Learning Center » Foreclosure

Llamas and Their Adopted Mother Facing Foreclosure

Julie Parker — Tue, 20 Mar 2012 09:00:22 +0000

Photo by Digitalart

The bond between Cheryl Rosimos, a resident of Oakdale, and her pet llamas is so strong that she made them her bridesmaids at her outdoor wedding. Today, she is desperately trying to keep herself and her brood under one roof.

The llamas play catch-me-if-you-can with Rosimos in the fenced-in backyard behind her 1,500 square feet house on East Lake Road, where she also lives with her husband Gary Koczera. She has plans to use these animals for pet therapy in nursing homes and other similar facilities in the local area. She has found the llamas to be quite intelligent and curious about everything.

But Rosimos is afraid that her all-male brood of six llamas could soon be split up if foreclosure becomes a reality. She can no longer afford her monthly mortgage of $2,200 for her ranch-style house. All she wants right now is not to have to separate the brood of llamas; they have been together since birth.

For three years, Rosimos has been sporadically employed; she recently found a steady job working in a legal office. She is now trying to negotiate with Chase about restructuring her mortgage. She has been having trouble with her payments since 2008. Till now, her efforts have not met with success.

She has also sought help from a firm that helps in mortgage modification and tried to apply for aid from HAMP scheme but, so far, relief has remained a distant dream. She previously sent a letter to Obama, contacted the offices of Rep. Joe Courtney and Senator Richard Blumenthal, talked with the Office of Consumer Counsel of the state; all of whom did not respond.

Ten times Chase has told her that they had lost her papers; Chase did not respond to queries wanting to know the bank’s version of the story. After Chase told her this, Rosimos bemoaned the fact that she was extremely nervous and wanted someone to help her get an affordable mortgage.

At one stage, it seemed that the modification had been approved and there was a hope that the monthly payment would go down to $1,500 per month. But later she was notified by the bank, sans any explanation, that the modification would increase her monthly payment to $2,400 – it being $500 more than what she was charged hitherto. It nearly gave her a heart attack.

Desperate she made the mistake of inking a contract that was not of much significant relief.

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What Will States do With Foreclosure Settlement Funds?

Julie Parker — Wed, 07 Mar 2012 09:00:49 +0000

Photo by AMagill

Tom Kelly the spokesperson of Attorney Greg Abbott of Texas said that the state Legislature would decide about how best to spend the $141 million from $428 million that the state would get from the foreclosure settlement. Staff attorney Molly Rogers of Texas Rio Grande Legal Aid based in Austin said, “The best use of that money would be to restructure loans. A good chunk of this money should go to appropriate organizations who can help borrowers”.

The Attorney General of New York Eric Schneiderman said in The Rachel Maddow Show of MSNBC that the bulk of the settlement funds allotted to the state would be “going for legal services for housing counseling, so no New Yorker is ever wrongfully evicted because they don’t have a lawyer”.

The plans of the states could alter with changes in financial conditions said Arturo Perez of National Conference of State Legislatures (director – fiscal affairs programme). He said that the states were rolling in money in 1998 when they reached a settlement with cigarette firms that resulted in them getting $206 billion through 25 years.

Some of the states are mulling over using the money for health-care and programmes related to anti-smoking. They had “started looking around and put their eyes on the tobacco settlement money, when the economy became soft in 2001”.

The onset of the recession that officially lasted for 18 months decimated the budgets of the states. The shortfall in budgets from 2009 till 2012 added up to over $530 billion across America as per the findings of Center for Budget and Policy Priorities. Since then recovery has started but the pace is too slow. A report dated 1st December by Conference of Legislatures noted that “the effects of the Great Recession continue to linger”.

Speaking over a telephonic interview Perez said, “State revenues fell like a bowling ball and they have bounced back, much like a bowling ball”. The states and municipalities hit by deficits coupled with foreclosures have to catch up of many decaying years.

Ohio will get $97 million from the national settlement. It will allot $75 million for demolishing vacant and dilapidated houses that are pulling down the values of the localities said Attorney General Mike De Wine of Ohio. Nearly 100,000 houses require to be razed to the ground. A programme will be started to distribute funds to the cities and the land banks for this purpose.

