DSNews.com – Although the Obama administration has worked to suppress foreclosures, it appears these efforts may not be enough, according to Bank Foreclosures Sale, a foreclosure listing service.

High unemployment continues to plague the real estate market, and according to a recent article in the New York Times, an estimated 2.4 million foreclosed homes will be added to the list of 2010 foreclosures. As a result, Bank Foreclosures Sale predicts prices will decrease another 10 percent.

Simon Campbell, a real estate analyst for the company, said it appears the real estate market may see a surge of shadow inventory properties appear on the market. These are properties that have not been calculated into official inventory numbers and include homes repossessed by lenders through foreclosures and similar actions and homes where owners are 90 days or more delinquent on payments.

Unemployment remains at a record high, and congressional leaders continue to look for ways that millions of people who have lost their jobs will be able to stay in their homes. While current statistics show lenders may finally be closer to finding a solution for the home mortgage crisis, Campbell said the question now is about how fast these lenders can work to stem potential foreclosures.

“Until we see a reduction in the number of foreclosures, we cannot get too hopeful about restoring housing industry stability,” Campbell said.

F.S. 718.116(1)(b)  The liability of a first mortgagee or its successor or assignees who acquire title to a unit by foreclosure or by deed in lieu of foreclosure for the unpaid assessments that became due prior to the mortgagee’s acquisition of title is limited to the lesser of:

1.  The unit’s unpaid common expenses and regular periodic assessments which accrued or came due during the 6 months immediately preceding the acquisition of title and for which payment in full has not been received by the association; or

2.  One percent of the original mortgage debt. The provisions of this paragraph apply only if the first mortgagee joined the association as a defendant in the foreclosure action. Joinder of the association is not required if, on the date the complaint is filed, the association was dissolved or did not maintain an office or agent for service of process at a location which was known to or reasonably discoverable by the mortgagee.

LasVegasSun – As Las Vegas limps into a new decade, let us return to the now-hazy origins of our current sickness: 2005.

It would seem the entire Las Vegas Valley had been slipped a drink laced with a financial hallucinogen — a powerful narcotic that combined Ecstasy’s feelings of well-being with methamphetamine’s urge to be busy.

Even the city’s most accomplished business and political elites could not resist its influence. They were spaced out, convinced that the laws of the economic universe had been suspended, that housing prices could expand into space, that borrowing money was as holy as prayer.

“We thought we had a recession-proof economy, we thought we would grow forever,” says Elliott Parker, a UNR economist.

Parker describes an “illusion, that we could create wealth from nothing, that we could keep consuming beyond our income, that housing prices would keep rising, that investments could yield high returns without risk, since we were all so clever …”

If they weren’t addicted to the drug themselves, Las Vegas denizens acted as street corner touts — marketing the magical drug for a living — and were always shouting its wonders.

We were, in Parker’s words, “selling high roller fantasies to gamblers and expensive houses to people who sold their homes elsewhere for even more insane amounts of money. We thought it would continue forever, and we made no contingency plans for the alternative.”

Illusion. Fantasy.

When skeptics pointed out that perhaps a dangerous real estate bubble was forming, the crowd responded with mockery:

“The only bubble you’ll see in this market is in a Champagne glass,” a well-known real estate player said in our now fated year of 2005.

But in fact, here’s what was happening in the Las Vegas real estate market: After years of slow and steady growth, a mania took hold. Home values had increased more than 35 percent in 2004 alone.

It was a classic bubble by 2005, right up there with phony Silicon Valley technology companies 10 years ago, and phony Amsterdam tulip futures 375 years ago.

For a while, Americans could borrow unlimited sums of money against their rising home values to come to Las Vegas to spend money. So we built new resorts.

We needed construction workers to build those resorts. We needed other construction workers to build homes for the first construction workers.

Simple logic

This wouldn’t — couldn’t — go on forever. At some point, Americans would hit their limits and the growth of tourism would slow, and we wouldn’t need so many construction workers to build resorts, and then we wouldn’t need so many construction workers to build those houses for the first construction workers.

Once we didn’t need those construction workers, they would be laid off and stop making mortgage payments on their homes. And the sell-off would begin. Throw in all the subprime loans that borrowers couldn’t pay to begin with and you’d get a fire sale. Welcome to 2007.

It’s simple logic, really. Any college freshman who got suckered into a pyramid scheme could explain the illogical underpinnings of it all. It was an economic house built without a foundation on a sandy desert hillside. And there it goes, into the wash.

Sure, we had the resorts, and the wealth they created was real, but the Strip was living on borrowed time, larded with debt, a bad recession away from near collapse and in some cases, bankruptcy.

