House Repos Blog

White Plains Foreclosure Case Ruling is Sending out Stern Warnings to Lenders

Julia Thorn — Fri, 06 Nov 2009 15:56:56 +0000

The White Plains foreclosure case ruling has sent out stern warnings to lenders. The USA Trustees of the Justice Department has taken great interest in the case. It has registered itself as an interested party.

A borrower living in her home had purchased the house in 2001 after contracting a mortgage with Wells Fargo. After four and a half years she refinanced it with Mortgage World Bankers INC.

David B. Shaev a lawyer dealing with consumer bankruptcy filed Chapter 13 bankruptcy on her behalf in February 2009 when she fell behind her dues. In March PHH a firm of Laurel New Jersey claimed the debt amounting to $461,263 inclusive of arrears of $33,545. Shaev said that at the time of filing he had only hoped for modification of the loan.

Months passed and PHH obviously began to drag its feet about the modification. At this point Shaev wanted proof of the standing of PHH in the case. PHH replied that it was the servicer and that note holder was U.S. Bank – the trustee of a securitization packet of mortgages. But U.S. Bank claimed it was not a party to the suit. Shaev now wanted proof that U.S. Bank held the note. The bank produced an affidavit from the vice president of PHH, Tracy Johnson, repeating what had been stated earlier – PHH was the servicer and U.S. Bank the holder of the note. Supporting this was submitted a copy of the assignment of the mortgage but that was signed by Johnson in the capacity of being vice president of MERS. This device had done away with the requirement of recording changes of ownership of property in the county land records office.

Another startling point was that as per the document the note was assigned on 26th March 2009 – much later after the filing of the bankruptcy.

Being questioned about ownership PHH admitted that it had charged a foreclosure fee of $450 that was not proper. Interest had also been overcharged.

The attorney representing PHH had the uncomfortable task of explaining these anomalies. Attempting to justify the actions he said, “In the secondary market, there are many cases where assignment of mortgages, assignment of notes, don’t happen at the time they should. It was standard operating procedure for many years.”

It was a welcome surprise to the defendants when the judge ruled, “Right now I am in bankruptcy court with a house that has no discernible debt on it, yet I have a client with a signed mortgage. We cannot in theory just go out and sell this house because the title company won’t give a clear title on it.”

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Foreclosures are Victimizing Apartment Dwellers

Julia Thorn — Wed, 04 Nov 2009 17:41:30 +0000

Foreclosures are victimizing apartment dwellers. One of the victims is Rafael Matos residing in Dorchester. He had been residing in this Brook Avenue apartment for the last four years and has never failed on paying his rent. His landlord too has never complained. Little wonder then that the eviction notice took him completely by surprise. He was not aware however that his landlord had defaulted on the house loan and that following this the lender, Deutsche Bank, had initiated foreclosure proceedings.

Matos had no idea that the house had been sold. The notice simply told him to vacate the premises. One week later his electricity was disconnected. He bemoaned that he had not done anything and was completely innocent.

Matos and 40 other tenants in the same boat demonstrated out the Beacon Street branch of the bank to focus attention on the plight of renters who were being victimized by this foreclosure wave for no fault of theirs. The protestors were joined by important city councilors demanding a meeting with the officials of the bank.

Councilor Chuck Turner said, “The foreclosures we see today are just the tip of the iceberg. We need to come together to create precedents. Deutsche Bank, take some of the pressure off of others who will be in the same situation, come forward and see that economic justice is done.”

One week prior to this picketing Deutsche Bank had said in a statement that it was not to be blamed for the evictions. The bank was merely a trustee whose role as “largely an administrative one.” The bank was not available for further comment.

When the councilors tried to go inside the security personnel blocked the way and refused entry. Speaking over the phone the media relations officer of the bank, Ted Meyer said that the local branch did not have the authority to talk about the mortgage matter. Turner asked Meyer to have a meeting with the tenants at Boston but he declined. However he agreed to arrange for bank officials to speak with the tenants and the housing advocates on a conference call.

Matos has continued to remain in his apartment throwing a challenge to the court orders. He said, “I’m going to tell them to stop the eviction because I don’t want to be another homeless person. They are millionaires. They don’t care about us. They don’t care about me, but I’m a hardworking man.”

