06 Dec 11 GMAC and Other Lenders Fighting the State of Massachusetts Over
Last week, the State of Massachusetts announced they were suing 5 major banks over mortgage fraud and deceptive lending practices that included foreclosure procedures. On Friday, GMAC Mortgage announced they effective immdeately that it will halt their loan origination in Massachusetts. Massachusetts Attorney General Martha Coakley said in a article that GMAC has to follow the law before foreclosing on consumers in order to do business in the state. “With today’s action, it appears GMAC has acknowledged it has a problem following the foreclosure laws and being held accountable for doing so.”
A spokesman for GMAC said they would not be buying new mortgages written by Massachusetts lenders because of the lawsuit. But Coakley wanted to preserve the state’s right to pursue two additional kinds of foreclosure related claims particular to Massachusetts an arrangement that home loan lenders did not appreciate. That breakdown led the attorney general to initiate her own lawsuit last week.
GMAC Mortgage has plenty of company as a defendant in the case. Lending giants Bank of America Corp., Wells Fargo & Co., Citigroup Inc., and JPMorgan Chase & Co. were all named for allegedly committing fraud and failure to reduce mortgage payments for some homeowners. The lenders all said they would fight the allegations in court.
Now GMAC Mortgage says it’s dropping its business with local brokers and smaller lenders. In a statement last week, the company said ‘‘recent developments’’ had ‘‘led mortgage lending in Massachusetts to no longer be viable.’’ That sounds like a dramatic reaction to the attorney general’s lawsuit. GMAC Mortgage certainly suggested legal costs were an economic tipping point that doomed the company’s business in Massachusetts.
But GMAC Mortgage is scaling back it’s so-called correspondent mortgage business all around the country. Ally Financial, reporting quarterly financial news last month, said it was losing hundreds of millions of dollars in the mortgage business. One response: reduce correspondent banking, which accounts for 8 % of Ally’s mortgage business. GMAC Mortgage is a relatively small presence in Massachusetts, too. But I’ve heard from smaller local lenders who depend on GMAC who now wonder how its departure might limit their access to credit. Read the original article > Lenders Should Not Blame Martha Coakley
08 Nov 11 Home Loan Delinquencies Rise
With mortgage lenders continuing to offer loan modifications and mortgage relief, many industry executives were taken back by the rise in delinquencies. The new refinance program, like the expanded Home Affordable Refinance and the Emergency Homeowners Loan Program, there should be enough options for struggling homeowners. The bad credit mortgage programs have narrowed with FHA new minimum credit score criteria, so this may have played a role in the increased delinquencies.
The rate at which mortgage holders were late with their payments by 60 days or more spiked in the last quarter. According to TransUnion, the delinquency rate increased in the June to September period for the first time since the last three months of 2009. TransUnion said 5.88% of homeowners missed two or more payments, an early sign of possible foreclosure. That was up from 5.82% in the 2nd quarter.
The increase surprised TransUnion researchers, who had expected late payments, or delinquencies, to fall for the quarter. “It’s much different than we’ve been talking about the last few quarters,” said Tim Martin, group vice president of U.S. Housing in TransUnion’s financial services business unit.
The problems were widespread. Between the second and third quarters, all but 10 states and the District of Columbia saw delinquency rates increase. TransUnion’s data is culled from 27 million credit reports, about 10% of U.S. consumers who actively use some form of credit. Martin could not pinpoint one particular reason for the jump. Normally, for instance, housing prices and unemployment have a big influence on delinquency. “Those are both still important, but neither has noticeably deteriorated,” he said. In fact, unemployment was steady during the summer and the Standard & Poor’s and Case-Shiller index showed small improvements in housing prices in most major cities during July and August.
Tags: Home Affordable Refinance
08 Nov 11 Home Affordable Refinance Revived
After a year of talking about the U.S. government stepping in again to help revive the housing sector, the HARP mortgage breathed new life as the Obama Administration rolled out there plane to expand the Home Affordable Refinance Program.
When the HARP mortgage program was initially rolled out, it was very difficult to find a lender who offered this government refinance plan for liens owned by Freddie Mac or Fannie Mae. Most lenders were not willing to take a risk lending to an upside down borrower that had a mortgage greater than their property’s value.
