But this $300 million is just a portion of the total funds the five biggest lenders have agreed to spend in Florida, one of the states hit hardest by the foreclosure epidemic. In total, Bank of America, Citigroup, Chase, Ally/GMAC and Wells Fargo have agreed to spend $8.4 billion in effort to right the wrongs that have been committed.
]]> Except for the $300 million that is essentially up for grabs, most of the huge settlement has already been set aside for various groups throughout the state, with most of the money -- $7.6 billion -- going to homeowners whose mortgages were serviced by one of the five lenders involved in the settlement.Another $309 million is expected go to homeowners who want to refinance and owe more on their property than the property is worth. Additionally, homeowners who lost their homes to foreclosure from Jan. 1, 2008 to Dec. 31, 2011 and suffered from abusive lending practices are set to receive $2,000 each, which will account for about $170 million of the state's settlement money.
Finally, the smallest chunk of the settlement money --about $34 million -- is expected to go to the state's general-revenue fund.
Even though it's now too late to submit your requests to Attorney General Pam Bondi's office, do you have any ideas as to how the leftover $300 million should be spent?
Source: Orlando Sentinel, "Last day to tell state how to spend giant mortgage settlement," Mary Shanklin, May 13, 2012
]]>By Thursday, at least 1,500 individuals and groups had submitted a wide range of suggestions as to how this portion of the settlement should be spent. One Florida resident told the Orlando Sentinel that he thinks a bulk of the funds should be used to investigate lenders that don't appear to be abiding by the terms agreed to in the settlement.
]]> The man said that he and his wife owe more on their mortgage than their home is worth, and they have been trying to lower the 7 percent interest rate on their loan, which is held by Citigroup and serviced by Wells Fargo, two of the lenders subject to the agreement.Even though lenders agreed in the settlement to help homeowners in similar situations to refinance, the man said he and his wife have been told by Wells Fargo that they don't qualify for assistance. Understandably, the man feels someone should be holding the lenders accountable for what they signed-off on.
On the other hand, Florida Realtors, an association representing the state's real-estate industry, has advocated for at least one-third of the money to be placed in an affordable-housing trust fund that has been depleted by lawmakers over the past ten years. Others have pushed for a portion of the money to be spent on providing debt counselors and legal services for distressed homeowners.
Please check back later this week for more on this important topic.
Source: Orlando Sentinel, "Last day to tell state how to spend giant mortgage settlement," Mary Shanklin, May 13, 2012
]]>What happened is that law firms working for lenders would routinely pay under-qualified workers to sign-off on foreclosure documents without making sure that their contents were accurate, which is required under the law. Many of the lawsuits were then voluntarily dismissed when homeowners fought back. The lenders would often then refile the lawsuits using new paperwork.
]]> If the Supreme Court rules that these foreclosure lawsuits that were voluntarily dismissed cannot be refiled, hundreds of thousands of foreclosures in the state sitting in limbo would essentially remain there, Reuters reported. Lenders could also face serious financial penalties.Interestingly, the specific homeowner involved in this case actually reached a settlement with his lender after arguing that a fraudulent mortgage assignment was filed in the foreclosure case against him. Although the settlement was private, it appears that his mortgage was paid off by his lender.
Even so, the Florida Supreme Court decided to hear the case because of what it called "public importance." The case could take another eight months to be decided, but legal experts say that it could also have an effect on judges in the 26 other states that require judicial approval for foreclosures.
In yesterday's oral arguments, an attorney representing the homeowner said that the practice of using voluntary dismissal as a "shield for fraud" should not be allowed.
"It sets up a system where every litigant is condoned and encouraged to lie, cheat and steal, knowing that if they are caught, they can simply voluntarily dismiss and absolve themselves from that fraud," the attorney argued.
The attorney representing the lender said that sanctions should be applied in cases where voluntary dismissal is used improperly, but voluntary dismissal should not be completely done away with as it affects so many other types of lawsuits in addition to foreclosures.
