The number of US homes in foreclosure topped the one million
mark for the first time ever, according to figures released this
week by federal agencies. The continued deepening of the
housing crisis is being driven by the relentless economic
squeeze on working people, confronted with declining wages
and persistent and growing mass unemployment.
While millions are facing the loss of their jobs and their homes,
corporate profits have reached their highest levels in five years.
The number of prime-rate mortgage borrowers in default doubled
from a year earlier, according to figures released Monday by the
Office of Thrift Supervision (OTS) and the Comptroller of the
Currency (OCC). The portion of such “prime” mortgages in
serious delinquency reached 3.6 percent in the third quarter,
up 19 percent from three months before.
The report surveyed the 34 million home loans made by banks
under the purview of the OTS and OCC, which amount to about
65 percent of all mortgages issued in the US. Given that the
figures only covered this share of US mortgages, the real
number of foreclosures is undoubtedly well over 1 million.
The total percentage of “nonperforming” mortgage loans climbed
for the sixth straight quarter, reaching 13 percent of all mortgages
in the survey. The percentage of mortgages that are “seriously
delinquent” reached 6.2 percent, while 3.2 percent of all
mortgages were in foreclosure.
Extrapolating from the survey of all US mortgages, 6.8 million of
US households were behind on their mortgage payments in the
third quarter. These figures do not count those families who have
already lost their homes. A loss rate of 3.2 percent on the $6 trillion
in loans measured by the report would represent write-downs of
some $192 billion.
Thursday, December 24, 2009
Former Fugitive Arraigned On Mortgage Fraud Charges
Lucette Montane, 26, a fugitive since June 2008, was arraigned
on a 2008 indictment in federal court. Montane surrendered to
Customs and Border Protection officials at the San Ysidro Port
of Entry, San Diego, California.
On July 18, 2008, a federal grand jury returned an indictment
charging Montane and five others with devising a plan to defraud
and to obtain money and property by false and fraudulent means,
related to mortgage fraud. As previously reported on Mortgage
Fraud Blog, according to court documents, in 2005, Abner Betech,
Said Betech and others started Creative Financial Solutions, Inc.
("CFS"), a mortgage brokering company located at 707 Broadway
Avenue, Suite 1720, San Diego. CFS was in the business of
sending loan application packages and other documents to
lenders for review and funding. The court documents further
allege that CFS did not fund loans, but instead received
commissions from the lenders when the loans closed. The
defendants were loan officers at CFS and in addition to the
commissions, they received payments from lenders, sellers,
and buyers when loans closed.
The documents also allege that CFS obtained mortgage loans for
unqualified borrowers by, among other things, concealing the true
purchase price of the homes by submitting false purchase contracts;
submitting false loan applications; intentionally concealing the fair
market value of the home; using misleading appraisals; and
submitting false bank statements and income documentation.
In total, the victim lenders funded more than $16 million in loans
on properties that have been foreclosed or are in the foreclosure
process. The lenders have lost over $3.9 million, with potential
losses in excess of $5.1 million, due to the fraudulent loans.
Agents from the Federal Bureau of Investigation and Internal
Revenue Service, Criminal Investigation Division, arrested
Montane based on a pending arrest warrant.
on a 2008 indictment in federal court. Montane surrendered to
Customs and Border Protection officials at the San Ysidro Port
of Entry, San Diego, California.
On July 18, 2008, a federal grand jury returned an indictment
charging Montane and five others with devising a plan to defraud
and to obtain money and property by false and fraudulent means,
related to mortgage fraud. As previously reported on Mortgage
Fraud Blog, according to court documents, in 2005, Abner Betech,
Said Betech and others started Creative Financial Solutions, Inc.
("CFS"), a mortgage brokering company located at 707 Broadway
Avenue, Suite 1720, San Diego. CFS was in the business of
sending loan application packages and other documents to
lenders for review and funding. The court documents further
allege that CFS did not fund loans, but instead received
commissions from the lenders when the loans closed. The
defendants were loan officers at CFS and in addition to the
commissions, they received payments from lenders, sellers,
and buyers when loans closed.
The documents also allege that CFS obtained mortgage loans for
unqualified borrowers by, among other things, concealing the true
purchase price of the homes by submitting false purchase contracts;
submitting false loan applications; intentionally concealing the fair
market value of the home; using misleading appraisals; and
submitting false bank statements and income documentation.
In total, the victim lenders funded more than $16 million in loans
on properties that have been foreclosed or are in the foreclosure
process. The lenders have lost over $3.9 million, with potential
losses in excess of $5.1 million, due to the fraudulent loans.