According to Nationwide, the new HARP refinance has been revised with no loan to value restrictions. That means no matter how underwater homeowners are, they have a new opportunity to refinance if they meet the HARP criteria. There are specific program requirements, so make sure you verify with your loan officer the qualification criteria.
Last week, the federal government announced the HARP refinance, implementing changes that would “allow many more struggling borrowers to refinance their mortgages at today’s ultra-low rates, reducing monthly payments for some homeowners and potentially providing a modest boost to the economy.” Read the original article online > HARP Mortgage Helps Homeowners Refinance.
13 Sep 11 Is Obama Missing the Mark with the Mortgage Mess?
Once again the Obama Administration suggests that the mortgage interest deduction should be on the table to help offset the growing national debt. Most executives in the mortgage and real estate industry believe President Obama needs to focus more on helping the housing sector rebound. There has been a lot of chatter about the President expanding the government sponsored refinance mortgage program, HARP (Home Affordable Refinance Program).
In what was arguably his most important address to Congress, President Obama detailed “The American Jobs Act” on Thursday — a $447 billion package that includes a series of measures to boost job growth, including tax cuts, infrastructure spending, expanded free trade agreements, easing of regulations, and measures “to help more people refinance their mortgages at interest rates that are now near 4%.”
The Federal Housing Finance Agency’s massive lawsuits against Bank of America, JPMorgan Chase (JPM), Citigroup (C) and twelve other large mortgage lenders, coming on the heels of various investor lawsuits against the large banks, do nothing to inspire the lenders into greasing the wheels of credit to get the economy moving again.
The FHFA’s lawsuits against many of the same banks that were bailed out by the government in 2008 through the Troubled Assets Relief Program, or TARP, perfectly illustrate the president’s lack of a coordinated approach to tackling the home loan financing mess.
Yesterday, Edwin DeMarco said in a statement yesterday, “The final outcome of this review remains uncertain but FHFA believes this undertaking is worthwhile and consistent with our conservator responsibilities.”
What was missing, though, was any mention of a settlement for the onslaught of regulatory orders and fines, government lawsuits and investor lawsuits faced by the nation’s largest banks. For the nation’s largest lender, Bank of America (BAC), the total potential losses from mortgage putback demands from investors and even from the government, are still impossible to gauge. Read the rest of the Nuwire Investor article.
02 Sep 11 US Government Sues Banks Over Failing Home Mortgages
The U.S. government announced their plans to sue the country’s biggest banks, along with a few other financial institutions for violating federal and state laws in the sale of mortgage securities.
Among the 17 institutions targeted by the lawsuits were Bank of America Corp., Citigroup Inc., JP Morgan Chase & Co., Goldman Sachs. Securities of home mortgages were risky investments whose collapse after the real-estate bust helped fuel the financial crisis that erupted in late 2008. The lawsuits were filed Friday by the Federal Housing Finance Agency, which oversees mortgage buyers Fannie Mae and Freddie Mac.
14 Jun 11 BofA Struggle with Countrywide Mortgages
Bank of America continues to have struggle with the bad credit loans and legal woes associated with Countrywide. The worst acquisition ever made by Bank of America continues to hurt the bank’s chances of a full recovery. The remnants of the Countrywide deal are still being felt as Sanford C. Bernstein analysts noted that BofA could face another $27 billion of housing losses between now and 2013. That’s on top of the $46 billion the bank has put up so far.
U.S. regulators and state attorneys general have been probing banks’ mortgage business one just about every front. Some are looking at the way banks packaged and sold securities that were backed by home mortgage loans, others are looking at how defaulting homeowners were denied loan modifications while others look at the way homeowners were forced out of the their homes improperly by so-called robo-signers. The attorneys general of New York and California have both announced investigations into banks mortgage issues even though the 50 state’s attorneys general were already in the midst of a group investigation. Read the rest of the article at the Forbes Blog.
09 Jun 11 2012 FHA Loan Limits Declining
Many mortgage professionals have voiced their concerns in regards to Congress lowering the 2012 FHA loan limits. Many homeowners in high cost regions will be unable refinance with FHA. The pending change in federal loan limits will have a much larger impact on FHA home loans than on those purchased or securitized by either Fannie Mae or Freddie Mac. Unless Congress says otherwise, the shift will take place on October 1st.
