Strategic default OK for Mortgage Bankers Association…but not for you?

The article below is from a recent post on the Mortgage-Mod_Monster blog:

Again we read the guilt trip that the mortgage industry places on distressed homeowners when dealing with their distressed mortgage. But it’s OK and even advisable for the corporations to walk away from their obligations. I’ve written about this before, but when the Mortgage Banker’s Association double deals, this is just too juicy to not publicize.

Freely quoting from Mandelman’s post: “The CEO of the powerful Mortgage Bankers Association, John Courson, has said that underwater borrowers should keep paying on their mortgage loans and ‘should not walk away from lawful debts’.  In an interview this past year, Courson appeared genuinely concerned adding: ‘What about the message they will send to their family and their kids and their friends?’

Just last year, you pointed out that defaults hurt neighborhoods by lowering property values, so borrowers would do less harm to our society were they just to repay what they owe.  You know… like the responsible homeowners.

This past week, the Co-Star Group, Inc., indicated that it had agreed to buy the MBA’s 10-story headquarters building in DC for $41.3 million.  The only problem is that $41.3 million comes up a skosh shy of the $75 million first mortgage on the building that the MBA took out from PNC Financial Group way back in 2007, when they purchased the property for $79 million.

The very same MBA also defaulted on their payments and secured a forbearance agreement, prior to the short sale.  Nicely done, Johnny-O.

What kind of message are YOU now sending to Your family, Your children, and Your friends by walking away from Your lawful $75 million debt?  Are they being morally harmed by your decision to stick the bank with close to $25 million?  And why aren’t You simply paying Your mortgage as agreed, Mr. Courson?

Again, advice to the distressed homeowner: Answer the emotional question first – do you want to keep your house? or walk away with the least damage and purchase another home in two years? Then consider the financial questions. Do you have steady, although significantly reduced employment that you can count on for the foreseeable future? Do you believe your property recover any lost value in 5 to nine years?

Currently, the best answer to solving a distressed mortgage is the REST Report. The REST Report calculates Net Present Value and enables a distressed mortgage owner to negotiate an unbiased mortgage modification with court support if the mortgage servicer chooses to ignore the calculations and pursue foreclosure…

If you don’t believe your property can recover value in 5 to nine years, give the keys back to the bank…It even now has a name, compliments of firms like the Mortgage Banker’s Association. It’s called a ‘strategic default’. Do not even consider for one minute any ethical responsibility to anyone but yourself. Your bank cares not one whit for your well-being. You owe them, or anyone else, not one red cent.

Ocwen rolls out a new loan modification for underwater borrowers

 

Finally a lender gets a brain! Locally based Ocwen recently revealed a plan that incorporates many of the components of a loan mod/refinance that I suggested over a year ago: Reduce the loan amount to today's value, write off the ‘underwater portion’ over a number of years if the owners stays current on all mortgage obligation aspects, and if/when the home is sold, Ocwen will recoup some of the regained equity…Brilliant! The other big added benefit to the lender is that they get to draw up new loan documents without all of the defects that are being challenged in court right now…and I wouldn’t be surprised if they slip in some new restrictive language to the now docs too!

For all of you with an underwater Ocwen loan…CALL THEM TODAY to see if you can qualify, then call me and let me know the details of the process/qualification/final terms so I can spread the news.

Below are excerpts from the article that was in the Palm Beach post.

The company is rolling out a new loan modification plan for underwater borrowers that lowers the amount owed on the loan - thus reducing the monthly payment - but asks for a share in the appreciated value when the house is either sold or refinanced.

The kickback to the lender may deter people who can afford to make their payments from defaulting, while giving an incentive to either the lender or investor to modify the loan.

"We think this answers some of the critics who say that by reducing principal, you are rewarding imprudent borrowing behavior," said Ocwen Executive Vice President Paul Koches. "What we see is unprecedented delinquencies, and we're doing our best to resolve them."

Offered in 33 states, including Florida, the plan is available only on loans where it will earn more for either the lender or investor than if the home went into foreclosure.

