Who's going to jail or getting fined over real estate/mortgage crimes?

This BLOG post will be updated on an ongoing basis to update you on who's paying for their behavior.  My guess is probably not enough people and not enough pain...

Public hanging or medieval stockades anyone? 
(Does it seem like alot of little fish are caught, but not the big fish?)

Here's an article outlining winners and losers from the mortgage meltdown - just to name a few:   http://www.8newsnow.com/story/16049641/foreclosure-crisis-the-winners-and-losers

Yes, 49/50 states settled the lawsuit against largest US banks (see AG settlement ), but $26 Billion against a $1 Trillion mortgage fiasco and nobody of significance is in jail?  Where are the derivative traders who failed in their Due Diligence responsibility? Or designers of CDOs who failed to disclose the real risks?

3-21-2012: Virginia man pleads guilty and gets $250K fine and may serve 3-20 years for real estate investment fraud. Source: http://www2.timesdispatch.com/business/2012/mar/21/david-silver-pleads-guilty-in-real-estate-investme-ar-1779889/

3-4-2012:  70 year old Tucson real estate agent gets 8 months and $700,000 in restitution for mortgage fraud.  Source:  http://www.vadvert.co.uk/government/22268-70-year-old-tuscon-real-estate-agent-sentenced-to-prison-for-mortgage-fraud.html

2-22-2012: Five people plead guilty in Cleveland, Ohio area to mortgage fraud involving $50 million mortgage scam from 500 real estate transactions. Source:  http://www.wtam.com/cc-common/news/sections/newsarticle.html?feed=122520&article=9536914

2-22-2012: San Bernardino man is guilty of real estate scam involving promising to help home owners avoid foreclosure and gets $6 million fine and to serve 12 years in federal prison.  Source:  http://www.utsandiego.com/news/2012/feb/21/man-sent-prison-real-estate-scam/

2-18-2012:  Minnesota businessman sentenced to 12 years for $226 million fraudulent development.

Source:  http://www.startribune.com/business/139519448.html

2-7-0212:  Family of real estate agents in Springfield MO sentenced to prison and fined >$4 million in restitution for mortgage fraud. Source:  http://www.kspr.com/news/local/kspr-monett-family-of-real-estate-agents-sentenced-in-11-million-dollar-mortgage-fraud-20120206,0,373444.story

2-3-2012: Real estate agent & mortgage broker guilty of mortgage fraud in Las Vegas.
Source:  http://www.legalnewsline.com/news/235120-real-estate-agent-mortgage-broker-found-guilty-of-fraud

1-27-2012:  Birmingham man sentenced to 5 year in prison & over $500,000 in fines & restitution. Source:  http://blog.al.com/spotnews/2012/01/birmingham_man_sentenced_in_fr.html

1-19-2012:  Former real estate and mortgage broker awaits sentencing upon guilty verdict for embezzeling >$500,000.  Source:  http://www.santacruzsentinel.com/localnews/ci_19778676

1-18-2012:  4 out of 5 already get sentence and owe >$11 million in restitution in Florida mortgage fraud case.  Source:  http://www.loansafe.org/parkland-real-estate-agent-pleads-guilty-to-mortgage-fraud

1-16-12: North Carolina attorney sentenced to 14 months in prison for mortgage fraud.
Source:  http://www.fbi.gov/charlotte/press-releases/2011/fayetteville-attorney-sentenced-for-mortgage-fraud

1-12-12:  2 of 10 people in Atlanta, Georgia area plead guilty of mortgage fraud -
Source:  http://www.coosavalleynews.com/np94876.htm

1-11-2012:  Man gets 13 years of prison over $1 million mortgage fraud scheme - Source:  http://www.fayobserver.com/articles/2012/01/11/1149735?sac=Bus

12-22-2011:  Cleveland Ohio Crook -  Sentencing includes both some form of restitution and jail (maybe 6-16 years). Source:  http://www.clevelandjewishnews.com/news/local/article_cbd26c8a-2cbf-11e1-b482-0019bb2963f4.html

12-21-2011: Wow, only one Canadian real estate agent gets convicted of tax evasion.  Does this mean NO US real estate agent ever got convicted? Source:  http://www.benzinga.com/pressreleases/11/12/m2217245/real-estate-agent-fined-93-679-for-tax-evasion

12-19-2011:  Iowa Real Estate Agent sentenced to 2 years in prison for wire fraud.
Source:  http://qctimes.com/news/local/real-estate-agent-sentenced-for-mortgage-fraud/article_3051a97e-2a71-11e1-ba31-001871e3ce6c.html

12-15-2011:  Mortgage fraud trial ready to wrap up -
Source:  http://blog.al.com/live/2011/12/mortgage_fraud_trial_defense_c.html

12-15-2011:  Internet auction fraud - http://www.fbi.gov/birmingham/press-releases/2011/illinois-man-pleads-guilty-to-internet-auction-real-estate-scam

12-5-2011:  Alabama real estate investor pleads guilty of rigging bids mail fraud relating to real estate auctions.  Source:  http://7thspace.com/headlines/401399/alabama_real_estate_investor_agrees_to_plead_guilty_to_conspiracy_to_rig_bids_for_the_purchase_of_real_estate_at_public_foreclosure_auctions.html  

11-23-2011:  Real estate investor convicted of Wire and Bank Fraud for up to $6.5 million in funds and may serve up to 30 years and fine of up to $1 million.  Source:  http://7thspace.com/headlines/400551/real_estate_investor_convicted_for_leading_a_mortgage_fraud_conspiracy.html

11-8-2011:  Former PA real estate agent convicted of wire fraud and money laundering involving 30+ homebuyers and over $6 million - http://www.abc27.com/story/15980916/former-real-estate-agent-convicted-of-money-laundering-wire-fraud

11-2-2011:  Another person convicted of defrauding lenders and laundering money and faces 20-30 years in prison. - Source:  http://newsandinsight.thomsonreuters.com/Legal/News/2011/11_-_November/Federal_jury_convicts_lawyer_in_real-estate_scam/

10-20-2011:  Man from Sacramento convicted on $1+ million fraud - collected money to buy real estate and develop property but oops...he pocketed some money instead - what a guy! - Source:  http://www.bizjournals.com/sacramento/news/2011/10/18/sacramento-man-prison-real-estaste-fraud.html

10-20-2011:  Former real estate agent maybe sentenced to 13+ years for scam - collected near $1 million to be used to purchase real estate but didn't. - Source:  http://www.wavenewspapers.com/news/local/132209508.html

10-15-2011:  Real estate agent sentenced (after < 2 hours by Jury) to 8+ years in jail for $43 million mortgage fraud in Minnesota.  Source:  http://www.twincities.com/business/ci_19104689

10-13-2011:  HUD suspends former President of Lend America from doing any business with HUD due to mortgage fraud scheme - it seems money collected to pay off loans being refinanced were channeled for unrelated purposes.  Source:  http://portal.hud.gov/hudportal/HUD?src=/press/press_releases_media_advisories/2011/HUDNo.11-250

10-6-2011:  Real estate agent  was one of 19 defendants involved in a $12+ million inflated mortgage fraud scheme and got >$5 million fine and <2 years jail time.  Source:  http://www.forbes.com/feeds/ap/2011/10/03/general-mo-mortgage-fraud-sentence_8714539.html

9-16-2011:  Man to serve more than 4 years of jail for >$5million mortgage fraud involving people using 100% financing.  Source: http://www.lcsun-news.com/las_cruces-news/ci_18899795

9-8-2011:  Man pleads guilty to $5 million mortgage scam/mail fraud in Sacramento and will serve 5 years.  Source:  http://www.egcitizen.com/articles/2011/09/06/news/doc4e66c34b0a658071704782.txt

http://www.statejournal.com/story.cfm?func=viewstory&storyid=106723

8-27-2011:  Another Alabama fraudster files false loan applications for Condominiums and 2nd mortgage and took over $1 million.  Source:  http://realestate.bryanellis.com/5068/real-estate-scam-of-the-day-alabama-real-estate-scam-mastermind-pleads-guilty/

8-26-2011:  Missouri developer guilty of million $ bank fraud scheme involving false vouchers.  Source:  http://www.bizjournals.com/stlouis/news/2011/08/26/st-charles-county-developer-sentenced.html

8-24-2011:  Man pleads guilty to multi million dollar mortgage scam - some realtors and buyers were inolved too. Source:  http://blog.al.com/live/2011/08/alleged_mastermind_of_baldwin.html

8-24-2011:  Fourth person (former loan officer) pleads guilty in a Kentucky mortgage fraud scheme that ultimately totalled millions of dollars. 
Source:  http://www.loansafe.org/fourth-person-pleads-guilty-in-central-kentucky-mortgage-scam

8-19-2011:  Former New York real estate agent/loan officer indicted by federal grand jury in $50 million mortgage fraud scheme and if convicted, may face fines and 3 years in jail. 
Source:  http://www.fbi.gov/newyork/press-releases/2011/real-estate-agent-indicted-in-50-million-mortgage-fraud-scheme

8-9-2011:  Minnesota closing agent gets >5 years prison for $1.2M fraud case. Source:  http://tcbmag.blogs.com/daily_developments/2011/08/real-estate-exec-gets-max-sentence-for-12m-fraud.html

8-5-2011:  3 people were charged in a $2.5 million scheme involving loan modifications - Source:  http://www.loansafe.org/three-real-estate-workers-charged-in-miami-for-stealing-2-5-million-in-loan-modification-scheme

8-5-2011:  14 people were charged in a $58 million mortgage fraud scheme involving receipt of money in exchange for false paperwork on mortgages.  Source:  http://blogs.wsj.com/law/2011/08/04/real-estate-woes-five-lawyers-busted-in-58m-mortgage-fraud-scheme/

7-27-2011: Former Mortgage Company owner convicted of money laundering, mail fraud $30 million real estate fraud.  Source:  http://www.denverpost.com/business/ci_18525859

7-27-2011: Real estate securities fraud results in man being sentenced to >200 month and $1.9 million fine.  Source:  http://www.loansafe.org/fugitive-texas-real-estate-fraudster-sentenced-to-more-than-17-years-in-prison

7-26-2011:  Alleged >$5 million mortgage fraud committed by former Minnesota real estate agent Source:  http://www.loansafe.org/former-minnesota-female-real-estate-broker-charged-in-mortgage-fraud-scheme

7-26-2011:  Connecticut real estate agent goes to jail for mortgage short sale fraud.
Source:  http://realtybiznews.com/short-sale-fraud-agent-jailed/9874323/

