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Those who designed the foreclosure crisis is now helping to solve the problem of huge numbers of foreclosed houses Fannie and Freddie are sitting on. The top brass from some of the mega companies that brought about the foreclosures crisis are now submitting proposals to the FHFA about what can be done with the millions of residences that Fannie Mae and Freddie Mac are sitting on and how these could be turned into rentals.

Daniel Mudd of Fortress (CEO) decided to take leave, a strategic move, after facing a lawsuit on 16th December by SEC questioning his part while he was CEO of Fannie Mae from 2005 till 2008. Fannie and Freddie have been helped by the Treasury to tune of $170 billion after being taken over in 2008 by the federal government.

Mudd and the former CEO of Freddie Mac, Richard Syron have been charged by SEC of making understatements regarding the sub-prime loans that the firms had held amounting to billions. Mudd has replied that the investors as well as the government knew of “every piece of material data about loans held by Fannie Mae”. The lawyer of Syron, Tom Green said there “was no shortage of meaningful disclosures” on the part of Freddie Mac.

Fortress’ spokesperson Gordon Runte did not make any comments regarding the issue of submission of proposal by his firm. In a statement dated 16th December Fortress has said that the suit filed against Mudd is not related in any way to Fortress.

Greg Lippman of Deutsche Bank (trader) hosted a meeting, the first of its kind, of lawyers and investors who had crafted the contracts and the financial tools that were used while betting against the housing market. During the time of the crisis from 2007 till 2008 Lippman had assisted Deutsche Bank to counterbalance the losses it had incurred on mortgage related investments.

A spokesperson of Deutsche Bank, Renee Calabro did not make any comments. Lippman is now the chief-investment-officer with LibreMax Capital – hedge fund based in New York. It has not made any submissions to FHFA. FHFA cited five examples of the proposals that had been submitted. The details were not disclosed because of trade policies; the privacy of those who submitted the proposals also required to be honoured.

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The anti-foreclosure Occupy moment has taken a new turn – it has started to occupy foreclosed units. In Seattle the activists occupied a warehouse that had been boarded up and was scheduled to be demolished soon. The protestors announced their plans of setting up a community centre. A party was held to celebrate the opening of the building. The police stepped in and arrested sixteen persons to clear out the occupation.

Sergeant Sean Whit comb speaking on behalf of the police said trespassing on private property is the same as trespassing on the downtown park for which they were evicted. Whit comb said, “It’s no different than when people were trespassing (in the park). We went nights and days, letting people camp in the park. We relied on education and outreach, rather than enforcing the law to the letter”.

In Atlanta the Occupy activists were greatly aggressive in trying to break up auction of foreclosed houses. During the auction proceedings they blew sirens and whistles making communication difficult for those participating in the auction said Tim Franzen, a spokesperson of Occupy Atlanta. He said, “We don’t know how many homes we saved for one more month during the holiday season. It was kind of a Christmas gift to the people”.

At River sidein California, Art de los Santo together with Occupy supporters numbering thirty six, returned with his furniture to his previous house. He broke the lock and re-entered to start living in the housing having three bedrooms and three bathrooms. This was his last step to get JPMorgan Chase given due attention to his repeated applications for loan modification. He is hoping that by protesting the bank will sit up.

After foreclosure the house had remained vacant while Art de los Santo together with his large family comprising of his spouse and four children squeezed into a rented apartment in Orange County. He has also had to rent a storage space. Forty six year old Santo said the house is full of memories. The children used to cycle around the place. The neighbourhood was pleasant.

The spokesperson of JPMorgan Chase Tom Kelly, said he has not yet heard about the particular case of Santo sand therefore could not comment; however he did not fail to mention that it was a case of trespassing.

In New York the Occupy protestors announced plans of allowing a homeless family to set up home in a vacant foreclosed house. In Portlanda woman facing foreclosure, with the help of the protestors, pledged she would never leave her house until forced by the authorities.

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The next target of Occupy activists is the foreclosed houses. A campaign will be launched to stop families from being evicted and to protest against foreclosure related fraud. The “Big Day of Action” will kick off from 6th December. The focus will be on the foreclosure mayhem and the protest will highlight “fraudulent lending practices”, “corrupt securitization” and unlawful evictions by banks.

The organizers are hoping that this will give momentum to the movement as it shifts its actions indoors while bringing into limelight the injustices of the crisis.

The details have not been announced as yet but activists in cities numbering twenty will participate on the action day. Abby Clark one of the organizers of Occupy Our Homes said they are planning to disrupt the foreclosure auctions (“mic-check”) while simultaneously put families inside vacant units.

Max Berger, another organizer of Occupy Our Homes and also a member of Occupy Wall Street said, “This is a shift from protesting Wall Street fraud to taking action on behalf of people who were harmed by it. It brings the movement into the neighbourhoods and gives people a sense of what’s really at stake”.