Called a shared appreciation modification, it's fairly simple on its face.

A home's principal amount is reduced to 95 percent of the current market value. That portion is forgiven in equal amounts over a three-year period as long as the owner stays current on the loan.

When the house is later either sold or refinanced, the homeowner must give the lender 25 percent of the appreciated value of the home.

For example, say the principal balance on a loan is $125,000, but the current value of the home is only $100,000. Ocwen's plan would reduce the balance to $95,000, putting $30,000 in a non-interest-bearing account that will be forgiven over a three-year period.

If the house is later sold for $120,000 - marking an appreciation of $20,000 - the homeowner would get to keep $15,000, while $5,000 would go to the lender. If the home doesn't appreciate, then the sale occurs as it normally would.

Ocwen, which has about 245 employees in its West Palm Beach office, estimates about 53,000 home­owners nationwide will be eligible for the principal reduction program.

The company specializes in servicing the nation's riskiest home loans and has a portfolio of about 460,000 loans. Ocwen's recent acquisition of Litton Loan Servicing will add 250,000 loans to its portfolio.

A test of the new loan modification program that was launched last year found that of borrowers offered the plan, 79 percent accepted it. The default rate has been about 2.6 percent.

"You have folks breaking their necks to make payments on a home where there is no hope in their lifetime of it regaining equity," Koches said. "A homeowner in a negative equity situation is one-and-a-half to two times more likely to go into delinquency."

In Palm Beach County, nearly 43 percent of homes with mortgages were underwater during the first quarter of 2011, according to real estate analysis firm CoreLogic.

Most home loan modifications result in an interest rate reduction, which can do little in the long run for homeowners who owe more on their loan than their home is worth, said Kathleen Day, spokeswoman for the Center for Responsible Lending.

"We've felt for a long time that unless you do principal write-downs, you really aren't getting at the problem," Day said. "It's in everyone's best interest to keep a credit worthy person in their home."

 

Thanks for reading…Steve Jackson

10 million more foreclosures in the pipeline

In August, the Obama administration asked the housing industry for ideas on how to more efficiently sell or unload this overhang, and the Senate heard testimony from various housing players Tuesday.

Roughly 10.4 million mortgages, or one in five homes with a mortgage will likely default if Congress refuses to implement new policy changes to prevent and sell more foreclosures, according to analyst Laurie Goodman from Amherst Securities Group.

At the end of the second quarter, more than 2.7 million long-delinquent loans, others in foreclosure and REO properties sat in the shadow inventory, more than double what it was in the first quarter of 2010. With the market averaging roughly 90,000 loan liquidations per month, it would take 32 months, nearly three years, to move through the overhang…and that number is contingent on NO other loans going into default.

"Many analysts looking at the housing problem mistakenly assume it is limited to loans that are currently non-performing (or 60-plus days past due). Such borrowers have a high probability of eventually losing their homes. However, the problem also includes loans with a compromised pay history; these are re-defaulting at a rapid rate," Goodman told a Senate subcommittee Tuesday.

Most of the proposals included recommendations to sell properties ‘in bulk’ to investors with one of the stipulations being that they be turned into rentals. (italics mine)

Stan Humphries, chief economist for Zillow, said the rental market is currently booming and would be able to handle a mass conversion of foreclosures into rentals. "Investors smell a distinct opportunity in this situation: The chance to buy an asset cheaply and rent it out. In fact, close to one-third of the purchases of existing homes this year have gone to all-cash buyers, the bulk of whom are real estate investors," Humphries said.