7-24-2011:  Wells Fargo gets fined $85 Million (a small pittance of the Billions in economic losses we all suffered in the mortgage fiasco) by the Federal Reserve Board for mortgage fraud related behavior by selling higher rate loans to >10,000 people who should have qualified for lower rates.  Can you say "Yield Spread Premium"?  Source:  http://agentgenius.com/real-estate-news-events/wells-fargo-fined-85-for-abusive-practices-of-thousands-of-borrowers/

7-22-2011:  This mortgage schmuck and his ponzi scheme gives bad image to the industry, but where was due diligence of investors?  The theory: "If it's too good to be true, it usually is" remains a constant! Source:  http://www.denverpost.com/business/ci_18525859

7-21-2011:  Real estate agent in Idaho convicted of lying to lender - sentenced to >5 total years and fined. Source: http://www.greenfieldreporter.com/view/story/925722b9bbbd4f94af06f715ed9e146b/ID--Mortgage-Fraud-Sentence/

7-14-201:  Two more involved with Taylor, Bean, Whitaker debacle were sentenced to jail time in addition to a $1.6 settlement - so far...Source:  https://www.fis.dowjones.com/WebBlogs.aspx?aid=DJFDBR0020110712e77c000dx%20&ProductIDFromApplication=&r=wsjblog&s=djfdbr

7-13-11:  Prospect Mortgage agrees to $3+ million fine involving FHA and kickbacks to real estate brokers.  Source: http://www.inman.com/news/2011/07/13/hud-lender-paid-kickbacks-real-estate-brokers-agents

7-13-11:  Two former real estate agents committed and admitted to $11 Million in mortgage fraud.  Source: http://ozarksfirst.com/fulltext?nxd_id=487207

7-13-11:  Real state agent convicted of mail fraud to serve 4+ years. Source:http://www2.timesdispatch.com/news/2011/jul/13/6/richmond-real-estate-agent-be-sentenced-fraud-sche-ar-1169735/

7-6-2011:  Real Estate agent lies....and that's news? Well, it is in this case and when you lie to HUD - http://www.star-telegram.com/2011/07/06/3203853/fort-worth-real-estate-agent-faked.html

6-29-2011: Man sells houses that didn't exist.  (Note:  To whom would you sell - people that didn't exist?  And where was the due diligence of the Buyers?  I think there's contributory negligence here - isn't there always when stupid Buyers meet shifty sellers?)
 Source:  http://alabama.realestaterama.com/2011/06/29/birmingham-man-faces-mortgage-fraud-charges-for-selling-houses-he-did-not-own-ID0124.html

6-24-2011: Real estate attorney charged with mortgage fraud - gets 3 years of supervised release. Source:  http://www.northcountrygazette.org/2011/06/23/kaplan_fraud/

6-21-2011: A former Colonial Bank executive was sentenced to eight (8) years in a federal prison related to Taylor, Bean & Whitaker Mortgage Corp fraud scheme.
Source:  http://www.biggerpockets.com/renewsblog/2011/06/17/real-estate-news-by-the-numbers-week-of-june-11-june-17/

6-18-2011: A California real estate broker charged with mortgage fraud for inflated property values & inflated incomes of buyers, and other charges.  Also, two people were harge with a fraud scheme involving a financial firm promoting foreclosure rescue/prevention services. Source: http://www.thereporter.com/news/ci_18298413

6-10-2011: I don't know whether this former real estate agent will use the "one armed man" defense, but hey - what could it hurt? Source: http://www.heraldtribune.com/article/20110609/BREAKING/110609559/2055/NEWS?Title=Fugitive-real-estate-agent-arrested-on-fraud-charges-

6-10-2011:  Anytime a Real Estate Agent breaks a bond of trust and tried to get away with a rime, all other honest agent cringe.  Yes there are dishonest agents, but far more are honest an hard working. Source:  http://blogs.sacbee.com/crime/archives/2011/06/couple-pleads-n-1.html

6-10-2011:  Another Ponzi scheme for commercial properties in Florida - Is there also such a thing as "greedy" or "stupid" investors?  Contributory negligence of due diligence?  Source:  http://www.housingwire.com/2011/06/08/former-tv-host-charged-in-florida-real-estate-ponzi-scheme 

5-29-2011:  Real estate agent (as President of an HOA), was accused in fraud scheme to sell 22 Condo units the HOA didn't own or she didn't have authorization to sell.  Source:  http://www.myfoxtampabay.com/dpp/news/local/pinellas/real_estate_fraud_arrest_clearwater052811

5-28-2011:  Three (3) Utah men were indited with conspiracy to commit mortgage fraud using "straw buyers" (i.e., using real people's information to falsely stage mortgage lending, getting false appraisals, etc,.) to get lender to provide the loan funds for closings that aren't real.  Possible penalties are sentences, about $2 million in fines, and property.  Source:  http://www.sltrib.com/sltrib/money/51894227-79/meier-goff-false-prowell.html.csp

5-27-2011:  Two former California realtor "sister" fraudsters had paid people $5K to use their personal and financial information as "straw buyers" and promised to buy the homes back.  They only got less than 2 years jail time and $200K fines. (Note: Small fish in the sea, but fish nonetheless!)
Source:  http://california.realestaterama.com/2011/05/27/former-real-estate-professionals-sentenced-for-mortgage-fraud-scheme-in-vallejo-ID01148.html

http://rejournalonline.com/real-estate-scam-of-the-day-pennsylvania-appraiser-set-to-pay-up/853783/, a Pennsylvania appraiser was convicted of fraud and paid a $15K fine, but wasn't sent to Federal prison like 5 others were.  Like the article questioned - tough enough sentence?

4-30-2011:  Co-founder of Omni National Bank (Jeffrey L. Levine) was fined $6.8 Million and sentenced to 5 years in Federal prison for involvement of inflating values of bank assets and mortgage fraud. (Atlanta Business Chronicle - 4-29 thru 5-5, page 13A).

4-22-2011:   Mortgage Loan Processors (mostly in major US banks) are getting regulatory actions, fines and penalties for sloppy foreclosure processing.  However, I haven't hear the final count of the foreclosures that kicked people out of their homes while there were in loan modification processing.  5-10-20-100? Has there been any restitution for those folks? - http://www.mortgagenewsdaily.com/04132011_mortgage_servicing.asp

4-8-2011:  Wives of WAMU accused of transferring assets to avoid access from legal claims...As of 3-15-2011, FDIC authorized suits to recover $3.5 B (wow, a far cry from the almost Trillion $ loss)!  Source:  WSJ, 3-18-2011, C1

3-15-2011:  Credit Suisse Group settled a securities class action lawsuit (about misleading some investors about their mortgage exposure by failing to write down some mortgage related securities) and will pay $70 million.  WSJ, 3-11-2011, C1 (Comment:  I wonder what the attorney's cut is out of the $70 million and how much the plaintiffs will actually receive?  Probably not near the damage to investors?)

3-1-2011:  WSJ 2-25-11, C3 - Former executive with Taylor, Bean, Whitaker pleaded guilty regarding a $1.9 Billion scheme may result in 30 years of prison on charges executives falsified sales of mortgage loans. (Hey, I didn't see any form of victim restitution....)

WSJ 2-24-2011, A1:  Possible settlement of $20 Billion and write downs of loans with large banks under Federal investigation over loan servicing issues like improperly foreclosing on borrowers and not providing sufficient help to restructure loans.  If the settlement isn't reached with the Obama Administration, different Federal agencies could pursue other penalties.

MDJ -2-12-2011, 6B =  The Securities and Exchange Commission filed civil fraud charges against three former IndyMac Bank executives by disclosing false and misleading reports about the financial stability of IndyMac Bank to investors just before it failed.  So far there's only a $100K fine and $2K in restitution - a far cry from the millions of $ in stock that were sold without the alleged proper disclosure of the financial situation.

WSJ-10-16/17-2010=Angelo Mozilo (former Countrywide Financial Chief) has recently settled out of court by paying a $67.5 million fine stemming from insider trading of about $140 million in stock.  It was also reported that he has been banned from servicing as officer or director of a public company (but I guess that doesn't prevent him from working for a private 'investment' firm - does it?) Oh, and alot of the fine will be paid by current employer - Bank of America ---Priceless!

Earlier in 2010 Goldman Sachs settled a $550 million suit stemming from misleading investors in the sale of mortgage backed securities.

Note:  A 10-21-2010 WSJ Opinion column mentioned that $45 million of the $67 million fine will be paid by Bank of America insurers (via the Countrywide acquisition) and goes on to say the settlement won't protect Mr. Mozilo from criminal charges.  Furthermore, Bank of America agreed to pay $9 Billion over Countrywide's lending practices.

10-7-2010:  Wells Fargo agreed to pay $24 million and reduce the amount of mortgage loans by $400 million (by lowering balance, interest rate, extend term, or reduce monthly payment) after 8 states' investigation of the marketing of risky mortgages by Wachovia and Golden West Financial Corp, both of which Wells Fargo acquired in  in 2006 and 2008, respectively.  Some of the risky

I don't think anything short of a hanging or public execution would have been good enough.  To think, their "fast and easy" loans based solely on credit score were part of the problems tempting homebuyers to stretch their finances to get a crazy loan like this...even though the borrower is partially at fault, tempting a baby with candy will get the baby sick and you their money.

Federal Housing Finance Agency (FHFA) subpoenas 64  Mortgage Issuers

The FHFA oversees government backed mortgage companies and regulates 12 home loan banks that are major fund sources for hundreds of banks. 

This inquiry centers on "private label" securities related to subprime, Alt-A, and other risky home loans.  Apparently, Fannie and Freddie couldn't buy them directly but bought $255 billion in slices of those with Triple A ratings - but were basically crap.  Freddie has almost $30 billion of the $100 billion of subprime and Alt-A loans went bad.  Fannie had $16 billion of $44 billion go bad.

The investigation will focus on whether these "bundles" of loans were sold under false pretences or mistakes, Fannie and Freddie could force the lenders to buy them back.

Maybe one possible tragedy is that Fannie and Freddie, being the major buyers of loans, were in a position to disclose such risk for all investors, yet never sent up warnings.

WSJ 6-25-2010:  Morgan Stanley agreed to pay $102 million ($58 million to >1,000 MA homeowners

References to products and services are not a specific endorsement, but the user must perform their due diligence and investigate whether the product or service is right for them. I welcome any or all comments that would help others.