Undoubtedly, this will be a very important case to follow.
Source: Reuters, "Florida Supreme Court hears landmark foreclosure suit," Michelle Conlin, May 10, 2012
]]>Mortgage fraud has become widespread in recent months, which is why it's so important for homeowners to be on the lookout. Oftentimes, these phony companies offer to save homeowners from foreclosure, secure reverse mortgages or reduce monthly mortgage payments in exchange for an upfront payment or monthly fee. Unfortunately, the homeowners never see the results they were promised.
]]> Falling victim to mortgage fraud is one way to make a stressful situation even worse, which is why homeowners need to know how to protect themselves. Here are several tips that can help protect homeowners from mortgage fraud:If you believe you may have been the victim of mortgage fraud, visit www.Stopfraud.gov for more information. The Justice Department's Consumer Protection Branch is vigorously prosecuting these fraudulent companies. Also, please know that reputable assistance is available to homeowners facing foreclosure.
Source: SurfKy.com, "Protect Yourself From Mortgage Fraud," David Dowdy, May 7, 2012
]]>The nation's five biggest lenders reached a settlement stemming from the allegations earlier this year, which was expected to result in another boom of foreclosures as lenders began taking action against homeowners who are delinquent on their mortgage payments. In fact, more than one million foreclosures were said to have been postponed from 2011 to 2012.
]]> However, as the Wall Street Journal recently pointed out, there are no signs of the second wave as of yet. Data released last week by LPS Applied Analytics and CoreLogic showed that while foreclosure inventory is still very high and new foreclosures are up, the numbers are still far lower than they were in March 2011.Additionally, the number of homeowners who are delinquent on their mortgage payments is down, as is the number of homeowners who are either in foreclosure or at risk of foreclosure. A spokesman from CoreLogic explained that there are certain areas of the nation seeing spikes in foreclosure activity, "but not that wave of foreclosures that people were expecting."
The Wall Street Journal said that February's $25 billion settlement with the nation's largest banks could have something to do with the relative stability. Under the settlement, banks are required to spend $17 billion to help homeowners modify their existing loans and agree to short sales, which allow the home to be sold for less than what is owed on the mortgage.
The Wall Street Journal concluded that while the possibility of another wave of foreclosures has not been ruled out, the country doesn't need to seek cover just yet.
Source: The Wall Street Journal, "That New Foreclosure Tsunami? Still Waiting," Robbie Whelan and Alan Zibel, May 3, 2012
]]>These numbers are a significant drop from the homeownership rate in June 2004, which reached as high as 69.2 percent for a brief time. Of course, this was before the onset of the recession and housing market collapse that lingers on today.
]]> Experts say that overly-strict mortgage lending standards are keeping many potential buyers qualifying for home loans or even applying in the first place. Foreclosures and bank repossessions have also stripped homeownership from many Americans.In recent years, many homeowners in Florida and elsewhere have lost their homes to foreclosure after being overwhelmed by mortgage payments they could not afford. For the most part, this large group of homeowners has turned into renters.
The impact on available rental apartment vacancies has been dramatic, reaching an 11-year low of 4.9 percent earlier this year. Rental homes, generally pricier than rental apartments, had an 8.8 percent vacancy rate in the first three months of 2012, down significantly from the 9.9 percent vacancy rate the year before.
The foreclosure epidemic has also resulted in a large number of homes remaining vacant. A full 18.5 million homes, or 13.9 percent of the 132.6 million existing homes in the country, currently stand vacant. Some of these homes are being offered for sale or rent, while others are intentionally off the market because of current market conditions.
Hopefully, this real estate crisis comes to an end soon so more people can realize the American dream of owning a home. However, experts say that the ownership rate could fall below 64 percent by the end of 2015 and stay there for years to come.
