ECONOMY - Foreclosures

Greed Files

"Get ready for another round of the foreclosure crisis" PBS NewsHour 3/5/2015

Excerpt

SUMMARY:  Despite what you might have heard, the foreclosure crisis is far from over.  Economics correspondent Paul Solman talks to people in Florida who have lost their homes, and considers whether a wave of new foreclosures is on the horizon.

JUDY WOODRUFF (NewsHour):  One of the gaping wounds of the housing crisis and the great recession that immediately followed it was a huge jump in the number of foreclosures in cities and regions around the country.

In many ways, the housing market today is healthier.

But, as our economics correspondent Paul Solman tells us, that painful wound still stings in a number of communities.  His story is part of our ongoing reporting Making Sense, which airs every Thursday on the NewsHour.

MARC JOSEPH, Real Estate Agent:  What I need to do with you now is, I need to walk through the house to make sure it’s broom-swept condition.

PAUL SOLMAN (NewsHour):  Despite what you may have heard, the foreclosure crisis is far from over, especially in Florida, which leads the nation, more than 300,000 cases still pending, another half-a-million homeowners delinquent, hundreds of thousands of modified loans about to balloon in payments.

Ten days ago, David — we have been asked not to use his last name — was in the final stage of the process, cash for keys.  He’d bought this house on a quiet street in Fort Myers in 2007 for $139,000 to live in with his brother and parents.  His father died soon after.

MARC JOSEPH:  By signing this, you are hereby releasing all claims.  If you come back to this property, it’s considered trespassing.

PAUL SOLMAN:  For a while, brothers and mother pooled their incomes from low-level jobs and her widow’s pension to make the monthly payment.  Then, one day in 2010, David came home to find that his mother, in her late 50s, had had a near-fatal heart attack.

DAVID, Florida:  I had to take care of her. My brother works.  I couldn’t work.  I had to take care of her.

PAUL SOLMAN:  With no health insurance — this was pre-Obamacare — the family fell behind.  Their original mortgage servicing company, Litton, agreed to modify the loan, reducing the interest rate, but not the principal, to cut payments by a third.

Two months later, though, Litton transferred the loan to Green Tree.

DAVID:  Green Tree took over.  The mortgage just started going up.  And my 401(k), my bank account, my car that — the only car that I bought myself, an ’03 Monte Carlo, brand-new, I had to get rid of that to pay for the mortgage.

ECONOMY - Foreclosures in Housing Market

"Increase in New Foreclosures Rate Shows Some Fragility in Housing Market" PBS Newshour 8/10/2012

Excerpt

SUMMARY: Though new reports show that banks are repossessing fewer homes from a year ago, mortgage defaults are on the rise. Jeffrey Brown talks to Guy Cecala of "Inside Mortgage Finance" about why foreclosure rates remain high, even when the house market shows signs of improvement.

ECONOMY - Is the Mortgage Industry Really That Blind?

"As Lenders Hold Homes in Foreclosure, Sales Are Hurt" by ERIC DASH, New York Times 5/22/2011

Excerpt

The nation’s biggest banks and mortgage lenders have steadily amassed real estate empires, acquiring a glut of foreclosed homes that threatens to deepen the housing slump and create a further drag on the economic recovery.

All told, they own more than 872,000 homes as a result of the groundswell in foreclosures, almost twice as many as when the financial crisis began in 2007, according to RealtyTrac, a real estate data provider. In addition, they are in the process of foreclosing on an additional one million homes and are poised to take possession of several million more in the years ahead.

Five years after the housing market started teetering, economists now worry that the rise in lender-owned homes could create another vicious circle, in which the growing inventory of distressed property further depresses home values and leads to even more distressed sales. With the spring home-selling season under way, real estate prices have been declining across the country in recent months.

EXCUSE me? DUH! This has just come to "their" attention? Is this industry really that blind?

Hint: STOP foreclosures, and refinance at affordable rates instead. In the long run, that would be more beneficial to the industry than their present course.

ECONOMY - Foreclosures 2010

"More Than One Million Homes Foreclosed on in 2010" by Paul Solman, PBS Newshour 1/13/2011

We've devoted a fair portion of our reporting over the past year to home ownership and foreclosure. Some of those stories ran again, with updates, during the last week of the year. Today comes the official tally for 2010: more than one million homes foreclosed on, with another FIVE million homeowners at least two months behind on their payments, according to foreclosure tracker RealtyTrac.

Rick Sharga, a vice president at the firm, says this year isn't looking any better. "We could easily see a 20 percent increase in both total foreclosure activity and bank repossessions in 2011," he told us, adding that he expects it to be "the peak year for foreclosure activity."

Why? Higher interest rates, a predicted continuation of the drop in real estate prices, persistent unemployment. Foreclosures slowed at the end of the year, due to the robo-signing controversy. But banks are reportedly gearing back up to repossess properties after fixing the paperwork.

