Quarterly Servicer Assessments Show Mortgage Servicers Demonstrate Considerable Improvement in Implementation of the Making Home Affordable Program; Administration Will Continue to Hold Servicers Accountable for their Progress as Additional Efforts to Reach Struggling Homeowners Get Underway

HUD Press Release (03/02/2012)

WASHINGTON- The U.S. Department of Housing and Urban Development (HUD) and the U.S. Department of the Treasury today released the February edition of the Obama Administration's Housing Scorecard – a comprehensive report on the nation’s housing market. Data continues to show signs that the housing market is strengthening, although the recovery remains fragile. The supply of new and existing homes on the market continued to decline last month.  However, home prices dipped again as seasonal lows continued for the fourth month in a row.  The continued fragility of the housing market underscores the need for recently-announced expansions of assistance to help prevent foreclosures and strengthen hard hit communities. The full Housing Scorecard is available online at www.hud.gov/scorecard.

"Since April 2009, more than 13 million homeowners have taken advantage of our refinance programs. Following enhancements to the Home Affordable Refinance Program, another 300,000 families have already started the process of refinancing and stand to save on average $2,500 per year – the equivalent of a good-sized tax cut. So the Administration's efforts have produced significant positive benefits,” said HUD Assistant Secretary Raphael Bostic. “But 1 in 5 Americans still owes more than their home is worth. This lasting scar of the Great Recession driven by housing's collapse is a clear sign that we are not yet out of the woods.  That is why we are asking the Congress to approve the President's housing proposals so that more homeowners can receive assistance."

Included in this month’s Making Home Affordable Program Report are detailed assessments for the largest mortgage servicers participating in the program with results from the fourth quarter of 2011.  The Servicer Assessments – first introduced in June 2011 and published quarterly – have set a benchmark for disclosure around servicer efforts to assist struggling homeowners.  News Release continues here:


HAMP: Chase, Bank of America ‘Improve’ Mortgage Mod Practices

eCredit Daily (03/03/12)


The two biggest mortgage servicers in the Home Affordable Modification Program made strides in helping borrowers reduce their monthly payments during the last three months of 2011. In HAMP's October-through-December assessment, both Bank of America and JPMorgan Chase were found to have "improved their practices." The two have begun receiving HAMP cash incentives for correcting deficiencies in three key areas: identifying and contacting homeowners; homeowner evaluation and assistance; and program reporting, management and governance.



HUD chief: Mortgage-relief effort depends on Congress

Philadelphia Inquirer (03/03/2012); Heavans, Alan J. And Lin, Jennifer   

The Obama administration's effort to help three million distressed borrowers refinance into FHA-backed, lower-rate mortgages still faces one big hurdle: Congress.

Housing and Urban Development Secretary Shaun Donovan, in Philadelphia on Friday for a summit on housing policy and related issues at the University of Pennsylvania, said without congressional action to expand the Federal Housing Administration to accommodate so many loans, "there's nothing we can do" for these borrowers.

The plan President Obama proposed in January would allow "responsible" borrowers who owed more on their mortgages than their houses were worth to refinance through the FHA, saving an average of $3,000 a year.

http://articles.philly.com/images/pixel.gifThe loans would not be guaranteed by Fannie Mae, Freddie Mac, or the FHA. Lenders would be charged a fee to pay for the program - something that also requires congressional approval.

Even before Obama detailed his program, Republican House leaders said they wouldn't support it.

Donovan emphasized, however, that other pieces of the administration program were moving forward, including efforts to accelerate refinancing for Fannie and Freddie loans that are "underwater," as well as a pilot program to turn bank-owned houses into rental properties in 10 high-foreclosure areas.

In addition, the Treasury has agreed to boost incentives to Fannie and Freddie to reduce the principal balance on loans they modify under the Home Affordable Modification Program.

To date, borrowers qualifying for modification receive from 6 to 21 cents on the dollar to write down principal on their loans. Treasury will triple those incentives, paying from 18 to 63 cents on the dollar. Article continues here: http://articles.philly.com/2012-03-03/business/31119650_1_hud-inspector-public-housing-fannie-and-freddie


Speculators Who Inflated Property Bubble to Get U.S. Loan Help: Mortgages

Bloomberg (03/05/12) Gopal, Prashant


For the first time, the White House has agreed to offer mortgage aid to investors who bought multiple homes before the housing meltdown. Under the revamped Home Affordable Modification Program, landlords can qualify for as many as four federally subsidized loan workouts beginning around May as long as they rent out each unit or provide proof of plans to fill them. Downplaying criticism that taxpayers are bailing out speculators, the Obama administration is stressing the importance of neighborhoods avoiding blight and renters remaining protected from eviction by keeping current owners in place.