According to a recent article in the National Mortgage News, “three times as many markets that will be affected when it comes to FHA loan limits compared with conforming loan limits backed by Fannie Mae or Freddie Mac. The Federal Housing Finance Agency published a report citing that only 250 county or county-equivalent areas—a “small fraction” of the total, the FHFA said—will be affected by the pending change. The FHA study indicates that its FHA limits would fall by more than 5% in eight states—Arizona, California, Colorado, Connecticut, Massachusetts, Maine, New Hampshire and Oregon—as well as the District of Columbia.
When evaluated for the potential impact on the number of loans eligible for government insurance, Colorado, Maine and Oregon fall off the list with the 2012 FHA loan limit impacting $221,000 borrowers. But that would only impact 4% of those areas’ loan count, the FHA analysis says. Other places would take big hits, too. The California FHA loan limit is projected to fall by $75,200 in Maricopa County, Ariz., from $346,250 to $271,050. Phoenix is in Maricopa County. In Los Angeles County, the lid would drop $104,250, from $729,750 to $625,500. But in Mendocino and San Joaquin counties in California, it would sink by $138,750 and $184,000, respectively. The change could be equally as tough on the East Coast, too. In Monroe County, Florida, for example, the FHA loan limit in Florida is projected to plunge by $200,500, from $729,750 to $529,000.
Until three years ago, FHA mortgage insurance limits were set at 95% of the median price house price for each particular area. But the maximum could not exceed 87% of the ceiling placed on the GSEs or go lower than 48% of that ceiling. In February 2008, however, Congress changed the formula in an effort to mitigate the economic downturn by temporarily setting the limit at 125% of the area median but not to exceed 175% of the GSE limit of $417,000. Five months later, though, lawmakers changed the rules again when they passed the recovery act, this time by assigning the task of setting the conforming loan limit to the newly created FHFA. Read the original article online at NationalMortgageNews.com
10 May 11 Mortgage Fraud Rose in 2010
When times are tough with foreclosure rates rising and lending guidelines tightening, it should be no surprise that mortgage fraud rose according to a report released yesterday. Yes the government and mortgage industry has made concerted efforts to reduce new home loan defaults and predatory lending. Even FHA mortgage lenders implemented a minimum credit score for FHA lending. After the housing market crashed, reports of suspected mortgage fraud soared. As banks, lenders, homeowners and mortgage brokers hurried to close deals, the process during the boom years was tainted by fakery, according to reports later submitted to the Financial Crimes Enforcement Network, an agency of the Treasury Department. The number of reports of suspected mortgage fraud rose to its highest level on record last year, as 70,472 reports were submitted to the government agency, according to a new release from the LexisNexis Mortgage Asset Research Institute. That’s nearly double the number of cases reported in 2006 when the market was at its peak, and it’s nearly 22 times the number of cases reported in 2000. From the LexisNexis release:
Fraudsters thrive on inadequacies within lengthy loan-related processes and a lack of consistency across organizations and/or industries that help them hide their true motives. Technology has enabled faster loan production through automation, ease of processing, and analytics. Industry professionals have keen knowledge of those processes, which makes it much easier to manipulate protocols in place to thwart adverse activities. The number of verified cases of mortgage fraud declined from 2009 to 2010, but that’s partially attributable to a decline in the number of new loans, the LexisNexis report says. Reports of suspected fraud increased nearly 5% during that period.
Homeowners and investors have filed numerous lawsuits against mortgage companies, claiming that crucial mortgage documents were misplaced or even forged. Some of these suits have been successful, bolstered by testimony from bank employees. In a widely cited example, an employee of the lender now owned by Bank of America testified in a New Jersey court in 2009 that her company regularly held onto mortgage notes even as the loans were sold to investors, contradicting what contracts usually require. Without a note, a bank cannot prove it has a right to foreclose on a home; homeowners have used the absence of a note to contest foreclosures. Likewise, a missing note compromises the legal rights of an investor in a mortgage security, a situation that has prompted some investors to sue the banks that sold them the securities. But it’s not just the banks who have been accused of fraud. The Wall Street Journal describes a practice some brokers allegedly used, in which they would get artificially low valuations of distressed homes, and then help a buyer sell those homes for a profit.
