If your mortgage is serviced by Wilshire this could be great news for you.  Wilshire has been notorious for not letting homeowners (borrowers) off the hook for the deficiencies created during a short sale or deed in lieu.

If you are facing a short sale situation with Wilshire, call our office today for guidance on the best way to make sure your short sale is closed without leaving you on the hook

-          The Bank Slayer

Until Freddie decides what if anything is going to happen to a loan in default it might take some real firepower to break your deal loose.  Call us today if your short sale with Freddie or Fannie is going nowhere or if your homeowner is facing an imminent foreclosure situation.

– The Bank Slayer

A recent article in The American Banker (focused on an unpleasant fact for Freddie Mac: when it pushes loan sellers to buy back loans, some of them tell Uncle Freddie to “take your loan and shove it, we ain’t buyin’ back no more.”

The GSE said some big-bank customers aren’t honoring its loan repurchase requests “in a timely manner.” A total of $4 billion in loan repurchase requests were unfulfilled as of Dec. 31, up by about a third from a year earlier. Nearly 30% of those requests had been outstanding for more than three months. And though some servicers had financial difficulties, three of the GSE’s “larger, higher credit quality” servicers had more than 30% of their repurchase obligations outstanding that long.

“It’s more like the movie ‘Network,’ where the star says, ‘I’m mad as hell, and I’m not going to take it anymore,’ ” said Larry Platt, a partner in the financial services group at K&L Gates LLP in Washington. “The dollars are too much.”

Fannie Mae recently launched a “Quality Control Initiative” to support its contention that its repurchase requests aren’t the result of nitpicking nor a desire to recoup the massive losses that it (and Freddie Mac) have been taking since they started operating as part of the US Government’s bottomless pit of public money that is being used to support residential mortgage markets without having to appear as part of the wildly widening US government’s deficit, but are, instead, a result of lenders being dumber than a stump. It’s apparent that such public relations ploys aren’t impressing the troops.

Lenders have complained that the GSEs are being too picky, pushing back loans for minor oversights.

“I think why you see resistance is there is this overcorrection going on, in terms of everything being pushed back,” said Paul Anastos, president of Mortgage Master Inc., a Walpole, Mass., lender. (He said he sells loans to Freddie, which has never asked him to buy any back.)

“If they focused in on really what was the problem, they’d gain more traction. I think they’d have more cooperation.”

Observers note that neither side can afford to push the other side to the brink. Fannie and Freddie are the only game in town when it comes to loan purchases, while the GSEs need big loan originators like Wells Fargo, Bank of America, and JP Morgan Chase, so it can’t afford to financially damage them or honk them off to the point that they get really creative and find a way to bypass Fannie and Freddie or simply say “screw it” and focus on something more profitable and less likely to involve the US Government changing the deal on them (again) after the fact. Sooner or later, they’ll have to reach a compromise.

In the meantime, the spat will provide plenty of fodder for chit-chat among those of us who saw this buy-back Armageddon coming years ago.

- The Homeowners Hero

NEW YORK, March 4 (Reuters) – Moody’s Investors Service on Thursday said it may downgrade portions of 125 residential mortgage bonds based on unusual “cash management arrangements” of GMAC Mortgage LLC, which services loans in the securities.

The rating company said GMAC commingled cash flows from multiple bonds in a single custodial account, Moody’s said in a statement. This allowed GMAC to use cash from loans in one bond for principal and interest payments on another, it said.

By allowing the commingling, it “increases the likelihood that some RMBS deals may not be able to recover the amounts ‘borrowed’ by the servicer to fund advances or another RMBS deal if a servicer bankruptcy were to occur,” Moody’s said.

This could give rise to competing claims in a bankruptcy proceeding, the rater said.

Downgrades based on mortgage servicing, rather than credit, may add to concerns of bond investors who have been long accustomed to harsh rating cuts as delinquencies and foreclosures increase losses.

