Borrowers to Get a Boost from Distressed Loan Sales Changes

Foreclosure Two BHThe practices surrounding the government’s sales of deeply delinquent, non-performing loans (NPLs) have drawn considerable controversy in the last year or so. Lawmakers and advocacy groups have repeatedly petitioned the heads of housing regulatory agencies for changes to these programs that require them to sell the distressed mortgages to non-profits rather than private investors or equity firms.
In early March, a group of 45 members of the U.S. House of Representatives, led by Rep. Mike Capuano (D-Massachusetts), wrote a letter to FHFA Director Mel Watt and HUD Secretary Julián Castro calling for, among other changes, more transparency and the removal of “bad actors” from the NPL sales.
This week, FHFA announced enhancements to its NPL sales programs that include evaluating borrowers for eligibility for the new principal modification program announced this week.
“The national housing market has significantly improved in recent years but there are still areas of the country where home values have not recovered and negative equity remains a real problem,” FHFA Director Melvin L. Watt said. “The Principal Reduction Modification program we are announcing today, along with the changes we are making to our NPL sales guidelines, will allow an opportunity for delinquent, underwater borrowers in these areas to avoid foreclosure and save their homes.”
The enhancements to the NPL sales announced by the FHFA include the following:
Establishing that NPL buyers must evaluate borrowers whose MTMLTV (market-to-market loan-to-value) ratio exceeds 115 percent for modifications that include principal reduction and/or arrearage forgiveness;
Forbidding NPL buyers from unilaterally releasing liens and “walking away” from vacant properties; and
Establishing more specific proprietary loan modification standards for NPL buyers.
The enhancements may not be the changes the advocates and lawmakers were looking for, but they are still aimed at achieving the best borrower outcomes. Some believe there is more work to be done, however.
“FHFA has listened to the community, and is now putting a higher priority on principal reduction as a key strategy to get struggling homeowners into sustainable mortgage modifications.”
Amy Schur, Campaign Director, ACCE
“FHFA has listened to the community, and is now putting a higher priority on principal reduction as a key strategy to get struggling homeowners into sustainable mortgage modifications,” said Amy Schur, Campaign Director for the Alliance of Californians for Community Empowerment (ACCE), a group that organized a nationwide protest in February over Agency sales of NPLs to Wall Street. “However, it’s still the case that the majority of these mortgages are going to foreclosure, leaving more property in our neighborhoods in the hands of private equity firms and hedge funds, which is not what we need.”
The GSEs are including smaller pools of geographically-focused loans in their NPL sales targeted for participation from non-profits. Fannie Mae included one such Community Impact Pool in an NPL auction announced this week. It is the third Community Impact Pool offered for sale by Fannie Mae since it began selling NPLs last year; the first two were bought by non-profit New Jersey Community Capital.
The changes announced this week are the second set of enhancements that FHFA has announced to its NPL sales program. FHFA announced in March 2015 a set of enhanced guidelines for NPL buyers which call for bidders to, among other requirements, identify servicing partners at the time of qualification and complete a questionnaire to demonstrate a record of successful loan resolution through foreclosure alternatives. Also, servicers who purchase non-performing Agency loans must apply a “waterfall of resolution tactics” before resorting to foreclosure.

Source http://www.dsnews.com

 

FHFA announces principal reduction program WASHINGTON – April 15, 2016 – The Federal Housing Finance Agency (FHFA) announced that Fannie Mae and Freddie Mac would offer principal reduction to certain seriously delinquent, underwater borrowers who are still struggling in the aftermath of the financial crisis to help them avoid foreclosure and stay in their homes. FHFA says its new Principal Reduction Modification program is a one-time offer. Modification rules Loans must be owned or guaranteed by Fannie Mae or Freddie Mac Owner-occupant borrowers are those 90 days or more delinquent as of March 1, 2016 Mortgages must have an outstanding unpaid principal balance of $250,000 or less Mark-to-market loan-to-value (MTMLTV) ratios must exceed 115 percent Other eligibility criteria also applies FHFA thinks that about 33,000 borrowers will be eligible for a Principal Reduction Modification. Loan servicers must solicit borrowers eligible for a Principal Reduction Modification no later than Oct. 15, 2016. FHFA additional information Fact Sheet: Principal Reduction Modification Frequently Asked Questions: Principal Reduction Modification FHFA’s Analysis of a Principal Reduction Modification Program and Enhanced Non-Performing Loan Sales Requirements Fact Sheet: Enhanced Non-Performing Loan Sale Guidelines © 2016 Florida Realtors®

WASHINGTON – April 15, 2016 – The Federal Housing Finance Agency (FHFA) announced that Fannie Mae and Freddie Mac would offer principal reduction to certain seriously delinquent, underwater borrowers who are still struggling in the aftermath of the financial crisis to help them avoid foreclosure and stay in their homes.