Homeowners, too, have been accused of misstating their income on their loan application by means of a stated income mortgage program. The nation’s five biggest mortgage lenders Bank of America, Wells Fargo, Citigroup, JPMorgan Chase and Ally Financial – have been accused of wrongfully foreclosing on homeowners and improperly handling mortgages. All 50 state attorneys general along with the Obama administration are working to reach a settlement deal. Read the original article from the Huffington Post.
19 Apr 11 Federal Reserve Announces New Mortgage Rules
New mortgage rules are coming in to play in 2011 as the government is set to put their footprint on home mortgage guidelines going forward. Under a proposal released by the Federal Reserve on Tuesday Mortgage lenders will be required to make sure prospective borrowers were able to repay their mortgages before giving them a loan. The new mortgage rule, which is required by the Dodd-Frank financial mortgage reform is intended to tighten lender standards and prevent mortgage fraud and lending abuses that led to the mortgage meltdown and the financial crisis in 2007. In 2006 subprime and bad credit loans begin defaulting, but since then we have seen a wide range of loan and credit types default.
In the lead-up to the crisis, for instance, borrowers could obtain a home mortgage loan without providing any proof of income or employment as the market churned out “subprime” loans to borrowers who were unable to afford them. The rule would establish minimum underwriting standards for most home loans such as requiring a lender to verify a borrower’s income, the amount of debt they have and whether they have a job.
Many banks have already tightened lending requirements after the mortgage market soured during the crisis and the rule may have a limited immediate impact. “This is where the banking industry is at, anyway,” said Robert Jaworski, a lawyer with Reed Smith who follows housing oversight. There is some question whether or not all loan programs would be affected by the rule. Some lenders were unclear if some of the government programs like the VA and FHA mortgage loan.
Building on existing truth-in-lending laws, lenders could be sued by the borrower if they do not take the proper steps to check a borrower’s ability to repay. In an important provision for the lending industry, the law provides protections from this type of liability if a loan meets specific standards defining a “qualified mortgage.”
A qualified home loan could not include interest-only payments, a balloon payment and regular payments that could add to the loan principle. The Fed, however, is grappling with how to implement this legal protection. The Fed said the law is “unclear” about how to define a “qualified mortgage” that would get a safe harbor, meaning it would be fully protected from litigation, or whether a borrower could still challenge the loan in court.
In its proposal, the Fed is seeking comment on two possible ways of defining a qualified mortgage. Under the first scenario, lenders would get more legal protection. It would give lenders a legal safe harbor if the “qualified mortgage” does not violate the payment provisions — even if the loan does not comply with the general underwriting standards such as income verification.
As a second possible definition of a “qualified mortgage,” the Fed proposes requiring that such a loan meet the requirements laid out in option one as well as the general underwriting standards. Lenders will likely support the first option presented by the Fed, said Bob Davis, executive vice president for mortgage, markets and public policy at the American Bankers Association. “They generally will prefer certainty,” he said. The Fed is seeking comments on the proposal through July 22nd. The final rule will be implemented by the Consumer Financial Protection Bureau, which opens its doors on July 21st.
31 Mar 11 Federal Mortgage Refinance Programs
Now more than ever, homeowners have access to loan relief with Federal mortgage programs designed to help borrowers refinance regardless of their credit or equity situation. Government mortgage help has never been more available to homeowners than in 2011. Nothing quite compares to the feelings associated with home ownership. Having a place where one can fully relax and realize the experience of being a king or queen is the dream of every individual. Maintaining your own home allows a chance to create a society that is a reflection of personal style. It also presents an opportunity to create a family legacy that can be the cornerstone of a life well lived. Dealing with the threat of foreclosure can provide a sense of discord that disrupts the ability to experience this goal. Government mortgage relief may be the solution to avoiding the risk of losing this opportunity. Utilizing the funds set aside for the federal mortgage program can prevent the loss of a part of the personal identity.