“A growth-addicted economy produced phony prosperity,” says Hugh Jackson, proprietor of the Las Vegas Gleaner blog and a policy consultant to the Progressive Leadership Alliance of Nevada, a liberal advocacy group.

Phony. Like the happiness of a drug.

This isn’t to say that the decade didn’t begin with hopeful signals — low unemployment and rising wages, and the tax revenue needed to improve schools, health care and social services. The Strip kept attracting more customers and building more hotel rooms to house them.

But the 9/11 terrorist attacks should have provided a clear warning that a dip in tourism could pummel the city. When tourism quickly resumed, however, that warning went unheeded.

Plus, debt was accumulating, in households here and among potential customers around the world, and on corporate balance sheets.

It should have been a portentous time, a ripe time for Cassandras.

“The decade began with a facade,” Jackson says of those go-go years.

A facade. Soon it was a Potemkin village of steel and stucco, massage parlors and pawn shops.

So wrong

In the reality-based world, many people knew the intensifying speculative bubble in real estate wasn’t sustainable and tried to warn others. Bill Robinson, a UNLV economist, sold his house in 2005, patiently explaining to neighbors the laws of economic reality and the coming crash.

“Everybody who was independent of all this saw it coming,” Robinson says. Meaning everybody sophisticated enough to understand economic data and not a paid representative of the resort or development industries.

(And, in fairness, some people from those industries tried to pull the fire alarm early on.)

What is striking about our real estate player, the one who sneered about there being no bubbles except those in Champagne, isn’t that he turned out to be so wrong. After all, people are wrong all the time. The sun revolved around the Earth for centuries after Ptolemy, and many smart and well-meaning people, even the high priest of laissez faire capitalism Alan Greenspan, were wrong about the housing bubble.

No, what’s striking is the tone of triumph and arrogance, like he’s pulled one over on the stupid herd.

It turns out, our addiction’s true power was so much like that of other drugs: It gave the user great powers to deceive.

We were good at deceiving others.

“Hardly anything we did this decade was upfront,” Robinson says.

Illusion has always been part of Las Vegas’ appeal — that we would not succumb to mathematical certainty at a card table; that we could come here and remake ourselves into glamour gods; that buildings that look like the New York City skyline can approximate the feeling one would get from actually being in New York City.

Illusion is one thing.

Deception, done with malice and for the most selfish ends, is something else.

Deception in Las Vegas took many different forms this decade.

Easy to con

On the Clark County Commission, four members would eventually be convicted of what amounted to dishonest service for taking bribes. Erin Kenny told us she was acting on the community’s behalf when she pushed approval of a CVS drugstore at Desert Inn Road and Buffalo Drive. Really, it was for a $200,000 bribe.

From the sensational to the prosaic: The real estate loan officers who extended money to people knowing they couldn’t repay, demanding no documentation, employing no safeguards or due diligence.

So, waddya make last year?

Oh, that’s good enough.

“Stated income,” we called these loans, employing our bottomless ability for euphemism.

Or, our lenders weren’t straight with borrowers — many who didn’t speak English — about what would happen to their monthly payment in a year or two after a “reset.”

On the other side of the ledger, there were speculators and plenty of average people who took out loans they had no intention of repaying.

“The easiest con for a con artist is another con artist,” says Mike Green, the Nevada historian. “If you want to believe you’ll always be living on the Big Rock Candy Mountain, then it’s easy for someone to sell you another piece of worthless land.”

Once things started to collapse, a whole new set of scam artists — “loan modification specialists” — preyed on vulnerable homeowners, promising to keep them in their homes but running off with cash instead.

For so many — and at great expense to the rest of us — the decade was a giant con, a bamboozlement, a flimflam.

“We have a history of benefiting from all that flimflamming,” Robinson notes.

“It’s kind of our culture. So at some point it was inevitable that if there was an easy-money climate, we would fall prey to it,” he says.

Which brings us back to another kind of deception, perhaps most damaging of all — self-deception.

“It’s easy to delude yourself into believing something you want to be true. And here we are,” says Mike Sloan, a gaming consultant and former state senator.

We were deceived, we were narcotized, because we wanted to be deceived.

SFGate.com – This was supposed to be the year of loan modifications.

With great fanfare early in the year, the Obama administration unrolled a plan to spur banks to help troubled homeowners avert foreclosure by reducing their monthly payments.

But at year end, the plan is widely considered a bust.

Borrowers complain of months of begging and endless phone-tree loops. Banks complain of borrowers who don’t submit documentation and don’t return calls.