FHFA says its new Principal Reduction Modification program is a one-time offer.

Modification rules

  • Loans must be owned or guaranteed by Fannie Mae or Freddie Mac
  • Owner-occupant borrowers are those 90 days or more delinquent as of March 1, 2016
  • Mortgages must have an outstanding unpaid principal balance of $250,000 or less
  • Mark-to-market loan-to-value (MTMLTV) ratios must exceed 115 percent
  • Other eligibility criteria also applies

FHFA thinks that about 33,000 borrowers will be eligible for a Principal Reduction Modification. Loan servicers must solicit borrowers eligible for a Principal Reduction Modification no later than Oct. 15, 2016.

FHFA additional information

© 2016 Florida Realtors®

Average rate on 30-year mortgage slips to 3.58%

Mortgage Rate Trend Index

Don’t expect major rate changes over the short term say three out of four (73%) mortgage experts in this week’s Bankrate.com poll. Only 7% foresee further declines, though; the remaining 20% predict an increase.

WASHINGTON (AP) – April 14, 2016 – Average long-term U.S. mortgage rates edged down this week to their lowest levels of the year, offering a continued incentive for purchasing during the spring home-buying season.

The benchmark 30-year fixed-rate loan touched its lowest point in nearly three years, since May 2013. Mortgage buyer Freddie Mac said Thursday that the average slipped to 3.58 percent from 3.59 percent last week. The key rate stood at 3.67 percent a year ago.

The average rate on 15-year fixed-rate mortgages declined to 2.86 percent from 2.88 percent last week.

The continued strong demand for U.S. government bonds, spurred by indications that the Federal Reserve won’t raise the interest rates it controls any time soon, has kept prices of the bonds at high levels. The bonds’ yields, moving in the opposite direction from their prices and influencing mortgage rates, have remained at low levels.

The yield on the 10-year Treasury bond stood at 1.76 percent Wednesday, unchanged from a week earlier. The yield rose to 1.78 percent Thursday morning.

To calculate average mortgage rates, Freddie Mac surveys lenders across the country at the beginning of each week. The average doesn’t include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.

The average fee for a 30-year mortgage was unchanged from last week at 0.5 point. The fee for a 15-year loan rose to 0.5 point from 0.4 point.

Rates on adjustable five-year mortgages averaged 2.84 percent this week, up from 2.82 percent last week. The fee fell to 0.4 point from 0.5 point.

AP Logo Copyright © 2016 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

Buyers need a Realtor to compete in seller’s market

WASHINGTON – April 14, 2016 – With demand exceeding supply in markets across the U.S., homebuyers may face an uphill battle to find the perfect home this spring.

Total housing inventory at the end of February was 1.88 million existing homes available for sale – 1.1 percent lower year-to-year and at 4.4 month supply at the current sales pace (4.5 months in Florida), which is below the six-month supply that most experts consider a balanced market between buyers and sellers.

“When there is more demand than inventory, homes sell quickly, prices rise and bidding wars can start,” says National Association of Realtors® (NAR) President Tom Salomone, broker-owner of Real Estate II Inc. in Coral Springs, Florida. “A Realtor with an ABR (Accredited Buyer’s Representative) designation is a homebuyer’s upper hand; they understand local markets and can negotiate on behalf of their buyer-clients.”

Salomone says, “Buying a home is often one of the biggest decisions of a person’s life, and having a Realtor in their corner is the ultimate advantage. They are there to guide consumers through the complexities of this life-changing transaction.”

NAR’s 2015 Profile of Home Buyers and Sellers asked recent homebuyers what they look for when deciding on a real estate agent: 53 percent said someone who could help them find the right home to purchase, and 12 percent said someone who can help them negotiate the terms of sale. The report found that homebuyers look at a median of 10 houses before deciding on one to purchase, and the typical search lasts 10 weeks.

“Having a real estate expert with specific knowledge of the local market and purchase process can mean the difference between a homebuyer getting that 10th house and having to search for another,” says Salomone.