Investors buying homes by the dozen

In some places homes are selling for $500 a pop

Reuters (03/02/2012); Conlin, Michelle

When Vena Jones-Cox entered the foyer of the once-grand Colonial-style home in downtown Columbus, Ohio, she stepped onto a wood floor that was so moldy and mushy that it actually wiggled. As Cox proceeded down the basement stairs, they disappeared from underneath her.

"I found myself lying on the floor," says Jones-Cox, 45. "Staring at a dead rat, by the way."

The house tour from hell didn't stop her from making an offer on the place. While she was at it, she bid on some other houses, too. Forty nine houses, actually.

She's paying $3,000 for each, a bit more than the cost of an Apple Mac Pro. "We're at a bottom," says Jones-Cox. "I mean, where else is there to go but up?"

As the greatest real-estate fire sale in the history of the United States rages on, the bulk buy is the dead hot deal of the moment. In some of the most foreclosure-ravaged parts of the country, it is almost as if the housing market has become the new big box store, with investors wiping out whole shelves at a time.

The idea is to arbitrage other people's misery. With the ranks of the rental class expected to swell, investors can buy houses at clearance sale prices, pour some money into repairs and then take advantage of the difference between their low cost of capital and the rent they receive. Often, they bank cash from day one.

Hedge funds and private equity shops like McKinley Capital Partners started to quietly become landlords by buying up inventory last year. Now Main Street investors are following suit.

"They aren't just buying one rental property," says Oak Park, Illinois realtor Kyra Pych. "This is a frenzy. They are loading up."

Pych has five clients who are in the process of buying more than one condo in Forest Park. Illinois. Units that sold for $180,000 during the boom are now going for as little as $13,500. So instead of putting that money into a retirement account, her customers are putting the cash into homes and renting them out.

In Detroit, the Midwest's aspiring Donald Trumps are buying bungalows for $500 each. In Atlanta, a group of Florida investors are in the process of buying the remaining 322 units in downtown Atlanta's swank, Art Deco Atlantic Residences, with room service and maids, near Atlantic Station. The prices start at $180,000.

In California, Waypoint Homes, which has already purchased 1,000 single-family homes, got $250 million in funding in January from Menlo Park private equity firm GI Partners for more bulk buys.

"The floodgates are starting to open," says John Burns, the founder of Irvine, California-based John Burns Real Estate Consulting. "There's billions of dollars of capital, of my clients alone, (looking) to invest in single-family rentals."

Easier to buy
Up to now, the business of buying foreclosed homes was often an old-fashioned affair. They were usually one off deals, and often involved an auction on the courthouse steps.

But the recent news of Fannie Mae's pilot auction of a bulk sale of 2,500 homes was a signal to many housing experts that bulk buying is about to undergo a quantum change. The coming auctions will not only put mammoth amounts of inventory up for bid; they will also streamline and automate current procedures. Article continues here: http://www.msnbc.msn.com/id/46594269/ns/business-real_estate/


HUD and FHA Change $1,000 Charge-Off Policy

The Mortgage Reports (03/05/2012); Chrisman, Rob

As HUD and the FHA change requirements and guidelines, the industry must react -- at least with FHA programs. A recent change is turning some heads, and some feel it could result in a 50% reduction in FHA lending based on a new collection policy.

It seems that if one has collections over $1,000, a borrower must pay them all off, or make payment arrangements with all of them, and then show three months history and count the payments in the Debt-to-Income (DTI) ratio. Mortgagees must document the case binder showing each account was resolved or paid in full.

If the total outstanding balance of all collection accounts is less than $1,000, the borrower is not required to pay off the collection accounts as a condition of mortgage approval.

FHA continues to require judgments to be paid off before the mortgage loan is eligible for FHA insurance. The purpose of these new guidelines is to modify documentation requirements for self-employed borrowers, provide new guidance on disputed accounts, and expand the current definition of family members for identity of interest transactions.

The two main changes are as follows.