A new research that is indicating that the foreclosure related crisis is hardly half over; 4 million houses are in some foreclosure stage. Meanwhile news is rolling in about unlawful and dubitable operations of the banks and lenders.

This action plan, like that of other Occupy actions, is focusing on specific questions relating to policy. The organization is being handled by experienced progressive groups affiliated to labour groups together with other friends of the movement

The website of Occupy Our Homes had been registered by a person who was formerly an official of SEIU. It has all the appearances of a smart campaign with videos showcasing stories of households who are threatened with foreclosure.

Visitors to the site are encouraged to sign pledging that until the mortgage industry did their part to assist the house owners and fixed the economy by reducing the principal to the present value of the property they (the visitors) would give support to the house owners by resisting these unlawful evictions.

There have been a number of groups under the umbrella of Take Back the Land taking related action for the last five years across USA said Max Rameau. He added that now with the ramping up of Occupy there is a good chance for the troubled borrowers. Not only will the banks be forced to stop evictions but also they will be compelled to make policy changes.

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In Oregon, the new House leader (Democrat) Tina Kotek said she is keen to see that the focus is on foreclosures and other small business ventures. She plans, in the future, to place these among her top priorities.

Speaking to the Associated Press she said, “Banks don’t want us touching those things, and we are going to have a conversation about that in February. Those two things, capital for business and people in foreclosure, are going to help the middle class”.

Kotek became the party leader when Republican Dave Hunt was ousted by the Democrats – it being a rare shake up in the middle of the term. For the first official business session since Kotek took over the reins, democratic legislators will return to Salem in order to conduct meetings. Committee meetings will be held to talk about suggested changes to the law of the state but no work on specific bills will be taken up as of yet.

The Democrats with Kotek had attempted to pass new bills that would mandate the banks to take care of foreclosed houses as well as slow down the foreclosure process for troubled homeowners, among other new regulations. But without support from the GOP, the bills languished.

The two parties are sharing power in the House after voting showed that 30 members had been elected from each side. The leaders of the parties came to an agreement that would require the members of each of the parties to sign off on any of the bills prior to voting.

Apart from foreclosure and other financial issues, Kotek has mentioned she is willing to hold talks with others in her party about focusing on priorities for a legislative session of 35 days that will kick off next February. She is hopeful that discussions on health insurance and the renovation of the Medicaid system will go smoothly. However, these discussions will take up much of the legislators’ time. They also need to make decisions about what direction the federal budget should take.

Forty four year old Kotek was elected in 2007 to the Legislature after having been engaged as a lobbyist pushing for reforms in the fields of social justice, education and social security net plans. She openly claims to be gay. She said, “I always try to put our most low-income families and kids first”.

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For decades Baltimore has been experience shrinkage of population and jobs. At the close of the 90’s decade the proportion of people to vacant properties was 1,000:22 as per survey findings of Broking Institution.

Today communities across America are battling with increasing abandoned building with increase in foreclosures. Vacant foreclosed houses in occupied neighbourhoods have become a chronic problem for Baltimore. Many houses are empty. The neighbours are experiencing serious problems because of this. No help is coming forth from the mortgage industry.

Professor Joe Schilling of Virginia Tech focuses on urban affairs and planning. He observed that in a weak market many houses are hanging in a state of “foreclosure limbo”. The owners have exited and the banks are undecided about taking back the unit at the auctions because it would mean inviting loss.

He said, “It seems there’s an increasing number of what I’d call bank walkaways. They are making an economic decision by not foreclosing on the property”.

In recent years the number of foreclosed houses has remained constant more or less around 16,000 units, despite foreclosures increasing said Michael Braverman, the deputy housing commissioner of Baltimore. But a house is not counted in the list for remedy until the city comes to the decision that it is not only empty but it is posing a danger to the locality and uninhabitable. It takes time for the structural problems to develop.

Thus the numbers of abandoned units are increasing. In 2009 the lenders initiated foreclosure proceeding against over 6,200 residences in Baltimore. Some of these houses have been sold but others are lying vacant either in a state of limbo or languishing in the inventory of the banks.

Abandonment becomes a challenging problem especially in the instances of row houses observed Dan Kildee of Center for Community Progress that focuses on the problem of abandoned units. He said, “The physical damage that can occur when you have shared walls is pretty obvious”.

One of the sufferers is a couple – Brian and Wendy Malaney living in Wilson Park Neighbourhood of Baltimore. Their problems surfaced when the house next to theirs was abandoned; water seeped in the mould set in because of the common walls.

