Fourteen banks are reportedly nearing a $10 billion settlement with banking regulators over the banks’ past involvement in foreclosure mishandlings that included faulty paperwork and excessive fees, The New York Times reports.
About $3.75 billion of the reported settlement would go to aid home owners who lost their homes to foreclosure — more than double what was set aside from a $26 billion settlement reached in 2012 among the state attorneys general and five of the nation’s largest banks.
The majority of the money from the latest settlement would go to help home owners struggling to make their payments and remain in their homes, such as with aid like loan modifications or lowering the amount of principal on their mortgages.
Banks have faced several settlements with government officials and home owners in recent months that have aimed to hold them accountable for the 2008 financial crisis and subsequent housing slump. From 2007 to early 2012, four million Americans faced foreclosure.
“It’s certainly a victory for consumers and could help entire neighborhoods,” Lynn Drysdale, a former co-chairwoman of the National Association of Consumer Advocates, told The New York Times about the latest proposed settlement. “But the devil, as they say, is in the details, and for those people who have had to totally uproot their lives because of eviction it may still not be enough.”
The same banks involved in the $26 billion mortgage settlement–JPMorgan Chase, Bank of America, Wells Fargo, Citigroup and Ally Financial — also are included in this recent settlement, The New York Times reports.
Daily Real Estate News | Thursday, February 09, 2012
After months of tense negotiations, the nation’s five largest banks and state and government officials have agreed to a $26 billion settlement aimed at holding banks accountable for the mishandling of some foreclosures.
The settlement is expected to help 1 million home owners, by having lenders reduce their mortgage debt or refinance into lower mortgage rates to reduce costs of their monthly payments. Also, about 750,000 people who lost their homes to foreclosure from September 2008 to the end of 2011 are expected to receive checks for about $2,000. The aid from the settlement will be distributed over the next three years, The New York Times reports.
“I wouldn’t say it’s a panacea for the housing industry but it is good for the banks to get this behind them,” Jason Goldberg, an analyst with Barclays, told The New York Times about the settlement.
Details of the settlement still need to be finalized, including how many states will participate. Also, federal officials say the final figure could move upwards to $39 billion. Mortgages owned by Fannie Mae and Freddie Mac will not be part of the deal.
Bank of America Nevada City Photo by John J. O'Dell
Three major banks have lost federal mortgage modification incentives in delivering a foreclosure relief program until they make big changes to improve their practices.
Obama administration officials have told Bank of America, JPMorgan Chase & Co., and Wells Fargo & Co. that they must make “substantial improvements” to the way they administer the Home Affordable Modification Program, and they will not receive any more federal money from the program until they do so. For example, officials noted that banks need substantial improvement in correctly evaluating borrowers’ incomes, which is a critical component for determining eligibility for the program. Some of the banks also need to improve how they identify and contact borrowers for the program.
Last month, the banks received $24 million in payments through HAMP, but no more payments will be made until servicers improve their performance, officials warned.
While Bank of America agreed that it needed to improve its practices in the program, JPMorgan Chase and Wells Fargo say they disagree with the poor evaluation. Wells Fargo, in fact, says they plan to contest the administration’s evaluation of how well it’s done with administering HAMP. The review, which examined all 10 servicers who administer the program, found that all 10 were performing below its benchmarks.
This marks the first time the Obama administration has taken major punitive action against banks in the HAMP program, which has been under attack in recent months from some lawmakers and critics who say the program has not done enough to help save home owners from foreclosure. Republicans in the House of Representatives voted to end the program earlier this year. However, the measure has yet to pass the Senate and the White House already has threatened a veto.
New York law firm Harwood Feffer filed a class action lawsuit against a Wells Fargo servicer America’s Servicing Company alleging it induced distressed borrowers to default on their mortgage in order to get a modification, meanwhile accruing late fees and penalties.
According to the suit, ASC allegedly told the borrowers now represented by Harwood Feffer that they would not be able to modify the mortgage as long as they were current. The firm said by making a loan default a pre-requisite for modification — even if the borrower qualified because of financial hardship — credit scores were harmed and fees, penalties and additional interest were charged.
The firm is suing ASC for compensation on those fees, totaling more than $5 million for the 12 plaintiff households. The suit was filed in U.S. District Court for the Northern District of California.
According to the Treasury Department‘s Home Affordable Modification Program guidelines, a participating servicer can offer a modification to a borrower facing imminent default. Wells Fargo participates in the voluntary program, but ASC does not.
Mortgage servicers have come under fire from Congress, regulators, state attorneys general and the public for mishandling foreclosure affidavits. Class action attorneys have used the issue to raise questions over the entire mortgage documentation process, from foreclosures and secularization to now modifications.