This sounds to me like the housing equivalent of ‘cash-for-clunkers’ which resulted in the removal from the market of tens of thousands of good, affordable used cars, as the requirement was to “junk’ the clunker trade-in (the dealers were not allowed to re-sell them)…The same thing will happen with homes; currently, a lot of buyers can’t purchase a great many of the foreclosed homes as they require too much work and/or don’t qualify for an FHA loan. Typically, the buyers in the under $250k market, (where a great percentage of the foreclosed homes sell), are FHA buyers because they DON’T have a lot of cash…so they are not able to ‘buy and rehab’. BUT, that is where cash buyers come in…they buy, rehab to move in condition, and re-sell…quite often to FHA or other low-down-payment buyers and they make a little money doing it…as they should. But if you take away these homes by requiring that they be converted to rentals, how does that help? Well, it helps the big companies, REITS, and investment groups that will get a piece of that sweet deal!

Just read my recent posts regarding the scary legislation working its way through Tallahhssee now…going to make it sooo easy, cheap and fast for the banks to get these homes back…We need everyone to PAY ATTENTION…and thanks for reading!

Steve Jackson

Foreclosures ramp up: County's 13% jump the trickle before the dam breaks, experts warn

More Palm Beach County homes received first-time foreclosure notices in August than the previous month, and experts warned Wednesday that the 13 percent increase is just a trickle before the flood.

Statewide, new foreclosure filings were up 10 percent last month from July, according to findings to be released today by the Irvine, Calif.-based company RealtyTrac.

Nationally, initial notices of foreclosure were up 33 percent.

But unlike previous reports that found increases and decreases in foreclosure activity were similar nationwide, there was a marked difference in August between judicial states, where a judge is required to sign off on a home repossession, and non-judicial states.

In the 25 states RealtyTrac considers non-judicial, initial foreclosures leapt 46 percent in August from July, although they were still down 10 percent from August 2010. In judicial states, including Florida, there was only a 21 percent increase in August from July, with a 25 percent drop from last year.

"I've been told by a number of banks' lawyers that they have cases ready to go and are just waiting for approval to file," said Mike Wasylik, a foreclosure defense attorney with the firm Ricardo, Wasylik & Kaniuk, which has an office in Boca Raton. "I've been expecting the dam to break for months now and I think there is still uncertainty about what is going to happen with regulatory actions and pending settlements."

Foreclosures were suspended last fall following questions about the validity of court documents used to take back homes. Activity remained on a simmer through early spring and has jumped around since then as lenders continue to patch up their foreclosure processes.

The nation's largest home lender and servicer, Bank of America, confirmed Wednesday it had ramped up foreclosures in non-judicial states, including Nevada, which saw a 31 percent increase in new filings in August from July. California, also a non-judicial state, saw a 55 percent increase.

"Strong gains like that from July to August demonstrate our progress, clearing more volume to advance to foreclosure once we pass the numerous, improved quality controls we have in place and only after all other options with homeowners have been exhausted," said Jumana Bauwens, a Bank of America spokeswoman. "The industry has not yet returned to normal or necessary foreclosure activity levels, but progress is certainly being made."

Still, lenders face more uncertainty.

Earlier this month, the Federal Housing Finance Agency sued 17 financial firms for selling Fannie Mae and Freddie Mac billions of dollars' worth of risky mortgage-backed securities that turned sour when the market collapsed.

Also, settlement negotiations continue between banks and the nation's attorneys general. The attorneys general joined last year in an effort to investigate the robo-signing scandal, penalize lenders for their paperwork missteps and help struggling borrowers.

"The banks don't know what their exposure is from past problems or that they have resolved the problems to the satisfaction of the attorneys general," said Guy Cecala, chief executive officer and publisher of Inside Mortgage Finance.

But foreclosures have not come to a complete standstill.

Last month, 715 Palm Beach County homes were sold at auction - the final step in a foreclosure - according to Palm Beach County Clerk of Courts data released Wednesday.

Just 31 percent of scheduled auctions were canceled, a decrease from a high of 51 percent in January when banks hurried to delay sales in the wake of the robo-signing scandal.

The Palm Beach County clerk's office tallied 1,126 initial foreclosure filings last month. That's slightly higher than RealtyTrac's 926, but could be a function of when the numbers were gathered.

"We were anticipating another wave of foreclosure filings this year, based on expert forecasts, but so far an influx of new cases has yet to materialize," said Clerk Sharon Bock.

