New wave of defaults on horizon, experts say

“Four years after the housing downturn began, prices in San Diego County and much of the rest of the country are beginning to inch up again. And, locally, at least, there are fewer foreclosures than there were last year.

So are we finally hitting bottom in the housing market? Don’t bet on it. So far, the nation’s banks, which have been given billions of dollars over the past year under the idea that they’ll use the money to help stabilize the economy, still seem to be reluctant to modify the terms of the loans they’ve made.

A report last week by the Government Accountability Office showed that the nation may be little more than halfway through the foreclosures emanating from the housing bubble.  And now, real estate experts say, we’re about to be hit with another wave of foreclosures, because many homeowners who have been laid off or furloughed during the recession can no longer pay their bills.

“There will be absolutely no shortage of foreclosures going forward,” said Bruce Norris, head of the Norris Group, a real estate investment firm in Riverside.  As of March 31, the GAO says, 1.6 million of the homes that were purchased with risky subprime or Alt-A loans between 2000 and 2007 have been foreclosed upon.

About 1 million more of those mortgages are either “seriously delinquent,” meaning more than 90 days past due, or already in the foreclosure process. An additional 4 million or so have not yet been refinanced or paid off.

“As a result, hundreds of thousands of additional nonprime borrowers are at risk of losing their homes in the near future,” the report warned.  And that doesn’t take into account the foreclosures that will likely take place as a result of layoffs and furloughs.”

Read more: http://www3.signonsandiego.com/stories/2009/aug/02/1b2dean212044-new-wave-defaults-horizon-experts-sa/

A Picture says a 1,000 words – More on Sad State of Loan Modifications

Today’s Boston Globe had the best graph of the success of major banks efforts to move forward with Loan Modifications.. And the sh

In March, the government launched the $50 billion program to help up to 4 million financially troubled borrowers, those who can’t afford to pay their mortgages because their interest rates spiked or they have lost income. The Treasury’s report card analyzed eligible loans that were delinquent for at least 60 days. It showed that only 235,247 of those borrowers, or 9 percent of the total, have been given a three-month trial modification, which becomes permanent if the borrower pays on time.

Click here for the full article

Federal Reserve Recommends Consumers Contact an Attorney to Resolve Contract Disputes With Banks

“The Federal Reserve, on its Website, says that although it does regulate banks, and will look into every complaint it receives from consumers regarding the banks it regulates, it does not have the authority to resolve every type of problem.

Disputes over contracts, undocumented factual disputes between a consumer and a bank, matters that are the subject of a pending law suit, complaints about customer service, or disagreements over a specific bank policy or procedure not addressed by federal law or regulation… as examples, are all outside the Fed’s authority as far as obtaining a resolution is concerned.

In those instances, where the Fed’s authority does not allow it to resolve matters, the Federal Reserve recommends that consumers contact an attorney.”
Read more:  http://mandelman.ml-implode.com/2009/08/federal-reserve-recommends-consumers-contact-an-attorney-to-resolve-contract-disputes-with-banks/

Foreclosure wave gathers momentum

August 6th, 2009, 2:00 am · 108 Comments · posted by Mathew Padilla

“There is no second foreclosure wave coming, says Sam Khater, senior economist, First American CoreLogic.

“To say there is a second wave implies the (current) wave has receded,” Khater told me. “I don’t see that the wave has receded.”

Khater shared his historical data of 90-day delinquency rates for Orange County, as well as the foreclosure-in-process rates and rates of REOs, or foreclosures on banks’ books. The 90-day rate includes all outstanding first mortgages at least three months late but not yet foreclosed. The foreclosure rate is just first mortgages with a notice of default or trustee’s sale filing. (Previously the person who distributes the report for First American told me the two rates did not overlap, but Khater, who compiles the data, said they do.)

If you look at the 90-day rate it has been heading straight up — it has not receded.”

Read more: http://mortgage.freedomblogging.com/2009/08/06/foreclosure-wave-gets-bigger/15037/

Suits Filed Against Sleazy Servicers – Treasury Knew

“AP News reported today that mortgage servicers, the same mortgage servicers that have received and continue to receive hundreds of millions in federal funds to modify mortgages as part of President Obama’s Making Home Affordable program, are engaging in practices that would make the worst loan modification company in history look like the Boy Scouts of America.