GMAC Mortgage is a unit of Residential Capital LLC. Residential Capital is owned by GMAC Inc.

Bottom Line:  Tough to buy a new house if you can’t sell your current home.

-       The Bank Slayer

Tax Credit Losing Momentum

By Kevin Chiu, Housing Predictor

First time home buyers are being credited $12.5 billion in government tax credits, according to the Treasury Department. But the federal tax credit with the expansion of the program to move-up home buyers is losing momentum, a Housing Predictor analysis shows.

A boom to first time home buyers and real estate agents amid the highest volume of foreclosures on record, the tax credit was expanded by the federal government in November to include move-up home buyers. But only a small percentage of move-up buyers have been able to take advantage of the $8,000 credit. The majority have had trouble selling their current homes.

A survey of 50 housing markets monitored by Housing Predictor indicates that the heavy volume of purchases triggered by the tax credit has slowed. The credit boosted home sales last summer and during the last part of 2009 only to fizzle, lacking the ability to sustain a real recovery in the majority of housing markets surveyed. Only eight markets of the 50 surveyed demonstrated on-going strengthening with more home sales. The tax credit expires April 30th.

High unemployment in the majority of the country is still hampering any real sort of recovery in housing. Despite low interest rates, which may rise later in 2010, home sales dropped in January and February. Home prices showed signs of stabilizing from government programs in some areas of the country, but the pent up back-log of foreclosures listed for sale and a shadow inventory of properties are pressuring home values in most markets.

The Obama administration has pumped more than $1.4-trillion into the housing market from buying mortgages with tax credits and programs to refinance homes at lower rates, but still hasn’t made a major move to remedy ailing markets. “You’ve got a really big problem that requires big guns and the tax credit is just not big enough,” said Robertson Williams of the Tax Policy Center in Washington, D.C.

Mortgage holders who owe more on their home than it is worth in today’s market are another problem. Under water home owners are helping to eliminate any real recovery in the housing market as more choose to walk away from their homes rather than keep paying the mortgage. Most homeowners have to sell their home before they can move and without equity they are at a loss to do so.

The National Association of Realtors lobbied for and got the tax credit extension from Congress, who asked them not to come back to request an extension for the program again.

A bill to force lenders to modify mortgages for homeowners at risk of foreclosure is bogged down in Congress as an average of 8,600 foreclosures a day are recorded across the nation.

HAMP tends to instill false hope in borrowers many of who soon find out either:

a)     they have been denied for a permanent modification even after making their payments;

b)    they have stopped making payments because they were told to and now can’t catch back up.

-       The Bank Slayer

Elizabeth Warren’s Report:

The December report of the Congressional Oversight Panel presents a finding that the TARP (Troubled Asset Relief Program) overall assisted in preventing a bigger crisis, but it created more challenges and encouraged risk-taking.

Earlier reports mentioned the abysmal failure of the foreclosure prevention/mortgage modification program and the government’s awareness of this failure. The panel has made recommendations to attempt to fix the issues.

However, in the December report, the following remains a key failure:

• The foreclosure crisis continues to grow.
• More than two million families have lost their homes to foreclosure since the start of this crisis.
• Countless more have lost their homes in short-sales or have turned their keys over to the lender.
• Foreclosure starts over the next five years are projected to range from 8 to 13 million.
• More than a year after TARP was passed, it appears that the TARP’s foreclosure mitigation programs have not yet achieved the scope, scale, and permanence necessary to address the crisis.

Executive Summary, Elizabeth Warren Introduces December Report

Thanks to Tom Lyons, at the Herald Tribune.  While this article uses examples from Florida it does a good job of highlighting what has become common practice here in Texas.

If you are unwilling to make a choice to fight your foreclosure or struggling mortgage situation you’ve likely sealed your own fate.