Jim Rokak is formerly the treasurer of Cuyahoga County who is charge of Thriving Communities Institute of Cleveland said that this will benefit those not in foreclosure but whose property values are tumbling because of the scenario.

Many States are Using Funds from Pan American Foreclosure

Julie Parker — Tue, 06 Mar 2012 09:00:31 +0000

Photo by AMagill

The ink was still wet on the pan American foreclosure settlement when word got around that many states were using the funds to bridge gaps in their budgets. Democratic Governor of Missouri Jay Nixon claimed a big slice of the money due to his state, to prevent mega cuts in expenses for universities and colleges. The Republican legislature heads have already supported the plan.

There are other politicians eyeing this largess for using it for purposes not related to the foreclosure crisis. The $25 billion deal is like a jar of water in a desert that has come in most timely when the states are facing yawning budget gaps running into multimillion dollars.

The bulk of the dollars are meant to go directly to the affected house owners but apart from that the 49 state administrations will get about $2.7 billion; the states are free to use it as they want to.

Some of the states are promising to use it for matters related to the housing crisis. Michiganhas said it will focus on helping homeless children who have been victims of the crisis. But many states are already thinking of diverting some portion of the dollars to narrowing their budget deficits; it is likely that more states will be thinking along these lines.

Consumer advocates are comparing it with 1998 when the tobacco settlement was reached. The states flushed with bonanza funds spent the money on issues that were not even remotely connected with anti-smoking measures.

The states had promised that with $206 billion that would flow in for many decades would be used to improve public health; but in practice this was not done. State spending on anti-smoking measures is lowest since 1999. Mari Cocco of Campaign for Tobacco-Free Kids said that the lesson learnt is now more vigilance is required to avoid a repeat.

Joan Bray (Democrat) a former senator and present chairperson of Consumes Council of Missouri said, “We shouldn’t be in the position of taking money that is intended to help consumers and their mortgage tribulations and putting that to another purpose”.

What will states do next month when the money flow stops? The states are more worried about today than tomorrow. The money will start flowing soon after a federal judge gives the final nod. The timing couldn’t be better as the state legislators would be blueprinting their budgets for the coming fiscal year.

Who is Going to Shoulder the Losses of the Foreclosure Crisis?

Julie Parker — Wed, 29 Feb 2012 11:57:05 +0000

Photo by Nikcname

The Obama government has plans of allowing refinancing of underwater homeowners who have gone underwater but are current on their mortgage dues.

Lowering the rate of interest for mortgage will hit the pockets of Fannie, Freddie and FHA – government supported agencies. Investors and pension funds too would see their earnings go down. Anthony Sanders of George Mason University (formerly head of Deutsche Bank at New York dealing with research on securities backed by mortgages) said “So we’ll bail out people who bought a house they can’t afford but stayed with it.

They are not in jeopardy, so why are we giving them a big Christmas gift”. Why should savers be punished?

The government argues that by reducing the monthly payment amount the risk of default is also reduced. From this ultimately the taxpayers will benefit. But what are the real causes of default? These are unemployment, staggering medical expenses, divorce etc. The reducing of monthly payments will not be of help in these cases said Sanders.

Professor Emeritus Ken Scott of Stanford University (law and business) said that the bulk of delinquencies came from the sub-prime mortgages that were contracted during 2004-2007. These loans were granted to those with poor credit.

Attempts at restructuring these loans, actually means giving “gifts to the borrower of some amount of money on the thought that, having forgiven some chunk of the debt, they’ll be able to pay what’s left”. But despite this the default rate on these types of modifications has gone up to 40% – a high proportion.

Who is going to shoulder the losses of the foreclosure crisis? The sub-prime borrowers who made negligible down payments and have lived without paying anything even as rent during the long period of foreclosure have really lost very little.

But other foreclosing lenders have to sell off their properties suffering losses; on top of this they have to bear the expenses pertaining to taxes, eviction, and maintenance for many months. Scott observed, “Who bears that loss? If the loss is still on the books of the lender, the lender. If it’s on the books of Fannie Mae and Freddie Mac, the taxpayer, because we are now underwriting all their losses”.

