She believes that the spending of the bailout fund under the Obama Administration will be more transparent.

Newly-installed U.S. President Barack Obama has outlined economic challenges that he and his administration will prioritize in his inaugural address. He also presented several remedies to these challenges that he hope will lead to the country’s economic recovery.

In his speech, Obama pointed out the urgency of dealing with several domestic challenges, including unemployment, business failures, home foreclosures and weaknesses in the school and health care system.

He pointed out that these domestic challenges cannot be resolved easily and immediately.

Obama promised to reduce the number of foreclosed homes in a bid to strengthen and stabilize the housing market.

Already, he won congressional approval for the release of the remaining 50 percent of the estimated $700 billion financial bailout fund. He plans to use a portion of the financial rescue fund to reduce the number of foreclosed properties and to provide more loans to small businesses and consumers.

He pointed out that the current state of the country’s economy calls for a bold and swift action. Aside from foreclosure prevention, he plans to create more jobs and improve the infrastructure and telecommunication system.

Foreclosure prevention is also part of Obama’s economic stimulus program that stands at over $825 billion in tax cuts and spending.

Meanwhile, Obama promised to use science and technology to improve the quality of health care and reduce its cost. His reforms include the use of information technology to improve and modernize the health care system delivery.

He also promised to develop and improve schools, universities and colleges to better equip them to meet current and future challenges and demands.

On the other hand, he reiterated his campaign promise to withdraw U.S. forces from Iraq and refocus on the war in Afghanistan. He described the combat invasion of Iraq, which is led by the U.S., as a mistake.

To sum up, Obama’s economic recovery plan is geared towards foreclosure prevention, energy independence and providing a low-cost universal health care.

There has been much anticipation as to whether the second half of the $700 billion bailout fund would be released or not. The Obama administration is looking forward to its first legislative triumph if ever the outcome on Thursday favours them. Part of the funds will be used for foreclosure prevention measures.

It is known to everyone that the $700 billion fund was initiated under the term of President George Bush. It was readily granted in hopes of relieving the bad economic condition of the country, particularly the foreclosure crisis. However, if the economic advisers of Bush were to lobby for the funds at present, things could turn out differently.

There have been a lot of allegations with regards to the fund administration during the term of Henry Paulson, treasury secretary under the Bush administration. There was allegedly no transparency and openness and foreclosure prevention efforts were not so much felt.

Congress has the power to decide on the release of the remaining $350 billion. If it chooses to approve the request, the money will be made accessible to the Obama administration. Otherwise, if either of or both the Senate and House vote to disapprove the request, Obama would need to use his veto power. Once he does so, he would gain full access to the funds.

However, rebuffing a Congress dominated by Democrats would not be a wise move for a newly elected Democratic President.

In order to prevent unnecessary conflicts, the Obama team has been trying to convince Congress that the funds would be handled differently from the previous administration. The funds would be managed with transparency so that people would know how the money would be utilized. Also, part of the funds would be dedicated to reducing foreclosures in the country.

In relation to the bailout fund, legislation by Barney Frank would impose certain conditions on the administration of the amount. If approved, the legislation would guarantee that $40-100 billion from the funds would be allotted to foreclosure prevention.