Life became unhealthy for the couple and their two little daughters. The owner had sought bankruptcy and could not be contacted. Chase as the servicer started foreclosure proceedings but had the house inspected. Later it washed its hands off the matter as its lender asked them to withdraw the case. Now who is responsible for the travails of the Malaneys?

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In some of the regions foreclosures are snapped up fast but in others these are languishing. The houses that are bought are being converted into rentals because the demand for rentals is high following the foreclosure crisis. While value of houses is falling the rental rate is rising. Investing in rentals seems to be the more attractive option.

The Federal Government has asked for ideas regarding converting the foreclosed houses it is sitting on, into rentals. The administration itself has not come forward with any concrete proposal. The ideas coming forth can in general be divided into two categories.

In one group the investors or non-profit bodes will buy pools of thousands of units in bulk promising to rent them out for a certain time period. This frees the government from taking on the role of a landlord. It is being given preference by HUD – the agency that is burdened by foreclosures as loans with the backing of FHA default.

In the second group investors would be permitted to contract joint operations with Fannie Mae and Freddie Mac for investing in bulk purchases of foreclosed houses. A property management firm at the national level would handle the daily tasks of the landlord.

The investors together with the government agency would divide between themselves the expenses pertaining to repairs, taxes etc. The target would be to ultimately sell these. Fannie Mae has already taken steps along this line with a much smaller cluster of its apartment (multifamily) assets.

A moot question is why are not the investors being allowed to purchase these units and lease them out as rentals? Is it to the better interests of the taxpayers to allow Fannie and Freddie to repossess these homes, repair and sell them in the manner things have been going on during the past two years? Or will the government agencies limit their losses by involving private agencies?

If investors demand discounts then bulk selling would involve hefty losses. A joint venture on the other hand would expect the firms to enter a new zone of property management zone about which they do not have much experience. Moreover if the landlords fail to property maintain the houses the government would then be blamed. This had happened in the 90’s in the Inland Empire.

However the idea of converting foreclosures into rentals is gaining popularity with both the parties, private investors and economists.

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The White House is trying to prop up the failing real estate market, which has hardly showed any signs of recovery from the shock of the 2008 credit crisis. The Obama Administration is planning to rent, sell or dispose of foreclosed houses that are under the control of the government.

The regulator of Freddie Mac and Fannie Mae, the FHFA (Federal Housing Finance Agency), as well as the Treasury and Department of Housing and Urban Development (HUD), said that they were willing to cooperate with this move. All these agencies are trying to reduce the number of foreclosed houses as well as boost up prices through giving incentives for renting out or selling properties under the ownership of Federal Housing Administration, Fannie Mae and Freddie Mac.

The target is to either sell or rent out properties in clusters in the hope that it “may reduce taxpayer losses and meet the enterprises responsibility to bring stability and liquidity to housing markets” said Edwar DeMarco of FHFA (acting director).

From the very start of his tenure, Obama has been battling to put the housing market on its own two feet. Unable to tackle the rush of defaults, Fannie Mae and Freddie Mac were brought under the wing of the U.S. federal government. Since September 2008, both the agencies have survived on government aid. To remain solvent, the Treasury has given assistance to the tune of $170 billion.

With his reelection looming large, Obama has not been able to show much tangible results for his attempts. The government program, HAMP (Home Affordable Modification Program), has been of help to nearly 650,000 troubled homeowners; it is a far cry from the original target of the program to help 3 million to 4 million house owners.

Keith Hennessey, former director of National Economic Council, during the tenure of President George Bush said, “In the 2008 campaign they said the president would come in and fix the housing problem. We literally couldn’t see a way that policy could solve the problem. I think they’ve figured that out now”.

The latest announcement by the government shows that there has been a shift in government policies from focusing on keeping the house owners in their homes to concentrating on the future of the units whose owners were beyond help.

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Foreclosures are threatening in the shadows in Lee County – stuck in the courts; it may soon emerge in the market further upsetting the scenario. It is happening at a time when the demand for houses is picking up in the county –  sales are on and prices are up ticking. All these indicate signs of recovery in the health of the market.

But clouds are hanging over the sunshine. Many foreclosed houses are not officially on the shop shelves but are going towards that direction. This is known as the “shadow inventory”. Experts opine that this could cause prices to tumble again for many years; it will persist until the backlog is cleared.

The calculations about how many are actually in this category vary but about houses numbering from 5,000 to 7,000 have been taken back by the lenders who are doubtful about the merit of their cases.

These however could be resubmitted after the documentation review is completed. Another lot of 6,000 are moving through the courts. Local banks by themselves had in their portfolio non-performing real estate debts worth $35.9 million as on 31st March. It means the borrowers are not making their repayments on these loans.

There are thousands of people living in houses that have not been served a foreclosure notice although they are lagging behind in their mortgage payments on many months; their prospects of becoming current are faint. When these houses will enter the market what will be the effect is anybody’s guess.