Federal Deposit Insurance Corporation (FDIC) News

4-11-2011: The $75 Billion Homeowner Affordability and Stability Plan (www.financialstability.gov) is a comprehensive plan to help responsible homeowners avoid foreclosure by providing affordable and sustainable mortgage loans.

Loan Modfications - ($50 Billion) - Treasury plans to make mortgage payments affordable and sustainable for middle-income American families that are at risk of foreclosure.

Refinancing - ($25 Billion) Borrowers who are current on their mortgage but have been unable to refinance because their house has decreased in value may now have the opportunity to refinance into a 30-year, fixed-rate loan.

Source: http://www.fdic.gov/consumers/loans/hasp/

FDIC plans to sell some real estate connected to CMBS (Commercial Mortgage Backed Securities)

The real estate for sale will come from the over 300 failed banks since the mid 2000's.

The real problem will be the perceived market valuation of these physical properties and the anticipated market values that the FDIC thinks they're worth.

The FDIC intends to open up more than $500 million in loans to see the associated real estate secured by those loans, but I think that the total current market value of some of those properties purchased during the real estate craze in the mid 2000's may be 30-50% less than loan value based on what I have seen or heard about property values.  Also, FDIC has $34 billion in assets from failed banks up for sale...no telling how many others are on FDIC books not yet up for sale, or those pending bank failures.

Source:  WSJ 10-20-2010, C6

Source:  http://www.globest.com/news/1772_1772/washington/fdic-plans-to-sell-some-realty-assets-as-cmbs303630-1.html

FDIC - Federal Deposit Insurance Corporation - What's it up to?

WSJ 10-13-2010:  The Financial Stability Board (group  of regulators, central bankers and international finance ministries) are set to propose stricter capital requirements and plans by firms on how they should be dismantled.  The FDIC plans to prevent any payments to shareholder/long term debtholders in the event of a firm's failures to prevent funnelling money that could have been used to pay some creditors.  The Treasury department objects to the FDIC control discretion and fears some creditors would leave when signs are telling them the end is near (or just doesn't like to share their power).  But FDIC's stance is the "clawback" provision (i.e., go back and collect money from someone who shouldn't have received the amount).  The FDIC can also charge a fee in financial industry to cover some expenses to try to prevent taxpayer .money for any bailouts.

10-8-2010:  FDIC targeted 50 executives and directors of failed banks to try and recover about $1 Billion in losses charging negligence or misconduct.  Note: 287+ banks have been closed since 2008.  In July 2010, the FDIC sued four former IndyMac Bank executives for $300 million in damages but cost the FDIC $12.7 Billion.

10-8-2010:  Government regulators plan to create new rules for FDIC to use their discretion when sizing and dismantling a large financial firm (in a non market disruptive manor) and settle creditor claims based on critical nature to keep operations going or maximize the value of the firm. In other words, all creditors will lose money - it's just that some will lose more of their exposure than others.

References to products and services are not a specific endorsement, but the user must perform their due diligence and investigate whether the product or service is right for them. I welcome any or all comments that would help others.

Housemate Match program - Matches rentals with renters

This program matches homeowners who have an extra room to rent in a condo, townhome, or a house with adults looking to rent a private bedroom and public living area room in a secure environment and both individuals willing to share expenses.

http://www.housematch.org/ or call 678-812-3729.

Note:  I don't know anyone who has used this service, but it probably has it's own set of pros and cons - especially getting two people together with similar philosophies, spending habits, and who trust one another.

References to products and services are not a specific endorsement, but the user must perform their due diligence and investigate whether the product or service is right for them. I welcome any or all comments that would help others.

Emergency Homeowners Loan Program (EHLP)

5-24-2011:  Here is another link to more information about EHLP -
http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/hcc/ehlp/ehlphome
 

Can you  visualize Dr. Evil of the Austin Powers movies say "One Billllion dollars...oooooaaaahhhh!"  
This is a post of an email I received 10-8-10:

The Dodd-Frank Wall Street Reform and Consumer Protection Act, signed into law by President Obama in July, authorizes HUD to administer a $1 billion Emergency Homeowners Loan Program (EHLP), to provide assistance – for up to 24 months -- to homeowners who have experienced a substantial reduction in income due to involuntary unemployment, underemployment, or a medical condition and are at-risk of foreclosure.  HUD will assist borrowers in 32 states and Puerto Rico not otherwise funded by Treasury’s Hardest Hit Housing Fund program, based on the state’s relative share of unemployed homeowners. 

Applications for this program are not being accepted at this time. It is HUD’s intention for the program to begin taking applications from eligible homeowners by the end of the year. Counselors are advised to encourage homeowners to seek other loss mitigation options in the meantime.

Who Will Be Helped:

1) the borrower must be at least three months delinquent in their payment and have a reasonable likelihood of being able to resume repayment of their mortgage and related housing expenses within two years;

2) the property must be the principle residence of the borrower, and eligible borrowers may not own a second home;

3) the borrower must have suffered at least a 15 percent reduction in income and have been able to afford their mortgage payments prior to the event that triggered the loss income.

How They Will Be Helped:

The HUD Emergency Homeowners Loan Program will offer a forgivable, deferred payment “bridge loan” (zero percent interest, non-recourse, subordinate loans) for up to $50,000 to assist eligible borrowers with their mortgage arrearages and payments on their mortgage principal, interest, mortgage insurance premiums, taxes and hazard insurance for up to 24 months.

There will be a dual delivery approach for program administration. The first approach will delegate some of the program’s administrative functions to a designated third party. The second approach will enable state housing finance agencies (HFAs) that operate substantially similar programs to engage in relief efforts on behalf of residents of their state:

* Delegated approach: HUD will delegate key program administration functions to NeighborWorks® America – an experienced and highly regarded national network of affiliated housing counseling agencies. Under the program, nonprofit housing counselors who are part of the National Foreclosure Mitigation Counseling Program administered by NeighborWorks® America will coordinate intake counseling, document preparation and outreach functions. HUD will also use its delegation authority to contract with an experienced entity to provide loan servicing and fiscal control functions such as collecting payments from homeowners, distributing payments to servicers, and managing loan balances.

* Substantially similar state law approach: State HFAs that operate loan assistance programs that are determined by HUD to be substantially similar to the EHLP will receive allocations to fund emergency loans for borrowers in their states as well as payments to cover the administrative costs of performing the intake and housing counseling and fiscal agent functions (described above) directly or indirectly through subcontracts with third parties.

For additional information on the program and a list of jurisdictions that are eligible to receive funding please visit: http://www.hud.gov/offices/hsg/sfh/hcc/msgs/EHLP100810.pdf

Another source of information:  http://www.mortgagenewsdaily.com/10082010_hud_hfas.asp



References to products and services are not a specific endorsement, but the user must perform their due diligence and investigate whether the product or service is right for them. I welcome any or all comments that would help others.

Help for Homeowners - Summary of Programs

3-2-2012: HARP is being expanded to all homeowners who are current on their Fannie Mae or Freddie Mac mortgages, have not used HARP before, and regardless how far underwater they are on their mortgage. Source: http://blogs.wsj.com/developments/2011/10/23/twelve-questions-on-obamas-refi-plan/


3-22-2011:  Let's see - Kill FHA Short Refi Program - Maybe kill HAMP - and now extend HARP -HAMP-HARP-FHA Short Refi and other program fates - Apparently, to qualify for HARP you must currently have a mortgage owned or guaranteed by the the former GSEs (Fannie Mae/Freddie Mac), have a 12 month history of on-time payments on your loan, and owe more on your loan than your home is worth (<=125%).  NOTE:  Not sure about these numbers but they are encouraging - During 2010 a total of 6.8 million mortgages were refinanced nationwide using HARP, with 621,803 loan closings - Then how did the other 90% get modified if they didn't refinance through a loan closing?  In 2009 190,180 homeowners used the program to refinance.

3-15-2011:  WSJ 3-15-2011, A16 - over half of all mortgages modified through Bush and Obama programs had redefaulted within 12 months.Private loans defaulted at a higher rate.  But they also reported 62% of "Government Guaranteed" loans but didn't specify FHA/VA/Fannie/Freddie?

3-1-2011:   Affordable Housing Centers of America (AHCOA) is a non profit organization designed to assist homeowners in financial trouble making their monthly mortgage payments.  ACHOA has counselors to assist the homeowner to work with their lenders to prevent foreclosure.  Many times, a bank/financial institution may have several departments - foreclosure, mortgage payment servicing, mortgage modification, etc.  These departments may not even talking with one another regarding the same customer's situation - sad, but true.  Affordable Housing Centers of America website

2-17-2011:  The new FHA Short Refinance Program involves banks and creditors to agree to write down home loans to below current equity (market) value of the home. The process refinance borrowers into the Federal backed mortgages.  As of this date, about 15 homeowners have refinanced since the program's release in August 2010.   http://portal.hud.gov/hudportal/HUD?src=/press/press_releases_media_advisories/2010/HUDNo.10-173

Note:  As of now, several other programs to help homeowner have dismal results - 5,000+ homeowners enrolled in program to assist unemployed homeowners; 3,000+ homeowner helped with refinancing 2nd liens; and 2,000+ homeowner received Federal assistance who have turned in their properties or were allowed short sales. (Source:  US House Committee on Oversight and Government Reform) 

Bush's - Hope Now - This was an attempt early in the mortgage meltdown (2007) to get existing lenders to modify your loan.  It was not very successful.

Bush's - Hope for Homeowners in (2008)

Barney Frank's proposed moratorium on foreclosures (with Fannie and Freddie)in (2009).

Barack Obama's - Home Affordable Modification Program (HAMP) - 1-888-995-HOPE (4673) in (2009).

Note: Other attempts by the Federal Government to prevent or relieve impact of foreclosures includes (a) $150 billion poured into Fannie and Freddie to date for purchase of failed mortgages; (b)both the first time homebuyer tax credits (one refundable, the other non-refundable); (c) Federal dollars to help neighborhoods struck by foreclosures; (d) another $1.5 billion to 5 states and $.5 billion to other states hit by foreclosures; and (e) FHA's recent continuation of flipper waiver allowing people to purchase flipped homes less than 90 days after foreclosed homes were bought and remodeled by investors.

10-20-2010:  (WSJ 10-20-2010, C2) - Wells Fargo was quoted to say their general practice is to exhaust every home retention option before foreclosure.

8-18-2010 WSJ A6 - Some complaints - overly complex, unwieldy and revised so often that servicers have a hard time keeping up with changes, but the Treasury Department blames servicers for not doing everything possible for the homeowner.

