San Diego Short Sale and Foreclosed Homes

 
 

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With the subprime market in ruins, affordable housing advocates are looking at new ways to promote responsible homeownership for low and moderate income families. While many policy makers would resign low and moderate income families to rental housing, a new study makes a case for keeping the door open to homeownership at all income levels.

Risky loans, not risky borrowers, are responsible for the foreclosure crisis—according to a study released Thursday by the Corporation for Enterprise Development and the Urban Institute. (Read the full study.)

Low-income home buyers who purchased homes through a program that often required them to have their mortgage loans reviewed and approved, were two to three times less likely to lose their homes to foreclosure than families with similar finances.

Researchers looked at home buyers who received matching federal and private dollars for every dollar they put away in an Individual Development Account or IDA. Most programs offered a two-to-one match; but some allow for a four-to-one match or greater.

But before participants can receive a matching grant, they’re required to complete financial literacy courses and their mortgage loans must sometimes be approved by counselors, who advise clients against risky loans. Often, they’re steered toward home-buyer assistance programs or certain lenders who can help them get government-insured loans.

“I think the fact that they’re saving toward a goal, they’re required to have financial education… and they’re getting counseling along the way–I think all of these things work together,” says Andrea Levere, president of the Corporation for Enterprise Development.

CFED found that IDA savers had a foreclosure rate of 3.1% as of April 2009, compared to about 7% for other home buyers with loans lower than $390,000. About 1.5% of IDA savers had loans with high interest rates, compared to nearly 20% of the broader sample of homeowners.

The study analyzed data from nearly 260,000 home sales, including 831 homebuyers who participated in IDA programs to purchase homes between 1999 and 2008. The IDA savers came from California, Indiana, New Hampshire, North Carolina, Ohio and Texas and they had a median income of $25,400 a year. Nearly three quarters were women and two-thirds were racial or ethnic minorities. They were compared to home buyers with similar incomes, loan amounts and credit scores.

Several groups who offer IDAs also report low foreclosure rates among participants. Of the 100 people who purchased homes with matched savings programs through Earn, a nonprofit in San Francisco that focuses on helping low income families save, Earn says only three have gone into foreclosure. Only one of the 168 homes purchased by participants in New Hampshire’s IDA program between 2001 and 2008 went into foreclosure.

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Here's how it happens:

Step 1: A seller lists their property in San Diego with a Realtor. Realtor does a Comparative Market Analysis (CMA), and determines the home is worth $250,000, and the seller decides to list the home for $275,000. 

Step 2: House fails to sell. Meanwhile, the home down the street sells for $250,000. After 6 months, the seller decides the agent hasn't done their job and fires them. 

Step 3: Seller hires a new agent, and lists the house for $250,000. The current CMA shows the home is now only worth $225,000. Once again the home is overpriced because the market value is declining. The house sits on the market for another 6 months without a single offer.

Step 4: The agent can't sell the overpriced house, so the seller fires them, and hires someone else. The home has been on the market for a year now, with 3 different agents. This time, the seller lists the home at $225,000. Again, the market has declined and the home is only worth $200,000. 

Step 5: I think you get the idea here....

The problem is not with a bad agent who listed the house, nor is it because the market is bad. The problem is a bad seller. Had the home been listed for $250,000 from the start, it would have sold. Every month the property sits on the market is another month that the home is losing value, and as time goes by less and less people even bother to view the property. The other thing to bear in mind is appraisers look at the same comparable sales that we as Realtors look at. If the market analysis can't support a listing price of $275,000, odds are good that the appraiser won't be able to support the price either.

The Solution:
As a Realtor, my solution is simple. If the seller is determined to list the home for a price that I feel is unrealistic, I don't have to take the listing. It doesn't make sense for agents to take 'dead on arrival' listings like that because we don't get paid for our services on homes that don't sell. For a seller, if you think your Realtor's analysis of your home is inaccurate, it might be a good idea to have a formal appraisal done on the property. It's extremely rare for someone to be able to sell a home for more than the appraised value because lenders will not write a loan for more than a home is worth. There are lots of appraisal companies in San Diego, and the cost is generally a couple hundred dollars. It's a small price to pay in order to be able to sell your home for $250,000 now rather than waiting months or years to find out the home has lost $100,000 in value. At the end of the day it just doesn't make sense for sellers or agents to list properties for more than they are actually worth. I understand wanting to make sure you don't get as much as possible for your home, but listening to the expert opinion of your Realtor can make the difference between a sale and a foreclosure.
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It’s been 16 months since Eugene and Patricia Harrison last paid the mortgage on their Perris, Calif., home. Eleven months since the notice got slapped on their front door, warning that it would be sold at auction.

A terse letter from a lawyer came eight months ago, telling them that their lender now owned the house. Three months later, the bank told them to pay up or get out by the end of the week.

Still, they remain in the yellow ranch-style home they bought seven years ago for $128,000, with its views of the San Jacinto Mountains. They’re not planning on going anywhere.