Who suffers the loss depends on who is holding the bag last. The loss is the homeowners if he or she continues to pay the mortgage. It’s the bank’s loss if it takes back the house from the defaulter. It could be the loss of the investor who has bought the securities backed by mortgages. The answer is pretty clear cut and straight.

Bill that Will Hasten Foreclosure Process in Florida is in the Eye of a Storm

Julie Parker — Tue, 28 Feb 2012 09:00:34 +0000

Photo by Kenteegardin

A bill winding through will soon become law in Florida. It will hasten the foreclosure process but opponents contend it will trample on property rights, give little chance to homeowners to plead their cause – all in the name of clearing the stockpile of pending foreclosure cases.

The supporters of the bill point to 368,000 foreclosure cases choking the courts. The sponsor of the bill is Senator Jack Latvala (Republican) and the cosponsor of the bill is Rep. Greg Stube (Republican).

Home Owners Associations would now be able to expedite their cases. More effort through private servers would now be able to spot the abandoned houses and judges would have more elbow room to dismiss cases with inadequate defense quickly.

The supporters of the bill pointed to the clause about locating vacant units being of great importance to the neighbourhood as these have become drug producing farms. But the opponents say that the bill reaches out to issues beyond that of vacant houses.

Senator Oscar Braynon (Democrat) said that homeowners trying to defend their homes would find things more difficult. Braynon said, “The reason the foreclosure process is long is it should be a long process to take someone’s property. That’s a constitutional right”.

One of the homeowners, Ronald Gillis, residing in Port Charlotte has called the legislators supporting the bill a “disgrace”. Thrasher rebuked Gallis for calling the behaviour of legislators pushing through with rapid foreclosures as disgraceful.

But Gillis refused to back track. Gillis, aged 47, has been struggling to be current with his housing payments when his business declined during the recession. He has been battling foreclosure for the last four years.

He alleged that the papers submitted by the bank were forged and added that there was nothing in the new law being proposed to address the comprehensive charges about fraud in foreclosure processing. Gillis said, “You have an obligation to represent the people and not the banks”.

Recently activists numbering hundreds converged on Tallahassee to protest against wrong foreclosure activities of banks. Some of them were dealing with dubious documentation and others were part of rights groups representing homeowner; these have popped up during the past couple of years keeping pace with the spiking of foreclosure rates in Florida– the highest in the country.

Most of the law makers however were concentrating on the time taken by a foreclosure case to run its course; it is 676 days in Florida as compared with the national figure of 318 days.

Cases Against Banks Regarding Wrong Foreclosures

Julie Parker — Mon, 27 Feb 2012 11:42:39 +0000

Photo by Nick Bastian Tempe

The Supreme Court of Massachusetts is about to rule within this month on one case pertaining to foreclosure that could result in claims surging from the house owners who are keen on having the seizure of their properties overruled.

The judges are mulling over upholding the ruling of lower court that returned back a house in Boston to Henrietta Eaton after it was argued by Sam Levine, aged 25, of Harvard Law School, before the appellate court that is the oldest in the nation, that the servicer of the loan had made mistakes while foreclosing. It did not have the promissory note that proved she was obligated to clear the mortgage.

If the ruling favoured Eaton it would indicate how the recent settlement reached on 9th May with the banks, still exposed them to liabilities linked with repossessions of houses. It would also underline the challenge for overhauling the foreclosure system. In a recent study the Chairman of the Federal Reserve Ben Bernanke had said that it was this that was the bane stopping the recovery of the real estate market.

The case of Eaton versus Fannie Mae (Federal National Mortgage Association) revolves round two papers that the borrowers ink while availing of a housing loan. The first one is the mortgage that established the right to take over a property.

The second is a promissory note that generates an obligation to repay the dues. While at the time of foreclosing the servicer held the mortgage it did not possess the promissory note. On document sans the other is referred to as naked mortgage.

Fannie Mae and Freddie Mac, government controlled entities, generally separate these two papers when making packages of the home loans to form securities that are sold to the investors. Almost all the bonds backed by mortgages amounting to $6 trillion have been sold during the previous three years.

Lawyer Richard Vetstein of Framingham, dealing with real estate said, “The banks will have to find ways to reunify them and establish the same party holds both the note and the mortgage. It’s going to open up foreclosures to challenges all over the place”.

