Banks propose billions to close foreclosure probe

Major banks are willing to pay to settle claims by federal and state officials of improper mortgage foreclosure practices, offering as much as $5 billion be used to compensate any borrowers previously wronged in the foreclosure process and provide transition assistance for borrowers who are ousted from their homes.


The banks' offer comes as mortgage companies and state and federal officials continue their efforts to strike a settlement of investigations sparked by allegations of "robo-signing" and other questionable foreclosure practices that came to light last fall.

Housing Market Indicators

Florida existing home sales: +12% (month-to-previous-year comparison) 


Florida existing condo sales: +24% (month-to-previous-year comparison)


Florida existing home median price: $126,300


Florida existing condo median price: $84,300


Florida consumer confidence: 72


National existing home sales: +3.7% (month-to-previous-month comparison; all housing types) 


National existing home median price $159,600


National (Freddie Mac) mortgage rate  4.78% (all housing types) 

New Uniform Foreclosure Guidelines

By the end of 2011, foreclosures under Fannie Mae and Freddie Mac – which hold or guarantee roughly 90% of all U.S. loans – must follow the same procedures. Loan servicers under Fannie and Freddie will be rewarded if they perform well and punished if they do not, according to the Federal Housing Finance Agency.

This initiative will direct servicers to reach families earlier, communicate more frequently and clearly, and provide relief.

Changes under the new guidelines:

• Loan servicers cannot work with homeowners on their loans while simultaneously moving forward with a foreclosure, called a “dual track” by FHFA.

• Loan servicers must contact homeowners as soon as they become delinquent and focus solely on remediating that delinquency. As long as the “borrower and servicer are engaged in a good-faith effort to resolve the delinquency,” a foreclosure cannot move forward.

• The servicer must formally review each case before taking any actions to consider the homeowner for any foreclosure alternatives.

• Loan servicers will be rewarded for speed. If a loan is modified in some way within four months, for example, the servicer receives $1,600. If it takes over seven months, however, the servicer gets only $400.

• Even if the foreclosure process has already begun, loan servicers will be paid a “financial incentive” if they continue to help the homeowners find an alternative to foreclosure.

• There will be fewer forms to fill out. It will simplify the process … by giving borrowers one application to fill out and servicers one application to review for all Freddie Mac loan modifications and foreclosure alternatives.

Investors buying as home prices are falling

Most major U.S. cities are seeing their home prices continue to fall, and at least 10 major markets are at their lowest point since the housing bubble burst.

The Standard & Poor's/Case-Shiller 20-city index (released today) showed home prices declined in 19 metro areas from January to February and 11 markets experienced faster price declines compared with the previous month. The index measures sales of select homes in those cities compared to January 2000. For each of the 20 metro areas it studies, the index provides an updated three-month moving average price. By measuring the sales price of the same homes over time, the index attempts to gauge true market values. Analysts expect the March index will fall past the low point.

The cities with the steepest declines from January were Minneapolis, San Francisco, Chicago and Miami.

New Florida Short Sale Bill

The number of short sales in Florida is rising, but lenders haven’t kept pace.

Bipartisan legislation was introduced last week to speed short sales by requiring lenders to decide whether to accept an offer within 45 days. The bill addresses the biggest obstacle for homebuyers and owners in short sale situations. By requiring lenders to make decisions on short sales within 45 days, this legislation would speed transactions and help prevent homes from going into foreclosure.

 

H.R. 1498 – the “Prompt Decision for Qualification for Short Sale Act of 2011” – would bring the processing time for short sale price approvals in line with the time required for other types of real estate deals by mandating a quicker response from the lender – at most 45 days after submitting the request for short sale approval.

Miami-Dade Jobs Picture Worse than Detroit?

Looking through Tuesday's (4-19) Labor Department jobs report, the unemployment picture for the Miami-Dade area of Florida appears more dire than that of even Detroit. The print media grabs that data and runs up stories about it being harder to find a job in Miami now than even in the Detroit.

How could that be?      After all, in March 2006, Michigan’s unemployment rate stood at 6.8 percent while Florida’s was less than half that at 3.1 percent.

Well, it's all there in the numbers folks, if you accept those as declared without review. The States with the highest unemployment rates in Tuesday’s Labor Department report are — California, Florida and Nevada. Detroit comes in at a rate of 11.1 percent, down from 14.5 percent a year earlier. Miami on the other hand is reported at 12.9 percent with a reported increase in unemployment from 12.5 percent a year ago. Motor City auto sales stats have influenced the reports having rebounded since they collapsed during the financial meltdown of 2008. On Tuesday, J.D. Power reported that car sales hit 11.1 million in April, almost 2 million higher than a year ago. Also, on the real estate front, the Federal Housing Finance Agency shows Detroit had a 25-point negative swing on its housing price index since 2000, while Miami-Dade was a much worse 55-point downward swing.

Keep in mind that the unemployment rate is is not as definitive as it might sound. Wouldn't it be much easier for us if a person was considered employed simply by the fact of them having a job? Instead, the powers that be throw in complications galore. For example: (1) A person who loses a 40 hour per week job, but works for one hour mowing a lawn for pay is classified as employed. (2) A person who simply expresses interest in having a job is classified as unemployed, while discouraged workers" who have lost a job, but do not make an effort to find a new job in a given week are not classified as unemployed or even as in the labor force.

One of the main reasons that Detroit’s unemployment rate went down is because its labor pool dropped, too. That is, the number of people either looking for a job or working declined from a year ago — down 2.8 percent. Hiring only went up 1 percent. That’s usually not a good sign, suggesting either people are moving out of town or are so discouraged by the hiring climate they’ve given up looking.

In Miami-Dade, though, the labor pool grew 1.1 percent in a year, while hiring went up 3.3 percent. That’s an encouraging trend when both measures increase, but the combination makes it harder to lower the unemployment rate.

Mortgage Lenders Told to Reimburse Homeowners

More than a dozen of the nation's largest mortgage providers have been told to reimburse homeowners over their mishandling of foreclosures.

These comprehensive enforcement actions, coordinated among the federal banking regulators, require major reforms in mortgage servicing operations.

Lenders were targeted over "a pattern of misconduct and negligence related to deficient practices in residential mortgage loan servicing and foreclosure processing," said the Federal Reserve Board, which teamed with the Treasury's Office of Thrift Supervision (OTS) and the Treasury's Office of the Comptroller of the Currency (OCC) in issuing enforcement orders against the banks.

Among the banks targeted for their foreclosure practices are Bank of America, Citigroup, JPMorgan Chase, and Wells Fargo. Officials said that "unsafe and unsound practices, violations of law and foreclosure processes geared toward speed and quantity, instead of quality and accuracy" will include fines and other types of sanctions and oversight.

"These comprehensive enforcement actions, coordinated among the federal banking regulators, require major reforms in mortgage servicing operations," said acting Comptroller of the Currency John Walsh.

Homeowners who were illegally foreclosed upon will be paid back for losses incurred during the foreclosure processes, and auditors will further investigate for improper foreclosures and other mishaps.

"These reforms will not only fix the problems we found in foreclosure processing, but will also correct failures in governance and the loan modification process and address financial harm to borrowers," Walsh added. "Our enforcement actions are intended to fix what is broken, identify and compensate borrowers who suffered financial harm, and ensure a fair and orderly mortgage servicing process going forward."

An estimated 2.4 million first-lien mortgage loans were in foreclosure in 2010.