Agents from the Federal Bureau of Investigation and Internal
Revenue Service, Criminal Investigation Division, arrested
Montane based on a pending arrest warrant.
Sluggish New Home Sales Show Recovery Is Rocky
The housing market is in the midst of a rocky recovery, but it’s
too soon to declare an end to the worst real estate slide since
the Great Depression.
That became clear Wednesday, when the government reported
that sales of new homes dropped a sharp 11.3 percent,
surprising and disappointing forecasters who had expected
an increase.
The report dashed cold water on recovery hopes that had been
raised Tuesday by news that sales of existing homes picked up
sharply last month. But sales of existing homes got a big boost
from a tax credit program for first-time home buyers that was
scheduled to expire Nov. 30, before it was extended and expanded
by Congress.
For technical reasons, the tax break didn’t give new sales the
same boost as existing homes in November. That’s because
new sales are recorded when contracts are signed, while existing
sales are logged when the sale closes. To get the original $8,000
tax credit, buyers had to close by Nov. 30, so new homes purchased
in November likely wouldn't have closed in time to qualify.
Although the tax break was extended through April, it remains to
be seen whether the housing momentum will carry over into the
new year. The uncertainty surrounding the program in the fall could
result in some distortion in the monthly numbers, analysts said.
too soon to declare an end to the worst real estate slide since
the Great Depression.
That became clear Wednesday, when the government reported
that sales of new homes dropped a sharp 11.3 percent,
surprising and disappointing forecasters who had expected
an increase.
The report dashed cold water on recovery hopes that had been
raised Tuesday by news that sales of existing homes picked up
sharply last month. But sales of existing homes got a big boost
from a tax credit program for first-time home buyers that was
scheduled to expire Nov. 30, before it was extended and expanded
by Congress.
For technical reasons, the tax break didn’t give new sales the
same boost as existing homes in November. That’s because
new sales are recorded when contracts are signed, while existing
sales are logged when the sale closes. To get the original $8,000
tax credit, buyers had to close by Nov. 30, so new homes purchased
in November likely wouldn't have closed in time to qualify.
Although the tax break was extended through April, it remains to
be seen whether the housing momentum will carry over into the
new year. The uncertainty surrounding the program in the fall could
result in some distortion in the monthly numbers, analysts said.
Tuesday, December 22, 2009
40% of recent buyers used FHA loans
According to the National Association of Realtors' (NAR) Realtor's Confidence Index, 39 percent of recent buyers purchased a home with a Federal Housing Administration (FHA) insured loan in November. The survey also reported that the number of first-time home buyers climbed to 51%. The RCI results also indicated that distressed sales increased to 33% of all home sales last month, and that both investors and first-time home buyers are competing for these properties. The preponderance of distressed properties on the market has also influenced buyers’ perceptions of other homes for sale, with many realtors report that many buyers have pricing expectations that treat every property as if it were in foreclosure.
Realtors also expressed ongoing concerns with the impact of the Home Valuation Code of Conduct on recent appraisals. According to some survey respondents, inexperienced or out-of-area appraisers continue to rely heavily on sales prices of distressed properties, even when other comps are available. The RCI is a key indicator of housing market strength based on a monthly survey of more than 50,000 Realtors®; in a typical month there are more than 3,000 usable responses. Participants are asked about their expectations for the demand for homes, price of homes, and other economic conditions.
Realtors also expressed ongoing concerns with the impact of the Home Valuation Code of Conduct on recent appraisals. According to some survey respondents, inexperienced or out-of-area appraisers continue to rely heavily on sales prices of distressed properties, even when other comps are available. The RCI is a key indicator of housing market strength based on a monthly survey of more than 50,000 Realtors®; in a typical month there are more than 3,000 usable responses. Participants are asked about their expectations for the demand for homes, price of homes, and other economic conditions.
Now for a new twist on the Night Before Christmas...
Twas the night before Christmas, when all through the nation
Not a lender was stirring, not for small business or even a house.
The applications were slung to the trash can with flair,
In hopes that St Bernake soon would be there.
The Wall Street insiders were nestled all snug in their beds,
While visions of big bonus payments danced in their heads.
And average investors stood with outstretched hands holding a cap,
To settle down and wait for a long winter’s nap.
When out on the wire there arose such a clatter,
I sprang from my bed to see what was the matter.
Away to the mail I flew like a flash,
Flipped on the tube and excitedly waited to receive some cash.
The hype shining off the newly reported economic blow
Gave the illusion of calm to investors below.
When, what to my wondering eyes should appear,
But a miniature loan, and eight interest points I fear.
With a little old lender, so lively and quick,
I knew in a moment it must be the economy is sick.