- Home Affordable Modification Program
- Home Affordable Refinance
- Emergency Homeowner Loan
- Obama Mortgage Relief
- FHA Short Refinance
With a large number of people experiencing the effects of the economic crisis on a personal level, the threat of losing their personal sanctuary is a real concern. An unstable job market only adds to the stress level for many individuals. A place of comfort is more essential than ever to unwind and escape the stress of everyday life. Utilizing the services available from the federal mortgage refinance program is an effective way to ensure that the home continues to be a castle. These government refinancing initiatives are available for anyone that wishes to seek out the services and qualifies for the program.
The purpose of the government is to provide opportunities for life, liberty and the pursuit of happiness. Working with the federal mortgage program can be the solution needed so that the investment in a personal household continues to provide these elements. We suggest working with a licensed professional from an experienced FHA mortgage company who has the ability to offer the FHA refinance package to replace your skyrocketing mortgage payment. This will eliminate the need to sacrifice the personal palace because of a series of unfortunate circumstances.
Save Your Home with Government Refinancing or Loan Modification
In order to continue on the quest for personal satisfaction, maintaining ownership of the property that has caused the titleholder to shed much blood, sweat and tears, the federal mortgage refinance program can be a savior. The monies provided by HARP will provide a security mechanism that will eliminate the need to declare anarchy against the system. With the personal kingdom well protected, the members of the homestead can continue their quest to slay dragons and rescue those held prisoner by opposing forces. The effort that went into creating a house out of a home can be continued to remain a personal treasure.
14 Mar 11 Home Affordable Refinance Program Extended for 1 Year
According to the Federal Housing Finance Agency, the Home Affordable Refinance Program (HARP) has been extended for another year. The mortgage relief program was set to expire on June 30th but will now continue until that date in 2012. News of the extension comes while a House subcommittee is debating the end of the Home Affordable Refinance Program’s companion, the Home Affordable Modification Program (HAMP) and has already voted to kill the FHA Short refinance program and the new Emergency Homeowner Loan Program which would provide 23 months of mortgage assistance unemployed and underemployed home owners.
HARP is designed to assist homeowners who owe more money on their current home loan that the market value of their home and are thus unable to qualify for a conventional refinance. Refinance loans from HARP are administered by the Enterprises Freddie Mac and Fannie Mae, can potentially reduce homeowners’ interest rates and remove some of the incentives for a strategic default.
The use of HARP more than tripled in 2010. During the year a total of 6.8 million home loans were refinanced nationwide and HARP, with 621,803 loan closings, represented nearly 10% of the total. In 2009 190,180 homeowners used the program for mortgage rate refinancing.
To qualify for HARP you must currently have a home loan owned or guaranteed by the Enterprises, have a one year history of on-time payments on your mortgage, and owe more on your home loan than your house is worth. The loan-to-value, however, cannot exceed 125%.
04 Mar 11 Is Congress Defunding the Mortgage Relief Programs?
Yesterday House Republicans introduced new legislation in an effort to shut down Federal housing and several popular mortgage relief programs that were created to stem foreclosures. Congress will debate eliminated the Emergency Mortgage Relief Program, Home Affordable Modification Program (HAMP) and the Neighborhood Stabilization Program. The Republican lawmakers contest that these mortgage relief programs have failed and therefore should no longer be funded.
Will Congress Repeal the Home Affordable Modification Program?
httpv://www.youtube.com/watch?v=cnIKEP6H5FA
Obama Mortgage Relief – There are certainly two sides to the foreclosure prevention initiatives that Obama has backed, as thousands of homeowners credits HAMP for helping them avoid foreclosures. Meanwhile, millions of homeowners are currently stuck in the loan modification process for six months to a year on average, because lenders are unable to facilitate the high demand of loan relief.
FHA Short Refinance Program in Jeopardy of Being Cut
FHA rates fell this week, but lenders and brokers continue to report that more and more borrowers are not meeting the underwriting criteria for refinancing because of credit or equity issues. In related news, FHA Commissioner David Stevens reiterated his support for the FHA short refinancing that was created to help underwater homeowners reduce their principal balance. On Wednesday, he discussed the progress of the FHA programs with a group of lenders who are eager to participate in the FHA short refi program. This controversial refinance program facilitates lenders to write down at least 10% of the principal balance on the home loan. Read the original article online > Emergency Mortgage Relief Program.