The director of Southwest Florida Real Estate Investment Society Jeff Tumbarello is also a realtor with Steelbridge Realty of Fort Myers. He does not think that the surging wave would injure the market.

He said, “People think that going forward there’s going to be a monster dump. But institutions aren’t going to all do it at the same time”. Each of the lenders is facing a different situation as regards their necessity to sell of quickly and legal entanglements.

Tumbarello also added there is little proof that the lenders with properties taken back are withholding these to any big extent. He said by and large there are 500 units on the active list of houses owned by lenders on MLS (Multiple Listing Services) 700 more are pending. It seems this is what they own.

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Maryland foreclosures available for purchase number around 12,518, a figure less than their neighbors Pennsylvania and Virginia, but somewhat more than West Virginia and Delaware. The average price for these homes is $154,000.

Maryland has an unemployment rate of about 2% below the overall US rate as of late. The federal workforce represents a significant portion of the population surrounding Washington, DC, which creates a more stable employment picture there.

The overall price for foreclosed houses has shown improvement is some locations, including:

* The average price of Baltimore foreclosures increased by 1.47% during the last month. There are currently 1,642 foreclosed homes listed for sale at an average price of $119,900.

Several other cities or towns that have seen a decline – some substantial – in the settled priced of foreclosed homes over the last month:

* The average price of Silver Spring foreclosures fell by 10.81% during the last month. There are currently 453 foreclosed homes available to purchase at an average list price of $199,800.

* The average price of Bowie foreclosures fell by 26.01% during the last month. There are 422 foreclosed homes on the market at an average price of $229,000.

* The average price of Glen Burnie foreclosures fell by 13.91% during the last month. There are 171 foreclosed homes on the market currently at an average price of $155,100.

* The average price of Gwynn Oak foreclosures fell by 19.29% during the last month. There are currently 120 foreclosed homes listed for sale on the market at an average price of $198,500.

* The average price of Laurel foreclosures fell by 20.63% during the last month. There are 302 foreclosed homes currently on the market at an average price of $203,400.

Maryland is a state rich in history and attractions. The Star Spangled Banner was written from a ship in Baltimore Harbor as the British attacked Baltimore in September 1814. The bloodiest day in the American Civil War occurred in Sharpsburg, Maryland, when over 23,000 casualties fell at the Battle of Antietam.

Although the outcome of the battle was inconclusive, it allowed Lincoln to issue the Emancipation proclamation five days later, freeing the slaves throughout America and the Confederacy.

Maryland also has outstanding beaches centered at Ocean City and the Chesapeake Bay, a center for sailing, fishing, crabbing and duck/goose hunting. With major league baseball, football, hockey and basketball in Baltimore and neighboring DC, there is a wide variety of sporting events. Maryland foreclosures are readily available and priced to sell.

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Foreclosures are playing havoc with price of houses whether foreclosed or not withits domino effect. The bad apples are rotting all the other ones in the housing basket.Mansions are not being spared.

67 years old Larry Deans “Dean Gardens” standing on 32,000 square feet in Atlanta is not just a mansion – it’s a mega mansion. It took four years and $25 million to be built.It has been in the market for 17 years with an asking price of $40 million. It has recently been sold to entertainment king Tyler Perry for $7.6 million who is planning to demolish the building.

Dean Gardens is bigger than the replica of White House built in Atlanta. Its interior presents a combination of various styles – Egyptian, Italian Renaissance and modern Las Vegas. Those who have attended charity events nurse various opinion – some are amused while other are horrified.

It was mocked by Joan Rivers in a television slot “How’d you get so rich” focusing on a bed encircled by flower frame of pink and green. She gasped and said that it resembled a float in a parade. Bloggers have been highly critical of the self-indulgence and waste it had come to symbolize.

The house had been crafted lovingly by Larry Dean and his first wife Lydia who wanted to bring up their four kids in dynastic style. But soon after the couple divorced causing one person to write, “After seeing the inside of this house, it’s no wonder at all that they divorced. I can’t imagine anyone being happy living in that monstrosity. Perhaps they should turn it into a prison”.

Another wrote that it was an embarrassment to the people of Atlanta. Couple of years previously Atlanta was said to be her first city of America – perhaps Dean Gardens was the feather in the cap.

Broker Hank Miller of Georgia Realty opined that the real worth of the property is the land on which it stands – it being valued more than the structure. That is why the new owner would demolish the building.

Atlanta Fine Homes Sotheby’s International Realty sold the house after listing it in 2009. Its co-founder Jenny Pruitt said, “The luxury-home market has been hit very hard, and this was very special property”. Till now the selling price of this mansion has been the highest in Atlanta but much less than $11 million touched in 2009.

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