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Fewer Foreclosures Among Low-cost Brooklyn Homes

Julia Thorn — Tue, 03 Nov 2009 18:21:08 +0000

Yvettee Ziegler was one of the many who had a good office job and lived in a rented apartment. She thought owning a unit seemed a pipe dream. But the Nehemiah project has made her dreams come true. It is an affordable housing plan that is run by a church. Today Ziegler is the proud owner of a house having three rooms which she shares with her mother in East New York – a locality in Brooklyn. The programme has constructed over 4,000 units in Brooklyn as well as Bronx starting from the 80’s. Ziegler said, “When it came to light that these churches were building affordable houses and how low the mortgages were, I thought, ‘Well, maybe this is something I can aspire to.”

According to the Bible, Prophet Nehemiah reconstructed the Temple of Jerusalem that had once been the pillar of stability in localities that had been ruined by arson and decay. The mortgage crisis has been the rerun of such a situation. Brooklyn has topped in foreclosure numbers. By contrast very few among those who had participated in this project have defaulted on their mortgages.

Metro Industrial Areas Foundation was the chief architect of the project. Mike Gecan of the foundation said that not more than 10 of the estates constructed by the programme have endured foreclosure. The officials who ran the show said that their success has been because of rejection of the excesses of the exotic loan period. Those who apply get their loans from private lenders or from the city. But Nehemiah includes its own tough conditions regarding income and credit ratings. For example the mortgage payment cannot be over 20% of the income of the applicant.

Gecan said, “At the time [the program began], the conventional wisdom said that people should be asked to spend a third of their income on housing. That is extraordinarily high, and if someone has a family emergency, has a job loss, or if the economy gets weakened, and if they go from 40 hours a week to 27 hours a week, then if you’re spending 35 percent of your income or 50 percent of your income on housing, you’re in trouble.”

The prospective house owners have to give details of their finances inclusive of bank statements. Sudden entry of cash has to be explained to the officials dealing with the programme so as to be sure that the applicants are not dealing in any unlawful activity.

Sarah Plowden is one of the officials of Nehemiah and she is also a house owner. She said, “In our community, there were ways to make money illegally, you know. The organization wanted to make sure they had clean money coming in there.”

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Bank of America is a Lagging Behind in Loan Modifications to Prevent Foreclosures

Julia Thorn — Fri, 30 Oct 2009 18:32:26 +0000

The staff of Bank of America are given a dose of reminder each day of how many miles they sill have to go to reach their goal. Outside the elevators of this massive office building in Plano, Texas on the fringes of Dallas is a thermometer made of cardboard. It inches forward as the bank improves its performance in signing up the risky borrowers to participate in the federal rescue programmes.

Bank of America located in Charlotte, North Carolina is facing the similar challenge as are other important lenders who are involved in rectifying the foreclosure crisis hand in hand with the government. There are only few weeks left for them to complete the deadline set for November by the Obama government. Bank of America is lagging behind considerably in comparison to the other banks as per the data released by the Treasury Department.

The efforts of BofA have been hindered by shortage of staff conversant with the computer systems and the fax tools in tuning with the gigantic scale of the operations. It started off in last March. BofA has also been a slow starter because it had taken a more traditional approach than many other banks. It insisted that the borrowers provide documents of their income and complete all other necessary paperwork before they would be granted preliminary green signal for proceeding with modification. From August the bank became more lenient towards these conditions and started to allow some modifications even without first getting the documents.

This has led to the borrowers facing difficulties. Last summer a correspondence was dispatched by Bank of America that erroneously informed some that they were not qualified to avail of the foreclosure prevention plan. The reason cited was that their loans did not have the backing of either Fannie Mae or Freddie Mac. It was only when a reporter wanted to know from the bank regarding this letter that BofA stopped sending these. A spokesperson of the bank said that the case was being reviewed but she did not know exactly how many letters had been sent.

The government is putting pressure on the lenders to be more active in helping the borrowers facing foreclosures. But many of the employees of Bank of America are nursing doubts whether all those who are looking for help are really in need of it. Jerry Durham of BofA said, “There’s a difference between hardship and entitlement.”