“We’re kind of on pins and needles, but who’d want to leave when you put this kind of energy into a house?” said Eugene Harrison, gesturing toward a bucolic mural of mountains, stream and flowers the couple painted on the living room wall.

Throughout the country, people continue to default on their home loans—but lenders have backed off on forced evictions, allowing many to remain in their homes, essentially rent-free.

Several factors are driving the trend, industry experts say, including government pressure on banks to modify loans and keep people in their homes. And with a glut of inventory in places like Southern California’s Inland Empire, Nevada and Arizona, lenders are loath to depress housing prices further by dumping more properties into a weak market.

Finally, allowing borrowers to stay in their homes helps protect the bank’s investment as it negotiates with the homeowners, said Gary Kirshner, a spokesman for Chase bank, a major lender. “If the person’s in the property, there’s less chance for vandalism, and they’re probably maintaining the house,” he said.

Economists say the situation won’t last forever, but in the meantime the “amnesty” may allow at least some homeowners to regain their financial footing and avoid eviction.

In the Inland Empire, an estimated 100,000 homeowners are living rent-free, according to economist John Husing, who based that number on the difference between loan delinquencies and foreclosures. Industry experts say it’s difficult to say how many families are in that situation nationally because only banks know for sure how many customers have stopped paying entirely.

But Rick Sharga of Irvine, Calif., data tracker RealtyTrac notes that the number of loans in which the borrower hasn’t made a payment in 90 days or more but is not in foreclosure is at 5.1% nationally, a record high. And yet the number of foreclosures last year was 2.9 million, below the 3.2 million that RealtyTrac economists predicted.

More evidence is provided by another firm, ForeclosureRadar, which says it now takes an average of 229 days for a bank to foreclose on a home in California after sending a notice of default, up from 146 days in August 2008.

“For some reason, banks are being more lenient with homeowners who are behind on their loans,” Sharga said. “Whether it’s a strategy to try and slow down the volume of foreclosures or simply a matter of the banks being able to keep up with volume is something that banks only know for sure.”

Lenders say the trend reflects their efforts to work with borrowers to modify loans to avoid foreclosure. Bank of America “continues to exhaust every possible option to qualify customers for modification or other solutions,” spokeswoman Jumana Bauwens said.

Some lenders are making it a policy to partner with delinquent borrowers. Citibank said this month that it would let borrowers on the brink of foreclosure stay at their homes for six months, whether or not they make payments, if they turn over their property deed. Such policies may partly reflect the fact that lenders can’t keep up with all the foreclosures, some say. “The mortgage lenders are so backlogged that some people are able to slip through the cracks,” said Kathryn Davis, a real estate agent at America’s Real Estate Advocates in Corona.

That was apparently the case for the Harrisons, who were told at various times that their house had been sold, that it belonged to someone else and that it was empty. “It’s been frustrating,” said Eugene Harrison.

The Harrisons missed their first payment in October 2008, shortly after Patricia Harrison lost her job as a healthcare aide and her husband’s part-time towing work dried up. They said they applied for a loan modification but were told that they couldn’t receive one until they were three months behind on their payments. So they stopped paying.

In April 2009, they received a notice warning them that their property “may be sold at a public sale,” and in July, they were told their house was a bank-owned property.

The bank sent a notice by FedEx in October demanding $3,000, and when the Harrisons called to discuss this notice, they were told they had four days to vacate the house.

Panicked, they arranged to stay with family in New Mexico and started packing their things, filling their garage with boxes of books, camping equipment and art. But no one came to kick them out. “We were afraid to leave the house, afraid the sheriff was going to come,” said Patricia.

After contacting consumer advocates about their situation, the Harrisons decided to stay put. Soon after, two men in a white pickup truck showed up at the house and peeped in the windows, telling the Harrisons that they thought the house was abandoned. The Harrisons suspected they were planning to move in themselves and chased them away.

As they wade through the red tape, the Harrisons can’t imagine abandoning a house where they’ve left their mark in the goldenrod and potpourri rose walls, the new fixtures and stenciling in the bathrooms, the fruit trees planted in the yard.

Although the Harrisons’ future is uncertain, industry observers agree that the rent-free life can’t last forever. As home values climb, banks will find it financially advantageous to foreclose on delinquent borrowers and sell their properties.

“In many cases, particularly in California, people owe a boatload of payments, and no bank is going to forgive that,” said Guy Cecala, editor of Inside Mortgage Finance, a trade publication.

In Diamond Bar, the Fraguere family is finally moving on after living rent-free for 18 months. Job loss and other setbacks prevented them from paying their mortgage, but they say they didn’t hear anything from the bank until a real estate agent showed up at their door last month saying she was going to sell their house.

Sandy Fraguere wasn’t surprised that it had taken the bank so long to ask them to move. “I don’t think they really knew what was going on or who was there,” she said.

