Free Republic

Refinancing lifeline fails to reach most 'underwater' homeowners Federal plan misses about 97 percent of eligible borrowers By Renae Merle Saturday, October 24, 2009 A seven-month-old government program to help homeowners with little or no equity refinance their mortgages has so far reached fewer than 3 percent of those targeted, with many struggling borrowers deciding that the benefits of a new loan aren't worth the closing costs. This lackluster performance reflects the difficulty of helping the growing segment of "underwater" homeowners -- those who owe more than their home is worth. The program is a key component of the Obama...

Four-Year Old Buys House With Federal Money Vincent Fernando|Oct. 22, 2009, 11:08 AM | The stories about a return to bubble-era lending standards are getting too depressing to bear. There are the no-down payment loans backed by the USDA, the FHA mortgage worth more than 110% of the value of the home, and now this: babies buying homes. Georgia Congressman John Lewis is holding hearings: “We will hear today that taxpayers claiming the credit include those: who already owned a home, who had not yet bought a home, and who are children—some as young as four years old. There are...

My ex-wife died about two and a half years ago. She had purchased a home in Southern California after our divorce for $250,000. I can’t help but mention that some of the funds that she used were provided by me by order of the divorce Court. Well, we have two children, one 18 the other 16. Since she belonged to a cult religion that believes that there is no disease and that medical care is unnecessary, she therefore made no preparations for a possibility of her death. No Will, no Trust, no life insurance. Well the kids asked me to...

Subprime mortgages: Myths And Reality Kent Cherny & Yuliya Demyanyk 17 October 2009 The global crisis is said to have originated in the US subprime mortgage market. This column argues that many of the most popular explanations that have emerged for the subprime crisis are, to a large extent, myths. Subprime mortgages have received a lot of attention in the US since 2000, when the number of subprime loans being originated and refinanced shot up rapidly. The attention intensified in 2007, when defaults on subprime loans began to skyrocket triggering what was known at the time as the “subprime crisis”...

If you think moderate Democrats are afraid of voting for ObamaCare, you should see how they react to a potential vote on the Countrywide Financial loan scandal. The House oversight committee was scheduled to meet on Thursday afternoon to mark up several minor pieces of legislation. Days before the meeting, California Republican Darrell Issa notified committee Chairman Edolphus Towns that Mr. Issa would call for a vote to subpoena Countrywide documents from Bank of America, which bought the failed subprime lender last year. Recall that, under the "Friends of Angelo" program, named for former Countrywide CEO Angelo Mozilo, Democratic Senators...

Almost two-thirds of all bad mortgages in our financial system were bought by government agencies or required by government regulations. Recent reports that the Federal Housing Administration (FHA) will suffer default rates of more than 20% on the 2007 and 2008 loans it guaranteed has raised questions once again about the government's role in the financial crisis and its efforts to achieve social purposes by distorting the financial system. The FHA's function is to guarantee mortgages of low-income borrowers (the mortgages are then sold through securitizations by Ginnie Mae) and thus to take reasonable credit risks in the interests of...

A real estate judge is refusing to reverse a landmark ruling that opens the door to voiding tens of thousands of Bay State foreclosures dating as far back as 1989. “The foreclosure sales (in question are) invalid because they failed to meet the requirements of (Massachusetts law),” Land Court Judge Keith Long wrote yesterday in reaffirming a decision he originally reached in March. Long denied a request from Wells Fargo and U.S. Bank to reinstate two Springfield foreclosures he invalidated in March because of flawed paperwork. As the Herald first reported in June, the case centers on documents that banks...

As I understand it ..

NEW YORK – A mortgage fraud crackdown announced Thursday resulted in the arrests of dozens of people, including six lawyers, seven loan officers and three mortgage brokers in four states. Thirty-one people were arrested in New York, Pennsylvania, Ohio and North Carolina. They were among 41 people charged with engaging in mortgage fraud scams that defrauded lenders out of more than $64 million in home mortgage loans. Of the 10 other defendants, one was expected to surrender later Thursday, four were previously charged and five remained at large. Authorities gathering for an afternoon news conference in Manhattan said the crackdown,...

The number of Americans receiving a foreclosure notice in the third quarter continued to grow, according to a new report, despite government programs intended to attack the problem.

Mortgage Loan Modification is the only solution to save your home and stop foreclosure. As of last month, lenders had sent out more than 571,000 offers to reduce borrowers' monthly payments, the Treasury Department said Wednesday. Treasury says 48 mortgage companies are now involved in the program, up from 38 in July. The companies have requested financial information from almost two-thirds of eligible borrowers and say they are on track to have 500,000 loan modifications in place by Nov. 1. What is Obama's Mortgage Relief Program & How do you qualify?