25 Feb 11 Banks Voicing Concerns on Obama Mortgage Plan
Many banks and lenders in the U.S. recently revealed gowing concerns regarding the Obama mortgage plan to stimulate the Anerican housing sector that has been plagued with a foreclosure epidemic and home loan regulation problems for the last few years. The banking industry privately knocked the Obama administration’s nascent proposal to force banks to modify mortgage loans, saying the plan won’t help solve problems facing troubled borrowers. The nation’s largest banks haven’t yet seen a proposal that is designed to help resolve mortgage-servicing errors that affected troubled borrowers. But industry executives are bristling at the administration’s new approach, disagreeing that principal reductions will help borrowers and, in turn, the broader housing market.
Though a unified settlement is uncertain and would have to appease regulators, banks and state attorneys general, some officials are pushing for banks to pay more than $20 billion in civil fines or to fund a comparable amount of loan modifications for distressed borrowers.
The proposal is the Obama administration’s latest effort to revamp the way mortgage companies help troubled borrowers and address concerns that past initiatives didn’t go far enough to help troubled borrowers The administration’s signature federal loan modification program, called HAMP, helped more than 500,000 borrowers lower their monthly payments through interest-rate reductions. But it has fallen short of ambitious goals to modify millions of home mortgage loans since its introduction two years ago. Last year, the White House unveiled new measures to encourage banks to write down loan balances, but they haven’t been widely used.
Given the banks’ track record in reworking loans, some attorneys who represent borrowers in foreclosure question whether the administration’s proposal could work. There has been a lot more mortgage help talk, than actual assistance for the average distressed homeowner that finds themselves strapped with underwater mortgages. “Requiring banks to eat the loss, and at the same time allowing them to administer the program, is a recipe for a program that will not do anything except raise people’s expectations and frustrate them,” said Gloria Einstein, an attorney at Jacksonville Legal Aid Inc. She said an independent third party should administer the program.
Banks have resisted reducing loan balances (also called a short refinance) mostly because of concerns that it could encourage more borrowers to stop making payments in order to receive a smaller loan. The mortgage relief plan also may face some resistance on Capitol Hill. House Republicans on Thursday said they would prepare bills next week to terminate HAMP and similar programs. The administration’s proposal appeared to be a ploy to “revamp” the HAMP program, said U.S. Rep. Patrick McHenry (R., N.C.). “If this is their attempt to create HAMP 2, then I find it deeply troubling.” The White House declined to comment. > Read the original WSJ article online.
09 Feb 11 Underwater Mortgages Rise 27%
The number of homeowners that have underwater mortgages continues to rise at a rapid pace. According to the Huffington Post, borrowers who owe more on their home loans than their property is valued at rose significantly in the 4th quarter of 2010. A shocking 27% of borrowers now have negative home equity. According to a new report from Zillow, the level of underwater mortgages rose 4% from 23% in the previous quarter. Most economists agree that loan modifications, mortgage help and falling home prices are to blame for the rise in negative equity.
03 Feb 11 Chase Announces Mortgage Help Center
After years of turmoil, the mortgage industry appears to be rebuilding. Banks like BofA, Citi and Chase have introduced mortgage relief programs to assist struggling homeowners avoid foreclosures. JP Morgan Chase & Co. announced that they will be making representatives available to borrowers in Massachusetts who are having trouble making their mortgage payments on time. The lending giant plans to open a Chase Homeownership Center in the Boston area sometime this year in an effort to assist customers struggling because of a drop in salary, unemployment, or ballooning subprime home loans. It did not offer more details about the location or opening date. “The best way to help borrowers find ways to stay in their homes is to sit down face-to-face and discuss their individual circumstances,’’ said David Lowman, chief executive of Chase Home Lending. The Massachusetts office will be one of 25 centers to be opened by the company this year, expanding its effort to 76 centers in 27 states. Chase said representatives have met with 120,000 customers since 2009, providing borrowers with a “single point of contact’’ to help them fill out loan modification applications, collect documents, and finalize paperwork.