Apparently about 15% of borrowers (398,000/1.3 million) who applied for the HAMP got help...another 520,000 have dropped out and about 45% (234,000) may have received loan restructuring with their loan company...but 286,000 homeowners weren't helped.

U.S. Department of Housing and Urban Development - FHA Short Refinance

All these programs were thought of to help homeowners.  For example, HAMP was designed to help millions of homeowners, but less than 500,000 homeowners in fact more people have been kicked out of the program than received permanent modifications and many more found no path to keeping their home.

References to products and services are not a specific endorsement, but the user must perform their due diligence and investigate whether the product or service is right for them. I welcome any or all comments that would help others.

Estimated cost of recent Mortgage Fraud - $1 TRILLION

According to the Atlanta Business Chronicle October 8-14, 2010 page 22A, and the Financial Crisis Inquiry Commission, at least 13% of mortgages originated between 2005 and 2007 had some element of fraudulent activity.

Apparently, 2 Atlanta zip codes (30310 and 30315) are among the top 10 zip codes for fraud....I think I had heard about these two zip codes a couple of years ago.  Also, Georgia ranks 6th in nation in amount of mortgage fraud.

Scariest part of article said the $1 trillion is a low-ball estimate and it could be as high as $4.8 TRILLION!

References to products and services are not a specific endorsement, but the user must perform their due diligence and investigate whether the product or service is right for them. I welcome any or all comments that would help others.

And the big keep getting bigger...

Mergers and acquisitions are also affecting the real estate industry - Realogy: Parent company of NRT, Century 21, ERA, Coldwell Banker, and Sotheby's International Realty.... One of it subsidiaries just got bigger - http://www.marketwatch.com/story/realogy-subsidiary-nrt-enters-new-real-estate-market-with-acquisition-of-leading-philadelphia-firm-coldwell-banker-preferred-2010-10-05?reflink=MW_news_stmp

References to products and services are not a specific endorsement, but the user must perform their due diligence and investigate whether the product or service is right for them. I welcome any or all comments that would help others.

Georgia Power program for up to $1,900 in rebates and another $1,500 in income tax credits

http://www.georgiarebate.com/

So far so good, but here's the catch 22...

To get the rebates, you have to use these Georgia Power approved contractors - which may end up costing more than the difference in rebates...

Click here for eligible rebates

For those of you who want to buy into this "rebate" tease...look for more details at Georgia Power's Energy Star website.

Even though I favor taking action on saving energy and encourage homeowners to seek comprehensive cost v. benefit analysis, I believe my access to rebates should not be limited to certain contractors. A licensed contractor should be enough, as long as they follow prescribed conditions/guidelines set by Georgia Power.

References to products and services are not a specific endorsement, but the user must perform their due diligence and investigate whether the product or service is right for them. I welcome any or all comments that would help others.

Financial Reform Bill 2010 - helpful, doesn't prevent big problems, or both?

Note:  Not addressing Federal Reserve or Fannie or Freddie - the real causes of most of the mess - are not addressed - And I don't think the Republicans would have addressed these facets either since they didn't when they were in control from 1994 through 2006.

A little of both, but fell way short according to Matt Taibbi (Rolling Stone) and the Wall Street Journal (6-24-2010, A19)

Apparently, the Bill could have been stronger, dealt with preventing certain loan generation, and deal making in the back room of Congress to water down the impact.

Helpful - Expands the number of small companies from Sarbanes-Oxley audit requirements.

Doesn't prevent problems - (1) Didn't revoke 1975 law that prevents municipal bond issuers from same regulation of corporate bonds (consider current municipal bond market - and states' pension plan deficits);  (2) law limits access to proxy issues to only investor with at least 5% of outstanding shares; (3) let's the SEC become a self funded agency (but may be killed by appropriations committee unwilling to give up power); (4) Congress left both the SEC and Commodity Futures Trading Commission alone instead of merging forces and eliminating regulatory confusion; (5) failed to pass the Frank amendment which effectively would allow third parties of fraud avoid liability; and (6) no reform of Fannie or Freddie (which will be another bi issue, but I believe might be another "rearrangement of Titanic's deck chairs.

Another example to failed reforms:  Public companies now have wider loopholes to avoid their own internal audits;

Calls for complete audit of the Federal Reserve were ignored.

Note:  Proxy access - looks like the SEC may let shareholders nominate Board Member next to other recommendations.

References to products and services are not a specific endorsement, but the user must perform their due diligence and investigate whether the product or service is right for them. I welcome any or all comments that would help others.

Cobb County Budget for 2011 - $328 million

About 50% or $156 million are salaries only.

About 17% increase in revenue is planned to be on licenses and permits (for what?).

About 5% of the expected revenue increase fines & forfeitures (from what?).

About a 5% decrease in property taxes & decrease in Federal & State funding.

Other notes: 

Powder Spring Station (just south of Sandtown & Powder Springs Road) intersection is planed to be County offices but will eventually become Cobb Senior services facility.

Public Safety office touts its new public safety records system expects to improve ticketing & data systems.

Note:  I don't know how much of this will be misspent like the street light funds were diverted to other non-related expenditures.

References to products and services are not a specific endorsement, but the user must perform their due diligence and investigate whether the product or service is right for them. I welcome any or all comments that would help others.

FORECLOSURE news updates...stay tuned for updates...

This post will be continuously updated to let you know what's going on in the real estate industry regarding foreclosures.  For those who are going through the uncomfortable but now commonplace home ownership turbulence, please view this Foreclosure Survival Guide.

5-27-2011:  Average difference in price between sales of typical resales v. foreclosed/distresed homes is 27% - http://www.mortgagenewsdaily.com/05262011_foreclosures_realtytrac.asp

4-19-2011:  So who's to blame for the financial system breakdown & foreclosure mess - read all about it in the Senate Subcommittee on Investigations report - Lots of blame to go around -  http://levin.senate.gov/newsroom/supporting/2011/PSI_WallStreetCrisis_041311.pdf

3-15-2011:  According to 2/24/2011 ABC - Home foreclosures in the Atlanta metro area rose about 11% in 2010. About 40% of all homes sold (30,400 of 78,600) were foreclosures.

3-15-2011:  The planned mortgage write downs (even if limited & targeted) may not only cost taxpayers alot (if loans are backed by Fannie and Freddie-owned by the taxpayers), but the mortgage modification process will be extended thereby extending the recovery by delaying the foreclosure process.  I am not advocating either way, but it means this is a double edged sword and economic recovery is key to reversing this slide.

3-1-2011:  Even though mortgage delinquencies (those at least 30 days overdue) were down (to about 12.9% of all loans), foreclosures remain at an all time high and are not selling to alleviate the inventory.  Also, about 4.6% of all US mortgage loans were in foreclosure in December 2010. (WSJ, 2-18-2011, A2)

1-10-2011:  In 2009, there were about 14,000 foreclosures in Cobb County, 2010, about 16,000 and already in 2011, there are another 1,256 advertised for foreclosure in the County for February.  Coupled with the 1,211 foreclosures in January 2011, Cobb is on track for at least another 15,000 foreclosures in 2011.

1-3-2011: Mark Zandi, chief economist at Moody’s Analytics, estimates 1.8 million foreclosed homes in the United States IN 2010 AND should rise to 2.1 million in 2011.

12-17-2010: The government's Troubled Asset Relief Program's special inspector general recently reported that 5.5 million homes had been the subject of foreclosure filings and that 1.7 million homeowners had lost their homes since January 2009.

12-15-2010:  About 22.5% of current homeowners are underwater (i.e., owe more on their homes than what they are worth).

12-7-2010:  About 1,750 foreclosures hit the Cobb County Courthouse steps yesterday - I am not sure when they will actually start hitting the market, but the majority should be listed by the end of February.

Note:  Nationwide, there are about 13.5 million homeowners who have less than 5% of equity in their homes and 11 million owe more than the home is worth. (Source:  WSJ, 11-27/28. 2010, A5)

12-3-2010:  Mortgage delinquencies decline but the number of new foreclosures is on the rise.  Nearly 13.5% of all home loans were at least 30 days late or in some sort of foreclosure status.

11-23-2010:  I agree that there should be restitution for those individuals who were incorrectly foreclosed upon - that is terrible.  But without knowing all the details of each situation, I don't know what exactly happened.  However, dealing with banks, I sometimes wonder if their logic or procedures are antiquated.  And they also misplace paperwork that is often scanned and emailed.  But how big of a problem is it by foreclosing on people who are current on their mortgage, nobody knows but it could be about 1% from the recent House subcommittee proceedings.

11-15-2010:  Of the 2.1 million mortgages in foreclosures as of 9-30-2010, the average days in foreclosure not making a mortgage payment) is 484 days. Florida alone experiences an average of 573 days (per WSJ 10-3-2010, A3).  An interesting statement made in the article is that GMAC (part of Ally Financial - you know them - part of the Federal Government)  suspended foreclosures "after" lawyers in Florida withdrew their lawsuits...now, why did they (US Government) do that?(WSJ-Oct 23-24, 2010)

11-9-2010:  Buyers are refusing to buy alot of foreclosures an short sales due to all the investigations by the states...estimates of 30-35% of properties in foreclosure were held as second homes or by investors.

11-5-2010:  About 200 investors were meeting recently in New York about the robosigning and other possible problems with foreclosing banks.  Investors are frustrated with their losses and are looking for someone to blame and therefore pay their losses.

The Obama administration has conducted a 4 month investigation and plans to release results of investigation in the next month.  SE (Mary Shapiro) is looking into disclosure, misrepresentation, omissions issues.  HUD (Shaun Donovan) has the authority to fine or sanction banks. (WSJ, 10-20-2010, C2)

11-4-2010:  Foreclosing mortgage holder - may lose a average of $1,000 per property per month of delay according to FBR Capital Markets. (WSJ-10-23-2010, B1)

11-3-2010: Bank of America (B of A) discovered the 85% of 1.3 million mortgage loans >60 days behind on payments came from Countrywide Financial Corp. 2008 acquisition.   I am beginning to see the ugly pattern...Bank of America bought Countrywide without adequate Due Diligence regarding the >1 million loans that are >60 days delinquent - Can you say "We have to buy the company before we know what's in it"?...Just like Pelosi's "We have to pass the bill before we know what's in it".  A 2009 SEC complaint against Countrywide warned of an increasing number of loans which failed to meet its already lax underwriting guidelines.