Home rescue plan delaying, not solving crisisTue Oct 13, 2009 12:23pm EDT By Nick Carey and Al Yoon ALBANY, Ohio/WEST PALM BEACH, Florida (Reuters) - Within weeks of taking office, U.S. President Barack Obama rode to the rescue of homeowners resigned to financial ruin. Obama, grappling with the worst U.S. housing crisis since the Great Depression, pledged to help as many as 9 million families keep their homes by reworking their mortgages. Eight months later, the plan is plagued by delays, red tape and, some critics say, a reluctance by banks to do their part. Just 17 percent of eligible...

CNBC has a long and detailed article about the current state of the President's mortgage rescue plan. Eight months later, the plan is plagued by delays, red tape and, some critics say, a reluctance by banks to do their part. Just 17 percent of eligible borrowers have had their loans modified and monthly payments cut. Hardly any have been given a cut in the amount they owe on homes which are now worth less. That means many successful applicants are left with loans that they still will not be able to afford in the long run. So instead of resolving...

New data suggest that foreclosures are rising in more expensive housing markets. About 30% of foreclosures in June involved homes in the top third of local housing values, up from 16% when the foreclosure crisis began three years ago, according to new data from real-estate Web site Zillow.com. The bottom one-third of housing markets, by home value, now account for 35% of foreclosures, down from 55% in 2006. The report shows that foreclosures, after declining earlier this year, began to accelerate in the late spring and that more expensive homes have more recently accounted for a growing share of all...

Kevin's homebuilding business collapsed in the recession, and they couldn't pay the mortgage. Their bank, JPMorgan Chase, rejected the Martins' request for a mortgage modification and took legal possession of the house Aug. 19. On their anniversary two days later, the Martins and their two young children moved in with Kevin's aunt in her small condominium in Charbonneau. They're broke, unemployed and visibly stunned at their rapid plunge from the middle class to the newly poor. A bomb of debt vaporized the Martins' once-comfortable life. The heavy load of leverage they had assumed in hopes of grabbing their piece of...

A former Fannie Mae executive warned a House panel Thursday that the Federal Housing Administration is destined for a multibillion-dollar taxpayer bailout in 24 to 36 months, an analysis that the agency’s top official immediately dismissed as “completely unfounded.” At a hearing before a House Financial Services panel, Edward J. Pinto predicted that the FHA will suffer $40 billion in losses, leaving it unable to cover its bad loans without taxpayer help. Pinto, a real estate finance consultant who served as Fannie Mae’s chief credit officer from 1987 to 1989, said he testified so lawmakers would “not be able to...

Bedlam Asset Management takes a look at exchange traded funds in its latest market commentary (H/T paver). Specifically, at how — largely because of greed — a sound concept has once again potentially been bastardised by the financial industry. As Bedlam notes, ETFs started off as a simple and good idea. They were convenient for investors, easy to understand, affordable, the natural successor of earlier market structures like futures. But then — unhappy with the ETFs’ solid but low returns — the industry turned to financial rocket scientists to try and beef up the ETF game. Or as Bedlam observes:...

Expanding the Community Reinvestment Act As we try to shake off the financial crisis, here's a bright idea. Take a law that has led to the writing of an enormous amount of bad mortgages and expand it. Then take enforcement away from bank examiners and give it to housing activists. Sound like a poisonous cocktail? Well, it is what the Obama administration and Democrats are currently stirring up on Capitol Hill. The White House and Congress want to expand a 30-year-old law--the Community Reinvestment Act--that helped to fuel the mortgage meltdown. What the CRA does, in effect, is compel banks...

Troubled homeowners may be losing a major lifeline: so-called short sales. To get bad loans off their books and spur home sales, lenders have been forgiving the difference between the outstanding mortgage balance and the purchase price. Banks were never eager participants in short sales, and now financial firms—even those that can offload losses to the government—are balking at such transactions. Some lenders are forcing the sellers to pay extra money at closing. Others want a promissory note for part of the amount due. The situation could be a setback for the already wobbly housing recovery. A record one-third of...

WASHINGTON — The federal government is engaged in a massive mortgage modification program that's on track to send billions in tax dollars to many of the very companies that judges or regulators have cited in recent years for abusive mortgage practices. The firms, called mortgage servicers, have been cited for badgering, manipulating or lying to their customers; sticking them with bogus fees, or improperly foreclosing on them. Mortgage servicers are the middlemen between homeowners and the investors that hold their mortgages, collecting homeowners' checks and disbursing payments for the mortgages, property tax and insurance. They're a necessary player for any...