In 2016, the ABR designation celebrates its 20th anniversary, with over 28,000 ABR designees. Realtors with the designation have completed advanced training in representing the specific needs of buyers and have specialized training for finding buyers the right home in a seller’s market.

© 2016 Florida Realtors®

New York AG Pettitions Watt Over Mortgage Relief

As the debate over whether or not to offer principal reduction to struggling homeowners has returned to the forefront of housing policy, New York Attorney General Eric Schneiderman has written a letter to FHFA Director Mel Watt asking the Director to “broadly and quickly” implement a plan offering principal reduction to homeowners facing foreclosure.
Schneiderman, who during his time in office has been a fierce advocate of preventing foreclosures and foreclosure relief scams, said in his letter on Friday that offering principal reduction is “a policy that I have advocated strongly for, that I am pleased FHFA is now seriously evaluating, and that should be deployed broadly and quickly to homeowners in desperate need of this relief from the continuing damage caused by the housing crisis.”
The principal reduction issue pre-dates Watt’s tenure as FHFA Director, which began in January 2014. In 2012, then-FHFA Director Ed DeMarco issued a statement after careful consideration that there would be no policy change with regard to principal reduction because “the anticipated benefits do not outweigh the costs and risks.”
Watt re-opened the issue and ignited the hopes of housing advocates and at-risk homeowners when, on March 22 in a public speech, he said that he would make a decision in the next 30 days as to whether or not there would be a policy change to offer principal reduction. The calls for principal reduction reached a fever pitch in early April when Watt’s fireside chat-style event on housing policy at Harvard Law School was cut short due to unruly behavior of protesters demanding principal reduction.
“(A principal reduction policy) should be deployed broadly and quickly to homeowners in desperate need of this relief from the continuing damage caused by the housing crisis.”
New York AG Eric Schneiderman
Now Schneiderman has joined the ranks of those urging Watt to offer principal reduction to homeowners facing foreclosure. Schneiderman pointed out in his letter that “virtually all of the large commercial single-family lenders now include principal reduction in their foreclosure mitigation options for struggling borrowers” and that Fannie Mae’s and Freddie Mac’s refusal to offer principal reduction is “causing countless numbers of families to remain at risk.”
“I urge you to move swiftly to create a principal reduction loan modification program and to ensure that this relief is provided to as many homeowners as possible, as it is the surest way to help the tens and thousands of families, both in New York State and throughout the country, who desperately need this relief,” Scheiderman said.

Source: WWW.DSNEWS.COM

Wells Fargo Settles for $1.2 Billion Over ‘Shoddy’ Mortgage Practices

seal-on-moneyWells Fargo has agreed to pay $1.2 billion to settle civil mortgage fraud claims against the bank and Wells Fargo executive Kurt Lofrano, according to an announcement from the Department of Justice on Friday.

According to the announcement, Wells Fargo agreed to pay $1.2 billion and admitted, acknowledged, and accepted responsibility for certifying that certain residential home mortgage loans were eligible for FHA insurance when they were not. As a result, according to the announcement, when some of those loans defaulted, the government had to pay the FHA insurance claims.

“This Administration remains committed to holding lenders accountable for their lending practices,” HUD Secretary Julián Castro said. “The $1.2 billion settlement with Wells Fargo is the largest recovery for loan origination violations in FHA’s history. Yet, this monetary figure can never truly make up for the countless families that lost homes as a result of poor lending practices.”

The settlement stems from Wells Fargo’s participation in the Direct Endorsement Lender program, a federal program administered by the Federal Housing Administration. Wells Fargo has the authority to originate, underwrite, and certify mortgages for FHA insurance based on the bank’s status as a Direct Endorsement Lender. If a loan that has been approved for FHA insurance later defaults, the mortgagee may submit an insurance claim to HUD for the balance of the loan, which HUD must pay.

The DOJ said that between May 2001 and October 2005, Wells Fargo—the largest HUD-approved residential mortgage lender— engaged in a “regular practice of reckless origination and underwriting of its FHA retail loans, all the while knowing that it would not be responsible when the defective loans went into default.” The DOJ said that the bank hired temporary staff that was not properly trained in order to increase the volume of these loans and also applied pressure on its underwriters to approve more FHA loans.

“Predictably, as a result, Wells Fargo’s loan volume and profits soared, but the quality of its loans declined significantly,” the DOJ said.

