More Relief for Unemployed Homeowners….but at what cost?

The FHA announced a change to its current policy on handling unemployed homeowners currently unable to make their monthly mortgage payments.  Up until the change in policy, unemployed homeowners were qualified for up to a four-month forbearance period.  Essentially four months of not paying their mortgage without incurring late fees, default status, and not having the missed payments reported to the credit bureau.  Along these same lines, President Obama has commented that other lenders, not just Fannie and Freddie, who are actively participating in the often criticized Making Home Affordable Program, to extend their three-month forbearance periods up to a full calendar year.

While this is absolutely a step in the right direction and provides much needed assistance for the hundreds of thousands of Americans unemployed and/or unable to make mortgage payments.  However, there is a question that must be asked…..AND THEN WHAT?  So what happens after the 12 month forbearance period? Where do those missed payments go? Surprise surprise….but those missed payments just get lumped in as principal…making the bank even richer….and making it even more difficult for the home owner to make future payments.

This poses an even more fundamental issue with all of these fixes and ideas being utilized to fix the epidemic…Do the banks really want to help?  I suppose they do….or at minimum….they have to appear to care.  Otherwise the “people” would not be happy.  I have been saying it all along….but if the banks are so willing to forbear payments….modify loans…and grant short sales…..why not simply offer principal reductions?

Imagine the banks adjusting the mortgage amount to 95% of the Fair Market Value…..

We would have a Country where people could make their payments….would have a tad of equity….and ultimately be free from the chains of debt, but what kind of place would that be?

To read more about this ….go to this article from Boston.com READ HERE

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Banks seek settlement….possible Principal reductions to be granted to Borrowers

Thanks to Bloomberg for Content:

U.S. banks, seeking to avoid $17 billion in court claims over faulty foreclosures, are discussing a settlement framework with state attorneys general that may let firms choose from a menu of options for helping borrowers, two people briefed on the talks said.

Under the proposal, Bank of America Corp. (BAC), Wells Fargo & Co. (WFC), JPMorgan Chase & Co. (JPM), Citigroup Inc. (C) and Ally Financial Inc. would pay penalties and pledge billions of dollars in relief to home buyers, one of the people said, asking not to be named because the talks are private. Firms may fulfill obligations to borrowers over time, choosing among options such as reducing loan principal, cutting fees or paying moving costs, the people said.

Stitching flexibility into settlements may help defuse opposition from a group of Republican attorneys general, who object to principal reductions sought by other states, one of the people said. The pace of talks is accelerating, with parties also nearing agreement on an industrywide overhaul of procedures for handling mortgages, that person said.

State and federal officials have been meeting with the largest U.S. loan servicers to resolve a nationwide probe into documentation lapses during home seizures. Earlier this week, attorneys general told the banks they will face an estimated $17 billion in claims if the inquiries result in civil lawsuits, according to a person with knowledge of the talks. The banks had previously offered to pay $5 billion.

Consent Decrees

Under the proposal, banks would pay the penalties to the states, which would determine how to use the funds, according to the people briefed on the talks. The separate relief funds, which lenders could decide how to provide, are expected to account for a majority of the companies’ costs, one of the people said.

The banks are reluctant to sign a deal with the states without a global settlement from federal agencies as well, said a person with direct knowledge of the banks’ position. U.S. lenders want the agreement to also cover current and future claims from Housing and Urban Development, which provides government insurance on mortgages through the Federal Housing Administration, this person said.

Federal Claims

The Department of Justice and HUD are suing Germany’s Deutsche Bank AG for more than $1 billion for allegedly lying “repeatedly” to obtain FHA insurance on risky loans. Federal prosecutors are suing under the False Claims Act, which allows the government to triple the amount of damages for fraudulent FHA claims. HUD General Counsel Helen Kanovsky said the U.S. may pursue similar cases against other banks.

“We go where the evidence takes us, and if it takes us to the larger players on Wall Street, so be it,” Kanovsky said in a May 3 interview.

New York Attorney General Eric Schneiderman is concerned about a settlement that provides “broad amnesty” to servicers, his spokesman Danny Kanner said in an earlier statement. Any agreement should preserve the ability of attorneys general to “follow the facts where they lead and not be precluded from conducting comprehensive investigations,” Lauren Passalacqua, a Schneiderman spokeswoman, said in April.

State Negotiations

State officials and banks are negotiating the liability releases and haven’t yet reached an agreement, one of the people said.

Dan Frahm, a spokesman for Charlotte, North Carolina-based Bank of America, and Sean Kevelighan, a spokesman for New York- based Citigroup, declined to comment. Vickee Adams of San Francisco-based Wells Fargo and Gina Proia of Detroit-based Ally also declined to comment. A representative of New York-based JPMorgan didn’t respond to a request for comment.