As we try to shake off the financial crisis, here's a bright idea. Take a law that has led to the writing of an enormous amount of bad mortgages and expand it. Then take enforcement away from bank examiners and give it to housing activists. Sound like a poisonous cocktail? Well, it is what the Obama administration and Democrats are currently stirring up on Capitol Hill.

Declining home values have put a serious squeeze on one of the mortgage market's most popular and fastest-growing financing concepts: the Federal Housing Administration's reverse-mortgage program for senior citizens 62 or older. In a letter to reverse-mortgage lenders on Sept. 23, FHA Commissioner David H. Stevens said his agency must reduce the maximum amounts that senior citizens can receive on reverse mortgages because the program faced an estimated budgetary shortfall of $798 million in the fiscal year that began Thursday. Mortgage industry sources said the move amounts to a 10 percent cutback for all new applicants for FHA reverse mortgages....

SEPTEMBER 30, 2009 Foreclosures, Delinquencies Continue to Rise By JESSICA HOLZER WASHINGTON -- Lenders stepped up efforts to help strapped borrowers during the second quarter of 2009, but their actions weren't enough to stem rising mortgage delinquencies and foreclosures, a federal banking regulator reported Wednesday. Since the first quarter of 2009, actions to rescue borrowers from foreclosure increased nearly 75%, as lenders ramped up their participation in the government's loan modification program, the Office of the Comptroller of the Currency said. Such actions, which totaled 440,000 during the quarter, once again climbed more quickly than new foreclosures. However, the poor...

Marshall & Ilsley Corp. said it has extended its foreclosure moratorium an additional 90 days through Dec. 31. The initial moratorium announced on Dec. 18, 2008, was on all owner-occupied residential loans for customers who agree to work “in good faith” to reach a successful repayment agreement. The moratorium applies to loans in all M&I markets. M&I had announced a previous extension on June 26 that runs through Tuesday. Milwaukee-based M&I (NYSE: MI) has a “homeowner assistance program” that assists potentially distressed homeowners who the bank identifies and offers assistance. The bank also has a “foreclosure abatement program” that includes...

A landmark ruling in a recent Kansas Supreme Court case may have given millions of distressed homeowners the legal wedge they need to avoid foreclosure. In Landmark National Bank v. Kesler, 2009 Kan. LEXIS 834, the Kansas Supreme Court held that a nominee company called MERS has no right or standing to bring an action for foreclosure. MERS is an acronym for Mortgage Electronic Registration Systems, a private company that registers mortgages electronically and tracks changes in ownership. The significance of the holding is that if MERS has no standing to foreclose, then nobody has standing to foreclose – on...

The visits had a ritual quality. Three times a year, a coalition of Chicago community groups met with the Federal Reserve and other banking regulators to warn about the growing prevalence of abusive mortgage lending. They began to present research in 1999 showing that large banking companies including Wells Fargo and Citigroup had created subprime businesses wholly focused on making loans at high interest rates, largely in the black and Hispanic neighborhoods to the south and west of downtown Chicago. The groups pleaded for regulators to act. The evidence eventually led Illinois to file suit against Wells Fargo in July...

Could half of all U.S. mortgages -- some 60 million -- be protected from foreclosure? That's how some are interpreting a ruling from the Kansas Supreme Court. Ellen Brown/Huffington Post: A landmark ruling in a recent Kansas Supreme Court case may have given millions of distressed homeowners the legal wedge they need to avoid foreclosure. In Landmark National Bank v. Kesler, 2009 Kan. LEXIS 834, the Kansas Supreme Court held that a nominee company called MERS has no right or standing to bring an action for foreclosure. MERS is an acronym for Mortgage Electronic Registration Systems, a private company that...

With all the attention paid to the health care battle, ACORN, and the president's "Full Ginsburg" appearances on five Sunday talk shows, few people noticed a hearing with an exceedingly boring title -- "Proposals to Enhance the Community Reinvestment Act" -- held last week in the House Financial Services Committee. But the session marked a key moment in the ongoing battle between Republicans and Democrats over what caused our current financial woes -- and how we might best avoid getting into the same trouble again.