The net results have been paltry: Just 31,382 borrowers nationwide had received permanent loan mods as of Nov. 30 under the Home Affordable Modification Program (HAMP), the Treasury Department reported. Meanwhile, First American CoreLogic says that 1.7 million homes are likely to be lost to foreclosure next year.

“HAMP is turning out to be something of a disaster,” said Lisa Sitkin, an attorney at Housing & Economic Rights Advocates in Oakland, who works with many struggling borrowers. “There are delays and lost steps at every turn. The bureaucratic requirements are endlessly frustrating.”

Richard Leong of Daly City is a case in point. He and wife Rachel Lim have owned their Daly City home since 2000. But after he lost his biotech job, they fell behind on payments. He contacted the loan servicer, JPMorgan Chase, a year ago to request a loan modification, and says he calls the bank at least once a week.

“I’ve been calling them so many times; each person gave me different answers,” he said. “All my savings and 401(k) are gone; right now I’m totally drained of money.”

Chase confirmed that Leong has been trying to get a loan modification since November 2008, but said it was stymied because there was no household income.

“Under HAMP, there needs to be some type of income to qualify for a modification,” said Chase spokesman Gary Kishner. “If there is no income, there is no way to sustain anything.”

Lim eventually got a job in Sacramento, but Kishner said Chase still hasn’t received proof of the income.

Stalemates common

That kind of stalemate appears to be typical – along with the increasing prevalence of mortgage problems due to unemployment.

So what’s the answer? Here are some ideas that various stakeholders and observers have suggested.

– Options for unemployed borrowers. Foreclosures aren’t just about subprime loans anymore. This year, many borrowers with prime loans fell behind because of job loss.

“The second wave of foreclosures is related to the terrible unemployment figures,” said the Rev. Lucy Kolin, a pastor at Oakland’s Resurrection Lutheran Church. She’s part of an interfaith coalition called the PICO National Network that went to Washington this month to urge legislators to address this group. “There is no program set up to deal with homeowners who are unemployed.”

PICO suggests expanding HAMP with an approach to specifically address unemployed homeowners, modeled on a Pennsylvania plan called Homeowners Emergency Mortgage Assistance.

“It would get the homeowners payment down to 31 percent of the monthly income for two or three years or until they regain employment,” she said. “It would not be a grant, but a loan. Treasury would pay the servicer at the end of 24 or 36 months for the lost payments; that amount would become a loan to the homeowners.” For people with no income, payments would be suspended.

– Principal write-downs. More than a quarter of mortgage holders owe more than their home is worth. Even if those people get loan modifications, they’re stuck paying off homes that could be underwater for years. That’s why many consumer advocates think banks should be compelled to reduce the amount of debt owed on underwater homes. A provision to let Bankruptcy Court judges do just that seems unlikely to pass Congress, after several failures.

“You want homeowners to be in a position where they can start to build equity and wealth,” said Paul Leonard, director of the California office at the Center for Responsible Lending in Oakland. “The problem with affordability-only modification is that it essentially makes homeowners renters for the foreseeable future and locks them into their homes so they can’t move elsewhere for better jobs.”

He suggests working out a way to make principal reductions part of the existing program, triggered only for properties that have experienced a certain level of price decline.

– Rent back foreclosed homes. Dean Baker, co-director of the Center for Economic and Policy Research in Washington, suggest giving former homeowners the right to rent their home after foreclosure. This year, Fannie Mae started offering the rent-back option to people who sign over their homes as a deed in lieu of foreclosure, which is less harmful to a borrower’s credit.

Incentive to deal

Baker sees the approach as a big stick to motivate lenders to play let’s make a deal.

“If you give people the right to rent, it changes the logic from the lender’s standpoint and makes foreclosure less attractive,” he said. “Many lenders of their own volition will decide to work on loan modifications – otherwise they could be stuck with a renter for five to 10 years. It would shift the balance of power hugely in favor of the homeowner.”

– More government pressure. Loan mods are voluntary. Banks get incentive payments for completing them, but it’s ultimately up to them whether a foreclosure will be cheaper. Starting this month, the Treasury Department is sending three-person “SWAT teams” to the eight largest loan servicers to keep tabs on how they’re handling loan mods. The banks will have to submit progress reports two times a day. And Treasury will publish lists of lenders that are falling short.

– More industry involvement. Christopher George, president of CMG Mortgage in San Ramon, says that trade groups, such as the California Mortgage Bankers Association, where he is the secretary, could get together to pitch in.

“My recommendation is to harness the power of members in those organizations, ask them to participate on a pro bono basis to help consumers navigate the process,” he said. “You know how confusing and complicated the whole process can be.”

He suggests the trade groups collaborate on a guide for troubled homeowner and perhaps hold regional modification fairs, with lenders, lawyers and financial advisers.