Foreclosure mills tend to be sloppy and make errors which later they have to undo and fix.  When you get paid by the piece and not the quality, the revenue model is simple.  More is better.  Sacrifice quality for volume.  Fix mistakes later.

-The Bank Slayer

When a ruling is reversed by an appellate court, the judge faulted sometimes grumbles.  - By Tom Lyons, HeraldTribune.com

So I didn’t know what to expect when I asked Circuit Court Judge Robert Bennett about an appellate court ruling that overturned a house foreclosure he had granted.

The three-judge panel said a bank that was not the original lender had not proven it had the right to foreclose, because the documents filed did not show how, or if, mortgage ownership had ever been transferred to the bank.

Bennett’s reaction?

The higher court was totally right, he said.   “I’m willing to fall on my sword on this one,” Bennett said. “It wasn’t a very good piece of judge work.”

To be fair, many judges have done much the same thing in similar cases, partly because most foreclosures had long been so routine. If contested at all, it was rare that anyone claimed a major financial institution had not proven any link to the mortgage.

Now, just a couple of years since Bennett’s ruling on a foreclosure case he cannot even recall, that sort of claim has become commonplace. Of the dozen or so lawyers I’ve heard from who fight foreclosures — a common specialty these days — all mentioned that issue.

“This issue of standing, it’s common throughout the state,” said circuit Chief Judge Lee Haworth.

Many mortgages from the past decade were sold, packaged together, and resold as securities. Showing ownership of just one became complicated, especially because transfer paperwork was often not done for each mortgage.

Law firms that some call “foreclosure mills” handle loan default cases by the thousands for financial institutions that were not the original lenders. Some have filed odd documents in their court cases.

Many claim loan documents are lost, but that ownership of the note was transferred, perhaps multiple times, and that the foreclosing bank is now the owner or trustee.

Problem is, they rarely show a clear chain of transfers back to the original lender. Often, the documents are not only vague but also of fresh vintage. Some are only created, signed and notarized after the foreclosure is filed.

And signatures authorizing the transfers make fun reading.

Some people listed as vice presidents and the like often are not, and were never even employees of the companies named. They work for companies that are hired to create the documents.  When accused of using sham documents, the response has sometimes been that the signers were somehow authorized to sign, a claim some judges have rejected.

But in many local cases, there has been no response at all from the alleged mortgage holder, and many cases have gone into limbo. And so, some homeowners have kept a roof over their heads while making no payments, but they have no idea when or how the legal battle might resume.   Bennett’s ruling happened before all this became as ordinary in Southwest Florida as sunshine.  Few judges then thought to doubt that a bank had standing to foreclose.

Bennett and Haworth both say the impact of the appellate court ruling won’t be a big thing for other cases, simply because, even without it, many judges have become well aware of the issue of questionable foreclosure documents.

That doesn’t mean they are all being spotted.

In uncontested cases, most still slip by, and Haworth says judges have too many cases to do the checking that a defense lawyer would do.  But there is bigger news that should help, Haworth says.

Last month, Florida’s Supreme Court decided that attorneys filing foreclosure cases will no longer be presumed blameless when they claim a right to foreclose based on faulty documents.

The foreclosure mills normally rely on an army of assistants and clerical workers, and lawyers claiming that an assistant’s error led to a faulty filing have rarely been called to task.  That’s about to change, Haworth says.

Some may still gamble in cases where they expect no opposition lawyer will be checking the documents.  But if they take the time and effort, most should be able to do things right and establish their claims, Haworth said.

If not, he said, they’ll have a problem.   “I’m looking forward to see how they do comply,” Haworth said. “Their license could be on the line.”

Here is a summary:

HAFA – New Program Offers Borrowers Foreclosure Alternatives

Introduction of Home Affordable Foreclosure Alternatives – Short Sale and Deed-in-Lieu of Foreclosure

Overview

Supplemental Directive 09-09 provides guidance to servicers on the Home Affordable Foreclosure Alternatives Program (HAFA) and includes the general terms and conditions, evaluation process, documentation, and reporting requirements. As part of the Home Affordable Modification Program (HAMP), HAFA provides financial incentives to servicers and borrowers who utilize a short sale or a deed-in-lieu (DIL) to avoid foreclosure on a HAMP-eligible loan.

