Insightful thoughts on Florida Real Estate

Pam Bondi, Florida’s Attorney General, Must Decide What to Do with $300m in Foreclosure Settlement

Attorney General Pam Bondi has received $300 million through the nationwide mortgage settlement with such companies as JPMorgan Chase, Wells Fargo, Citigroup, BofA, and Ally Financial.  She is currently taking suggestions from Floridians about how best to use it to keep struggling homeowners afloat.

TALLAHASSEE, Fla. – May 7, 2012 – Florida’s attorney general has $300 million to spend to keep struggling homeowners out of foreclosure, and she’s looking for suggestions on how to dole it out.

The money, which is part of $8.4 billion in cash and mortgage relief slated for Florida from the nationwide foreclosure settlement announced in February, is being held in an escrow account until a spending plan is finalized.

Through May 14, Floridians can send suggestions to Attorney General Pam Bondi’s office by going to www.MyFloridaLegal.com or calling (866) 966-7226.

The money must be spent on foreclosure prevention programs and can generally be used to hire housing counselors, setting up state and local foreclosure assistance hotlines, creating foreclosure mediation programs, providing legal assistance, funding anti-blight projects, and training and staffing financial fraud or consumer protection enforcement efforts.

“Florida is one of the hardest-hit states in the country in terms of foreclosures, and I’d like to hear from Floridians about ways we can help homeowners and offset the devastation caused by the foreclosure crisis,” Bondi said.

Tens of thousands of Floridians are expected to benefit from the $25 billion nationwide settlement with JPMorgan Chase, Wells Fargo, Citigroup, Bank of America and Ally Financial.

The agreement was forged by attorneys general from throughout the country who waived the right to pursue some civil complaints against the banks, but criminal prosecution and claims by individual homeowners are still allowed.

Florida’s share of the deal includes an estimated $7.6 billion in benefits to homeowners in the form of loan modifications, principal reductions, short sales, and moving assistance for people who can’t stay in their homes.

About $171 million will be cash payments to Florida borrowers who lost homes to foreclosure between 2008 and 2011 and were victims of servicer abuse. An additional $309 million will refinance underwater borrowers current on their loans.

John Lucas, Bondi’s press secretary, said there is no estimate yet for how many homeowners will be helped with the $300 million.

“The attorney general’s office is in the early stages of gathering public input,” he said. “At the conclusion of gathering information and meeting with housing experts and others in fields relating to housing relief, we will be able to share more about how the funds will be directed.”

For more information on the $25 billion national mortgage settlement, go to www.nationalmortgagesettlement.com.

© 2012 The Palm Beach Pos

Homeowners Beware: Default Mortgage and Foreclosure Scams are Becoming Prevalent

Scam artists are now able to pull lists of homeowners who are in foreclosure or in default on their mortgages.  Many unaware homeowners have lost large quantities of money to such scammers.  Here are a few things to look for.

DOVER, Fla. – May 7, 2012 – The person on the other end of the phone had all the right lingo and promised Anthony Curatolo that he was preapproved to refinance with a government-backed mortgage.

The new loan would save him hundreds of dollars a month.

“They said they were authorized to give out 2 percent loans because the government was giving stimulus money for them to do that with,” Curatolo said. “They give you a name like they’re a mortgage company, and they’re not.”

Curatolo, very close to falling behind on his payments, jumped at the chance. But there was a catch: First he had to make two payments totaling $1,000.

He did. Then the company disconnected its phone.

Curatolo didn’t know it, but the company had pulled a disappearing act before.

There are pages of online complaints from consumers across the country detailing the same story. Federal authorities and local consumer advocates say this scenario is the latest twist on a scam to trick desperate homeowners into forking over cash.

The scammers collect lists of homeowners who are in default on their mortgages or in foreclosure. They often say they are “authorized by the government” to provide a low-interest loan. They require money upfront, then do nothing to help the homeowner.

When someone falls for the phony pitch, they’re likely to be hit by other scam artists. That’s because they land on a “suckers list,” as it’s called by Kevin Jackson of the Hillsborough County Consumer Protection Agency.

“Once you get on it, it’s hard to get off,” Jackson said. “Once you fall for it, the scammers figure you’ll fall for it again. And they sell those lists.”

That’s what happened to Curatolo.

