On Monday, March 12th, the proposed Settlement documents were filed in Federal Court revealing what each of the Lenders is required to do. You can read the details at http://nationalmortgagesettlement.com/. How they’ll meet those obligations is critical to upside down homeowners. Those details are slowly emerging through analysis, press-releases, and side deals. Here’s what you need to know so far:
1. The Lenders - the Settlement ends lawsuits by the Federal Government and State Attorney Generals against: Bank of America, Wells Fargo, JP Morgan Chase, Citigroup, and GMAC/Ally.
2. The Settlement - requires the 5 Lenders to collectively provide up to $25 Billion in relief to distressed borrowers and payments to government agencies. This will be provided through a combination of direct cash payments and credits for debt reduction and other loan adjustments. The individual lender shares are: BofA: $11.82 Billion; Wells Fargo: $5.35 Billion; Chase: $5.29 Billion; Citigroup: $2.21 Billion; and Ally: $610 Million.
3. The Allocations - The Settlement requires the Lenders to provide the relief through three broad categories:
(1) Foreclosure Assistance Payments - paid to State and Federal Govenerment agencies;
(2) Consumer Relief Programs - credits for principal reduction of 1st and 2nd loans;
(3) Loan Refinancing - provides interest rate and principal reduction
4. The Side Deals - The Settlement is very complex and the devil will be in the details since each lender can map out exactly how it plans to satisfy its allocations. See my recent Blog on the Wells Fargo roadmap. However, already participating lenders are cutting “side-deals” to obtain a better result by offering even better settlement options:
a. Bank of America - announced deeper principal reductions for about 200,000 homeowners, up to $100,000 each. In exchange, they will avoid up to $850 Million in penalties. BofA has also announced that it is temporarily halting foreclosures while it identifies and solicits the potential beneficiaries of these reductions.
b. Ally - announced possible principal reductions to current market value. Further, some borrowers in extreme financial distress may get reductions to 85% of their home’s value.
5. What to Do Now - Although the Settlement terms must still be approved by a Federal Judge, if you are in financial distress and in danger of losing your home, contact your State Attorney General’s office for information and contact links with the specific lenders. The California AG’s website for the National Settlement is at http://oag.ca.gov/nationalmortgagesettlement and has internet and/or phone contacts for each of the participating lenders. Don’t expect immediate relief. The Settlement is a process that still requires Court approval, will take several months to get organized, and will take up to three years to fully provide benefits. But, it does promise substantial relief for those who qualify and diligently pursue the available benefits.
The information presented in this Article is not to be taken as legal advice. Every person’s situation is different. If you are upside-down on your loan, especially if you’re facing a lender lawsuit, get competent legal advice in your State immediately so that you can determine your best options.
Article was written by Steve Beede.
“Meanwhile, if you or someone you know is struggling with an upside-down property in California and don’t know what to do, our $200 flat fee Consultation Program can offer knowledge of what to expect and form strategies to either keep the property or move on with as little financial risk as possible. To schedule a Consultation, please contact our office at (916) 966-2260”.
Attorney Steve Beede
BPE Law Group, PC.
11140 Fair Oaks Blvd., Suite 300
Fair Oaks, CA 95628
(916) 966-2260
sjbeede@bpelaw.com
To avoid losing homes to foreclosure due to long response times for short sale transactions, three senators introduced legislation to speed up the short sale process.
Senators Lisa Murkowski (R-Alaska), Scott Brown (R-Massachusetts), and Sherrod Brown (D-Ohio) proposed the bill addressing the issue of short sales timelines on February 17. A short sale is a real estate transaction where the homeowner sells the property for less than the unpaid balance with the lender’s approval.
“There are neighborhoods across the country full of empty homes and underwater owners that have legitimate offers, but unresponsive banks,” said Murkowski. “What we have here is a failure to communicate. Why don’t we make it easier for Americans trying to participate in the housing market, regardless of whether the answer is ‘yes,’ ‘no’ or ‘maybe?’”
The legislation, also known as the Prompt Notification of Short Sale Act, will require a written response from a lender no later than 75 days after receipt of the written request from the buyer.
The lender’s response to the buyer must specify acceptance, rejection, a counter offer, need for extension, and an estimation for when a decision will be reached. The servicer
will be limited to one extension of no more than 21 days.
The bill will also allow the buyer to be awarded $1000, plus “reasonable” attorney fees if the Act is violated.
According to a release from Short Sale New England, short sale homes do not bring down neighboring home values like foreclosed homes do, and 83 percent of short sale buyers are satisfied with their purchase, according to a 2012 Home Ownership Satisfaction Survey conducted by HomeGain.
“The current short sale process can be time consuming and inefficient, and many would-be buyers end up walking away from a sale that could have saved a homeowner from foreclosure,” said Moe Veissi, president of the National Association of Realtors. “As the leading advocate for homeownership, realtors are supportive of any effort to improve the process for approving short sales.”