Next stop for the Fragueres is a hotel, where they plan to stay for two weeks until their apartment in Chino Hills is ready for them to move in. Their dogs are being boarded and their belongings stored until they can retrieve them someday. The Fragueres have started saying goodbye to their neighbors, adding yet another empty house to a block that has already seen two other families forced to pack up and leave.

(c) 2010, Los Angeles Times.

Distributed by McClatchy-Tribune Information Services.

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RISMEDIA, March 27, 2010—(MCT)—Homeowners defaulting on mortgages today may be surprised to learn years from now that they still owe thousands of dollars—and a collection agency is coming after them to get it.

That’s because lenders have been quietly selling second mortgages and home equity lines left unpaid after foreclosures and short sales. The buyers: collection agencies, which in some states have years to make a claim. If they win court judgments, these collectors could have years to pursue borrowers with repayment plans, and even garnish their wages, said Scott CoBen, a Sacramento bankruptcy attorney.

“The only relief a consumer will have is entering into a debt negotiating plan or filing for bankruptcy,” said Sylvia Alayon, a vice president with the New York-based Consumer Mortgage Audit Center. The firm provides mortgage analysis to lenders, advocacy groups and attorneys.

The phenomenon suggests an ominous, looming echo of today’s real estate meltdown. As debt collectors surely seek at least partial repayment of millions of dollars in unpaid home loans, some say renewed financial stresses on tens of thousands of local consumers could dampen economic recovery.

“I think there will be a lot of unhappy people when it hits,” said CoBen. “We saw this in the ’90s. This is not really new. Just when you think you’re back on your feet, you’re making money and the economy’s good, they hit you with this.”

Alayon said most people are so stressed out and exhausted by trying to save their homes today that they are unaware they could face another hit later. And many who are losing homes don’t get the advice necessary to prevent future fallout, say nonprofit loan counselors.

“You’ve got tens of thousands of people in California who have this hanging over their heads who don’t even know it,” said Scott Thompson, principal at for-profit Mortgage Resolution Services in Carmichael, Calif. He fears a new wave of bankruptcies might flatten people just starting to recover from losing their homes.

“So many of these are people with 750 or 800 credit scores who made a bad decision,” said Thompson. “Or they’re people who suffered income cuts. These are people, in terms of the economy, whom we need to participate.”

But an entire industry is gearing up to buy their debt at deep discounts and collect what they can, Alayon said. “It’s a big business and investors are coming out of the woodwork. It’s a very lucrative business,” she said. Real estate insiders and financial players know it as “scratch and dent.”

Regionally, no one knows for sure how much unpaid debt is on the line. CoBen said people who used their borrowings for a traditional loan on a house in which they lived generally have little to worry about. But borrowers may be vulnerable in years ahead—generally, those who defaulted not only on their first mortgage but also on a home equity loan or second mortgage.

In California, banks can’t collect from borrowers for primary, so-called “first-lien,” loans that go unpaid. When a house is foreclosed or sold through a short sale, the lender of the first loan gets the house back or the proceeds from another buyer.

But banks also made thousands of “second-lien” loans, including those used to finance 20% down payments during the housing boom. A separate category of “seconds” includes home equity loans and home equity lines of credit. Nationally, about 3.4% of those loans are currently delinquent, according to Foresight.

Owners are generally, but not always, on the hook for the second loans left over from a foreclosure or short sale. Most investor mortgages, too, leave the borrower liable for potential unpaid debt. In many short sales, experienced real estate agents or attorneys can negotiate away debt obligations for the second-lien loan. But many inexperienced borrowers don’t know that, and sign final-hour agreements giving lenders the right to pursue them later.

“Seek advice,” counseled Doug Robinson, spokesman for national nonprofit mortgage counselor NeighborWorks America. He said nonprofit counselors can help. “Often when you work with a real estate agent, they’re not really equipped to handle the repercussions. They’re set up to make the sale,” he said.

Government forces are already moving to limit potential damage to millions now struggling with home loans. A new Obama administration short sale program aims to prevent banks that hold second-lien loans from pursuing collections from homeowners after the short sale. It goes into effect April 5, 2010 and works this way: Sellers will receive notice that their servicer has steered part of the sales proceeds to secondary lien holders “in exchange for release and full satisfaction of their liens.” This release would apply only to short sales done through the administration’s Home Affordable Foreclosure Alternatives program.

In California, Democratic state Sen. Ellen Corbett recently introduced SB 1178, which would expand California’s protections for some people who refinance and take on a second mortgage.

People who refinance, but use the funds to improve their homes or to stay in their homes with a better interest rate, would be protected. Lenders could not seek court judgments to collect from these borrowers in the event of foreclosure or short sales.

“If you refinance a property and aren’t using the money for personal reasons, you shouldn’t lose your personal protections,” said California Association of Realtors lobbyist Alex Creel. He said the idea has been around for years but has become more urgent as thousands lose income and fall into mortgage trouble. The bill would apply to all foreclosures or short sales that occur after it becomes law. It doesn’t matter when the loan was made, Creel said. SB 1178 is still in the early stages of consideration. It must clear both houses of the Legislature and be signed by Gov. Arnold Schwarzenegger by Sept. 30 in order to take effect.