Foreclosure Alternatives

The HAFA program simplifies and streamlines the use of short sale and DIL options by incorporating the following unique features:

• Complements HAMP by providing viable alternatives for borrowers who are HAMP eligible.
• Utilizes borrower financial and hardship information collected in conjunction with HAMP, eliminating the need for additional eligibility analysis.
• Allows the borrower to receive pre-approved short sale terms prior to the property listing.
• Prohibits the servicer from requiring, as a condition of approving the short sale, a reduction in the real estate commission agreed upon in the listing agreement.
• Requires that borrowers be fully released from future liability for the debt.
• Provides financial incentives to borrowers, servicers, and investors.

Timing & Eligibility

Servicers – Supplemental Directive 09-09 is effective April 5, 2010, but participating servicers may elect to implement HAFA prior to April 5, 2010, in accordance with the Supplemental Directive. In order to participate in HAFA, a servicer must have executed a HAMP Servicer Participation Agreement (SPA) by December 31, 2009. (The HAMP SPA is available for review on HMPadmin.com.)

Borrowers – Servicers must consider a HAMP-eligible borrower for HAFA in accordance with their policies within 30 calendar days of the date the borrower:

• Does not qualify for a HAMP Trial Period Plan,
• Does not successfully complete a HAMP Trial Period Plan,
• Is delinquent on a HAMP modification by missing at least two consecutive payments, or
• Requests a short sale or DIL.

Note: A borrower must be considered for a HAMP modification and other retention programs offered by the servicer prior to being considered for HAFA.

If you are trying to save your family from a foreclosure situation call our office now at 713-595-8200.

– The Bank Slayer

Although bankruptcy may be an option or even the answer,  property owners should explore all options

– The Homeowner’s Hero

Chapter 13 can save an investment property – Lien stripping in action

by David Leibowitz, Illinois and Wisconsin Bankruptcy Attorney

Today, a Wisconsin client asked what we could do to help save his investment property. It’s worth only about $70,000. It has a first mortgage for $80,000 and a second mortgage for $30,000. Our client bought the property at the top of the market. He can afford the first mortgage, but not the second. And he certainly doesn’t want a short sale or a deficiency judgment. He makes enough money that he could afford to pay it. What can be done?

Our client has little other unsecured debt.

But the entire second mortgage really is unsecured – there’s no equity in the building to support it. So in chapter 13, we can treat that debt as unsecured and strip away the second mortgage.  Instead of paying 11% interest on the second mortgage, our client can pay it off in full over a period of five years – and he could afford to do that.  Not only that, but $10,000 of the first mortgage can also be treated as unsecured and paid off in full over 5 years – without interest. That’s because it is perfectly OK to modify a non-residential mortgage loan in chapter 13 even though you can’t modify a mortgage loan secured by your personal residence. Wasn’t that a smart idea of Congress to reject mortgage modification? Gee, we really could have made some progress with our mortgage crisis.

Anyway, our client will be able to keep his building, reduce the mortgage considerably, pay off his debts over a reasonable period of time without interest and get the second mortgage lien released, thanks to the creative use of chapter 13.

REALTORS, be very, very careful when negotiating with the mortgage companies.  Your clients (the homeowners) may want to pursue and possible sue you after closing a short sale if you led them to believe they would be free of their house trouble.  If you are working with a homeowner attempting a short sale, remember two important facts:

1. According to stats in the Houston area MLS you have less than a 25% chance of success in closing the short sale (i.e. your homeowner gets foreclosed first).
2. Most banks are pumping out short sale approvals which leave the homeowner on the hook (unless negotiated differently).