A few weeks after his money disappeared, he received a phone call from the same customer service representative. This time the man gave a different company name.

“I said, ‘Aren’t you the same person I’ve already talked to?’ The phone went click,” Curatolo said. “He recognized my voice, I think.”

Refinance scams are popular, Jackson said, and the crooks are former mortgage professionals who know how to make it all sound legitimate. Sometimes they even invoke the U.S. Department of Housing and Urban Development.

“They like to use some of the names and acronyms out there that you’ll see on HUD, trying to make it look like they’re connected to those programs,” he said.

The disconnected phone number Curatolo tried to call was registered to a company in California called Certified Processing. All the phone numbers linked to the company are disconnected.

The Better Business Bureau in Los Angeles has given Certified Processing an F rating. The website for the bureau cites complaints about loan modification promises that customers say the company did not keep.

In addition, the state attorney general in Maine filed a cease-and-desist order in January against the company. The order says the company did not comply with state requirements and prohibits it from soliciting customers in the state.

The Florida attorney general’s office said there is no active investigation into Certified Processing in Florida.

Jackson said consumers should check out any company selling mortgage help.

For one thing, it’s against Florida law to charge upfront fees to help with a refinance or loan modification.

A few other things to be on the lookout for: companies that tell you to stop talking to your lender or to stop paying your mortgage. Some companies even tell you to send your mortgage payment to them instead.

As for Curatolo, he learned his lesson the hard way. But his phone keeps ringing.

© 2012 the Tampa Tribune (Tampa, Fla.), Shannon Behnken. Distributed by MCT Information Services

Flood Insurance Premiums Will Rise After October

Homeowners beware: the National Flood Insurance Program will raise its premiums anywhere from 5 to 20 percent after October 1 of this year.

WASHINGTON – May 4, 2012 – The National Flood Insurance Program (NFIP) will charge homeowners more for coverage after Oct. 1, 2012. Officials say flood premiums will go up an average 5 percent nationwide, but they could rise as much as 20 percent in some areas while as other premiums go down. NFIP will also disallow rebates.

“People who receive the most subsidies in risky areas will see big premium increases, probably phased in,” Eli Lehrer, national director of the Center on Finance, Insurance and Real Estate at The Heartland Institute in Washington, told the South Florida Sun-Sentinel. “Rates have to go up. The real question is: Will the program be sustainable? It cannot continue at the rates it has now.”

The flood insurance program operates at a loss, and most experts agree it must generate more money to dig itself out of an $18 billion hole. However, a premium increase impacts Florida homeowners most. The state currently has 37 percent of all NFIP policies – 2.1 million out of 5.6 million.

Rebates

Since the federal government runs the national flood insurance program, insurers act more like middlemen between homeowners and NFIP. Currently, some insurers rebate part of their commission, allowed under state law, as a way to attract business. That practice must end on Oct. 1.

FEMA, however, says the national program is better served by an across-the-board premium policy that doesn’t favor one insurance agent over another. By banning commission rebates, the rule change will also effectively raise rates for some homeowners.

FEMA says that 48 states already ban rebates, calling them “an illegal inducement to purchase insurance.”

Potential changes

The U.S. Congress is also considering a long-term extension of the flood insurance program, which expires in its current form on May 31. In addition to extending the program, a law could change the way the program is administered. A bill passed in the House, for example, would put an individual homeowner’s policy premium more in line with actual risks for the area. The Senate has a different version of the bill, though, and nothing is assured.

Source: 2012 South Florida Sun-Sentinel, William E. Gibson, Washington Bureau

© 2012 Florida Realtors®

Mortgage Industry Still has Many Improvements to Make Following the Housing Crisis of 2007

Mortgage servicers have their work cut out for them when trying to rebuild the image of the mortgage industry, which has long been tarnished by "inappropriate fees, mishandled accounts, shoddy paperwork and illegal foreclosures."

WASHINGTON – May 4, 2012 – Nearly two years after the “robo-signing” scandal forced a reboot of the nation’s home-foreclosure process, mortgage servicers have begun the hard work of buffing up their industry’s tarnished image after years of making life miserable for Americans struggling to hold on to their homes.

Changing the industry’s bad behavior will be a slow and painful process for servicers who collect mortgage payments and manage the accounts on behalf of lenders, however. The inappropriate fees, mishandled accounts, shoddy paperwork and illegal foreclosures that first came to light after the 2007 housing crisis were long-standing problems that had gone largely unnoticed for years.