(c) 2010, The Sacramento Bee (Sacramento, Calif.).

Distributed by McClatchy-Tribune Information Services.

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RISMEDIA, April 1, 2010—When it comes time to remodel, many homeowners think “do-it-yourself” or DIY is the smartest and most cost effective way to get the job done. And while popular TV shows on HGTV and publications at the home improvement store boast the ease of such projects, Jeff Brecko, vice president of Aurora Custom Remodeling, advises homeowners to take an in-depth look at their project and consider all options before tackling such a large undertaking.

“DIY projects can be great if you are taking on a small project, but when remodeling major portions of a home, such as a kitchen or bathroom, there are many structural and design elements that need to be considered,” said Brecko, who also serves as the 2010 chair of the Northeast Florida Builders Association’s Remodeler’s Council. “Essentially, there are five aspects that must be considered when deciding whether to hire a professional remodeler versus doing the project yourself. Those aspects include design, quality, time, money and warranty.”

Brecko said the design aspect of a remodeling project is paramount to its success. A professional remodeler can take a homeowner’s idea and transform it into reality with an addition or renovation. The years of experience a homeowner gets when they hire a professional remodeler will make the project better and this expertise is invaluable in designing a project to fit within an existing structure and budget.

Quality is the next facet a homeowner must look at when remodeling. The quality of a professional remodeling job will be far superior to that which a homeowner will receive if this is their first time remodeling, Brecko said. Professionals are able to guarantee better subcontractors at better prices with better leverage. Though a homeowner may find excellent subcontractors by contacting friends who have remodeled, checking references and calling past clients, they are unlikely to secure the pricing and warranty a professional remodeler will command.

Everyone knows time is money, and that is especially true when it comes to remodeling. A professional remodeler will ensure the project stays on time and within budget by perfecting the plans before the job begins, creating a thorough scope of work, hiring the qualified subcontractors and vendors ahead of time and properly supervising the quality of work. If it is necessary for a client to move out of their home during the renovation, a professional remodeler can save them extended rental costs by maintaining a deliberate pace of construction according to a pre-planned construction schedule.

“Many remodeling projects become the victim of the best intentions,” Brecko said. “A professional remodeler will employ systems to ensure that the project stays on schedule to protect not only their bottom line, but more importantly, their reputation.”

The last aspect Brecko recommends considering on a remodeling project is the warranty that comes with a professional company. When homeowners hire a professional, they are buying a service more than a product. A professionally managed job will have quality built in and will require less maintenance and fewer warranty calls on products.

“When you hire a professional remodeling team, you can expect motivated individuals who desire your complete satisfaction,” Brecko said. “Homeowners deserve to have someone working on their home who has experience, knowledge and the wherewithal to back up their work and reputation.”

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A new analysis by the Center for Neighborhood Technology (CNT) shows that only two in five American communities—or 39%—are affordable for typical households when their transportation costs are considered along with housing costs.

The Housing + Transportation (H+T) Affordability Index examines 337 metro areas across the country—encompassing 161,000 neighborhoods and 80% of the U.S. population—and provides the only comprehensive snapshot of neighborhood affordability by accounting for combined housing and transportation costs associated with a community. The H+T Index and its accompanying report, Penny Wise, Pound Fuelish, illustrate the direct link between household transportation costs and the location and design of neighborhoods and transit options.

Under the traditional definition of housing affordability (30% or less of household income spent on housing), seven out of ten U.S. communities are considered “affordable” to the typical household. But in almost all metro regions of the country, when the definition of affordability includes both housing and transportation costs—at 45% of income—the number of communities affordable to households earning the area median income decreases significantly. Nationally, the number of affordable communities declines to 39%, resulting in a net loss of 48,000 neighborhoods with combined housing and transportation costs that stress the average family’s budget.

“Across the nation, families are dealing with the economic crisis and looking at their bottom lines to determine how they can save money and plan for the future,” said Congressman Earl Blumenauer (D-OR). “The H+T Index provides valuable information about the two biggest household expenses, housing and transportation. This index will help policymakers level the playing field to improve location efficiency, and it will help lenders educate consumers about the trade-offs and costs associated with their housing choices.”

For most families, transportation is the second largest household expense. The new analysis shows that for many families in “drive ‘til you qualify” zones, savings realized from lower cost housing are eliminated by unexpectedly high transportation costs. Yet it is difficult for consumers and policymakers to estimate the full costs of a location, including the cost of both housing and of transportation. This lack of information can lead families to unknowingly make housing decisions that cause them to live beyond their means as gas prices rise and commutes grow longer. A community’s average transportation costs can range from 12% of household income in efficient neighborhoods with walkable streets, access to transit, and a wide variety of stores and services to 32% in locations where driving long distances is the only way to reach essential services.