More rapid than eagles his couriers they came,
And he whistled, and shouted, and called them by name!
"Now Buyer! Now Seller! Now Investor & Lender!
On, Calamity! On Collapse! on Economic Blitzen!
Interest rates to the roof - their backs are against the wall!
Now dash away hope! Dash away dreams! Dash away all!"
As dry dollars that before the economic storm do fly,
When they meet with an obstacle, mount to the sky.
So up to the stratosphere they flew,
With the sleight of hand and St. Bernake too.
And then, in a twinkling, I heard on the net
The prancing and pawning of each little asset.
As I sucked in my breath and was turning around,
Down the markets came without a re-bound.
Obama was dressed all in black from his head to his foot,
And his reputation was all tarnished with allowances and loot.
A bundle of debt he had flung on his back,
And he looked like a peddler, just opening his pack.
His eyes-how they twinkled! his dimples how merry!
His cheeks were like roses, his nose like a cherry!
His droll little mouth was drawn up like a bow,
And the smile of his grin was as white as the snow.
The stump of industry he held tight in his teeth,
And the smoke it encircled his head like a wreath.
He had a broad face and very little belly,
With knees that shook like a bowlful of jelly!
He was chummy and pleasant, a right jolly old elf,
So you smile when you saw him, in spite of yourself!
A wink of his eye and a twist of his head,
Soon let me know I had economic collapse to dread.
He spoke not a word, but went straight to his work,
And filled all the coffers, then turned with a jerk.
And laying his finger to the taxpayer, with one last blow,
He gave a final nod and up the chimney the money did rose!
He sprang to his feet, to his team gave a whistle,
And away they all flew like the sound of a pistol.
But I heard him exclaim, ‘ere he drove out of sight,
"Happy Christmas to all bankers - your funds are safe and tight!
About the author:
Chris McLaughlin is widely known as America’s top
Real Estate Attorney and Investment Consultant.
Not a lender was stirring, not for small business or even a house.
The applications were slung to the trash can with flair,
In hopes that St Bernake soon would be there.
The Wall Street insiders were nestled all snug in their beds,
While visions of big bonus payments danced in their heads.
And average investors stood with outstretched hands holding a cap,
To settle down and wait for a long winter’s nap.
When out on the wire there arose such a clatter,
I sprang from my bed to see what was the matter.
Away to the mail I flew like a flash,
Flipped on the tube and excitedly waited to receive some cash.
The hype shining off the newly reported economic blow
Gave the illusion of calm to investors below.
When, what to my wondering eyes should appear,
But a miniature loan, and eight interest points I fear.
With a little old lender, so lively and quick,
I knew in a moment it must be the economy is sick.
More rapid than eagles his couriers they came,
And he whistled, and shouted, and called them by name!
"Now Buyer! Now Seller! Now Investor & Lender!
On, Calamity! On Collapse! on Economic Blitzen!
Interest rates to the roof - their backs are against the wall!
Now dash away hope! Dash away dreams! Dash away all!"
As dry dollars that before the economic storm do fly,
When they meet with an obstacle, mount to the sky.
So up to the stratosphere they flew,
With the sleight of hand and St. Bernake too.
And then, in a twinkling, I heard on the net
The prancing and pawning of each little asset.
As I sucked in my breath and was turning around,
Down the markets came without a re-bound.
Obama was dressed all in black from his head to his foot,
And his reputation was all tarnished with allowances and loot.
A bundle of debt he had flung on his back,
And he looked like a peddler, just opening his pack.
His eyes-how they twinkled! his dimples how merry!
His cheeks were like roses, his nose like a cherry!
His droll little mouth was drawn up like a bow,
And the smile of his grin was as white as the snow.
The stump of industry he held tight in his teeth,
And the smoke it encircled his head like a wreath.
He had a broad face and very little belly,
With knees that shook like a bowlful of jelly!
He was chummy and pleasant, a right jolly old elf,
So you smile when you saw him, in spite of yourself!
A wink of his eye and a twist of his head,
Soon let me know I had economic collapse to dread.
He spoke not a word, but went straight to his work,
And filled all the coffers, then turned with a jerk.
And laying his finger to the taxpayer, with one last blow,
He gave a final nod and up the chimney the money did rose!
He sprang to his feet, to his team gave a whistle,
And away they all flew like the sound of a pistol.
But I heard him exclaim, ‘ere he drove out of sight,
"Happy Christmas to all bankers - your funds are safe and tight!
About the author:
Chris McLaughlin is widely known as America’s top
Real Estate Attorney and Investment Consultant.