– Do nothing. There’s plenty of grassroots support for an idea that could be expressed as “you made your bed, now lie in it.” Patrick Killelea, a Menlo Park programmer who maintains the popular Patrick.net blog, explains the rationale.

“These were all grown-ups getting themselves voluntarily into debt with the false expectation that prices would rise forever,” he said. “They did a lot of harm, because prices were driven up, so people, especially families with young children … would have to take on unreasonable debt because of bad decisions that other people made.”

Letting homes go into foreclosure would allow the market to recover much more quickly, he said. “It would drive prices down and it would be quicker,” Killelea said. “It’s like peeling a Band-Aid slowly versus ripping it off.”

Rather than prolong the agony, “Just yank the whole thing off.”

In the state of Florida is it legal for a debt collection agency to sue me for a second mortgage on a second home I had bought in Florida?

The home could not be sold as a short sale and was foreclosed on. Before it foreclosed the bank which held both mortgages sold off the second mortgage to a debt collection agency.

I was unable to pay them and now they have served papers on me and are suing me for the sum of the second mortgage.

I have heard in other states that they cannot do this but am unsure about in Florida.

Any help would be greatly appreciated. Thanks!

Bonnie (more…)

I live in Tennessee and I had a Rental Property that was Foreclosed on in 2008. Wells Fargo held the original Mortgage and sold the property for less that the amount that I owned. I received a 1099-A and thought I was done with my Rental Nightmares!

I recently recieved a letter from a out of town Collection Agency stating that I owed 19K!!

I do not have the means to pay this debt, that’s why I loss the Property!

I know my credit is ruined but what else can they do to me! “You can’t squeeze blood from a turnip”…or can you???

Thanks for your advise

Scott (more…)

I have a rental property that went into foreclosure after I had my debts discharged in bankruptcy.  The lender still holds a first position even though the debt was discharged.  The IRS also has a lein on the property and this lein caused the lender to remove the property from the scheduled sheriff sale.  

Nobody is going to buy the property because the house is no longer worth the lein values.  If someone bought it, they would have to accept both leins. 

How can I get the bank to release the lein so I can sell the house to pay off the tax lein?  Is it legal for me to offer the bank some money to release the lein. 

Maybe I can just buy the house from the bank for a cash amount.  I am the only one willing to buy it with the IRS lein on it.  Will the IRS sit there forever holding that lein? 

Thanks.  I feel stuck in limbo.  I want to get on with my life.

Mel (more…)

We built our dream home in 2007, and up until the day before closing thought we were in heaven.  We found out the day before we closed that the good faith estimate on what our motgage was WAY off!  Like $1000 off. Not wanting to walk away from our dream and the money we put in to it, we signed. 

We put it up for sale right away, hoping that we could break even, and nothing. We kept up on the motgage for awhile, to the detrimate of our other obligations, but we could only keep it up for so long. We tried renegotiating our loan, but again…dead end.

We foreclosed on our home in Feb 08 (according to lender 2/12/08 was when forecloser was completed, and county record show transfer of title on loan happening at auction, 2/13/08).  We had a first and second mortgage.  We were defeated and tired. 

We moved and have started to rebound from the process.  We did a little reseach a few months prior to the foreclosure and found out that the home sold for more than we owed on the 1st and that the 2nd had “charged off” on our credit.  We called to find out how to help our credit due to the charge off and were told that we could settle for more money than we had available to us, or basically do nothing.  They (the mortgage lender) said that they would never persue the debt, but that it would stay on our credit. 

We just found out that we qualify for a VA Loan and that there wait after foreclosure is shorter than a conventional or FHA (2 years vs 3 years).  Excited and ready to move on, we started to check proir to the “timeline’, just to make sure we would be able to purchase another home.  So…found out that the “2 year” wait starts the day the foreclosure hits your credit, same with the the 2nd mortgage charge off. It is only 3 month shy of the “2 year” mark for us. But during my checking process I found out that up to 8 months after the foreclosure was reported my mortgage company continued to report me as late??? Can they do that?

They said that the sale wasn’t finalized until 10/08. But again, according to county records the title transfered from us to the buyer on 2/13/08.  Also, the second is continuing every month to report a charge off on my credit up to now!!  How can they do this? 

I understand that it is considered a debt that is still outstanding and that they have deemed it uncollectable, but how can they continue to “re-new” that debt? Is this legal? If I am trying to rebuild me and my families life after foreclosure, how am I to do that if the lender can continue to report me like it just happened?