“The Rockefeller Foundation is proud to have funded the H+T Index as part of our initiative to promote equitable and sustainable transportation,” said Nick Turner, Managing Director at The Rockefeller Foundation. “This unique tool will give consumers the opportunity to make more informed decisions about where they can afford to live, and help provide policy makers with data to develop new policies and targeted investments that can reduce transportation costs. Transportation costs are often the second highest expense for working Americans–and the Rockefeller Foundation’s initiative is committed to helping Americans re-think our transportation future as a critical way to expand economic opportunity.”

The failure to provide Americans with affordable transportation and compact neighborhoods that support pedestrians and cyclists as well as drivers, increases the financial pressure on families, resulting in unstable household budgets, lack of savings, and even foreclosure, and places communities across the country, particularly those with inadequate transportation options, at greater risk.

“In recent years we have seen foreclosures increasing faster in outer suburbs than in central cities. When gas prices peaked in 2008, families in many regions saw their transportation costs soar by $3,000 per year or more. When communities have few transportation options and require driving long distances for basic necessities, already stressed household budgets are very vulnerable to spikes in gas prices and rising transportation costs,” said Scott Bernstein, president and founder of CNT. “The H+T Index gives a reliable estimate of each neighborhood’s average household transportation costs, a strong move toward a ‘no surprises, no sticker shock’ home buying or renting experience.”

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RISMEDIA, March 30, 2010—I finally broke down and got my first smart phone with a touch screen, the Blackberry Storm 2. Wow, from the original Maxwell Smart’s shoe phone to this.

If I understand this correctly, I believe that with this device I can now script, shoot, edit and distribute a full length feature movie without ever leaving the patio of the Yellow Deli.

Which hadn’t ever occurred to me as something I might want to do, but then I didn’t know that you could. As a matter of fact, I went into this kicking and screaming. Once I adapt to a new cell phone, I don’t want to switch and have to relearn how to make a call. But, what the heck, the thing is free.

Now those of you who have already worn out a couple of sets of thumbs are surely going to ask, “Where has he been?” But, this is truly amazing, and the carrier gave it to me.

It’s got GPS so I can call in an airstrike on my exact coordinates. Which begs the question, does someone want to know where I am? And, could they know from this device what I’m saying, emailing, watching and listening to? You have to admit that it does have a sort of Orwellian aspect to it.

A video camera? My first video camera weighed ten pounds. But, before I digress too far, I didn’t set out to write about the features of smart phones, as much as the possibilities to use these tools to put our country back on the right track. We now have the ability to shine heat and light on some dark places. But, how will we use this remarkable ability?

Is it power to the people or a pacifier? Hey, it works for the kids; just plop them in front of a screen and it doesn’t even have to be entertaining.

Is this a tool of change or another time-burning distraction?

I bring this up because I am suddenly aware of the gap between what we could be doing with what we have available to us and what we actually do, which is not much.

Little by little, the “time-saving convenience” has whittled away our prosperity until these stark truths are impossible to ignore:

–We cannot feed our children, “Almost one in four children in our country lives on the brink of hunger,” said David Beckmann, the President of Bread of the World.

–We cannot protect our children from predators because our governments have been forced to slash budgets.

–We are laying off teachers assuring that the next generation will not receive the quality of education they will need to compete in the emerging economy.

–We are saddling several future generations with a huge debt that will limit their options even further. The young men and women of our military are coming home to a 21% unemployment rate for returning service people.

–Everyday, more and more homeowners are being illegally evicted from their homes without right or even cause. And, they don’t even know what happened to them. What ever your passion or talent, it has a place in the American Foreclosure Resistance Movement. This is affecting children, women, the elderly, minorities, pets and all of the services that our community relies on to be a safe and livable community.

–Slow emergency response times are becoming common place. Pot holes the sizes of Hippopotami are left to widen and deepen. Parks are closing.

We can do better than this. The American Foreclosure Resistance Movement (AFRM) is a step beyond tea and coffee parties to a more focused effort to return the wealth and power to the middle class. We cannot wait to change politicians; we need to act now.

The objectives are two fold: to assist those resisting foreclosure, and to organize a movement to demand that Congress act to stop all foreclosures until the Financial Crisis Inquiry Commission finishes its work and issues its report.

Even people who, a year ago, were rabid about dead-beat borrowers are beginning to see that this is way bigger than that. That this will touch them on many levels and that this is the only real solution. Just stop the foreclosures until we sort out a few things.

I believe what we are going to find is that the financial intermediaries have attained all of their wealth through a massive fraud upon everyone. Your loan obligation was satisfied long ago and you don’t owe that money to anyone. It starts with sophisticated predatory lending, phony ratings, and illegal foreclosures, and ends with massive income tax fraud.

And, as long as foreclosures continue, there can be no meaningful recovery on the jobs front.