There are indications from the Supreme Judicial Court of Massachusetts that the ruling could go in favour of the house owners. The court has asked both the sides to submit briefs giving arguments if such a ruling should be applied to lending in future or retroactively.

Who Will Be Eligible for Benefit from the National Foreclosure Settlement?

Julie Parker — Fri, 24 Feb 2012 09:00:08 +0000

Photo by Nikcname

The settlement reached at on 9th February between the five mega mortgage servicers is to say the least – complex. There is no doubt about one thing – it will be months before individual house owners come to know whether they qualify for benefits or not and if so what they will have to do.

To address this problem a website has been launched nationalmortgagesettlement.com. From it some basic information can be known – especially the time period for the implementation of this settlement.

But it will disappoint those looking for immediate details. The website notes, “Because of the complexity of the mortgage market and this agreement, which will be performed over a three-year period, borrowers will not immediately know if they are eligible for relief”.

One thing however is pointed out on this site that troubled house owners from those states that did not join in the settlement would not be qualified for any direct relief. It means luck will not favour borrowers from Oklahoma.

Another point is that those whose mortgages are held by either Fannie Mae or Freddie Mac will not benefit from this settlement. Borrowers who want to find out if they fall under this latter category will have to check on the Internet and browse through the sites of Fannie Mae and Freddie Mac. What will happen to other borrowers?

For the following six or maybe nine months the banks involved (Ally, Bank of America, J.P. Morgan Chase, Citi and Wells Fargo) will try and sort out this matter of eligibility and then contact those who are qualified with related details. The borrower is free to contact the servicer immediately but it may not prove fruitful because nobody knows the details as yet.

The settlement focuses on those house owners who are underwater – owes more than the worth of their house. For those homeowners who are lagging behind and may default the help could be in the form of reduction of principal due or other types of modifications. Those who are current on their loans would get the chance to refinance and contract new terms at present low interest rates; the mortgage rates prevailing at present have never been so low.

Those who saw their houses swallowed up by foreclosure from 1st January 2008 till 31st December 2011 will get cash that will be most probably in the vicinity of $2,000. Forms will be sent through the Internet giving instructions. Those unemployed will get special attention.

Zuccotti Park Continues to Be the Focus of Anti-Foreclosure Activists OWS

Julie Parker — Thu, 26 Jan 2012 09:00:44 +0000

Photo by Renjith Krishnan

Zuccotti Park in New York continues to be the focus of anti-foreclosure activists OWS. They are streaming in and out but not permitted to stay overnight. They have shifted to indoor spaces and even camping in churches to continue with their movement.

Twenty five year old Daniel Abel is an activist who spends his nights at West Park Church. He said that role of Zuccotti Park was changing – it has become a meeting point. He explained, “If we slept here and fought the cops every night, it wouldn’t be effective”.

Recently one night all the lights were off at United Methodist in Brooklyn before the clock struck ten. The floor provided space for many to curl up while others chose the pews. Those who were awake kept far back and carried on their conversations in whispers.

Another activist, Andrew Dittner aged thirty six, said that the church environment makes the people respectful. He is a graduate from Boston.

Committees have been set up by the activists to see to multiple tasks like cleaning, housing, safety etc. The pastors of the churches expect the activists to oversee security, medical assistance and cleaning up operations. The church authorities have stipulated they must go to sleep early and exit in the mornings.

At the West Park Church and Park Slope United Methodist Church the activists of OWS pay for costs of utilities. From the donations they collected last autumn they have as balance $300,000.

Life in the church is not without challenges. There have been scuffles about who should stay and who should not. The committee on housing has fixed up for the protestors a hot line for registering their names for residing in the churches. About 150 are allowed. Each evening when they roll in their names are checked on a list.

Despite this, vagabonds and criminals have sneaked in together with the homeless.

One of the activists, Tonya Iketubosin was arrested for rape. He was released on bail last November. He posed a problem for the activists when he signed up for staying at St. Paul and St. Andrew churches. When the others recognized him, a meeting was held to decide whether he would be allowed in or not. The housing issues were being handled by Jeffrey Brewer. Ultimately they allowed him to stay on that night but the security kept an eye on him.