11-2-2010:  Ben Bernake was going to investigate if bank policies, procedures, or internal controls caused any improper foreclosures.  A recent National Association of Realtors (NAR) survey of 20-25% of about 2,000 agents - they have a client no longer interested in purchasing due to this mess.  Also, mortgage applications off about 30% from this time last year due to the federal tax credit surge.

10-28-2010:  Some numbers...About 11 million residential properties with mortgages exceed home's value; shadow inventory (not on market yet) of 3.7 million foreclosed homes; prices may fall another 5-10%; - estimated 40% of homes with loans above home value; foreclosure not performed on 25% of people who haven't made a mortgage payment for past 2 years; 8 million homes in some stage of delinquency-default-foreclosure; another 8 million owners have mortgage values of at least 95% of their home's value; about 50% of homeowners using HAMP have defaulted within 12 months of modification; each 1% drop in home price lowers wealth by $70 Billion; and lost 5 million jobs in residential construction.  With these facts, it's really not surprising that a home is no longer seen as a long term equity investment.
10-27-2010:  Bond and mortgage insurers have filed lawsuits against banks and lenders for bad loans through poor underwriting and problem appraisals.  Federal Home Loan Banks in PA, WA, CA have sued some Wall Street banks to force a "buy back" of bad loans.  The legal question focus on the "representations and warranties" of a contractual nature.  Trustees (administrator in banks who oversee loan pool or securitized loan packages) and loan servicers (daily management of loans including modifications). Example: Trustee determines borrower lied, can force originating bank to repurchase loan.

Bank of America is reviewing 102,000 foreclosure cases.  Early reviews of several hundred selected revealed less than 25 had procedural errors like improper paperwork and signature errors, but nothing that would prevent a foreclosure.  Also, Wells Fargo found some robo-signer issues without proper documentation but I don't believe it resulted in erroneous foreclosures.

Note: 40,if not all 50, states' Attorney Generals are planning a joint investigation of foreclosure practices of banks in their states.  The Ohio Atty General was the first to file a lawsuit (against Ally - Govt owned bank) for signing and filing false documents. (MDJ 10-10-10 12A)

10-22-2010:  There are estimates of between $24-180 billion of mortgages to repurchase besides those requested from Fannie, Freddie and insurers.  As of October 2010, Fannie & Freddie have managed to get $6 billion repurchased and other banks could repurchase $22 billion. (I would think it's worst case scenario and they would by back loans secured by rel estate so will they really lose anything or make out like bandits if economy rebounds)...A weird take on this is the banks designed this crisis to somehow profit from it and are creating this smoke screen while putting their hand back in the cookie jar.  I doubt they planned all this to lose money.

The Federal Housing Finance Agency (FHFA) (Edward DeMarco is acting director) - chief Fannie Mae/Freddie Mac regulator - based on the 64 subpoenas reported in June 2010, 

10-21-2010:  Impact on investors of these mortgage is unknown at this time but since MERS held many of these loans in their name, the qualification as a REMIC (real estate mortgage investment conduit), which provides for income tax exclusion as it passes income through to investors who pay the tax. One New York state judge thought the investors were partially liable for some of the $8.4 billion B of A settlement since they were perceived to not satisfy terms and condition of the pooling and servicing agreements.

JP Morgan Chase was setting aside $1.3 Billion in mortgage litigation reserves and another $1 Billion to cover repurchase of faulty mortgages from Fannie, Freddie or any one else.  They are now reviewing 115,000 loan files.

Wells Fargo set aside $1.3 billion to settle demands to repurchase mortgages by investors.

Bank of America has reopened 100,000 foreclosure files and plans to proceed with foreclosures as of Monday, October 18th.B of A also has expended  $1.7 billion related to repurchasing mortgages with $11 billion currently requested.

Estimates of more than 3 million "additional" vacant homes on the market and more are added monthly with foreclosure action.

Two large title insurance companies (Stewart Title and Old Republic) have instituted new, stricter guidelines writing title insurance and may end up rejecting coverage for foreclosures.  The largest title insurance company Fidelity National Financial, Inc. has reached agreement with B of A to warrant foreclosures that were not caused by bank errors. (Source:  WSJ 10-13-2010, A9)

10-20-2010:  About 4.4 million home loans are either in foreclosure or at least 90 days overdue.  There have been 6.4 million total actual foreclosures since 2006.  B of A services 14 million ($2.1 Trillion) or 20% of mortgages in the US.  Ten of the 14 million of Bank of America's (B of A's) total current mortgage loans and 80% of B of A's current delinquent loans came from B of A's acquisition of Countrywide.  Note:  So why did B of A "ever" acquire Countrywide's loans? - The truth may never be told....But, to coin a media term that was used on the last US President, we might want to try to "connect the dots".

Chris Dodd (Senate Banking Committee Chairman) plans to hold a hearing November 10, 2010 about  improper documentation, confusion as to ownership, and whether there were any forced foreclosures that were not supported by proper procedures and documentation.  (Note:  Ok Chris, where were you in the Fannie/Freddie meltdown and putting a stop to funny loans?)

10-11-2010:  Ok, in 25 words or less, "The moratorium on foreclosures is a short run buffer to long term pain thanks to Congress' fear of perception they don't care about homeowners (voters)."  Banks may have submitted flawed affidavits (robo signed documents) in lieu of promissory note (that may have been lost or destroyed) and banks need more proof of ownership if that happens.  Further complication stems from the Mortgage Electronic Registration System (MERS) temporarily holds a loan (but doesn't own it) while the true mortgage gets bought and sold several times and instead of filing a record in the applicable county for each change of ownership, MERS holds it until the dust settles.

Another problem raised is that in order for the income taxes from the securities to be exempted and passed through to the ultimate investors was to create a REMIC (real estate mortgage investment conduit), where the income generated is passed through to the investors and taxed accordingly.  Since MERS held alot of these securitized loans, it may have disqualified the loans from being classified as REMICs and therefore subject to different taxes.


10-9-2010: WSJ Opinion 10-9/10;16/17-2010 A14/A5 - Politicians (Harry Reid, Nancy Pelosi, Debbie Wasserman Schultz)and others) were jumping into the fray by  recommending a federal investigation or moratorium on foreclosures until loans were properly researched.  President Obama vetoed a bill supporting electronic transmission of notarized documents across state lines which would have expedited foreclosures.

BOA, Wells Fargo, JP Morgan Chase (largest by stock value), and Citigroup service about $4.5-5.0 Trillion of  mortgages owned by investors, or about 70% of the investor owned loans.
 
10-6-2010 (c1) - $2.8 trillion in mortgage backed securities. Upon mortgage foreclosure, holders of junior liens usually suffer total losses and primary liens take less of a hit.  If a foreclosure is delayed, the servicer must keep advancing money to all lien holders even when the loan is not producing any revenue.  This makes senior or primary lien holders desiring foreclosure faster to reduce expenses.  Servicers normally have management agreements to protect the interest of the investors under securitized mortgage bonds.  The Association of Mortgage Investors are demanding the loans be repurchased if any documentation is missing.

9-30-2010:  JP Morgan was planning to halt the foreclosure process on 56,000 homes currently in some stage of the foreclosure process in 23 states.  GMAC was to suspend evicetions/foreclosures/pending sales in certain states.

9-21-2010:  Ally Financial (majority owned by the US Government) owns GMAC Mortgage (probably through the recent General Motors bailout).  I think the following statement from a 9-21-2010 WSJ article sums up the mortgage mess in 25 words or less..."The securitization process has made it difficult to identify who actually owns the mortgage.".....DOH!
9-16-2010:  MDJ, 9-10-2010 (page A1) - Foreclosures scheduled for October 2010 are about 20% lower than September's; and about 11,500 homes have been foreclosed in Cobb alone by this date (an 11% increase from same date in 2009); with Cobb's unemployment rate at about 10%, more short sales and foreclosures will put downward pressure on home prices; and lenders across the US foreclosed on about 93,000 homes in July 2010 alone (some estimate more than 1 million foreclosures in 2010 alone).

8-31-2010:  WSJ, 8-27-2010 (page A4) - Even though the total number of homeowner who missed consecutive mortgage payments fell, the number of new distressed homeowners increased.

According to Jay Brinkmann, chief economist with Mortgage Banker Association, estimate more than 7 million homeowners are behind on payments or in foreclosure.

8-27-2010:  WSJ page A4 referred to 4.5 million homeowners are delinquent or in foreclosure.

8-27-2010: MDJ page A1 mentioned 1 of 10 households is facing foreclosure and 2 million home have been foreclosed since the recession began.

8-4-2010: WSJ page C1 Federal Reserve Bank of New York acquired alot (about $29 Billion) of real estate properties in the bear sterns takeover in 2008, which have dropped 35% in value since then. About 50% of residential portion and 13% of commercial portion of the portfolio is non-performing.

References to products and services are not a specific endorsement, but the user must perform their due diligence and investigate whether the product or service is right for them. I welcome any or all comments that would help others.

Consumer Credit Counseling Service changed its name...Now CredAbility!

12-26-2010 Update via FHA:  CredAbility provides free, confidential budget counseling, housing counseling, comprehensive financial education, bankruptcy counseling and education, and debt management programs to consumers nationwide from all walks of life.  Their mission is to help financially-distressed people move from crisis to control by providing compassionate service and innovative and practical solutions. In 2009, CredAbility served more than 750,000 people, a 26% increase from 2008.


The agency provides services around the clock in English and Spanish, 365 days a year. Counseling and education are available in person, by telephone and via the Internet at http://www.credability.org/
 
This non profit agency has helped thousands of people with their budgets and controlling costs. The difficult part is gathering your courage, swallowing your foolish pride, and face your monsters to talk with them. Yes, there is a fear of working with them and reducing your credit score, but if you are in financial trouble, your score's going to take a hit anyway - they may be of great help.

They have a Debt Management Plan (DMP) where a CCCS counselor negotiates/coordinates a structured repayment plan with creditors to accept lower levels of payments and you make one payment to credibility once a month and that gets distributed to your creditors. Here are some of the conditions you may want to enlist the assistance of Credability:

• Use credit cards to over daily expenses
• You make only minimum payments on credit cards
• Making late payments
• Charging more money each month
• Credit cards getting close to their limit
• Receive cal from collection services
• If loss in income will cause immediate difficulty paying bills.

I understand that you may have a preliminary discussion with their representatives with no negative hit to your credit score until they start representing you in concessions or debt reductions. Their new website address is... http://www.credability.org/

References to products and services are not a specific endorsement, but the user must perform their due diligence and investigate whether the product or service is right for them. I welcome any or all comments that would help others.