Source: Bloomberg, "Homeownership Rate in U.S. Falls to Lowest Since 1997," John Gittelsohn, April 30, 2012
]]>These changes were implemented after officials admitted that the original plan for the $1 billion foreclosure prevention program didn't meet the needs of distressed homeowners. They realized that underemployed and unemployed homeowners needed longer than six months to get back on their feet and that program eligibility requirements may have been too strict.
]]> Other changes were made as well. For example, under the new rules, the aid to bring a loan current will now be awarded when the homeowner is approved for the program, instead of at the end of the process. The goal is to help spare the credit scores of homeowners and reduce late fees charged by lenders.The changes to the program were administered by the Florida Housing Finance Corp. on Friday, but they still need approval from the federal government, which funds the program. The federal government is expected to provide authorization this month.
As of April 1, close to $90 million has been reserved to assist 4,955 homeowners throughout the state. In Palm Beach County, it appears that about 350 homeowners have received aid under the program.
As you may remember, we recently discussed how the Hardest Hit program received sharp criticism after a government watchdog issued a report concluding that the program was not helping as many people as planned. However, a spokesman for the Florida Housing Finance Corp. said that the changes were not in response to the criticism.
Source: Palm Beach Post, "Florida's 'Hardest-hit' Homeowners Are Eligible for More Aid," Kimberly Miller, April 30, 2012
]]>The report found that approximately 10 percent of the nation's youth are going to be impacted by foreclosures, including those which have already taken place and those which seem likely to occur. In the past five years, it's estimated that 2.3 million children have lost their homes to foreclosure after their parents couldn't keep up on payments.
]]> Additionally, the study found that about 3 million children currently live in homes that are teetering on the brink of foreclosure, with mortgages seriously in delinquency or the actual foreclosure process already underway. The study also found that there are another 3 million children who live or lived in rental properties that are at risk of foreclosure or have already been repossessed.Being thrown out of their home causes children to lose the shelter of their familiar neighborhood, school, and friends, the report concluded. For many children, their level of achievement in school is adversely affected by the trauma of suddenly losing their shelter and the anxiety that surrounds it.
An examination of 16 different research studies on the subject revealed that a forced move from a home typically causes a child to experience a drop in math and reading test scores as dramatic as those caused by missing a month of school attendance. Home mortgage foreclosures may also have an adverse impact on children's health, both physical and psychological.
This is why it's imperative to do what it takes to save your home if you are in jeopardy of losing it to foreclosure. There are currently alternatives available such as a loan modification that could keep your family in the home you know and love.
Source: Chicago Sun-Times, "Study: Foreclosures take toll on kids," Julie Schmit, April 19, 2012
]]>In February, the nation's five largest lenders reached a settlement with 49 states after being accused of robo-signing and other unlawful foreclosure practices. Since the settlement, foreclosure activity has picked up in about half of the country, experts say.
]]> Last month, a report by RealtyTrac indicated that while foreclosures slowed slightly on average nationally, they increased dramatically in states like Florida where foreclosures are handled by the court system. According to an economist at BNP Paribas, 1 million homes are expected to be foreclosed this year, which is an increase from 800,000 in 2011.Typically foreclosure homes sell at a steep discount, which is why they bring down the prices of other homes in the area. The chief economist at the real estate website Zillow said that in a healthy real estate market, foreclosed homes make up less than 5 percent of all home sales. However, since 2008, 15 to 20 percent of all home sales have been foreclosed properties.
Overall, the Standard & Poor's/Case-Shiller home-price index revealed that home prices have dropped by 35 percent since the housing bubble burst. In February, home prices dropped from the month before in 16 of the 20 cities analyzed for the sixth month in a row.
The good news is that experts say that the decline has finally slowed, which could mean that the sale prices are stabilizing. What would really help is if more Americans can fight off foreclosure...
Source: Associated Press, "Foreclosures squeezing US home prices and sales," Christopher S. Rugaber, April 24, 2012
]]>As you may remember, the Troubled Asset Relief Program is the federal government's $700 billion bailout program that was intended to provide relief to distressed homeowners as well as distressed banks. The Hardest Hit program and the Home Affordable Modification Program are both part of TARP and have both been harshly criticized.