Whether it was obtaining loan modifications, arranging short sales, negotiating principal reductions or refinancing homes through the federal Home Affordable Refinance Program, mortgage servicers were more obstacle than facilitator during the housing meltdown, according to many housing advocates and consumer attorneys. And depending on whom you talk to, not much has changed.

“They’re a huge, inefficient, bureaucratic ship that doesn’t operate well, and it’s not going to turn itself around quickly. Just the day in, day out pulling of teeth you have to do (with servicers) is mind-numbing,” said Daniel Lindsey, supervisory attorney at the Legal Assistance Foundation in Chicago, which helps delinquent homeowners avoid foreclosure.

David H. Stevens, the president and CEO of the Mortgage Bankers Association, acknowledged servicers’ recent deficiencies, but said the industry had changed its business model and that progress couldn’t be denied.

“There are still mistakes being made, but it pales in comparison to what this environment was like in the early part of this housing crisis,” Stevens said. “I think we are clearly on the precipice of that changing.”

Early on, servicers admittedly were unprepared to handle the massive failures of unsustainable and exotic mortgages that had originated during the housing bubble. Failed lenders such as Countrywide Mortgage and Washington Mutual added millions more bad loans to servicers’ caseloads just as they were trying to ramp up their systems and staffing to handle the crisis, Stevens said.

But after the problems resulted in federal consent orders against 17 servicers, a near-nationwide moratorium on foreclosures, a $25 billion national settlement to address past improprieties and federal plans for mandatory industry standards, the situation is starting to improve.

The national settlement negotiated by the federal government and the states has forced the nation’s five largest servicers to beef up staffing, improve communication with borrowers, assign one person per account and provide greater accountability when executing foreclosure documents. Stevens called the requirements “extraordinary.”

“I’ve been in the financial services market for three decades,” he said. “There’s never been standards like this.”

Many of the settlement terms probably will become mandatory for the entire industry when the Consumer Financial Protection Bureau finalizes new standards for servicers later this year.

Announced in February, the terms of the $25 billion settlement call for Ally Financial (formerly GMAC), Bank Of America, Citi, JPMorgan Chase and Wells Fargo to provide $17 billion in principal reductions and loan modifications, up to $3 billion in refinancing relief, $1.5 billion to borrowers who lost their homes and another $1.5 billion to participating states.

While the settlement is a “good first step,” said Diane Thompson, an attorney with the National Consumer Law Center, she wonders whether the agreement might cause servicers to relax their consumer-friendly efforts, realizing that their punishment already has been delivered.

“I think there’s a real risk that the pressure on them to behave well has disappeared,” she said.

As for the industry guidelines the Consumer Financial Protection Bureau has proposed, Thompson called them “very weak.”

“They don’t go much beyond existing law and the clear and explicit literal mandates of Dodd-Frank. So if I was a servicer, I wouldn’t be particularly worried,” she said, speaking of the 2010 financial overhaul law.

While most of the financial relief spelled out in the settlement is yet to come, the agreement is bearing some early fruit. Loan counselors and attorneys say they’re starting to see more loan modifications and principal reductions than at any time in recent memory.

“A year ago, I could count on two hands the number of principal reductions I’ve seen over the last five years. Now I’ve seen that many in the last six months. And that was before the settlement,” said John Groene, a neighborhood director at Neighborhood Housing Services of Chicago Inc., a nonprofit community revitalization agency.

Copyright © 2012 the McClatchy Washington Bureau, Tony Pugh. Distributed by MCT Information Services.

Housing Prices are the Lowest They Will Be

Economists say homebuyers should act now to find a bargain home since the housing market is on the cusp of a turnaround.  Right now, it's more affordable to buy than to rent in most areas of the nation.

WASHINGTON – May 4, 2012 – Homebuyers who want a bargain may want to act now because the housing market is in the midst of a turnaround, economists say.

Home prices have fallen and mortgage rates are hovering near record lows, pushing home affordability for the average family to record highs. Meanwhile, rents have been on the rise, making owning a home cheaper than renting in most areas of the country, according to recent surveys.

But the housing deals aren’t expected to stick around much longer.