Wells Fargo and ASC did not immediately reply to requests for comment.
For all your real estate needs:
John J. O’Dell
Real Estate Broker
Call today (530) 263-1091
When the New York Times can’t suggest a logical reason for widespread banking practices that’s a sure indicator that something is horribly broken and that something seems to be much of the entire banking industry’s mismanagement of short sales.
In an excellent article by Michael Powell published October 24, 2010 entitled “Short Sales Resisted as Foreclosures are Revived,” Mr. Powell sheds light on numerous actual banking decisions that just do not make financial sense in any marketplace. The cases he cites, however, are in Maricopa County, Arizona.
For example, he cites the case of one Ms. Lydia Sweetland. Having lost her job, drained her savings and retirement funds, she applied for a mortgage modification and (surprise?) was summarily rejected by GMAC bank. Ms. Sweetland reluctantly realized (after seven months of being unable to pay that mortgage) that perhaps a short sale would bring this awful situation to an acceptable conclusion for all concerned. Her mortgage balance was $206,000. She found a buyer willing to pay $200,000 for the property. That offer was rejected and she was notified that GMAC would foreclose on her within seven days, losing about $19,000 in the process that the bank would not have lost had they accepted the short sale proposal.
There’s no need for logic and fairness when all your bad decisions are bailed out
In a half dozen more cases examined by the New York Times, Bank of America rejected short sale offers and foreclosed at lower prices. Brilliant! Having received Billions of dollars in federal bailouts (paid for, as we all know, buy US, the little guy federal taxpayers) Bank of America and other large banks can apparently perpetuate an economically disastrous practice that wrecks individual lives with nary a thought of logic or equity.
Holding 31 per cent of pending foreclosures in Maricopa County (which includes Phoenix and Scottsdale), this one bank is set up to lose hundreds of millions more than necessary by rejecting short sales and proceeding to foreclosure. I wonder, is Marie Antoinette the CEO of the bank? “Let them eat cake” has never resonated so strongly in the country as this economically destructive attitude does, now. Having never adopted the guillotine, we have no instant remedy to snap bank management out of this arrogant and financially stupid policy so the consumer rightfully feels disrespected and abused. That’s NOT a good thing. If the banking business thinks nothing of losing an unnecessary extra 10% of the principal balance rather than work with a buyer, they best not be surprised when the sanctity of the contract becomes invalid among most consumers. It’s a prescription for economic chaos.
“The dog ate my homework”
When it comes to ludicrous “justifications” for indefensible policies, it’s hard to top the excuse that kids sometimes use to “justify” not having their homework done. Listen, however, to the “justifications” for the banks’ reluctance to engage in short sales offered by those in the know, and quoted in the article:
· “Banks are historically reluctant to do short sales, fearing that somehow the homeowner is getting an advantage on them”;
· “{Banks} have this irrational belief that if you foreclose and hold on to the property for six months, somehow prices will rebound;”
· “banks computer systems repeatedly asked for and lost the same information and generated inaccurate responses:”
· “Servicers can reap high fees from foreclosures:”
· In a reversal of previous regulatory policy (changed April 2009), “banks can foreclose on a home and avoid writing down the loan until the home is sold, as opposed to taking the write-down immediately on a short sale;”
Sounds an awful lot like “Let them eat cake” to me.
But it’s hard for even these mercenary heartless bureaucrats to justify this one: A Mr. Nicholas Yannuzzi put 20% down and bought a one-story home for his wife, who had been diagnosed with bone cancer, so she would not have to climb stairs. Sadly, his wife later died, he lost his job and used his retirement funds to pay the mortgage for the past five months. Didn’t make any difference to Wells Fargo Bank, his mortgage holder: they rejected his request for a mortgage modification and then for a short sale.
So, after working diligently all of his life, never having a financial problem before, owning five homes and in the sunset of his life, he is now waiting to be locked out of his home.
Perhaps you may remember the movie “Network,” starring Peter Finch and written by Paddy Chayefsky, that won four Academy Awards, released in 1976 and now rated as one of the top ten films of all time. It was satire, but the protagonist’s mantra was this screaming phrase” “I’m sick and tired and I’m not gonna take it anymore!”
That’s what happens when you ‘let them eat cake’: chaos ensues.
Conclusion: They’re lazy AND it’s the money
Let’s all pretend that if we postpone the write-downs, it will all turn out okay in six months. Let’s all ignore the human toll this crisis is taking and “just follow orders.” Let’s all realize that in this dysfunctional political system we are now in, it’s every man and woman for themselves. Fee income considerations and the timing of balance sheet losses are now trumping the need to treat people fairly. It’s easier to “just follow procedure” than invent solutions.