Agreements with states would follow consent decrees that the 14 largest mortgage servicers reached last month with federal regulators including the Federal Reserve, the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corp. Firms pledged to pay back homeowners for losses from foreclosures or loans that were mishandled.

Iowa Attorney General Thomas J. Miller, a Democrat who is leading the talks on behalf of the states, said at the time that the federal accords wouldn’t halt efforts to extract financial penalties and overhaul procedures for home seizures.

To contact the reporters on this story: Dakin Campbell in San Francisco at dcampbell27@bloomberg.net; David McLaughlin in New York at dmclaughlin9@bloomberg.net.

To contact the editors responsible for this story: David Scheer at dscheer@bloomberg.net; John Pickering at jpickering@bloomberg.net

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Flipping Good News!!

The Federal Housing Administration is suspending its anti-flipping rule for a second year, extending the waiver until the end of 2011.

http://www.boston.com/realestate/news/blogs/renow/2011/02/for_better_or_w.html

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Empty Promises…But Finally The Bank Feels Some Heat

This Is News Worthy….Bank Promised To Negotiate A Loan Modification If The Home Owner Stopped His Bankruptcy. Guess What Happened Once The Bankruptcy Was Stopped. Exactly!!!

While it is the Ninth Circuit’s Decision…Hopefully Other Circuit’s Follow Suit.

Read This Link..and Decide For Yourselves.

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Attorney Avi Liss…On Money Matters

http://www.dailymotion.com/video/xehotc_8-16-avi-liss-2_news

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A Wise Man Once Said…..

http://www.credit.com/news/credit-debt/2010-07-17/despite-making-wise-financial-decisions-most-homeowners-still-face-foreclosure.html

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Massachusetts Foreclosures Increased in 2010…More Stats!!

This is not really news…but it certainly reinforces what we have been reporting over the past calendar year.  The article attached, posted on Boston.com lays out some highlights…lowlights..and insights to the foreclosure epidemic.

http://www.boston.com/realestate/news/articles/2011/01/20/state_foreclosures_rise_steeply_in_2010/?p1=Well_RE_Article

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The Bank is foreclosing……but when?

First of all…and it’s much easier said than done, but do not feel shamed or badly. You find yourself in the same situation as many home owners throughout Massachusetts. The fact is….we are all victims of a bad economy…devalued housing market…and of course the standard challenges that life continuously throws at us. That said, the best thing you can do is be educated about the options you have and how to preserve them.
The good news….yes…there is good news….is that there are several options, that with the help of experienced lawyers, you can utilize to postpone any actions by the bank, either temporarily or permanently.
Banks throw the word foreclosure around far too freely. They do so, as it clearly strikes the nerve of many home owners…and rightfully so. No one wants not should have their home stripped from them. Banks must comply with several strict statutes in Massachusetts to in fact complete a foreclosure. It is a lengthy and detailed process….the key word being lengthy. Just because a bank tells you that they are proceeding with foreclosure…does not mean it is literally about to occur. Rather, it just means that they have or intend to begin the process. Luckily for you….you have time.
Unless you have been served with a notice form the Massachusetts Land Court…and provided a date for an actual foreclosure auction…just remember that the bank is most likely in the preliminary stages of the foreclosure. Most importantly….this means it is time for you to speak with someone who can show you your options.
Those options are as follows:
Ch. 7 Bankruptcy – If your house is worth less than you owe….or you just do not have the financial ability to keep the home..you can file for protection under the bankruptcy code. This particular section of the code, would avoid the need for a foreclosure….rather you would be able to eliminate the debt from the home and surrender it back…on your own terms.
Ch. 13 Bankruptcy – You can keep your house….This section of the code allows you a period of time to pay back the amount you are behind…penalty free. In the simplest of terms….it is a repayment plan for home owners who found themselves behind on payments. These are very common and a great way for home owners to keep their homes and to actually make their lives easier
Loan Modification – Work with the bank to see if you qualify for a modification of your mortgage. You can lower your interest rate….extend the length of time on the mortgage…You can also attempt the modification within the bankruptcy.
Short Sale – If you do not qualify for a Bankruptcy…and want to remain in the property for a while longer….a short sale is a very good option. Essentially, you would sell your home for less than is due to the bank….and by utilizing our experienced lawyers you will not have any liability for the deficiency…. More simply, you will not owe the bank the difference of what you sell the house for and what you sold it for.

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Law & Propaganda: Podcast #3

This week we discuss bankruptcy exceptions. Also clown cars.

ENJOY THE SHOW!

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