RealtyTrac has lowered its nationwide prediction of total foreclosure filings - initial notices, sale notices and auctions - for 2011 from 3 million to 2.5 million.

"As painful an issue as foreclosure is, it has to get back on track, otherwise we'll slip further and further behind," Cecala said. "The year 2011 will go down as the year that nothing got done."

If you have been reading my blog, you have read about the scary pro-bank bill under review now in Florida…my guess is that the banks are holding back going forward here in full force in the hopes that this bill gets passed in the dark of night. Then, the banks can EASILY FORECLOSE AND TAKE POSSESSION OF HOMES. The bill even has a provision that if you defend your foreclosure but the bank eventually does get to foreclose…YOU AND YOUR ATTY HAVE TO PAY THE BANKS LEGAL FEES!

Thanks for reading…Steve Jackson

 

Our sales manager, John Durante, is an accomplished drummer/musician. Just days after the 9-11 tragedy, John and his band wrote this tribute to the victims. Below is the video of John and his band performing that song.

Your 2011 proposed property tax bill…think it’s wrong?

At the end of last week you should have received your 'proposed' 2011 Tax bill in the mail. If you haven't taken the time to open it up and dig into it...now is a good time to do that. I have put together a short video regarding the tax bill/appeal. September 16, 2011, is the deadline to file a petition with the Value Adjustment Board to challenge a property’s market value, classification, or an exemption.

If you would like some help in determining if your assessed value is accurate, send John or I an email or give us a call: John can be reached at 561-685-1867 and I can be reached at 561-602-1258.

Also, below, I have placed several links that are helpful in navigating the tax appeal process.                                                               



Click on the image above to go to the VAB site for all forms and instructions.



And if you haven't received your proposed tax bill, misplaced it already or just threw it away, click on the image above and pull up your tax bill from the property appraiser site directly.



Click on this image, above, to go directly to the appeal form

Here is the link to the Frequently asked questions

portion of the appeal website

Thanks for reading our blog.

Steve Jackson

Is Florida the Next Non-Judicial Foreclosure State

Please forward this blog post to every Floridian that you know or share it on your Facebook page…if this gets passed, it will be devastating for tens of thousands of homeowners. It will, in essence, take away the right to challenge the banks foreclosure (fraudulent documents and all) AND includes a huge disincentive to foreclosure defense attorneys from even taking your case.

If the mortgage industry has its way, the passage of a new bill floating around Tallahassee will ensure that Floridians will be displaced from their homes without legal representation or due process.  In typical Orwellian style, this bill is entitled the Fair Foreclosure Act – it’s anything but . . .

Florida often makes the national news when it comes to foreclosures, and it’s never positive.  According to a recent 24/7 Wall Street study, three of the ten housing markets most likely to collapse in 2012 are in Florida.  Naples, Miami and Ft. Lauderdale all make the top 10, and the rest of the Sunshine State isn’t far behind.

In its preamble, the FFA actually says, “Once suit has been filed, the public interest is served by moving foreclosure cases to final resolution expeditiously in order to get real property back into the stream of commerce.”  Of course, it is this glut of foreclosed homes flooding the real estate market that has all but ensured its collapse.  REO properties typically sell far below market value, and when so many REOs exist, it drives the overall market to new lows.  The vicious cycle is complete as more homeowners suffer increased losses from a down market.

So the bill’s stated purpose is flawed right from the outset, but getting our homes back into the “stream of commerce” really isn’t the purpose of the Fair Foreclosure Act.  Its sole design is to take Floridians’ property without due process or equal protection under the law.

Florida has a proud history of whoring for the mortgage industry, and while states across the country are fighting to restore honor and integrity to our judicial system, Florida has taken a different approach.  In Florida, the Supreme Court and our elected state officials are doing what they can to ensure their benefactors . . . the banks . . . get what they want.

Remember Foreclosure Court?   It unconstitutionally employed retired senior judges to act as mortgage mercenaries – ramrodding defective foreclosures through the judicial system despite national ridicule.  I am actually shocked it fell victim to Governor Scott’s massive spending cuts.  That must have been a mistake.