Wells Fargo & Co. said it plans to refile paperwork in 55,000 foreclosure cases after it discovered flaws in foreclosure documents.
The San Francisco-based bank, which is also among the largest providers of residential mortgages in Minnesota, had previously stood by its foreclosure paperwork as other major mortgage lenders came under scrutiny.
Wells Fargo proceeded with foreclosures while rivals including Bank of America Corp. and JPMorgan Chase & Co. delayed theirs.
Wells said it had identified possible problems with a final step in its foreclosure process by bank employees and notaries on legal affidavits.
The bank will begin the filings in 23 states and hopes to complete them by mid-November.
“The issues the company has identified do not relate in any way to the quality of the customer and loan data.” Wells said in a statement. “Nor does the company believe that any of these instances led to foreclosures which should not have otherwise occurred
Outraged neighbors ratted on a Wells Fargo & Co. employee who threw lavish parties at a foreclosed home in pricey Malibu, Calif. The bank said Monday that the employee had been fired.
The Los Angeles Times first reported earlier that 39 year old Cheronda Guyton, a Wells Fargo senior vice president responsible for foreclosed commercial properties and a seventeen year veteran of the bank, spent weekends at the house, hosting parties that caught the attention of neighbors.
Wells Fargo took possession last May of a 3,800 square foot beachfront mansion. The previous owner was reportedly wiped out by the Ponzi scheme run by Bernard Madoff. It was valued at $12 million when it was taken back by the bank in May.
Instead of putting the property up for sale or letting it stand empty while the foreclosure was completed, Cheronda Guyton, senior vice president in charge of commercial foreclosed properties for the bank, apparently used the place to entertain friends, including transporting guests from a yacht moored offshore.
After neighbors cried foul, Wells Fargo investigated and identified Guyton as the culprit. Monday, the company said in a statement, “We deeply regret the activities that have taken place as they do not reflect the conduct we expect of our team members.”
Malibu Mayor Andy Stern, who also happens to be a real estate agent, told Reuters that the house could lease for $150,000 a month.
Wells says the house was kept off the market under an agreement with the prior owners. “Our investigation concluded a single team member was responsible for violating our company policies,” Wells said in a statement. “As a result, employment of this individual has been terminated. We deeply regret the activities that have taken place as they do not reflect the conduct we expect of our team members.”
Malibu Colony is one of the city’s first and still most exclusive neighborhoods. It has been the playpen of celebrities going back to Bing Crosby’s days
What the figures show for April of this year is that residential sales are about the same number as it was for April of last year.However, we’ve had a further decline in medium residential home prices of minus 23 percent. Here are the stats for sales in Nevada County.
There were 67 residential properties sold in April 2009 compared to 62 residential sales in April 2008.Total residential sales from January to the end of April 2009 were 191 sales compared to the same period last year of 203 sales.
The medium price for April 2009 was $299,000 compared to April 2008 of $387,500 a decline in market price of 23 percent.There were 1,165 residential properties listed for sale at the end of April, which based on the number of sales from January to April 2009 equals about 1.6 years supply of residential property for sale, assuming sales continue at the same rate.
There were 20 land sales from January to April in 2009 with a 45 month supply of land at the end of April. Last year there were 45 land sales with a 49 month supply of land.
I’ve noticed a pickup in pending sales, which I post on this website daily for those that are interested, and it seems that the pending sales are up. They have been hovering in the 200 pending sales starting within the last month. However, this is for all sales, not just residential sales.
Where are we with future sales? It’s anyone’s guess, Fannie Mae and Freddie Mac asked lenders to forestall any more foreclosures until March 6, 2009.What they are doing now that the agreement date has expired? Some circles say we are in for a tsunami of foreclosures. The following banks had agreed to the government’s request and their expiration dates of the agreement.
JP Morgan Chase – New Owner-Occupied residential loans that are owned and serviced by JPMorgan Chase. As with Fannie Mae, the moratorium of foreclosures end date, March 6th.
Citigroup – All Citi-owned first mortgage loans that are principal residence and on loans for which understandings with investors have been reached. Moratorium end date – March 12th.
Bank of America (also Countrywide now renamed Bank of America Home Loans) – Delay foreclosures sales on owner occupied properties whose mortgage loans are owned and serviced by B of A or Countrywide – Through March 6th.
Wells Fargo (also Wachovia) – For Loans it holds. The moratorium is expected to remain in place until the government’s foreclosure prevention plan is announced. The majority of Wells Fargo’s mortgage loans are serviced by it and owned by other investors.