]]> The Hardest Hit program was geared toward the states with the most homeowners underwater in their mortgages and the highest unemployment rates. The larger Home Affordable Modification Program was then charged with lessening the foreclosure crisis on a national level, and it has also been criticized for failing to perform as intended.The federal watchdog's report said perhaps the biggest obstacle is that states administering the programs have had a hard time getting the loan servicers to participate. Of course, modifying existing home loans would mean that mortgage servicers have to take a hit, which they are reluctant to do.
Additionally, the report pointed out that states do not have the same authority as the federal government when it comes to bargaining with the loan servicers.
That is likely why the Hardest Hit program has focused on assisting unemployed homeowners with meeting their mortgage payments instead of loan modifications. However, the programs won't last forever, which is why loan modifications are just as important as providing aid to unemployed homeowners.
If you are currently facing foreclosure, or fear that you could be soon, talk to a foreclosure defense attorney in your area to find out about your options. Although the process may seem tedious, it is possible to get foreclosure relief through these programs and others.
Source: CNNMoney, "Watchdog blasts housing program for 'hardest hit'," Jennifer Liberto, April 12, 2012
]]>The watchdog reported that as of Dec. 31, just 3 percent of the program's $7.6 billion in aid had been put to use.
Originally, the goal of the Hardest Hit program was to provide assistance to 458,000 distressed homeowners by 2017, when the program ends. However, the federal watchdog reported that only 30,640 homeowners have been assisted by the program thus far, which is about 7 percent of the program's total goal.
]]> The federal watchdog also expressed criticism that the majority of the funds that have been used as part of the program have been thrown at bolstering existing state programs that help unemployed homeowners meet their mortgage payments. The watchdog said that while assisting unemployed homeowners is very important, it's not the program's only priority."It is important to reach the unemployed, but it's not reaching underwater homes like it was intended," said the watchdog, also known as the Special Inspector General for TARP. She said that mortgage modifications such as principal reductions should also be of primary focus.
The Special Inspector General's report indicated that while 26,100 unemployed homeowners have been assisted by the Hardest Hit program thus far, only 606 homeowners were able to get either their mortgage principal reduced or their second lien reduced.
Please check back later this week for more on this important topic, including the likely culprit for the program's disappointment.
Source: CNNMoney, "Watchdog blasts housing program for 'hardest hit'," Jennifer Liberto, April 12, 2012
]]>The settlement, although providing compensation and protections for struggling homeowners, is also expected to re-open the floodgates for foreclosure filings throughout the nation. Many foreclosures have been sitting stagnant since 2010, when the robo-signing scandal was brought to light and lenders put foreclosure litigation on hold.
]]> This resulted in homeowners being able to stay in their homes for months and even years with delinquent mortgages. In Florida, the average time for a foreclosure case to make it through the backed-up court system stretched to 861 days. But now, experts predict that the foreclosures will speed up in duration and many more new complaints will be filed."Perhaps a million foreclosures could have been pursued last year but weren't," the executive vice president for real estate investment company told CNNMoney. But he said the wait will soon be over. According to RealtyTrac, foreclosure filings were up 10 percent in states like Florida where foreclosure cases must go through the court system.
"The dam may not burst in the next 30 to 45 days, but it will eventually burst, and everyone downstream should be prepared for that to happen," the CEO of RealtyTrac said in a statement. He said both new foreclosure activity and short sale activity are expected to soar.
A short sale is an alternative to foreclosure that involves selling a home to a third party for less than is owed. The profit is then given to the lender as full or partial payment of the past due amount. For more information on short sales and other ways to avoid foreclosure, contact a foreclosure defense attorney in your area.