A study shows that people who abruptly and intentionally abandon their mortgages often have high credit scores, in stark contrast with most financially distressed borrowers. Who is more likely to walk away from a house and a mortgage -- a person with super-prime credit scores or someone with lower scores? Research using a massive sample of 24 million individual credit files has found that homeowners with high scores when they apply for a loan are 50% more likely to "strategically default" -- abruptly and intentionally pull the plug and abandon the mortgage -- compared with lower-scoring borrowers. National credit bureau...

As Iceland Goes... by: Allie Winegar Duzett, September 21, 2009 “The Icelandic Meltdown,” by Philipp Bagus and David Howden, published in the August 2009 edition of The Free Market newsletter, takes an in-depth look at Iceland’s current financial crisis. The thesis: that contrary to popular belief, the free market was not the cause of the financial meltdown—indeed, the free market may be the key to resurrecting Iceland’s economy. Is it possible that by looking at what went wrong there, we could get an idea of how larger country’s economies collapsed, such as America’s? Bagus and Howden begin by examining the...

The president used this speech to preview the G20 coming up in Pittsburgh. He proclaimed yet again that the economy has come back from the brink and credited his stimulus package with helping it come off the ledge. Judging by the polls, I would say that the American people aren't necessarily buying this and it's not the first time he's said it.

... Wilson, 69, is accused of walking into the Bank of America branch in the 4100 block of El Cajon Boulevard in City Heights and handing a bank manager a demand note, saying he had a bomb. Prosecutors said he made off with $107,000 before he was caught lying on a front porch near the bank.

As the housing market began booming in mid-2000, Wells Fargo & Co. teamed up with prominent African American commentator and PBS talk show host Tavis Smiley and financial author Kelvin Boston, the host of “Moneywise,”...to host something called “Wealth Building” seminars in black neighborhoods. Smiley was the keynote speaker, and the big draw...Smiley would charge up the audience — and rattle the Wells Fargo executives in attendance — by launching into a story about how he hated banks, and how they used to refuse to lend him money for his real estate projects in Compton, Calif., and elsewhere. After Hurricane...

If you've been waiting for home prices or interest rates to fall further before you buy a home, it's time to rethink your strategy. If you act soon, you'll be able to take advantage of historically low prices and interest rates that won't be around forever. And if you're a first-time buyer and you act very soon, you can still take advantage of an $8,000 tax credit. Here are five reasons to take the plunge now. 1. You may get a fat tax credit. The first-time home buyer's tax credit is worth 10% of the home's purchase price, up to...

DALLAS - When Congress passed an $8,000 tax credit for first-time home buyers last winter, it was intended as a dose of shock therapy during a crisis. Now the question is becoming whether the housing market can function without it. As many as 40 percent of all home buyers this year will qualify for the credit. It is on track to cost the government $15 billion, more than twice the amount that was projected when Congress passed the stimulus bill in February. In the view of the real estate industry and some economists, all that money is well spent. They...

The Federal Housing Administration said Friday that its financial cushion will sink below mandatory levels for the first time in its history, but officials insisted the agency won’t need to be rescued. “Under no circumstance will any taxpayer bailout be needed,” said David Stevens, the F.H.A.’s commissioner. He also said its borrowers are unlikely to see any change. Amid the collapse of the subprime lending market, the government has taken up the slack. The F.H.A. has insured nearly a quarter of all new loans made this year, and about 80 percent of that business is from first-time homebuyers. But the...

There's more troubling news regarding FHA loans. The Federal Housing Administration has been hit so hard by the mortgage crisis that for the first time, the agency's cash reserves will drop below the minimum level set by Congress, FHA officials said. The FHA guaranteed about a quarter of all U.S. home loans made this year, and the reserves are meant as a financial cushion to ensure that the agency can cover unexpected losses. "It's very serious," FHA Commissioner David H. Stevens said in an interview. "There's nothing more serious that we're addressing right now, outside the housing crisis in general,...

In mortgages, there's a trick that mortgage professionals use to hide costs. It's called "rolling in the costs". It's pretty simple. Let's say you owe $115,000 and closing costs are $3000. So, a mortgage broker will simply make your loan $118,000. The $3000 in closing costs are "rolled into the loan". They don't go away. Borrowers just don't see them because there aren't any out of pocket expense associated with them. Instead, you just owe that much more on your mortgage. You'll get that much less when you sell and your payment is that much higher. You aren't winning. All...

President Obama Speaks - And Lies (Again) President Obama stood in New York at "high noon" and talked about how we must have "change", and that we have "helped homeowners avoid foreclosures", how "we must put in place reforms" and that "we have helped come back from the brink" and "an irresponsible period of crisis." In fact, in his speech he said: So I want to urge you to demonstrate that you take this obligation to heart. To put greater effort into helping families who need their mortgages modified under my administration's homeownership plan. To help small business owners who...