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The Aftermath of the Housing Boom is Followed by Foreclosure Doom in Homestead

Julia Thorn — Thu, 29 Oct 2009 18:44:12 +0000

It is there for all to see – the aftermath of the housing boom is being followed by the foreclosure doom in Homestead.

Two of the victims are Alexandra and Waldo Cruz. They were lured into buying the cute property in Homestead with three bedrooms, two bathrooms and a garden during the time of the boom. But four years on their first nest is marked by foreclosure. They have time till next April to find another accommodation to shift to with their four children – their ages stretching from 3 months to about 15 years.

Alexandra has recently lost her job. At that time she was 9 months into her pregnancy. Two weeks previously she started on a new assignment and has to toil for 6 days in a week with less pay. Simultaneously her husband is not earning much from overtime. It led to the inevitable – they defaulted and endured foreclosure.

Across Miami-Dade property value has fallen drastically. Homestead has been the worst hit with no other city nearing its intensity. Here the foreclosure rate is 1:49. It is the highest in the county and the highest in the state.

Homestead has fallen again after having recovered from the damages of Hurricane Andrew that ripped across in 1992. The building boom was another type of deceptive hurricane with easy land, easy mortgages and easy home prices. It led to a veritable stampede among the shoppers. This was the first home buying occasion for many.

In 2007 Homestead had been lauded for being the city with the fastest growth rate in the county having a population of over 50,000 as per the findings of USA Census Bureau. Ned Murray of the Florida International University (Metropolitan Center) said, “Homestead was ground zero because so much new development was being built. Most of the people were buying on the margin; they were barely eligible for a mortgage.”

But the picture changed with the collapse in the real estate market and the exit of residents. Demographers opine that the population numbers have gone down by 1,800 in the past 12 months. This has had a negative impact on the tax collection. It contracted by about $1 billion or 24.7% over the last one year.

To grapple with its finances the cit has laid off 33 jobs and cut down its budget by $10.9 million. The police force remains the same. There has been no spike in essential services pertaining to electric and water supply as well as sewer and trash pick up charges.

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Foreclosure Scams are Keeping Pace With Increase in Foreclosures

Julia Thorn — Thu, 29 Oct 2009 18:02:02 +0000

Millions of Americans are set to lose their homes during the forthcoming years. The administration is gearing up to tackle the menace of foreclosure scams that are keeping pace with increase in foreclosure numbers. Lawyer Michael Chung referred to it as a “tidal wave” of foreclosure rescue scams. He said, “We were set up to help people deal with various legal issues. But almost every single call I get is related to rescue scams.”

During the period of the housing boom the scams were of a different character. The banks became heavily involved in easy lending – an irresponsible attitude that permitted the borrowers to contract mortgages without making any down payment and without providing any proof of income. This planted the seed for later fraudulent activities to sprout.

The sub-prime free-for-all partying, allowed shady characters with criminal background to join hands with mortgage agents and appraisers of property. Houses were bought and sold at the drop of a hat – this being known as flipping. Huge profits were netted overnight as property prices continued to spiral. Often the buyers were ‘straw’ or non-existent.

Todd Lackner investigating mortgage fraud in San Diego said, “Sub-prime fraud played a huge role in the housing crisis. Bank employees must have recognized individual cases of fraud but no one was looking at the whole market and realizing this was an epidemic.” The epidemic paved the way for the housing crisis. This in turn was the prime cause for pushing the largest economy in the world into recession.

Recently there have been signs of a slow recovery in the housing sector but reports are pouring in of rising unemployment and increase in foreclosure numbers. A potential flood of foreclosures is poised to break out. It will cause more pain and further decreases.

Last April the FBI brought charges or mortgage fraud against 24 persons in San Diego. In all 220 properties were involved that calculated to sale price of $100 million. Across the nation the FBI noted that during September it had 300 of its agents handling 2,600 fraud cases. 8 agents were busy only with San Diego cases.

As the foreclosure crisis advanced it became a veritable gold mine for scammers as they began to pick on vulnerable borrowers desperate to get out of the quicksand. The scammers charged fees. Often these fees per individual were small – around $8,000. But added up these calculated to a tidy sum. FBI noted that in 63% of the cases the loss calculated to more than $1 million but the total number is still not clear.