Source: CNNMoney, "Flood of foreclosures to hit the housing market," Les Christie, April 13, 2012
]]>To help prevent a mess like this from happening again, the federal government has proposed new rules to better regulate the mortgage servicing industry. The rules are aimed at making it easier for homeowners to avoid foreclosure and making home loans more transparent to borrowers.
]]> Essentially, the new rules, which were devised by the Consumer Financial Protection Bureau, would mandate that loan service providers warn borrowers of impending changes to their interest rate or homeowners insurance and provide monthly standardized statements explaining their charges.Additionally, under the new rules mortgage servicers will also be required to make "good-faith efforts" to contact borrowers at risk of foreclosure and provide them with options that could help them keep their homes. The rules also require stepped-up record-keeping and foreclosure counseling programs.
The federal agency said that it will be proposing the rules this summer and expects to have them finalized by January of next year. A spokesman for the agency said that under the new rules, "consumers would have clearer information about their options to keep their homes and would be in a better position to hold servicers accountable for their decisions."
Now, more than ever, distressed homeowners in Florida and the rest of the nation have the opportunity to defend themselves from foreclosure. What all homeowners facing foreclosure need to know is that they have options, they just have to act.
Source: The Associated Press, "New Rules Aim To Help Borrowers Avoid Foreclosure," April 10, 2012
]]>Well, according to the state attorney general, Florida will walk away from the settlement agreement with about $8 billion in total. The AG said that a large chunk of that amount -- about $3.1 billion -- will be used to help the state's distressed homeowners modify their mortgages or reduce their mortgage balances.
]]> Additionally, the AG said that close to $310 million will be used to help provide refinancing to homeowners who have found themselves "underwater" with their mortgages, meaning that they owe more on their loans that their homes are worth. The AG also said that about $171 million will be put towards partially compensating Florida residents who lost their homes to foreclosure.Finally, the AG's office said it will set aside about $334 million to address a variety of needs resulting from the foreclosure crisis, including compensating the state for having to pursue legal action against the banks, enchaining law enforcement efforts against financial fraud and mitigating the number of preventable foreclosures in the state.
Now the state will move ahead in developing plans and programs to meet these objectives. So far, a Florida lawmaker has proposed two ideas to the AG's office.
The first is that counselors certified by the U.S. Department of Housing and Urban Development are brought in to give homeowners advice on the best way to handle their financial problems. The second is a "Hardest Hit" program that would provide aid to unemployed or underemployed homeowners so they can fend off foreclosure.
Can you think of any other ways the AG's office could use the money to assist struggling Florida homeowners?
Source: Herald Tribune, "Help for troubled homeowners," April 6, 2012
]]>The Law Offices of David J. Stern shut down after losing its two biggest clients, banking giants that become concerned when the law firm was accused of dishonest foreclosure practices, including robo-signing, which refers to forgery and notary fraud.
]]> Before closing on March 31, 2011, Stern's firm was handling somewhere around 100,000 of Florida's foreclosure cases. Of course, without representation, these cases were left in limbo while being added to the court system's mounting backlog.Surprisingly, after 377 complaints were made to the Florida Bar relating to foreclosure fraud, Stern has not been sanctioned and is still licensed to practice law in the state. In fact, so far not one attorney has been sanctioned as a result of the foreclosure scandal that plagued the state.
However, some foreclosure defense attorneys in the state say that there are at least a couple positive outcomes in the wake of David J. Stern's fall. They say that since the robo-signing scandal, courts are more tuned-in to foreclosure fraud and the defenses of homeowners.
"[A]rguments we've been making are resonating, we're getting cases dismissed, and judges are no longer taking at face value everything the banks say," one foreclosure defense attorney explained.
Foreclosure continues to be a problem in Florida and elsewhere. But now more than ever, Florida homeowners need to know that they have options after being served with a foreclosure complaint. The key is to get help from someone who understands the process and can help you make an informed decision in moving forward.
Source: The Palm Beach Post, "Thousands of foreclosures in limbo one year after Stern firm's collapse," Kimberly Miller, April 2, 2012
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