The law is on our side, but it isn’t being fairly administered. The role of the AFRM is to become a clearing house for information that will prevent illegal foreclosures and provide those already illegally foreclosed with support they need to obtain significant damages.

People from all over the country send me their scenarios, and last week I came across the most egregious example yet of banksters stealing homes. It proves that in a non-judicial foreclosure state such as California, anyone can manufacture documentation and steal someone’s home without them ever missing a payment.

The homeowner documented everything in a 14-page chronology, and contacted every government agency in her 28 month battle to overcome a totally false assertion that she had not paid her property taxes. She paid them and has the receipt. The servicer never provided any evidence that they paid anything. But, that gave them the excuse, without the homeowner’s approval, to establish an impound account to collect additional monthly funds ostensibly to pay property taxes.

Attempts to resolve the matter were continually frustrated by conflicting instructions, lost paper work, missing employees, and mysterious disconnections after critical questions.

Wouldn’t you just know it, even after there was never enough money in the impound account so the homeowner was defaulted and eventually the servicer seized the home.

Along the way, they hired loan modification experts and lawyers who simply didn’t know what to do.

Mortgage servicing fraud is so easy in California because California is a non-judicial state. This foreclosure went right on even though the servicer said it was still attempting to resolve the discrepancy. They received no notice of the sale. This is a crime, and it’s going on in every state. I believe judges look the other way and rubber stamp obviously phony documents.

That is why we need the AFRM.

Our leaders’ answers are to look the other way and respond by giving pretender lenders a ton of money. The numbers boggle the mind, but it really doesn’t matter; it’s the general idea that seems to lack any common sense. But, what have they really done to keep people in their homes? Nothing!

But, I don’t really blame them; we knew who they were when we voted for them. We let them divide us into to camps with bogus ideology while they do nothing but line their pockets and enrich their friends. Don’t get me wrong, there are three people who give me some hope, but they are mostly branded kooks.

Alan Grayson, Marcie Kaptur and Ron Paul, among others want to audit the Fed, and we should support that transparency and let all of congress know that we want that bill to pass. Go here to sign the petition, http://www.auditthefed.com/

But, that isn’t going to help the 13 million people who will lose their homes because not enough of us are standing up for each other. Government is organized and deceitful; we are disorganized, apathetic and “disinformed.”

However, we’ve got social networks, the Internet, and access to heaps of information. I think we take this web of connectivity and really do something with it. I know that no one cares about my cat video, but spreading the truth about what really was done to the economy and how we can turn this around is interesting.

Because the law is on our side, we can win. But, we have to fight back. First, in the courts to stop foreclosures until all predatory lending claims can be heard.

If you have a problem or you want to help out, you are welcome. It’s all about spreading the word. If you can help out with a website, we now have a domain name, but we need to get it unparked. Right now it is showing a lot of services that I haven’t evaluated or recommended.

Send information. If someone in your community has something to share, let’s get it out there.

Finally, I want to point out that those who are foreclosed on receive a 1098 that, in other years, would have been taxable as income to the borrower. It reflects the so-called loss that the banks are claiming on the loan. Now, considering that the financial intermediary didn’t loan any money, set the sale price at auction, received TARP funds, and cashed in credit default swaps, isn’t there a strong likelihood of income tax fraud on top of everything else.

If anybody over at the IRS is reading this, I have a question. When a pretender lender issues a 1098 for a loss on a residential mortgage that they do not and have never owned, and they received credit default swaps and tarp funds covering or exceeding that amount, why isn’t that income tax fraud? If I buy a credit default swap saying I won’t hear a peep back from the IRS for at least two weeks, are my winnings taxable?

George W. Mantor is known as “The Real Estate Professor” for his consumer education efforts including a long-running radio program, monthly workshop series, public appearances, and frequent articles.

During a career dating back to 1978, he has amassed experience in new home and resale residential real estate, resort marketing and commercial and investment property.

Prior to starting his own real estate and mortgage brokerage in 1992, he had been Director of Training and Customer Service for Great Western Real Estate. In addition, he has served on virtually every real estate committee, including a term as a Director of the California Association of REALTORS.

George is a nationally respected authority on all areas of real estate and is frequently quoted in a wide range of publications. He is an oft invited guest of Fox Business Network and for many years, he was the host of “Keepin’ It Real…Real talk about the real thing, real estate” on KCEO radio.

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RISMEDIA, March 29, 2010—(MCT)—The Obama administration took a series of steps recently to fortify its $75 billion effort to modify mortgages and plans to unveil more changes—including a push to reduce principals on difficult loans—to help struggling homeowners and cut down on foreclosures.

In announcing the renewed effort, the administration acknowledged that the year-old program known as Home Affordable Modification Program (HAMP) hasn’t done enough. By the end of December, 2009, it had permanently lowered monthly payments for only about 170,000 borrowers out of the expected 3 million to 4 million it was aimed at covering through 2012.