Edward and Maria Moller are worried about losing their house — not now, but in 2013. That is when the suburban San Diego schoolteachers will see their mortgage payments jump, most likely beyond their ability to pay. Like millions of buyers during the boom, the Mollers leveraged their way into a house they could not otherwise afford by taking out a loan that required them to make only interest payments at first, putting off payments on the principal for several years.

Investor's Business Daily has an article that will raise some eyebrows for the mortgage market. Skyrocketing growth in loans from the Federal Housing Administration and Ginnie Mae have helped support the mortgage market — but could leave taxpayers on the hook for massive new losses. FHA-insured loans have more than tripled from 530,000 in fiscal year 2007 to 1.7 million thus far in 2009. The Government National Mortgage Association, which securitizes FHA loans, has boosted its mortgage-related issuance to $287 billion from $85 billion.

...arlier this month the nonpartisan Congressional Budget Office delivered its latest revenue-raising options for Senate and House consideration as they write this fall's tax and budget legislation. Tucked away in the report are several incendiary plans that could — if adopted — cost homeowners billions of dollars. Though not formal legislative proposals, the CBO's options represent a handy fiscal menu for legislators to pick and choose from to reduce the deficit — now at unprecedented levels — or to pay for new programs they might want to advance. Tops on the CBO's hit list for housing: Slash deductions for homeowner...

Rep. Charles Rangel claimed on mortgage papers that a Harlem brownstone was his principal residence -- even though he was living elsewhere at the time, The Post has learned. When the Democrat -- who is under investigation by the House Ethics Committee -- took out the mortgage in 1990, he said the property on West 132nd Street was his "principal residence," records show. But Rangel has been living since the 1970s in Harlem's Lenox Terrace apartment complex, where he improperly amassed four rent-stabilized properties. State law requires that rent-regulated apartments be the tenant's residence.

That's the supposition from this WAPO article. Today, the biggest of those banks are even bigger. The crisis may be turning out very well for many of the behemoths that dominate U.S. finance. A series of federally arranged mergers safely landed troubled banks on the decks of more stable firms. And it allowed the survivors to emerge from the turmoil with strengthened market positions, giving them even greater control over consumer lending and more potential to profit.

Mortgage applications were up for the second week in a row. U.S. mortgage applications rose for a second straight week, with demand for home refinancing loans rising to its highest level since early June, data from an industry group showed on Wednesday.

These are very important numbers ... While the number of U.S. prime RMBS loans rolling into a delinquency status has recently slowed, this improvement is being overwhelmed by the dramatic decrease in delinquency cure rates that has occurred since 2006, according to Fitch Ratings. An increasing number of borrowers who are 'underwater' on their mortgages appear to be driving this trend, as Fitch has also observed. Delinquency cure rates refer to the percentage of delinquent loans returning to a current payment status each month. Cure rates have declined from an average of 45% during 2000-2006 to the currently level of...

We're all likely more familiar with Mortgage Backed Securities (MBS) and Credit Debt Obligations and their effect on the financial crisis than most of us ever wanted to be. Both of these very sophisticated financial instruments had an important role to play in creating the crisis we are still battling through. One of the biggest problems for both MBS and CDS was that they would take financial instruments of varying degrees of risk and package them together into one bond that would then be given on risk profile by Moody's and other bond rating firms. In other words, varying degrees...

It's a fairly quiet morning in the markets however the three major indices are looking to make it four days in a row. Right now, all major indices are about about a half percent after things turned positive in Europe. There's plenty of economic data to digest. Yesterday, the weekly jobless numbers came out. The number of first-time claims for unemployment benefits rose unexpectedly for the second straight week, a sign that jobs remain scarce even as other data show the economy is stabilizing.

<p>The delinquency rate for mortgage loans on one-to-four-unit residential properties rose to a seasonally adjusted rate of 9.24 percent of all loans outstanding as of the end of the second quarter of 2009, up 12 basis points from the first quarter of 2009, and up 283 basis points from one year ago, according to the Mortgage Bankers Association’s (MBA) National Delinquency Survey. The non-seasonally adjusted delinquency rate increased 64 basis points from 8.22 percent in the first quarter of 2009 to 8.86 percent this quarter, the Mortgage Bankers Association is reporting.</p>

Mortgage lenders say the flood of foreclosures has not yet crested. Highwater mark should come this fall.