As usual, the future is inscrutably murky. A recent Massachusetts court decision again called bank paperwork into question. That could slow foreclosures yet again. But regardless, the high anxiety of underwater homeowners is unlikely to be allayed - short of medical intervention - anytime soon.

At last weekend's annual economics convention, we spoke with half of the famous Case-Shiller real estate index, Karl "Chip" Case. He was worried about the larger implications of moribund market.

"We haven't figured out what's going to happen to the housing market yet," he began. "I would have thought two years ago, three years ago, that by now we would have that sorted out. But we haven't."

Case was surprised by an apparent economic recovery without a recovery in housing and all the bad debt held against real estate that's worth less and less.

"The housing market's still about 8 million in properties under water, and that's a conservative guess. It's Fannie [Mae] and Freddie [Mac]. It's the banks. There's a lot of paper out there. $10 trillion dollars of paper, and a lot of it is not on the books at its true value. The big portfolio holders -- Fannie, Freddie, FHA [Federal Housing Authority] -- have no idea, to be frank with you, no idea what the paper they're holding is worth and I think it's a potential time bomb. If housing prices were to go down 15% from here, it's just untold additional losses."

And a grim tidings for the financial system - and the economy as a whole.

ECONOMY - Vacant Homes and 1869 Florida Statute

"At Legal Fringe, Empty Houses Go to the Needy" by CATHARINE SKIPP and DAMIEN CAVE, New York Times 11/8/2010

Excerpt

Save Florida Homes Inc. and its owner, Mark Guerette, have found foreclosed homes for several needy families here in Broward County, and his tenants could not be more pleased. Fabian Ferguson, his wife and two children now live a two-bedroom home they have transformed from damaged and abandoned to full and cozy.

There is just one problem: Mr. Guerette is not the owner. Yet.

In a sign of the odd ingenuity that has grown from the real estate collapse, he is banking on an 1869 Florida statute that says the bundle of properties he has seized will be his if the owners do not claim them within seven years.

A version of the same law was used in the 1850s to claim possession of runaway slaves, though Mr. Guerette, 47, a clean-cut mortgage broker, sees his efforts as heroic. “There are all these properties out there that could be used for good,” he said.

The North Lauderdale authorities, though, see him as a crook. He is scheduled to go on trial in December on fraud charges in a case that, along with a handful of others in Florida and in other states, could determine whether maintaining a property and paying taxes on it is enough to lead to ownership.

Legal scholars say the concept is old — rooted in Renaissance England, when agricultural land would sometimes go fallow, left untended by long-lost heirs. But it is also common. All 50 states allow for so-called adverse possession, with the time to forge a kind of common-law marriage with property varying from a few years (in most states) to several decades (in New Jersey).

The statute generally requires that properties be maintained openly and continuously, which usually means paying property taxes and utility bills.

It is not clear how many people are testing the idea, but lawyers say that do-it-yourself possession cases have been popping up all over the country — and, they note, these self-proclaimed owners play an odd role in a real-estate mess that never seems to end. Though they may cringe at the analogy, as squatters with bank accounts, these adverse possessors are like leeches, and it can be difficult to tell at times whether they are cleaning a wound already there, or making it worse.

One comment on the above quote, I though about leaving out the very last sentence above due to the use of the term "leeches."

This is a trigger-word that gives UNDUE bad context, a tactic used in typical political attack-ads, like the term "death panels" used in anti-healthcare reform ads.

ECONOMY - The Foreclosure Battlefield

"Battle Lines Forming in Clash Over Foreclosures" by GRETCHEN MORGENSON and ANDREW MARTIN, New York Times 10/20/2010

Excerpt

About a month after Washington Mutual Bank made a multimillion-dollar mortgage loan on a mountain home near Santa Barbara, Calif., a crucial piece of paperwork disappeared.

But bank officials were unperturbed. After conducting a “due and diligent search,” an assistant vice president simply drew up an affidavit stating that the paperwork — a promissory note committing the borrower to repay the mortgage — could not be found, according to court documents.

The handling of that lost note in 2006 was hardly unusual. Mortgage documents of all sorts were treated in an almost lackadaisical way during the dizzying mortgage lending spree from 2005 through 2007, according to court documents, analysts and interviews.

Now those missing and possibly fraudulent documents are at the center of a potentially seismic legal clash that pits big lenders against homeowners and their advocates concerned that the lenders’ rush to foreclose flouts private property rights.

That clash — expected to be played out in courtrooms across the country and scrutinized by law enforcement officials investigating possible wrongdoing by big lenders — leaped to the forefront of the mortgage crisis this week as big lenders began lifting their freezes on foreclosures and insisted the worst was behind them.

Federal officials meeting in Washington on Wednesday indicated that a government review of the problems would not be complete until the end of the year.

In short, the legal disagreement amounts to whether banks can rely on flawed documentation to repossess homes.