Even so, the program and separate efforts by banks and other lenders to rework overdue loans have pushed the rate of new foreclosures down 15.4% in the final three months last year, according to a recently released federal report. But the report also sounded alarms about a potential looming tide of foreclosures. The number of borrowers who were 90 days or more past due on their mortgage payments, a key measure of future defaults, swelled 20.4% in the last quarter over the previous quarter.

Worse, the modifications, while delaying the foreclosure process, did not appear to be a long-term solution: About 52% of those with modified loans defaulted again after nine months, said the report from the Office of the Comptroller of the Currency and the Office of Thrift Supervision, which cover about two-thirds of the outstanding home loans.

The time bomb of delinquencies and repeat defaults has focused more attention on the administration’s Home Affordable Mortgage Program, which President Barack Obama launched with great fanfare more than a year ago.

At a House hearing, frustrated Democrats and Republicans labeled the program a bust so far, echoing a stinging report this week by a government watchdog. “This program is a failure and a waste of taxpayer dollars,” said Rep. Patrick McHenry, R-N.C.

Rep. Edolphus Towns, D-N.Y., chairman of the House Oversight and Government Reform committee, warned the Obama administration it needed to act quickly to fix the program. “I really do believe we can do a whole lot better than what we’re doing to keep people in their homes,” he said.

Assistant Treasury Secretary Herbert M. Allison admitted that modifying mortgages has been more difficult than administration officials had anticipated.

“Certainly we’ve seen a lot of frustration with this program since its inception,” he told lawmakers. “We did not fully envision the challenges we would encounter.”

Among the changes to take effect June 1, 2010 is a prohibition on mortgage servicers from starting or continuing foreclosure proceedings on a borrower who enters the Home Affordable Modification Program.

Companies servicing mortgages also must screen every borrower who has missed two or more payments to determine whether the borrower is eligible for the program. If so, the servicer “must pro-actively solicit those borrowers” to participate. Those companies also are required to make quicker decisions about eligibility and to process documents quickly.

In addition, Allison said, the administration was preparing to move forward with an initiative to modify second mortgages after four of the largest mortgage servicers—Bank of America Corp., Citigroup Inc., JPMorgan Chase & Co. and Wells Fargo & Co.—agreed to participate.

That initiative would be part of a greater administration push to have lenders reduce the amount of principal owed on delinquent loans, an action analysts said is a key to limiting foreclosures.

Administration officials will announce greater incentives for servicers to write down mortgage principal as well as to allow jobless homeowners in the program to skip three months of payments, according to an industry executive who requested anonymity because the changes had not been made public.

“Principal reduction is probably the last remaining significant vital step that needs to be taken in loan modifications in order to make those modifications stick,” said Stuart A. Gabriel, director of the Ziman Center for Real Estate at University of California-Los Angeles.

Many analysts believe the problem of negative equity—about a quarter of U.S. homeowners with mortgages owe more than their homes are worth—will make it difficult for modifications to succeed, since even a slight economic setback could cause those borrowers to abandon their loans and homes.

First American CoreLogic, a Santa Ana, Calif., real estate research firm, estimated that the typical homeowner who is under water won’t see home value rise above the loan amount at least until late 2015.

In some extremely depressed markets, such as Las Vegas, Detroit and parts of Florida, it might take until 2020 or later for those borrowers to regain any ownership stake in their homes, the research firm said.

Trying to address that issue, Bank of America said that it would offer to reduce $3 billion in principal over a five-year period for certain borrowers with adjustable-rate mortgages from Countrywide Financial Corp., the former No. 1 mortgage lender that Bank of America acquired in 2008. The bank said it hoped its effort would serve as a model for other mortgage servicing companies.

Such efforts may be too little, too late, according to analysts at the financial research firm Institutional Risk Analytics in Torrance, Calif., who said the latest refinements of the government’s anti-foreclosure efforts show little prospect of success.

“This is a ‘kick the can down the road’ action at best,” said Institutional Risk Chief Executive Dennis Santiago. “It defines a series of procedural hoops that need to be jumped prior to allowing foreclosure to complete. Yes, it will keep people in their homes longer. However, there remain no provisions for relief of the debt.”

The Home Affordable Mortgage Program, which was launched last spring, got off to a slow start. By the end of February, just 168,708 mortgages had been permanently modified. Allison said more than 1-million three-month trial modifications have been started, but conversion to permanently reduced payments has been difficult amid complaints from homeowners about delays, lost paperwork and bureaucratic runarounds by lenders who process the modifications.

(c) 2010, Los Angeles Times.

Distributed by McClatchy-Tribune Information Services.

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RISMEDIA, March 23, 2010—(MCT)—With home prices expected to keep falling in many parts of the country, experts said finding a fix for the underwater crisis will be difficult. Banks can’t afford to bail out homeowners without another bailout from the government. Even if federal help comes—either for the homeowner directly or for banks—taxpayers ultimately will be on the hook for the debt. Do nothing, and homeowners and communities continue to suffer.