New rule to speed up foreclosure rescues
The latest foreclosure rescue attempt is a new rule that allows mortgage servicers to waive the escrow requirements for first-lien home equity lines of credit (HELOC) and home equity loans during a Home Affordable Modification Program (HAMP) trial-period, according to HAMP administrators. The waiver applies to all servicers that “due to system and technology limitations” are not able to collect escrow payments on home equity loans or credit lines. During the HAMP trial periods, the borrower must pay all escrow obligations, such as tax and insurance bills. Trial period payments only apply to principal and interest. However, once the trial modification is converted to permanent status, the loan must move to a servicing system that can accept escrow payments for home equity loans or credit lines, administrators said. The escrow-relate waiver is the second such rule to take effect this weeks intended to speed up HAMP processing. “By eliminating the need to convert these loans during the trial period to a new servicing system, the loan can begin the trial modification process faster,” said a statement by HAMP administrators to servicers.
Luxury homeowners default at twice US rate
Homeowners with mortgages of more than $1 million are defaulting at almost twice the U.S. rate and some are turning to short sales to unload properties as stock-market losses and pay cuts squeeze wealthy borrowers. Payments on about 12 percent of mortgages exceeding $1 million were 90 days or more overdue in September, compared with 6.3 percent on loans less than $250,000 and 7.4 percent on all U.S. mortgages, according to data from First American CoreLogic Inc., a California-based research firm. The rate for mortgages above $1 million was 4.7 percent a year earlier. Short sales almost tripled to 40,000 in the first six months of 2009 from the same period a year earlier, according to data from the Office of Thrift Supervision. The bank regulator doesn't break out short sales by size of mortgage. There are 114,000 home loans of more than $1 million, according to First American, and about a quarter of all mortgaged homes in the U.S. have loan balances bigger than their current value, known as being upside down or underwater, the data company said. Luxury home prices probably will drop another 5 percent before reaching a bottom in September 2010, according to Sam Khater, senior economist at First American.
Saturday, December 19, 2009
Among the key elements of the bill:
*** Lenders must ensure that borrowers
have the ability to repay their loans.
*** It creates an organizations whose
sole purpose is to protect consumers
from abusive financial products and
borrowing instruments.
*** Increases oversight of companies
important to the economy and arranges
for them to safely shut down without
the need of bailouts.
*** No longer will executives have total
control over the size of their bonuses.
*** Provides the government the ability
to enact reforms of the Securities market.
*** Requires all hedge funds to be registered.
Such measures might go a long way towards
stabilizing the current shaky economy.
have the ability to repay their loans.
*** It creates an organizations whose
sole purpose is to protect consumers
from abusive financial products and
borrowing instruments.
*** Increases oversight of companies
important to the economy and arranges
for them to safely shut down without
the need of bailouts.
*** No longer will executives have total
control over the size of their bonuses.
*** Provides the government the ability
to enact reforms of the Securities market.
*** Requires all hedge funds to be registered.
Such measures might go a long way towards
stabilizing the current shaky economy.
Predatory lending bill passed
Congress is moving at light speed
to get legislation in before the
holidays. The latest measure to
pass is a sweeping bill that will
restructure government economics
and oversight. This bill is designed
to oversee mortgages, ban "predatory"
lending, and declares that no company
is so big it requires a taxpayer bail-
out.
It passed with a slim majority of
the House going for it. This bill is
going to shake things up significantly.
There's just one minor thing it left
out of the equation. It does not
authorize federal judges to restructure
mortgages.
The debate has raged heatedly across
both parties. Some argue that allowing
judges that power would increase abuse
of the judicial system and ruining any
chance of recovery for the housing
market.
The Mortgage Bankers Association in
particular claims that had the bill
passed with the judicial amendment,
costs would have actually increased
for borrowers.
However, the majority of the House
felt that the other measures were a
step forward in insuring the economy
against future meltdowns.
Thanks Cory Boatright
to get legislation in before the
holidays. The latest measure to
pass is a sweeping bill that will
restructure government economics
and oversight. This bill is designed
to oversee mortgages, ban "predatory"
lending, and declares that no company
is so big it requires a taxpayer bail-
out.
It passed with a slim majority of
the House going for it. This bill is
going to shake things up significantly.
There's just one minor thing it left
out of the equation. It does not
authorize federal judges to restructure
mortgages.
The debate has raged heatedly across
both parties. Some argue that allowing
judges that power would increase abuse
of the judicial system and ruining any
chance of recovery for the housing
market.
The Mortgage Bankers Association in
particular claims that had the bill
passed with the judicial amendment,
costs would have actually increased
for borrowers.
However, the majority of the House
felt that the other measures were a
step forward in insuring the economy
against future meltdowns.
Thanks Cory Boatright
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