“Wells Fargo has helped millions of people buy homes and we will continue to meet the financing needs of the customers and communities the FHA program is intended to serve.”
Franklin Codel, Wells Fargo

According to the DOJ, Wells Fargo then failed to self-report to HUD the bad loans that it was originating. The DOJ said that Lofrano, in his capacity as VP of Credit Risk-Quality Assurance, executed annual certifications required by HUD for the bank’s participation in the Direct Endorsement Lender program on Wells Fargo’s behalf for the years in question.

“Today, Wells Fargo, one of the biggest mortgage lenders in the world, has been held responsible for years of reckless underwriting, while relying on government insurance to deal with the damage,” said U.S. Attorney Preet Bharara for the Southern District of New York. “Wells Fargo has long taken advantage of the FHA mortgage insurance program, designed to help millions of Americans realize the dream of home ownership, to write thousands and thousands of faulty loans. Driven to maximize profits, Wells Fargo employed shoddy underwriting practices to drive up loan volume, at the expense of loan quality. Even though Wells Fargo identified through internal quality assurance reviews thousands of problematic loans, the bank decided not to report them to HUD. As a result, while Wells Fargo enjoyed huge profits from its FHA loan business, the government was left holding the bag when the bad loans went bust. With today’s settlement, Wells Fargo has finally resolved the years-long litigation, adding to the list of large financial institutions against which this office has successfully pursued civil fraud prosecutions.”

In a press release, President of Wells Fargo Home Lending Franklin Codel said, “Today’s court filing details a previously announced agreement in principle that resolves not only the pending lawsuit filed by the U.S. Attorney for the Southern District of New York, but also a number of other potential claims going back as far as 15 years in some cases. It allows us to put the legal process behind us, and to focus our resources and energy on what we do best—serving the needs of the nation’s homeowners.”

Codel continued, “We are dedicated to providing access to credit to a broad range of customers through offerings that exist today as well as new products and programs on the horizon. Wells Fargo has helped millions of people buy homes and we will continue to meet the financing needs of the customers and communities the FHA program is intended to serve.”

Click here to view the announcement from the Department of Justice.

Source wwwdsnews.com

Short Sale Tax Break On Verge Of Being Extended Until 2017

Included in federal spending bill expected to be signed by President Obama

December 18, 2015 Ben Lane 32 Comments
KEYWORDS HOUSE OF REPRESENTATIVES MORTGAGE DEBTMORTGAGE DEBT FORGIVENESS ACT MORTGAGE DEBT RELIEF ACT SHORT SALE SHORT SALE TAX BREAK U.S. SENATE
US Capitol
Homeowners who had short sales in 2015 are about to get big break on their taxes, thanks for a massive federal spending bill that’s about to be signed into law by President Obama.

The Mortgage Debt Forgiveness Act was set to expire at the end of 2015, and without an extension, any mortgage forgiveness achieved in a short sale would have been counted as income for homeowners whom banks allowed to sell their homes for less than the amount of their mortgage during 2015.

But an extension to the Mortgage Debt Forgiveness Act was included in the fiscal 2016 federal appropriations and tax relief bill, which passed both the House of Representatives and the Senate on Friday.

The bill is now awaiting the signature of President Obama, who reportedly will sign the bill into law on Friday, meaning that borrowers who had short sales in 2015 are about to be able to breath a little easier.

This is not the first year that the extension of the short sale tax break has come right down to the wire. Last year, President Obama signed the 2014 version of the short sale tax break on Dec. 29.

But what’s different in this year’s version of the short sale tax break applies not only to short sales that took place in 2015, but it also extends the short sale tax break to cover any short sales that take place in 2016 as well.

Previous extensions of the short sale tax break only covered short sales during the previous year, leaving many homeowners wondering if they were going to get stuck with a massive tax bill.

While last year’s short sale tax break was in Congressional limbo, a report from RealtyTrac estimated that in the first three quarters of 2014, there were more than 170,000 short sales representing a mortgage debt forgiveness of $8.1 billion total.

The average short sale has a mortgage forgiveness of about $75,000, which if the tax break expired would be counted as income.

RealtyTrac also estimated that the potential taxes on the average short sale to be $22,114, which would have brought the total tax liability to $2.7 billion.

But that didn’t happen last year, and it’s now one step away from not happening in 2015 or 2016.