Equi-Trax released a survey last year on the issues real estate agents face when completing short sales. Guy Taylor, CEO at Equi-Trax, said 71.9 percent of respondents reported that a short sale can take four to nine months to complete, and they think that is simply too long.”
The survey also found that 18.2 percent of deals require less than three months to complete, with 10 percent requiring more than 10 months.
When agents in the survey were asked to how the short sale process can be improved, 57.6 percent said lenders should take less time to close transactions, 14 percent said borrowers should be better educated about short sales, and 40.4 percent said both of these changes are necessary to improve the process.
In April 2011, a similar bill was introduced by Reps. Tom Rooney (R-Florida) and Robert Andrews (D-New Jersey), but this version requested a response deadline of 45 days instead of 75 from lenders. The legislation never came up for debate before a House committee.
Brought to you by the CALIFORNIA ASSOCIATION OF REALTORS®.
On February 9, Attorney General Kamala D. Harris announced that California secured up to $18 billion for its distressed homeowners as part of a $25 billion national multistate settlement with the country's five largest loan servicers. More than $12 billion will be used to offer short sales or write down loans over the next three years for about 250,000 underwater homeowners in California, according to the attorney general. Relief will go to areas hardest hit by the foreclosure crisis within the first year of the settlement.
Although the actual settlement has not yet been released, the attorney general has stated that other financial benefits for California include $849 million for refinancing 28,000 borrowers who are underwater but current on their payments; $279 million restitution for 140,000 homeowners who were foreclosed upon between 2008 and 2011; $1.1 billion for unemployed homeowners, transitional assistance, and repairing blight; $3.5 billion to extinguish unpaid loans that remain after foreclosure for 32,000 homeowners; and $430 million to the state attorney general's office for costs and fees. As part of a California guarantee, if the lenders fail to reduce principal balances by a minimum of $12 billion, they will be required to pay fines up to $800 million to the state.
The loans involved in this settlement are those owned or serviced by Bank of America, JPMorgan Chase, Wells Fargo, Citigroup, and Ally Financial Inc. The settlement releases the five named lenders from certain federal and state claims pertaining to robo-signing and other foreclosure misconduct by the lenders. It does not affect any individual's rights to bring legal action against a lender. It also does not apply to the majority of mortgage loans, which are those owned by Fannie Mae or Freddie Mac.
This mortgage settlement does not change any homeowner's existing financial relationship with a settling lender. It does not relieve homeowners from any obligation. It does not require a settling lender to stop any foreclosure.
Homeowners seeking relief under the settlement agreement should contact their loan servicer or a HUD-approved housing counselor. More information including detailed FAQs is also available from the California Attorney General's website, or visit the National Mortgage Settlement website.
By: Esther Cho
A foreclosure report released by CoreLogic Wednesday revealed that the number of homes in foreclosure is decreasing nationwide. The report included monthly data on foreclosures, foreclosure inventory, and 90-plus delinquency rates.
Completed foreclosures for 2011 totaled 830,000, compared to 1.1 million in 2010. The December 2011 completed foreclosures figure was also down to 55,000, compared to 67,000 in December 2010.
Nationally, the number of loans in the foreclosure inventory decreased 8.4 percent in December 2011, compared to December 2010, which is a decline of about 130,000 properties. Data from the report revealed 1.4 million homes, or 3.4 percent of all homes with a mortgage, were in the foreclosure inventory as of December 2011.
A property is counted as foreclosure inventory when the mortgage servicer places the property into the foreclosure process. Foreclosure inventory is only measured against homes with an outstanding mortgage. About one-third of homeowners nationwide own their homes.
“The inventory of foreclosed properties has begun to shrink, and the pace at which properties are entering foreclosure is slowing. While foreclosure filings are being curtailed by a variety of judicial and regulatory constraints, mortgage servicers are completing REO sales faster than they are completing foreclosures,” Mark
Fleming, chief economist with CoreLogic, said in the release. “This is the first time in a year that REO sales have outpaced completed foreclosures, and part of the reason for the decrease in the foreclosure inventory.”
In December 2011, servicers increased the rate at which they were able to process distressed assets, also known as distressed clearing ratio, according to the CoreLogic report.
The distressed clearing ratio is found by dividing the number of REO sales by completed foreclosures. A higher ratio means faster clearing of REO inventory. The distressed clearing ratio was 1.03 in December, up from 0.94 in November.
The share of borrowers nationally that were 90 days or more delinquent decreased to 7.3 percent in December 2011, compared to 7.8 percent in December 2010.
From the start of the financial crisis in September 2008, there have been approximately 3.2 million completed foreclosures, according to the report.
CoreLogic, headquartered in California, provides information, analytics, and services to the private and public sectors.
December 2011 Highlights From the Report
The five states with the highest foreclosure inventory:
The five states with the lowest foreclosure inventory:
Of the top 100 markets measured by Core Based Statistical Areas (CBSAs) population, 34 are showing an increase in the foreclosure inventory in December 2011, compared to 46 in November 2011.
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