According to the AP’s report, which came out today:

• At least 30 servicers are being sued for charging illegally high fees, using illegal collection practices, and foreclosing on homes prematurely.
• At least 14 have been accused lying to homeowners about whether they would qualify for loan modifications or how low their payments would be if they did receive a modification.  And in many cases, the servicers are accused of telling borrowers not to make payments because their applications for modification were being reviewed… and then moving to foreclosure anyway. ”

  Read more: http://mandelman.ml-implode.com/2009/08/suits-filed-against-sleazy-servicers-treasury-knew/

The Progress on Loan Modifications Isn’t Quite What It Seems

“The Treasury Department’s report on the progress — or lack of it — among servicers doing loan modifications makes it seem like the Obama administration is keeping a close eye on its Making Home Affordable Program. But Felix Salmon at Reuters takes a second look at Treasury report, and raises some important questions. Salmon notes that the purpose of the report is “to document the number of struggling homeowners already helped under the program, provide information on servicer performance and expand transparency around the initiative.” Treasury officials told The Wall Street Journal they were encouraged by the program’s early results, even though only about 9 percent of eligible borrowers have received trial loan modifications so far.

The bigger problem, Salmon writes, is that the Treasury’s report “seems to have more spin than transparency.” How so? Well, the graph accompanying the report refers to “cumulative” progress made on loan modifications.”

Read more: http://washingtonindependent.com/53808/the-progress-on-loan-modifications-isnt-quite-what-it-seems

Help slow to arrive for troubled homeowners

Only 9% of eligible borrowers get mortgages modified under new program”For the past 16 months, Courtney Scott has been trying to get her lender, Bank of America, to modify the mortgage on her Atlanta-area home. She’s sent dozens of letters and e-mails to state and federal officials, bank representatives and mortgage assistance groups like HOPE”…
Read more here: http://www.msnbc.msn.com/id/32287179/ns/business-mortgage_mess/from/ET

Loan Modifications not Getting Better – Bank of America Worst

For those of you who are not sure this is a real issue, check out todays Bloomberg.com.

Bank of America Corp. and Wells Fargo & Co. were the worst performers among the biggest U.S. banks in modifying loans for struggling homeowners, according to a Treasury Department report.

Bank of America began 27,985 trial loan modifications, or 4 percent of its eligible loans, under the government’s Making Home Affordable program started in March, the report today shows. Wells Fargo had a 6 percent rate, trailing JPMorgan Chase & Co.’s pace of 20 percent, and Citigroup Inc.’s 15 percent.

Another demonstration of the lack of Heart in the banking industry

Doesn’t  it just make sense to help these people out – ASSOCIATED PRESS – 2:00 a.m. August 2, 2009

The Vangelakoses’ southwest Florida condominium has marble floors, a large pool overlooking a river, and modern furnishings that speak of affluence and luxury. What they don’t have in the 32-story building is a single neighbor.

Most of the other tenants in the 200-unit condo didn’t close on their contracts, and the few who did have transferred to an adjacent building owned by the same company because more people live there.

The Vangelakoses’ mortgage lender will not allow them to do the same. That leaves them the sole residents of Oasis Tower One.

Victor Vangelakos said they don’t want to move to the tower next door because they would still be paying the mortgage and maintenance costs on the condo they own. They paid $430,000 for the unit and took out a $336,000 mortgage – essentially spending their life savings.

He’d like The Related Group to buy them out.

“They want us to be refugees in Tower II,” Victor Vangelakos said. “That’s not how I expected us to live here.”

Click here for the article

D.C. Power Players Get Sweetheart Loans

2009-08-01 — cbsnews.com

“…, while the government debated how to regulate the mortgage industry, Countrywide pursued a shrewd strategy: attempt to curry favor among influential people by offering them sweetheart loans,…”
Read more…http://www.cbsnews.com/stories/2009/07/31/eveningnews/main5202115.shtml