Will bankruptcy prevent foreclosure? Yes and No

Again, the answer is "it all depends".

Bankruptcy can stall the foreclosure process, but only until state laws allow the mortgage holder can proceed again with foreclosure. For example, in Georgia, unless you follow very strict rules and guidelines, it only delays the inevitable foreclosure process for about a month or less.

Most people file for Chapter 7 bankruptcy (complete forgiveness) and want all their debts forgiven including household, but normally when these situations exist, the homeowner doesn't have the continuing income to make the monthly payments and therefore must then relinquish their home as well.

However, if the homeowner is in a position of Chapter 13 (debt restructuring) and has income but needs a break on debt repayment, then the home may be kept and the mortgage balance may be restructured thereby preventing a foreclosure.

References to products and services are not a specific endorsement, but the user must perform their due diligence and investigate whether the product or service is right for them. I welcome any or all comments that would help others.

Recycling Programs

If you know of other resources that helped you, let me know.

RECYCLING CORNER RECYCLING OF HOUSEHOLD ITEMS & ELECTRONICS PRODUCTS
NAME of ORGANIZATION	DESCRIPTION of SERVICE	WEBSITE &/or PHONE #
FREECYCLE.ORG	Recycle Old Stuff in your House - Give old stuff to people instead of tossing it into the garbage.	Click to join Freecycle_Cobb
Recycle Refrigerators	Georgia Power offers programs to properly Disposal of non-primary refrigerators.	To find out more about the program, call 1-866-446-9250, or Click here to find out more about Georgia Power refrigerator recycling program.
Recycle Computers	Proper Disposal of computers in your area.	To find computer equipment recyclers in your area, Click here to find recycling organizations in your area. To find a recycling center closest to your home who does not send junked computers to developing countries, Click here for recyclers. You may even want to try Reboot CLICK HERE to go to ReBoot website and discover more about recycling electronics items.
Rechargeable Battery Recycling Corporation	Proper Disposal of Rechargeable Batteries-Properly dispose of anything from laptop to cell phone batteries.	To find a recycling center closest to your home, CLICK HERE and type in your city, state, and zip, or call 800-822-8837. I think Best Buy has a station at their entrance/exit area to dispose of rechargeable batteries and cell phone batteries.
National Cristina Foundation	Where you can donate your old computer.	NCF
CTIA Wireless Foundation	Donate your old, used cell phone to help fight domestic violence. You can donate your used wireless phone to support Donate a Phone CALL to PROTECT, which aids in the fight against domestic violence. Wireless phones are reprogrammed with emergency phone numbers and redistributed free of charge to victims in need.	CTIA
Free Mulch - Wood Chips from Tree Companies	Sign up for free delivery of wood chips and wood circles.	Your Source for all things AboutTrees.com

References to products and services are not a specific endorsement, but the user must perform their due diligence and investigate whether the product or service is right for them. I welcome any or all comments that would help others.

Real Estate Terminology and Definitions

There may be several terms/words you hear or read in real estate that you may not know what they mean. Check my Dictionary of Terms used in Real Estate to learn what they mean (see abuyeragent.com/definitions.htm - I have to use this format since Google will think it's spam and delete all my blog entries if I place a link back to my own website).

TERMS and DEFINITIONS


Acre: 43,560 square feet or 208.71’(L) x 208.71’(W).
Acceleration Clause: A clause in the mortgage loan that permits the lender to call the entire amount due and payable upon certain conditions or violations. (Examples include loan payments stop or upon of sale of property without informing lender.)
Adjustable Rate Mortgage (ARM): A mortgage loan that normally offer a low introductory rate (i.e., low monthly payment to start) and provides for the interest rate to change at specific intervals during the term of the loan. The rate is normally tied to an index like the LIBOR or PRIME interest rate. CAUTION: You need to understand the impact on monthly payments – they could run hundreds of dollars per month higher than the introductory monthly amount.
Appraisal: Valuation of market value by a professional appraiser using standards/guidelines for the local and national real estate industry. The appraisal is critical information used by the lender to confirm/determine loan amounts. NOTE: Under the current environment, appraisers are more sensitive to fluctuating market prices and restrictions on subjective quality factors that were used before.
Back End Ratio:In short, it’s your annual gross income less long term debt (I.e., car loans, student loans, usually not credit card balances, etc,.) divide by your gross annual income.
Balloon Mortgage: Usually fixed monthly payment based on 30 year loan and a lump sum balance at the end of a period of time - normally 3,5, or 7 years.
Balloon Payment: The final payment of a mortgage that is usually a large lump sum that pay off the remainder of the loan amount. Example: Monthly payments of $1,000 per month for 5 years and then a $50,000 lump sum (Balloon) payment.
Builder Warranty: The builder offers homebuyers peace of mind that he/she will come back and try to repair any major structural or system defects. Normally, written guidelines determine what is considered a defect and what repairs will be attempted. Many builders will have a period of time (e.g., 10 months after purchase) that they will return to repair known type repairs of house settlement and normal adjustments.
Buyer Broker/Buyer Agent: Agent hired by the Buyer that represents their best interests in finding a property, negotiating a contract, and all other aspects of the home buying transaction.
CAPS: Amount of rate that can change that is limited each time period and overall. CAPS are listed in X/X format where the first X is the maximum annual rate increase and the second X reflects the total increase over the life of the loan. Under an X/X/X format, the first X reflects maximum rate increase of first adjustment, second X is maximum increase under the next adjustment, and third X reflects maximum rate increase over life of the loan.
Certificate of Occupancy(C/O): The local government issues this document that allows the home to be occupied once the builder has satisfied the building inspector's review of local building codes. WARNING: This inspection is not to be relied upon or considered a thorough home inspection.
Closing: This just refers to when you meet with the closing attorney to sign a lot of papers reflecting the transfer of ownership from the seller to you and your commitment to paying off the loan. Basically, this is where you bring your down payment money and agree to pay on the loan and then you get the house in exchange. The HUD-1 and a lot of other standardized forms and documents are signed here and you understand that if you don’t make payments on the loan, you don’t get to keep the house.
Closing Attorney: An attorney trained and licensed to close loans for lenders. You may also hire one to review your real estate transaction. NOTE: At a loan losing, they do not represent the seller or buyer, but they represent the Lender's best interests.
Closing Costs: Costs necessary to close the loan. They include expenditures like your lender's loan origination fee, underwriting fees, property survey, appraisal fee, credit report, attorney fees, title insurance, recording fees, and any incidental expenses incurred by the lender or attorney. Closing costs (including prepaids/escrows) normally run anywhere from 2.0-3.5% of the amount of your loan. Other expenses to consider are: YOUR Title Insurance coverage; Flood Insurance coverage (if you're in a flood zone); and PMI (Private Mortgage Insurance) or MIP (Mortgage Insurance Premium) that may or may not be required at closing or rolled into the loan. NOTE: You may spend money to "BUY DOWN" (i.e. reduce) the rate of interest your lender would charge you at a competitive market rate based on your credit history. These costs are sometimes referred to as "DISCOUNT POINTS" and may be considered as "ordinary closing costs the seller will cover.
Condominium: This isn’t a style of building, but a form o ownership. This form of ownership means that you share financial responsibility with other owners in the care, insurance, and maintenance of common areas such as parking lot, gates, fitness centers, playground/pool area, walkways, and exterior building maintenance and landscaping.
Contingency Clause: Provisions in a real estate contract that protect either the Buyer’s or Seller’s interest by providing for a critical condition of sale to be satisfied, or else the contract may be terminated.
Deficiency Judgment

Federal Reserve"discount" rate: Interest rate that is set by the Federal Open Market Committee (12 FR Presidents & FR Governors) for banks to borrow money from other banks in the Federal Reserve System/Network. This rate more closely impacts mortgage rates by affecting consumer iquidity.

Federal Reserve"funds" rate: Interest rate the Federal Reserve sets to allow banks borrow money from other banks in the Federal Reserve system. Lowering the Federal Reserve discount rate is normally seen as a measure to improve bank liquidity in a slow economy.