So, let me get the clear, there is a "disagreement" about relying on "flawed" paperwork?! That includes missing legal paperwork?

I have to wonder what planet these legal shysters live on. Or maybe they live in an alternate universe.

ECONOMY - Foreclosures, Loan Modifications the Real Issue

"Would a U.S. Foreclosure Ban Yield 'Catastrophic' Consequences?"
PBS Newshour 10/11/2010

From transcript

SHARI OLEFSON, real estate attorney: Well, it could be very serious, Jeffrey, because, obviously, consumer confidence has been one of the biggest problems in our real estate market. We saw what happened at the beginning of this crisis, with all the interconnectedness of -- in terms of the market and reaching to Wall Street and to Main Street.

And we can only guess what some of the impacts of a more permanent foreclosure freeze might be for the country. In terms of the volume here, I mean, it's a huge bucket. We're also including, though, a lot of foreclosures that are being properly done. And we're just sort of double-checking to see that the procedure has been done right.

My question to Shari would be, if we don't have a PAUSE in foreclosures how can anyone KNOW if they were, in fact, properly done?

Note I do think a "moratorium" is too strong a word. A nationwide pause for review is more in line with this problem.

Also, at the very beginning of this video the statement "nationwide moratorium on selling foreclosed homes" is wrong, is should have been "nationwide moratorium on PROCESSING foreclosed homes." The processing of loan documentation BEFORE sale and before the homeowner vacates.

As noted in my previous post, is the issue of loan modifications. If the people who review loans are also responsible for reviewing loan modification requests AND they do NOT read the loan documentation, then there MAY be may homeowners out there who SHOULD have had their loans modified and not foreclosed.

ECONOMY - Lending Sleaze, Foreclosures

"'Robo-Signing' Paperwork Breakdown Leaves Many Houses in Foreclosure Limbo"
PBS Newshour 10/6/2010


SLEAZEBAGS! As if Americans don't already have enough trouble.

Excerpts from transcript

MICHAEL CALHOUN, president, Center for Responsible Lending: Well, this is a critical breakdown in one of the most important safeguards in the foreclosure process.

Before a bank or lender goes to court to take somebody's home, they're required by law to have someone individually review the paperwork and the payment history to make sure that the person is, in fact, behind on the mortgage, has not been charged improper fees.

And then they certify, under oath, under personality of perjury, that they have done this individual review. We have now found that, on an industry-wide basis, that was totally ignored.

And that means there are a lot of people out there who had foreclosure proceedings brought against them when they shouldn't have. And we're talking a lot of people. There are about 2.5 million households in foreclosure right now. Another 2.5 million people are at risk of foreclosure because they're behind on their mortgages.
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JEFFREY BROWN (Newshour): So, it's just that we don't know?

MICHAEL CALHOUN: It's sort of throwing darts against the wall determining who has got a foreclosure and who has a defense and shouldn't be foreclosed.

And Professor Mayer makes a real important point. It used to be that you would get a home loan from your local bank. They would keep the loan, and you would deal with them throughout the process. Now the model has been, you take out a home loan, and then that loan is sold off to investors and to other institutions.

And another company, who doesn't own the loan, is the one collecting, processing your payments, and also bringing these foreclosure proceedings. So, there's a real disconnect there. These companies are not the ones typically that own the loan. They're just foreclosing for someone else.

And so they don't have the same incentives, the same need and incentive for care if -- they would have if they actually held the loan and had a lifetime relationship with you.
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JEFFREY BROWN: What kind of impact do you see on these people in their homes and on the larger housing market, of course?

MICHAEL CALHOUN: You make an important point about the modifications, because the people who were supposed to fill out these foreclosure papers correctly are also the same companies that are supposed to determine if homeowners are eligible for modifications of their loan to keep them in their house.

JEFFREY BROWN: Which has been a big issue over the last few years, of course, right.

MICHAEL CALHOUN: And it's been a big issue.

And it's just further evidence. These stories echo the ones that have been aired, that people trying to get loan modifications, would send their paperwork in over and over again. It would get lost, and then they would end up being foreclosed on, without ever getting an answer to their modification.

Make special note of the last paragraph above. This MAY mean that many foreclosures ARE improper.

Also note the paragraph highlighted blue. Could this be a breakdown in regulation of institutions that collect and process loans that do NOT own the loan?

Should we allow "selling off" of loans, especially home loans?

LATEST

"Largest U.S. Bank Halts Foreclosures in All States" by DAVID STREITFELD and NELSON D. SCHWARTZ, New York Times 10/8/2010

Excerpt

Bank of America, the nation’s largest bank, said Friday that it was extending its suspension of foreclosures to all 50 states.

The plan swept states with some of the highest foreclosure levels, including California, Nevada and Arizona, into a swelling crisis over lenders’ flawed paperwork that had been mostly confined to 23 other states that require judicial review of foreclosures.