An improving job market, a decrease in the number of homeowners falling behind on their mortgage, and an anticipated improvement in access to mortgages is expected to help home prices start bouncing back by next year, economists say.

Investors eyeing profits in rentals also have been snapping up bank-owned properties, which Clear Capital’s Alex Villacorte attributes as helping to lead to an increase in prices on foreclosed properties. This “could have a significant impact on the market overall in terms of providing a rising floor to home values,” Villacorte told CNNMoney.

Some areas are already seeing prices rise. In Phoenix, housing prices have already increased 8.4 percent during the three months ending April 30, and Miami saw prices bump up 4.6 percent quarter over quarter, according to Clear Capital data.

“Stuff I was selling six months ago for $60,000 to $80,000 is now $90,000 to $110,000,” Tanya Marchiol, founder of Team Investments in Phoenix, told CNNMoney.

Loan rates, demand predictions

Buyers may want to act more quickly because mortgage rates are expected to tick up slightly by the end of the year. The increase is being sparked by greater demand, says Doug Lebda, CEO of LendingTree. He predicts 30-year fixed-rate mortgages will inch up to 4.5 percent by the end of the year, which is still low, however, by historical standards.

The Mortgage Bankers Association is also predicting a big leap in mortgage loans next year. For this year, MBA estimates that buyers will take out loans totaling about $415 billion, but by 2013 that number is expected to nearly double to $706 billion.

Source: “Buying a Home Won’t get Much Cheaper,” CNNMoney (May 3, 2012) and “Time To Trade The Lease For A Mortgage?” NPR (May 1, 2012)

© Copyright 2012 INFORMATION, INC.

Fannie Mae and Freddie Mac Adopt New Guidelines to Expedite the Short Sale Process

Fannie Mae and Freddie Mac have begun to impliment new measures to speed up the short sale process.  This is not the first time the government has attempted to shorten the process; will these changes work?

PHILADELPHIA – May 3, 2012 – Government-backed housing giants Fannie Mae and Freddie Mac are adopting new guidelines to streamline the process for short sales, which most real estate observers expect will outpace foreclosures in the coming year.

The guidelines, required by the Federal Housing Finance Agency and effective June 15, would require servicers of mortgages backed by Freddie and Fannie to review and respond to requests for short sales within 30 calendar days of receipt of a buyer’s offer.

A short sale is a transaction in which a lender agrees to accept less than the amount owed on the mortgage. It is a “strategic default,” designed to get a borrower out of financial trouble without having to go through the drawn-out legal tangle of the foreclosure process.

A short sale does affect the seller’s credit score, reducing it as much as a foreclosure would, according to Fair Isaac Corp., which developed the system.

On average, according to recent data from foreclosure search engine RealtyTrac, short sales are taking 306 days from start to finish, compared with 113 days in 2006 as the housing market started to unravel.

Area real estate agents who handle such transactions have acknowledged that they do take a long time to complete, and that delays often result in loss of the sale.

But lenders are becoming more accommodating, though they have issues with short sales because unscrupulous investors and others have abused them, perhaps to the tune of $375 million in annual losses nationwide.

In January, there were more than 35,000 short sales nationwide, on pace for more than 105,000 pre-foreclosure sales for the first quarter. That would be the highest quarterly total since the first three months of 2009.

This is not the first time the government has acted to accelerate the short-sale process. In late 2009, the Treasury Department proposed financial incentives and simplified the procedures for completing them. That included a $1,000 payment to servicers and a maximum of $1,000 to go to investors who signed off on payments to subordinate lienholders, the Treasury said. Borrowers were to receive $1,500 in relocation expenses.

The rules, which took effect in April 2010, were supposed to reduce the short-sale process to 10 days, but didn’t.

The pending Fannie Mae/Freddie Mac guidelines will mandate weekly status updates to the borrower if the short sale remains under review after 30 calendar days.

Servicers also will be required to make and then inform borrowers of final decisions within 60 calendar days of receipt of an offer.

By the end of the year, Fannie and Freddie will announce other “enhancements” to the short-sale process, including borrower-eligibility evaluation, simplified documents, and payments to subordinate lienholders.

Housing Finance Agency acting director Edward J. DeMarco said the changes were being considered as “additional tools to prevent foreclosure, keep homes occupied, and help maintain stable communities.”

Copyright © 2012 The Philadelphia Inquirer. Distributed by MCT Information Services.