The churches that have opened their doors to the activists said that shelter would be provided all through winter. The pastor of West Park, Brashear said the movement had helped many individuals to battle foreclosure.

Strategic Defaults and Foreclosure

Julie Parker — Tue, 24 Jan 2012 09:00:30 +0000

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The credit success of RMBS (Residential Mortgage Backed Securities) in America is facing multiple challenges in the current year. The biggest danger is from strategic defaults as per the findings of Moody’s Investors Service.

The general view is that in 2012 the waters will not be turbulent but calm. Moody’s study shows that stability signs are showing in the performances of outstanding loan pools of the residential housing sector. This means that the loss calculations from RMBS will remain unchanged.

Debash Chatterjee the managing director of an associate of Moody’s said, “Although Delays in loan liquidation timelines and an increase in distressed sales will continue to dampen housing prices and limit recovering on delinquent loans, they will not have a material impact on RMBS pools”.

Due to modification of loans, the delinquency among the loan pools has not only remained flat but in some instances these are also dropping. The rates of re-default on loans that have been modified have also dropped thanks to reduction of payments in the modifications being made bigger.

But strategic defaults where the borrower intentionally walks away from the house and foreclosure are posing risk causing the possibility of property prices to tumble again in 2012.

The agency predicts that the risk is coming from the big sector of mortgages where over half the house owners have gone underwater – the value of the house being less than the loan due amount. Till now they have been regular in making payments on their housing mortgages but since the latter part of 2010 the negative equity among the big borrowers have “risen significantly”.

The sub-prime sector however is facing the least risk of deterioration in this current year because the weaker borrowers have already been weeded out. The risk clouds hover over Alt-A and option-ARM loans but not as much as in the jumbo segment; of the two option-ARM is posing greater risk.

William Fricke of Moody’s (vice president cum senior credit officer) explained that modifications and forgiveness of principal are the two key factors that can stop strategic defaults. But he apprehends that servicers will be reluctant to take recourse to this because GSE does not allow and that many RMBS too carry clauses putting brakes on this practice.

The methods of servicers are changing – they are becoming more easily accessible to the borrowers through single point of contact. The issuance of RMBS will be small because of GSE dominance and uncertainty about what moves the regulators will take.

New Laws Bring Down Foreclosures by 53% in Hawaii State

Julie Parker — Mon, 23 Jan 2012 10:45:22 +0000

Photo by Smlp.co.uk

Foreclosure numbers in Hawaii have tumbled by 53% since the time the Legislature initiated sweeping changes in mortgage laws in 2011.

Hawaii ranked 11th as regards foreclosure rate and this prompted legislators to set up Mortgage Foreclosure Task Force to review all the facets pertaining to both judicial as well as non-judicial foreclosure processing in Hawaii State.

In 2011 the task force helped in the drafting of the laws that gives wide protection to the troubled house owners threatened with foreclosures because of dubitable operations that were unfair.

Jeff Gilbreath, one of the members of the task force said that already an impact is visible – thanks to the passage of the law. Gilbreath speaking before House as well as Senate committees committed to consumer protection recently referring to the report said that it “showed a 53% decrease in foreclosures in the state of Hawaii that I think we can attribute to Act 48”.

In 2012 the task force is scheduled to see to further analysis of rules and regulations pertaining to foreclosure so as to suggest betterment. The aim is to make the law understandable and equally applicable to all the stakeholders involved in the process of foreclosure.

Everett Kaneshige the chairperson of the panel and the deputy director of the Department of Commerce and Consumer Affairs said that the members of the task force had divided into groups for working purposes to comb through the new Act “line by line” focusing on the issues related to particular groups and finding solutions to issues relating to foreclosures that are specific to condo and the homeowner associations.

The legislators will mull over the recommendations of the task force when they take up legislation this session relating to foreclosure. The concerns continue about increasing the protective umbrella to shield the house owners from the bite of foreclosures.

Senator Rosalyn Baker said related legislation would be introduced in the next session. She wanted to know what else could be undertaken to put brakes on highly focused fraudulent advertising that target those house owners who are desperately trying not to lose their houses.

They are so anguished that they fall for these advertisements and court risk. She is keen on introducing more measures to stop these dishonest practices and “really shine a light on these folks”.