Five (5) year adjustable: Mortgage where interest rate changes every 5 years based on an index (Prime Rate; LIBOR; etc,.) plus a specified margin.
Fixed Rate Mortgage: Mortgage with 15 or 30 year maturity (sometimes longer) where interest rate is fixed for duration of loan.
Good Faith Estimate (GFE): Generally a form you get from the lender you choose to get a loan from that outlines your interest rate; monthly mortgage payment; total estimated closing costs; and total estimated amount to bring to closing. RESPA requires the lender to provide the Borrower a GFE within 3 business days of applying for a loan.
Home Equity Line of Credit (HELOC): A variable rate loan tied to the prime rate and establishes a "line of credit" against a maximum amount and gives borrower quick access to cash.
Home Inspection: A private inspector, normally under certification from CABO/ASHI, that spends 2-3 hours at a home testing and inspecting for defects, functionality, operation, and possible problems and future repairs. There are normally a set of guidelines (i.e., building codes) that the inspector uses to evaluate whether or not the area/system of the house meets that guideline, and writes a report (including photos) to use to negotiate with seller for repairs.
Home Warranty: For used houses, the builder warranty is normally expired. There are private companies that offer assistance to locate plumbers, electricians, HVAC services, and other home services for you if you purchase a home warranty. The home warranty normally covers a period of 12 months and can cost almost $500 per year.
Homeowner’s Association (HOA): A group of homeowners that establish and enforce guidelines to preserve the quality look of the neighborhood and common areas/elements like pool, playground, and exterior of all homes.
Homeowner’s Insurance: Insurance against loss of your home and its contents due to burglary, flood, fire, wind or other provision of the insurance policy. NOTE: Insurers and policies differ so please evaluate apples to apples of coverage and what their performance is when paying claims.
HOA CCRs (Conditions, Covenants, and Restrictions): This is a set of rules of which you must comply as a condition of home ownership in the community. The CCRs usually establish Board Member election guidelines; power of the Board members; and guidelines on what is and isn’t acceptable on the exterior of your home and in your yard. Pros: Ensures look of community is retained and kept maintained. Con: Restricts exterior house colors; fence styles; and items you can place in the yard.
HUD-1 (Settlement Statement): HUD-1 EXAMPLE - This is a standard form used at all residential real estate transaction closings that itemizes all Buyer and Seller closing costs, the total amount due at closing from the Buyer, the total amount of proceeds to Sellers, and serves as the official evidence of transfer of ownership until the Warranty Deed is recorded in the local real estate office.
Index: Floating index tied to mortgage loans normally using either the one year Treasury Constant Maturity Yield or the LIBOR index.
Interest only Loans: Monthly payment covers only interest with the amount of principal adding to the loan for a number of years up to perhaps 10. (See Pros and Cons about Interest Only Loans)
LIBOR(London Interbank Offered Rate): The rate that international banks charge each other on large loans. This rate has been known to fluctuate and increase faster than the U.S. Treasury 10 year bonds that U.S. mortgage rates parallel. Therefore, they are more volatile in Adjustable Rate Mortgages.
Interest Rate Lock: Lender usually "locks" or "guarantees" the interest rate quoted for only a specific number of days...normally 30 days...without a charge. After this period expires, the rate may fluctuate unless you pay extra to lock the rate for more than the initial period.
Margin: The number of percentage points added to the index on adjustable mortgages.
Mortgage Broker: Generally, organizations that do not lend to you directly, but do charge a fee to you to get a loan from a number of wholesalers/other investors but doesn’t service the loan (i.e., collect mortgage payments).
Mortgage Insurance: This (one-time cost) insurance is required by lenders to insure loans greater than 80% of the sale price (due to higher probability of foreclosure). If the home forecloses, the remaining lender balance is paid.
Option ARM: Adjustable rate loans allow for a fixed period of time (1,3,5 years) a low payment based on interest only or no interest and accrue balance - very risky and for sophisticated borrowers.
Points: Percentage of the loan amount - Each point is 1/100th of the loan amount. (Ex: $1,000 = 1 point of a $100,000 loan.)
Prepaids/Escrows: Accounts established upfront by the lender to pay for your annual property taxes and homeowner’s insurance. Your monthly mortgage payment will include 1/12th of your estimated annual property taxes and homeowner’s insurance. At closing, expect to pay one full year of homeowner’s insurance and 2-3 additional months of insurance to start the escrow account.
Property Taxes: Local governments appraise real property, apply the 40% state assessment rate, and then apply a tax rate to the assessed value to determine how much property tax you pay. The government’s appraised value normally has no bearing on current market value. NOTE: Under current environment of property values falling nationwide, many homeowners are upset to pay taxes on values exceeding current market values.
Prepayment penalty: Some investors provide money in exchange for a certain return over a certain period of time. Therefore, certain home loans carry a provision that charges a fee (sometimes in the thousands of dollars) to pay off a loan early (i.e., before the term expires) so the investor earns a minimum return on their investment. WARNING: Always confirm in writing before you agree to the loan if there is a prepayment penalty and stay away from these loans unless you are willing to assume the risk.
Real Estate Settlement & Procedures Act (RESPA): RESPA DETAILS HERE In 1974, US Congress passed a law that standardized real estate settlement that established the HUD-1 Settlement Statement; required escrow rules; disclosure requirements; closing cost estimates; and generally governed a more fair practice of mortgage lenders.
Short Sale:When a Seller is in a position (job loss, major illness, bankruptcy, etc,) that requires the sale of real property and the net proceeds will not be sufficient (i.e., will be short) to pay the remaining balance of the mortgage(s), the bank(s) involved need to agree to sell the real property at a negotiated price that causes the mortgage to be short. (See Deficiency Judgment)
Survey: A formal measurement of the boundaries of a property that also indicates any easements, encroachments, or right-of-ways. Traditionally, lenders have required a survey on new properties or properties of unusual shapes or sizes. In the past several years, if the property is a resale in an established subdivision, or the loan is a conventional type loan, then the lender doesn't require a survey. However, it doesn't preclude you to get a survey in case you plan to install a fence or just want to know where your property lines exist.
Title Insurance: Generally, a closing attorney will investigate the Chain of Title to a property and determine if the Seller has “clean title” allowing the legal transfer of title to a Buyer. At times, due to recording errors, fraud and other reasons, clear title to a property may not legally exit by the Seller thereby resulting in the Buyer losing the property. Buyers may want to purchase this insurance to cover their down payment and their legal expenses challenging title claims in case they lose the home because real owner reclaims property. (This has happened more than once.)

Have you heard of a term, word, or phrase that isn't listed here? If so, please let me know and help you define it and determine its importance in your search or real estate transaction.

References to products and services are not a specific endorsement, but the user must perform their due diligence and investigate whether the product or service is right for them. I welcome any or all comments that would help others.

Fannie Mae - fired employee over criticism of loan assistance program?

Rep.Spencer Bachus (R) has asked Rep Barney Frank for a hearing into the firing of Caroline Herron (former Fannie Mae Executive) ...Apparently, (according to the 8-7-10 AJC), she was fired after she criticized how the company was running a loan assistance program....She asked that the borrower provide proof of income and these requests were ignored....

Yeah, let's see if (a) Rep Frank holds a hearing and (b) if the real truth is told...I think I know the answer to both concerns...

References to products and services are not a specific endorsement, but the user must perform their due diligence and investigate whether the product or service is right for them. I welcome any or all comments that would help others.

Legal Advice Websites

If you need to get an understanding of certain legal matters, you may want to first review one of these websites I saw referenced in one of Clark Howard's older articles in the AJC.  Of course, you should always consult the advice of an attorney familiar with matters of particular interest to you since the law field changes daily.

• http://www.nolo.com/
• http://www.findthelaw.com/
• http://www.mylawyer.com/
• http://www.thelaw.com/
• http://www.uslaw.com/
• http://www.legalzoom.com/   (Created by a law firm.)

Other websites of legal assistance are:

• http://closingattorneyga.com/  - Glenn Sherman - a good Real Estate attorney
• http://www.gabar.org/  - Georgia BAR Association - Source of attorneys for various specialties

Other sources of help are:

• Quicken software like Willmaker and Lawyer
• Licensed real estate agent for formal real estate documents
• Office supply stores for simple Quit Claim Deeds and other general legal forms - but be careful not to do too much with them - the are jus general formats that may not be state specific.

References to products and services are not a specific endorsement, but the user must perform their due diligence and investigate whether the product or service is right for them.  I welcome any or all comments that would help others.

Questions to ask your home inspector

Home inspections performed on homes should reveal some possible functional problems, but inspectors don't probe inside walls, under floor coverings, pipes underground, and behind finished walls. Yes, some problems that aren't readily visible won't be revealed, but a home inspection should reveal some potential problems that may not be found by an untrained eye.

HUD has published a list of 10 questions to ask your home inspector Click here for the list of questions to ask home inspectors - http://www.hud.gov/offices/hsg/sfh/insp/inspfaq.cfm

Checkout this HUD's website for information about home inspections. - http://www.pueblo.gsa.gov/cic_text/housing/inspection/home.htm

Another good website to visit for information is the GAHI (Georgia Association of Home Inspectors) - http://www.gahi.com/

A good website report some categories by the National Association of Certified Home Inspectors Click here for summary of inspection items - http://homebuying.about.com/od/homeshopping/qt/091107_homeinsp.htm

References to products and services are not a specific endorsement, but the user must perform their due diligence and investigate whether the product or service is right for them.

Title Insurance News: Do I need owner's title insurance?

2-8-2012:  Another article supporting reasons to buy title insurance:  Source:  http://www.philadelphiaweekly.com/real-estate/is_owners_title_insurance_worth_the_cost-138872149.html


4-22-2011:  Here's a list of 76 reasons why title insurance is valuable to a home owner - http://www.theclosingcompany.net/76reason.asp

11-15-2010:  WSJ 10-29-2010 C3 - Title insurers will not require blanket indemnification...however, Stewart Title Guaranty Company says they'll issue title insurance as long as the lender followed all legal processes..now that's a big hole isn't it?  Also, Fidelity isn't going to require banks to sign agreements like B of A's.

11-4-2010:  Some title insurers are not writing new policies until the dust settles on all the investigations of foreclosure practices by many banks and financial institutions.  Fannie & Freddie are working on an indemnification agreement to serve as a model that may be adopted industry wide and may be similar to the Bank of America agreement with Fidelity National that indemnifies the insurer against any loss resulting from bank errors or misconduct in the foreclosure process. (Oh, isn't that a comfortable thought that those who helped get us in the mess to begin with is writing rules on other aspects of this industry?) 

10-22-2010 update:  I heard Ilyce Glink say something about Old Republic Title Company refusing to insure Chase foreclosures, but I am not sure if that's true or how long the boycott will last.  Other title insurers will probably selectively refuse to insure certain foreclosures if certain proof of ownership wasn't obtained.

Well, that all depends on your level of pain...but I always recommend it.   This insurance doesn't duplicate homeowner's insurance, but does provide legal assistance, settlement of legitimate claims, and legal protection from non-legitimate suits.  It may also protect you with respect to property line boundary disputes. It also protects your up front down payment in case you lose the home and possible any equity interest. (Yes - there was a case where the entire subdivision in Cobb County, Georgia that reverted back to the rightful owner and some people lost their down payment and house.)

Also, lenders are going to require you to purchase Lender's coverage for them, but your "Owner's" coverage is totally optional.

A "title search/title examination" is normally performed by the closing attorney for a purchase or refinance to verify a "chain of title" (i.e., title history) is clean and free of any "clouded" (i.e., questionable) liens. In other words, you have "clear" title.

With that said, mistakes when recording document/liens (e.g. income tax, property tax, delinquent HOA dues, contractors, etc,.) are made and you are still accountable to clear the title even if you weren't responsible for the lien. Some other things that may happen are non-legal previous actions (forged deeds & wills) regarding previous mortgages, liens from unpaid work by contractors, previously unrecorded right of way/easements, or legality of ownership. I have a list of 73 reasons I can send you.

The important point is that there could have been errors or fraud in the past and you would need to enlist legal assistance on your dime unless you have title insurance that covers your protection. 

SOME LARGER TITLE INSURANCE COMPANIES

 
CHICAGO TITLE INSURANCE COMPANY - 601 Riverside Avenue- Jacksonville, FL 32204 - (888) 866-3684


FIDELITY NATIONAL TITLE INSURANCE COMPANY - 601 Riverside Avenue - Jacksonville, FL 32204 - (888) 866-3684


THE FIRST AMERICAN CORPORATION - 1 First American Way - Santa Ana, California 92707 - Toll Free: 800.854.3643 - Local: 714.800.3000


LAND AMERICA FINANCIAL GROUP - 101 Gateway Centre Parkway - Richmond, VA 23235 - Toll Free: (800) 446-7086


OLD REPUBLIC NATIONAL TITLE INSURANCE COMPANY - 400 Second Avenue South
Minneapolis, MN 55401-2499 - (612) 371-1111 (800) 328-4441 (US) (612) 371-1191 FAX


STEWART TITLE INSURANCE COMPANY - 1980 Post Oak Blvd., Suite 800 - Houston, Texas 77056 - Office: 713-625-8100 - Watts: 800-729-1900 - Fax: 713-629-2323

SOME REASONS FOR OWNER'S TITLE INSURANCE

• Married seller who represents himself or herself as single.
• Claims of undisclosed heirs
• Impersonation of owner(s)
• Clerical or recording errors by courthouse clerks
• Incorrect legal description of property
• Previous contracts signed by minors or mentally incompetent persons
• Improperly probated will
• Confusion of title resulting from similar names
• Lost or forged deeds

References to products and services are not a specific endorsement, but the user must perform their due diligence and investigate whether the product or service is right for them.