If you are working with a homeowner on a short sale call our office to have us review the documentation and help you improve that success rate from 25% to 98% and save yourself possible headaches or worse a lawsuit later.

– The Bank Slayer

If you are struggling in negotiations with BofA call us to find out what levers to pull with these buffoons 713-595-8200.

-The Bank Slayer

CALL FOR ACTION: Foreclosed Over 40 Cents?

Originally printed at http://www.winknews.com/news/local/84156617.html

LEE COUNTY, Fla- In the middle of the multi-billion dollar foreclosure crisis, there’s a southwest Florida family that could lose their house over a 40 cent mistake.   According to the homeowner, that mistake was his lender’s fault.

“I’m fearful to send them more money,” said the homeowner, who is also afraid of losing his job for talking about the situation publicly.    “Mark” said he modified his mortgage to match his lower income after a layoff and thought everything would be alright, until his lender took an automatic payment incorrectly.

“They posted it 40 cents short … three weeks later we get a letter saying you’ve missed your payment so you’re out,” said “Mark”.    For three weeks, “Mark” called his lender time and time again trying to resolve the problem.

“They said, ‘no problem we assure you everything will get fixed’. Just make the 40 cent payment to make it even.”    But the problem did not get fixed and “Mark” had to seek the help of foreclosure attorney Carmen Dellutri.

“The extraordinary thing about this case is that the bank made a mistake. They acknowledged it and yet they wouldn’t fix the problem,” said Dellutri, who said he’s never heard of someone almost losing a house over less than the cost of a soda.

Dellutri said his phones are ringing off the hook with homeowners just like “Mark” who think they’ve resolved their mortgage issues.

“This gentleman contacted me with a situation that I hear about 5 times a week. The banks and mortgage companies will not work with individuals and they renig on the deal,” said Dellutri.      Like many homeowners, “Mark” was forced to default on his mortgage payments to get his lender to even start the modification discussion.
For two years, WINK News has been uncovering stories of homeowners that say the same thing.
Last March, we met Janice Bass who said she was in financial trouble but doing everything she could to keep up with her payments. The Fort Myers resident said she couldn’t get her lender to work out a modification with her until she stopped paying altogether. By July, she had stopped paying and was working out a modification but when we checked back in October she still hadn’t heard anything from her lender.

The Making Homes Affordable Act was supposed to save seven to nine million homes, as of February 1, 2010 it’s saved about 850-thousand.      “We had a breakthrough oppurtunity in December and January,” said Alvina McHale, the communications and marketing director for the United States Treasury Department.

McHale said the Treasury knows there are a lot of problems with the act, so they are making changes.    They are going town to town to get troubled borrowers face to face with their mortgage lenders, streamlining paperwork to get people from temporary to permanent lenders and creating new rules for lenders.

Those new rules require lenders to acknowelege applications made through the treasury department within ten days, and make a decision within 30.

“If people don’t get an answer from their lender, they call our hotline, ask for the MHA desk and we will work with the lender to get an answer,” said McHale.     No everyone will qualify for a modification, especially if the homeowner is too upside down in their home of can’t even make the lower payments.

But “Mark” said he feels homeowners are getting the raw end of the bargain.      Not only could he and his family lose their home over a the bank’s forty cent mistake, but his lender made another big mistake on top of it. One month they took two payments out of his account automatically, stretching his already thinning budget to the last penny.

When he called his lender about this problem, they told him they had to keep the payment because he’s technically in default since he stopped making payments to qualify for a modification.     However, there is not much “Mark” can do.

Attorney Dellutri said there is no law that lets him or anyone enforce modification provisions. In fact, he said the homeowner is better off fighting a foreclosure.    “I’ve got a judge, the rules of evidence.. And I’m in a playing field where I know it’s going to be fair,” said Dellutri.     Due to “Mark’s” pending litigation, Bank of America would not respond to our inquiries about the situation.