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Civil Courts are Clogged by Staggering Number of Foreclosures

Julia Thorn — Wed, 28 Oct 2009 17:39:49 +0000

None involved in a foreclosure ever want to go anywhere near the process once again – not the borrowers, or lenders or the judges presiding over the cases. The civil courts are clogged with staggering number of foreclosures.

In Midami-Dade, Monroe and Broward counties are sitting on 135,000 foreclosures this year as compared to 17,500 in 2006. It has been a veritable avalanche. The owners of the homes are hanging in a state of limbo. Banks are not getting their regular payments and the snowballing effect is felt by all from condo associations to the local government that are failing to collect dues. The government on the other hand is having to spend extra funds for the safety of abandoned houses.

Judge Jennifer D. Bailey (11th Judicial Circuit) said, “Everybody’s getting burned in this thing. The bank’s not going to come out of this in one piece. The people, who owned the property, whether they’re homeowners or investors, are not going to come out in one piece.”

Even the courts are straining not to crumble apart as the foreclosures are crowding the calendar of the judges who has to deal with other cases also like traffic, wills etc. Bailey said, “We’re sort of built to handle 25,000 to 35,000 cases a year. We have almost 35,000 by the end of June that are foreclosures alone, out of a total of 50,000 cases filed.”

In Florida State 17% of over 3.5 million mortgages are in some stage of foreclosure. It is the highest in the country according to report on the second quarter released by Mortgage Bankers Association. Previously foreclosure cases took three or five months to run its course. But now it takes nine months for it to move starting from the date of initial filing to the time of the foreclosure auction. The system now resembles a monopoly game that has gone wrong. If a court date is missed or an auction cancelled then the process goes back by three months to start from scratch.

The problem is not related to volume alone. There is a maze of rules that vary from one judicial circuit to another. This causes confusion among the plaintiffs. Many of the borrowers have taken the help of AWOL that compels the lenders to follow the path of methods that consume more time.

Even in normal times foreclosures involve piles of paperwork. In times of crisis it has become even more cumbersome.

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Lenders Being Legally Challenged for Activating Predatory Lending

Julia Thorn — Tue, 27 Oct 2009 17:44:12 +0000

Right across the nation individuals as well as groups of sufferers are legally challenging the lenders for activating predatory lending that ultimately led to the foreclosure crisis.

Wells Fargo is facing such suits because one of the banks Wells Fargo has lately taken over started the option ARM loans. By these the borrowers start off by making extremely low monthly payments. Later the interests that have not been paid were added to the principal. Currently under the cloud of recession many are defaulting.

The aim of the legal suit against Wells Fargo is to make the bank restructure its mortgages so that the borrowers can afford them. The homeowners are on the lookout for a second chance. Damages are also being sought by the suit – especially from those who had either lost their homes or paid of their mortgages at an unjustifiable high rate. Wells Fargo is trying to have this case dismissed on the ground that the claims lack base – it being wrongly characterizing the bank’s long standing fame as being a responsible lender.

Attorney Generals of many states are similarly filing cases against some of the mortgage giants alleging that improper lending practices had been followed. Banks are now feeling the sting of these increasing numbers of suits from NAACP. Some of the city officials as well as individuals are bringing in suits alleging that the banks had discriminated against the minorities while granting loans.

Martha Coakley the Attorney General of Massachusetts has reached a settlement amounting to $10 million last June with Fermont Investment & Loan for its unfair dealings in sub-prime mortgages. The state will disburse $5 million to those who had taken these loans from Freemont. Another amount of $3 million would be spent for foreclosure relief and education of home owners. The balance would be taken by the state to cover the costs. Meanwhile Fermont assured that it would proceed with more loan modifications and refrain from foreclosing on 2,200 additional loans without first giving notice to the office of the Attorney General and then following it up by getting the green signal from the court in some cases.

Following the settlement Martha Coakley said, “The American dream of homeownership has turned into a nightmare for many borrowers because of predatory lending practices. We will continue to hold companies responsible for their role in the foreclosure crisis.”