Penny Mac - not to be confused with a Big Mac - Are they a debt collector?

Ok - We have had Freddie Mac and McDonald's Big Mac, but now there's Penny Mac.

Apparently the private company (Private National Mortgage Acceptance Co - Penny Mac) was formed to purchase the recent shaky mortgage loans from other lenders as well as credit card and auto loans.  

Now the big question is "Will they be treated a  a mortgage company-servicer, or a debt collector?" for regulatory purposes.

References to products and services are not a specific endorsement, but the user must perform their due diligence and investigate whether the product or service is right for them.

Lien laws in Georgia - Contractors can place a lien on your home

Go to the Georgia Governor's Office of Consumer Affairs (GOCA) website with respect to Liens on your home to review what can happen to your property and steps you can take up front to protect yourself.

People who contribute labor or materials to improve a new or existing home are allowed to file a claim of lien against the home if they do not get paid.

According to the Atlanta Business Chronicle (9-3/9-8, page 7B) - a lien waiver (expiration of lien), becomes effective after 60 days, even if the contractor doesn't get paid.

According to the GOCA, liens expire after twelve months - as long as the contractor doesn't pursue the lien in court - whether small claims or other court.

These are the steps that contractors have to follow to file liens.

References to products and services are not a specific endorsement, but the user must perform their due diligence and investigate whether the product or service is right for them.

FHA offers Short Refinance Program for Homeowners who owe more than their home is worth

Per a recent press release, U.S. Department of Housing and Urban Development - FHA Short Refinance option enables lenders to provide additional refinancing options to homeowners who owe more than their home is worth.

Starting September 7, 2010, the Federal Housing Administration (FHA) will offer certain 'underwater' non-FHA, non - Fannie & Freddie borrowers - i.e., some of those "creative financing deals-sub prime/Alt A/stated loans"  that were prevalent (from 500,000 to 1.5 million) who are current on their existing mortgage (this seems to contradict some news that lenders advise people to get behind 2+ payments so they can help them with HAMP) and whose lenders agree to write off at least ten percent (10%) of the unpaid principal balance of the first mortgage, the opportunity to qualify for a new FHA-insured mortgage. (Note:  This program doesn't apply to Fannie Mae or Freddie Mac loans.)

Write downs:  First & Second mortgage liens need to be written down to less than 115% of home's value (probably determined by appraisal).

About 11 million borrowers (about 25% of households with loans) owe more than their home is worth.

About $14 billion of the unused TARP funds earmarked for housing assistance will be used to buy the "lower balance" loans....Let's hope it's not as "generous" as the FDIC's 80% of book loss.

Some problems:  Possible lawsuits by investors whose money from the write downs and lack of incentive by investors to write down unless there is high probability of borrower default.

Some benefits: 

(to Lenders/Investors) - get rid of loans that were already modified and maybe headed there again.

(to Borrowers) - obviously get a lower mortgage and monthly payment, but will the 90% reduction be filed as a lien.

NOTE:  Doing the math...if there is only $14 billion available, then at $200,000 per loan, then only 70,000 borrowers could be helped...even using $100,000 loan balance, than only means 140,000 borrowers - a far cry from 500,000 - to 1.5 million borrowers that the Obama Administration wants to help.

References to products and services are not a specific endorsement, but the user must perform their due diligence and investigate whether the product or service is right for them.

Reasons why condo sales may slow down

Recently enacted Federal rules regarding FHA loans require these three elements to exist before FHA will approve a loan to purchase a condominium unit:

• less than or = 15% of (occupied) units' HOA fees are delinquent
• more than or = 10% of HOA budget must be held in reserves (most HOAs hold some in reserve, but many don't hold more than 10%) - This could require a hike in existing HOA fees even when the HOA has been fiscally responsible and held costs down.
• less than or = 50% of the units can be held/owned by investors

Source:  Atlanta Business Chronicle - September 3-9, 2010, page 8A

You may search this HUD condo website to see if your condo is approved and if originally approved before 2000, they will require full (not streamlined) recertification.

References to products and services are not a specific endorsement, but the user must perform their due diligence and investigate whether the product or service is right for them.

Mortgage fraud - what's the impact?

According to page 3 of the WSJ - 8-23-2010, losses rose over 15% last year after falling about 60% over the previous 2 years.

In 2009, almost $14 Billion in loans originated were fraudulent.

Mortgage fraud based on false appraisals rose almost half as many between 2008 and 2009.

Loan Application fraud accounts for about 60% of all mortgage fraud, which obviously leave 40% of fraud that involves other non-applicants - real estate agents, appraisers, attorneys, etc,.

In short, the scam was to get someone with good credit applying for no-doc loans (which are now non-existent). Another twist of a scam is when someone rented a property, redirected & collected mail, and acquired the owner's SS# and subsequently their identity, then sold his house.

I believe the above information might only be related to conventional loans backed by the US Government.

Per the 6-4-2010 WSJ (page C10), additional FHA loans may have not met underwriting guidelines.  Just the 2008 FHA loans amounted to $205 Billion.  FHA has stopped taking FHA loans from several lenders causing some to fold and leave no resources to buy back bad loans. (Maybe FHA loans that shouldn't have been made.)  Fannie and Freddie are demanding payments as reimbursements on bad loans.

References to products and services are not a specific endorsement, but the user must perform their due diligence and investigate whether the product or service is right for them. I welcome any or all comments that would help others.

Fannie Mae and Freddie Mac - What will be the future burden on US taxpayers?

Update 10-22-2010:   Just heard Bloomberg News report that Fannie and Freddie may need up to $360 billion ($148 billion so far) through 2013 (---I guess because they were STUPID and bought alot of CRAP mortgages).
 
Nutshell lesson for today - Fannie Mae (Federal National Mortgage Association - FNMA) and Freddie Mac (Federal Home Loan Mortgage Corporation - FHLMC), were established decades ago as Government Sponsored Enterprises (basically independent corporations) but with the full backing of the US Government if they failed...and they basically did ...and then went under conservatorships and were absorbed into the US Government Control in September 2008. Their importance in real estate was basically to purchase residential mortgages/loans that met FNMA/FHMLC criteria from lenders.

This created a "secondary mortgage market" (and competing with other investors buying these loans too) which in turn gave money back to lenders to make more loans. This keeps the real estate market/home building/home sales moving because lenders didn't need tie up their money to carry the loans since they had a ready and willing buyer - the US Government----Cha-ching!

Fannie and Freddie hold about $5.5 Trillion in mortgages. Based on current market value of loans held by Fannie Mae alone, the values are down $145 Billion. Also, about 5.5% of the $3 Trillion mortgages (i.e., $165 Billion) are 90 days or more behind

Based on two articles in the WSJ in 5-11-2010 issue, Fannie is requesting another $8.4 billion to cover losses. That means we will have spent $145 billion for Fannie's ($84 billion losses) and Freddie’s ($61 billion losses).

How much more are you and I going to pay for this?

IRS Publication 4681 - Cancelled Debts, Foreclosures, Repossessions and Abandonment

If anyone has a short sale, foreclosure, or HAMP (Home Affordable Modification Program) loan modification, you may refer to
IRS Publication 4681 which outlines the conditions under which you are not required to pay Federal Income Tax on forgiveness/discharge of "net" mortgage related debt via the IRS Form 1099 you'll receive from the discharge...Yes, the amount (between what the bank gets for the sale of the property and the amount you owed would be their loss) would normally be taxed because it is a "benefit" that you don't owe the debt any longer.

I am not certain this is applicable in the case of Deed in Lieu of Foreclosure,

I believe this exclusion runs to 2013, but consult your tax advisor to be sure.

Since this exclusion of income is only applied for Federal income taxes, I am not sure what impact this law has on State income taxes.

I would like to see the tax burden permanently eliminated if the asset is also disposed, but creates a Moral Dilemma or disincentive for people to take unnecessary risk.

References to products and services are not a specific endorsement, but the user must perform their due diligence and investigate whether the product or service is right for them.

Changes to FHA Up Front & Annual Mortgage Insurance Premiums

Update 2-16-2011:  To quote a famous US President..."Well, there you go again"...FHA will be raising the annual Mortgage Insurance Premium (MIP) by .25, resulting in another $21/month based on a $100,000 FHA loan. (Sources: http://www.hud.gov/offices/adm/hudclips/letters/mortgagee/files/11-10ml.pdf and http://portal.hud.gov/hudportal/documents/huddoc?id=fromthedeskof021811.pdf)

Effective April 9, 2010 those upfront premiums went from 1.75 percent to 2.25 percent. However, the FHA was not able to raise the annual premium without the permission of Congress as it was already at the authorized ceiling. Under the law (H.R.5981) passed 6-10-2010, the FHA will be allowed to increase its annual premium to 1.50 percent of the unpaid balance of the loan.

Per FHA Commissioner David Stevens' congressional testimony,  for new borrowers, the FHA will lower its upfront premium (from 2.25% to 1.0%) simultaneously with the increase to the annual premium (from .55% to .90%). It was FHA's intention to implement that change effective on September 7, 2010 (but now has been delayed until 10-4-2010), FHA’s upfront mortgage insurance premium will be adjusted down to 100 basis points on all amortization terms and the annual mortgage insurance premium will increase to 85-90 basis points on amortization terms greater than 15 years.

Example:  Based on a $100,000 FHA loan, the new up front premium will be $1,000 (instead of $2,250) and the annual charge would probably be $900 (instead of $550).

The net overall difference is effectively an increase in taxes (to those people making less than $250,000 per year). Even though FHA plans to lower the upfront premium, the monthly MIP charge is going up over the minimm mandatory 5 years of payments - based on a $100,000 loan, it could mean more than $750 over 5 years. You may get a small break if they retain the MIP tax deductibility...