  1. A P&L and Balance Sheet is required if more than a calendar quarter has elapsed since date of most recent calendar or fiscal-year end tax return was filed by the borrower -- with no exceptions.
  2.  If income used to qualify the borrower exceeds the two year average of tax returns, an audited P&L or signed quarterly tax returns obtained from IRS are required.

The second bulletin stated that if the Automated Underwriting System using the TOTAL Mortgage Scorecard rates the mortgage loan application as an Accept, the mortgage application will no longer be referred to a DE underwriter for review due to disputed accounts, as long as these accounts meet both of the following conditions:

  1. The total outstanding balance of all disputed credit accounts or collections are less than $1,000
  2. The disputed credit accounts or collections are aged two years from date of last activity as indicated on the most recent credit report. 

The new guidance in this section of the ML is effective for all case numbers assigned on or after April 1, 2012, and applies to all FHA insured loans. See complete ML here: http://portal.hud.gov/hudportal/documents/huddoc?id=12-03ml.pdf

Article here: http://themortgagereports.com/8210/hud-and-fha-change-charge-off-policy


Majority of Seniors Have Less Than $10,000 at Life’s End

Reverse Mortgage Daily (03/02/2012); Ecker, Elizabeth

The majority of seniors have less than $10,000 in financial assets when they pass away, with more than half of the senior population not having any home equity at the end of their lives, according to a report this week by Boston College.

The study, “Were They Prepared for Retirement,” was prepared by researchers at the National Bureau of Economic Research. In conclusion, it states: “Despite the appearance of substantial assets at the median, a substantial fraction of people die with income less than $10,000 and with no financial assets and with zero housing wealth.”

While they may have been deemed “prepared” for retirement, the authors write, they would have little capacity to pay for unanticipated needs such as health or other unforeseen costs, or for entertainment, travel or other leisure activities.

NewImageSource: Financial Security Project at Boston College

According to the study, 57% of people living alone have less than $10,000 in assets when they pass away, and the same proportion have no home equity. For couples, the total having less than $10,000 is closer to one-third.

“What we take away from this is that a significant number of households have a very small cushion if they encounter any kind of financial need,” James Poterba of the Massachusetts Institute of Technology, who co-authored the study, told the Boston College project.

View the study here: http://www.nber.org/papers/w17824


A third of the time, lenders don’t have paperwork in foreclosure mediation sessions

Las Vegas Sun (03/02/2012); Schwartz, David McGrath

When homeowners headed for foreclosure sit down with their bank to see if they can work out an agreement, state law requires the lender come equipped with documents proving who owns the home, among other things. In one-third of those mediation meetings, however, banks failed to produce the required documents, according to an analysis of the last six months of 2011.

The figures appear to provide statistical evidence to support what many homeowners have claimed — that banks aren’t negotiating in good faith to help them stay in their houses.

JP Morgan Chase had the highest rate of noncompliance with the state law. It failed to produce required documents in 52 percent of mediations, which homeowners may request before a bank forecloses. The figures were released Thursday by the state’s Foreclosure Mediation Program.

Bank of America, by far the biggest private lender in Nevada, did not produce the necessary documents 41 percent of the time.

Overall, out of the 3,183 mediations from July 1 to Dec. 31, lenders were missing documents on 1,148 occasions, or 36 percent of the time.

“The noncompliance rate since the beginning of the program has been shockingly high,” said Barbara Buckley, head of the Legal Aid Center of Southern Nevada and the former Assembly speaker who authored the foreclosure mediation bill. “I had hoped by now that the lenders would begin complying.”

Bill Uffelman, president of the Nevada Bankers Association, said “the numbers speak for themselves.”

“The fact that they’re missing required documents, produced somewhere along the life of the loan, indicates insufficient record keeping,” he said.

Representatives of the banks could not be reached after the figures were released.

The state’s Foreclosure Mediation Program started in September 2009 was intended to allow homeowners to sit down with their lender before going through foreclosure. It does not force banks to make any concessions but it does require they do the following:

• Show up at mediation sessions.

• Bring documents, such as a certified copy proving ownership and a chain of title.

• Have the authority to negotiate on behalf of the lender.

• Participate “in good faith,” as determined by the mediator, who is appointed by the Nevada court system.

When the program started, it struggled to get bank representatives to show up at all, said Verise Campbell, administrator of the program. In the last six months of 2011, banks had representatives present in all but 2 percent of mediation sessions. Article continues here: http://www.lasvegassun.com/news/2012/mar/02/third-time-lenders-dont-have-paperwork-foreclosure/