Then, with the addition of Pam Bondi as our new Attorney General, the mortgage industry took firm control of our prosecutors as well.  Ms. Bondi all but killed any investigation into foreclosure fraud, and fired two assistant prosecutors who gained national attention for piecing together a massive conspiracy by the mortgage industry to defraud our state court judges in foreclosure cases.

BUT, these acts of treason pale in comparison to the Fair Foreclosure Act, which proposes to do the following:

• Where the amount of principal and interest equals or exceeds 120% of the just value of the home, it will allow the mortgage company to foreclose without going through the judicial process.  That means no foreclosure complaint, no defense, no due process, no justice.  It will be as easy to take your home as it is to repo a car.
• It will repeal Florida Statutes § 57.105, which awards attorney fees to homeowners who successfully defeat mortgage companies in court.  At the same time, it assesses attorney fees against a homeowner and his lawyer (in equal parts) if the mortgage company prevails.  The design here is to stop consumer lawyers from taking any more foreclosure cases by making it impossible to make money and even personally expose the lawyer to penalties.  Consumer lawyers will have no upside potential and all downside risk.
• It will eliminate the right of a homeowner to set aside a wrongful foreclosure, even if the plaintiff committed fraud in the process of taking the home.  The ONLY recourse would be awarding money damages.  This language is to appease the title companies by retroactively ratifying all that foreclosure fraud that has taken place over the last decade.  Once the bank takes your home, you’ll never get it back, no matter what.

The typical knee-jerk response is always that these homeowners are people who “got in over their head.”  But such banking propaganda ignores the fact that 1 in 2 houses in Florida have no equity.  So, according to bankers, half of Floridians are irresponsible homebuyers. Wall Street and greedy bankers created this horrible mess, but they want no part of shared sacrifice in cleaning it up.  Middle class America didn’t cause this problem, and Middle class America shouldn’t pay for it.

We Floridians suffer from foreclosure fatigue, and the FFA will send us all over the edge.

This article comes courtesy of Chip Parker, A Jacksonville Bankruptcy Attorney. About Chip Parker, Jacksonville Bankruptcy Attorney

Chip Parker is the managing partner of the fastest growing law firm in Northeast Florida (two years running), Parker & DuFresne, P.A., and according to The Jacksonville Business Journal, he is an Ultimate CEO. Mr. Parker represents businesses and consumers facing bankruptcy, and homeowners in foreclosure defense actions. He is the recent recipient of Jacksonville Area Legal Aid's Award for Outstanding Pro Bono Service. Mr. Parker is an active member of the National Association of Consumer Bankruptcy Attorneys and National Association of Consumer Advocates

View all of the Fannie Mae foreclosed homes in Palm Beach County

Click on the Fannie Mae image and you will be able to see all of the Fannie Mae foreclosures in Palm Beach County.

If you are interested in seeing any of the homes on their list…call us at 561-432-5202 quickly as there typically are limited time periods for viewing/offers.

Palm Beach County Inlet webcams...

I thought these were cool...just click on the image above...hope you enjoy them!

Thanks for stopping by our blog.

Credit Ratings Downgrade for Fannie and Freddie Now?

In what is shaping up to be an erratic trading day, the Dow has dropped below 3% in early trading after the latest news that Standard & Poor's downgraded the debt of mortgage finance giants Fannie Mae and Freddie Mac.

It was widely expected that S&P's downgrade of U.S. debt would roll downhill to other entities that are closely linked to the federal government.

Fannie and Freddie, which were taken over by the government in 2008, fuel home sales by purchasing mortgages from banks.

It's not clear what - if any - effect the downgrade will have on Fannie and Freddie's borrowing costs. And since Treasury yields remain at very low levels, a sharp spike in mortgage rates seems unlikely.

I’ll let you know what effect this is having on mortgage rates as soon as I know!

Thanks for reading,

Steve