One economist said it all boils down to one thing: sharing the pain. “At the end of the day, someone has to pay for this problem—either the lender, the homeowner or the public pays,” said Mark Zandi, chief economist for Moody’s Economy.com. “It is really about divvying up the cost, and that is very difficult politically to do.”

The Obama administration said last month it would allocate $1.5 billion to five states to create programs that target unemployed homeowners struggling to avoid foreclosure, as well as people underwater on their mortgages. The programs would also focus on helping people with second mortgages modify their loans.

Here’s a look at some other options and what experts say about them:

Principal reductions
One way to solve the negative equity problem is to simply get rid of it. That would require banks to modify loans—and write down the principal owed to reflect a home’s value on the current market. Proponents of this solution argue that it is more costly to continue the cycle of foreclosures. But lenders would face large losses if they wrote down large portions of their loans.

Zandi said some lenders are doing this when it makes sense. Under the Obama administration home loan modification program, lenders can write down or defer principal if the borrower’s debt-to-income ratio is greater than 31%. Principal write-downs typically are being done when the homeowner wants to stay in the house and the lender doesn’t think it can sell the house to recoup what is owed.

He also predicts lenders will engage in more short sales, where they write down the difference between what is owed on the mortgage and what a buyer is willing to pay, to avoid costly foreclosures.

Julia Gordon, senior policy counsel for the nonprofit Center for Responsible Lending, agrees that principal reduction is one of the better ways to start healing the housing market.

But it gets complicated when there are second mortgages or lines of credit, common when economic pressures left little equity in some people’s homes. She said there is often a conflict of interest when the mortgage, or first lien, is held by one lender and the second is held by a different one. Lenders often don’t want to approve reducing principal on the first lien unless the second lien holder also takes a hit. “If the second liens disappear, that would clear servicers to do more principal reductions,” she said.

Rick Sharga, senior vice president of RealtyTrac Inc., an Irvine, Calif.-based foreclosure website, said he doubts that banks will write down principal in large numbers. “Many are in a capital position where they can’t afford to do that,” Sharga said. “The glimmer of hope is we figure 2010 will be the peak of foreclosure activity.”

RealtyTrac expects 3.5 million properties nationally to receive a foreclosure filing this year, up from 2.8 million last year.

Stabilize home prices
Gail Madziar, spokeswoman for the Michigan Bankers Association, said some banks are even leasing homes they foreclosed on back to the original owners to help stabilize home prices and neighborhoods.

Another way to stabilize prices is to control the release of distressed inventory onto the market. Banks have been doing this in recent months to slow the erosion of home prices and minimize the losses they record on their books.

Help for unemployed workers
The Mortgage Bankers Association announced recently that it was considering a program to help qualified borrowers who have lost their jobs so they can stay in their homes while they seek new employment.

The forbearance program would have loan servicers reducing the borrower’s mortgage payment for up to nine months. The payment would be reduced to an affordable level based on household income.

John Courson, president and CEO of the association, said that the average U.S. worker is unemployed for up to seven months and that is a long time for a homeowner to stay current on the mortgage with such a large drop in income.

“Further, borrowers with such a precipitous drop in income can’t qualify for most loan modification programs, so we are looking for ways to allow those borrowers to keep their homes while they look for another job,” he said.

The association has asked the government to add this tool to the Home Affordable Modification Program to help the swelling ranks of unemployed people.

Gordon of the Center for Responsible Lending said another solution might be to provide a low-cost loan fund like one in Pennsylvania that unemployed homeowners can tap into to pay their mortgages. The Homeowners’ Emergency Mortgage Assistance Program was created in 1983 to prevent homelessness in Pennsylvania by offering loans of up to $60,000 for 24 months. In times of high unemployment, the loans extend to three years.

Freeze foreclosures
Michigan state Sen. Hansen Clarke, a Democrat who sponsored 90-day foreclosure moratorium legislation that took effect last July, said he thinks judges should be given the power to temporarily suspend foreclosures for up to two years. “Look at all the people who have had to walk away from their houses. I get so angry when I see these neighborhoods, because action could have been taken,” Clarke said.

Gordon said a temporary suspension could be helpful if servicers use that time to evaluate the homeowner for a loan modification. Now, the foreclosure process and evaluation process generally are happening at the same time, sending mixed messages to homeowners.

Tim Ross, president of Royal Oak, Mich.-based Ross Mortgage, said that more mortgage loan servicers are eager to keep people in their homes these days and that could go a long way to solving the negative equity problem.

On top of that, new household formation, which occurs when young adults leave home to set up their own places or when people get married or divorced, continues to create demand for new homes. And with new home building at a standstill, demand driven from household formation should absorb what’s in the market, he said.

“Despite the fact that we have outmigration, there are fundamentals in place that will ultimately rescue us,” Ross said.

(c) 2010, Detroit Free Press.

Distributed by McClatchy-Tribune Information Services.

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