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Foreclosures Have Made Life for CEO’s Expensive and Fraught With Fear

Julia Thorn — Mon, 26 Oct 2009 20:27:49 +0000

Contrary to popular view the CEOs are not just wallowing in bonus and perks but foreclosures have made life for them expensive and fraught with fear.

Firms have been cutting down roots and branches to somehow survive through this recession and yet they are being compelled to spend huge sums on the CEO’s who are afraid of their personal security.

Starbucks that had shut stores and laid off em0loyees have nevertheless spent in 2008 $511,079 or the personal security of its CEO Howard Schultz. $595,875 was spent by FedFex for its CEO Fred Smith. Walt Disney exhausted $645,368 for its CEO Robert Iger , Occidental Petroleum used $575,407 for Ray Irani and McKesson paid $401,706 for John Hammergren.

It may be termed as a hysterical paranoia but it is unavoidable. Lat year 110 firms in the corporate sector spent $65,345 marking an increase of 123% from 2007 expenses of $29,291 according to the findings of Equilar that conducted research in compensation for executives. Ten firms spent $4.6 million for beefing up the security of CEO’s in 2008 – 40% higher than the ten largest spenders of 2007.

The question arises if in these hard days such spending is justified. The companies answer in the affirmative while filing their data with Securities and Exchange Commission. The explanation is that these expenses are linked with the protection of the interest of the shareholders. But not all are willing to accept this line of argument and say that uppermost on the agenda is the benefit of the company and those who run it.

The foreclosure climate has made the CEOs very unpopular. In September the vacation house of Daniel Vasella (CEO of Novartis) was vandalized. In July the urn of his deceased mother was taken away from a cemetery and the grave of his sister was also desecrated. Crosses were placed on the names of Vasella and his spouse.

David Chun of Equilar said, “Given several notable incidents of violence towards executives, it doesn’t come as a surprise that companies are taking increased measures.”

The film world has by and large skipped recession. John Marshall of Commonwealth Studios said, “Still, when I get in the car I hit the button that locks all the doors, all the little things available to me.” His gated home is protected by electronic locks and if the alarm sets off there is a well planned escape route for the family. While working he has employed round the clock guards. For a security consultant he has been paying a six figure salary.

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With Foreclosures and Unemployment Continuing it is Doubtful if Recession is Over

Julia Thorn — Fri, 23 Oct 2009 20:23:21 +0000

Many are talking about recession being over but with foreclosures and unemployment continuing unabated it is raising doubts. There are heart rending scenes all around. A grandmother and her two small wards had just carted eggs, milk, bottled water and other bare essentials when her credit card was refused after being swiped. It was a public humiliation but the general public was too engrossed in their own worries to react in proper manner. It is not unusual for a neighbour relaxing on the porch to see a stranger come to the adjacent house and paste a foreclosure notice.

The men doing this are specially designated to repossess not only cars but also houses that are homes. Contradicting these scenes are optimistic talks about how the recession turning back. Newsweek recently shouted, “The Recession is Over!” Barack Obama repeated these sentiments but ordinary Americans are skeptical. They cannot see or feel it. Maybe some who had suffered huge losses in stocks are beginning to feel good but the ordinary folks who have lost jobs and endured pay cuts continue to be a worried lot. People are continuing to lose their houses and jobs as they drown on debts. Millions are twiddling their toes without jobs right across the country. California has been one of the worst hit pockets.

In August the unemployment rate in California spiked to 12.2%. It means 2.2% of Californians are sans jobs. It is scary! There seems to be nothing to help them get back to honest work. It has to be admitted that the speed of job losses have lessened and that is something to be happy about. In July California lost 12,300 jobs. This is much better than 70,000 jobs that vanished each month from January to July. But even then the numbers are uncomfortably high. Jobs have gone for friends and neighbours.

This makes them unable to pay for their mortgages and so on top of this they lose their home and hearth. Most of the mortgage loans have gone underwater with the worth of the house being less than the loan amount. Technically in such a situation the victim is qualified to avail of Homeowner Affordability Program. But the problem is that banks and lenders who took the help of bailout money are now not in their turn willing to help the common person weighed down with exotic mortgages that should never have been contracted in the first place.

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House Repos Blog

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