I did contact the leaner,who by the way is the same for both mortgages and where originated at the same time, said that the 1st credit reporting months later was because of the sale not being complete until 8 months later.  And the 2nd, because we still “owe” the debt they can continue to report it.

I am so tired, please let me know what to do?  Fight…give up??

Defeated,
Gary and Jeni (more…)

Florida Foreclosure Defense Blog – The law firm of Shuster & Saben has obtained the dismissal of a foreclosure lawsuit filed against the firm’s Brevard County client. The Plaintiff / Lender filed suit against our client in an attempt of take their Cocoa, Florida investment property. In the subject action, after the lender drastically raised our client’s interest rate (to well over 8% A.P.R.), our client was unable to continue to afford to make monthly mortgage payments. Our client had financed the property with an A.R.M. (Adjustable Rate Mortgage) that was linked to the LIBOR index, and faced an increase in their interest rate after their initial rate expired. Despite the fact that interest rates declined from 2007 to 2009, the lender still raised the client’s interest rate to a point that it was no longer affordable. Several months after the client stopped making mortgage payments the lender filed a Notice of Lis Pendens and a Complaint for Foreclosure in the Brevard County Circuit Court.

The client consulted with several other Space Coast attorneys before choosing Shuster & Saben to defend the foreclosure action. After Shuster & Saben filed its notice of appearance and voluminous discovery requests the lender decided to dismiss the case and cancel the lis pendens. Counsel for the lender advised that the lender has decided to write off the loan.

To view the actual Florida Foreclosure Dismissed.

Yahoo News – Can’t pay the mortgage? You still might be able to stay in your home. Government-controlled mortgage company Fannie Mae is going to give borrowers on the verge of foreclosure the option of renting their homes for a year.

The change announced Thursday could give a temporary break to thousands of homeowners, but critics question whether it will only add to the mushrooming losses at the company, which has received billions in taxpayer money.

The new “Deed for Lease” program will allow homeowners to transfer title to Fannie Mae and sign a one-year lease, with potential month-to-month extensions after that. It also helps save money because the lender does not need to complete the often lengthy and time-consuming foreclosure process.

The program helps “eliminate some of the uncertainty of foreclosure, keeps families and tenants in their homes during a transitional period, and helps to stabilize neighborhoods and communities,” Jay Ryan, a Fannie Mae vice president, said in a statement.

It also does less harm to the borrower’s credit record.

“It shows that you put your best effort to work out a solution,” said Gabe del Rio, director of homeownership at Community HousingWorks of San Diego.

However, Mike Himes, director of homeownership services at NeighborWorks Sacramento, said the industry should push harder to modify loans at lower monthly payments. “The preferred option is allowing people to retain ownership,” he said.

Fannie Mae executives said the rental program is designed to help delinquent homeowners who don’t qualify for a loan modification, but still want to stay in their homes.

To qualify, homeowners have to live in the home as the primary residence and prove that they can afford the market rent, which will be established by the management company running the program. Rents are based on current market rates.

The plan is expected to be particularly attractive in places like Phoenix or Orange County, Calif., where homeowners are stuck paying large mortgage bills on properties that are now worth far less than they originally paid. At the same time, rents have been falling in those areas. So by renting the same house, former homeowners could wind up paying far less every month.

In Orange County, for example, the average monthly rent for all apartments was about $1,450 in September, down nearly 8 percent from a year earlier, according to research firm MPF Research. In Phoenix, the average renter paid about $720, also down about 8 percent from last year.

Still, the effort is likely to attract a relatively small number of homeowners.

In the first nine months of the year, Fannie Mae took ownership of nearly 2,000 properties through a process known as a deed-in-lieu of foreclosure. That pales in comparison to the 90,000 foreclosed properties the company repossessed in the period.

Deed-in-lieu works like the new program, allowing homeowners to turn over title to Fannie Mae, but rather than renting, the owners simply walk away.

While Fannie Mae executives say the company’s motives are community-minded, critics say the company is simply gambling that the properties will eventually sell for a higher price. That’s folly, says Peter Schiff, president of Euro Pacific Capital in Darien, Conn., and a longtime bearish investor.

“Taxpayers are now going to own all these houses that (Fannie Mae) should have unloaded,” he said. “It’s going to cost a fortune.”

The announcement came as Fannie Mae asked for an additional $15 billion in government aid after posting another big loss in the third quarter. The mortgage finance company, seized by federal regulators in September 2008, posted a quarterly loss of $19.8 billion, including $883 million in dividends paid to the Treasury Department.

Pessimists like Schiff say the recent stability in the housing market is just temporary, and argue that there is a huge backlog of foreclosed homes that haven’t gone on the market. Refusing to sell those homes, they say, only prolongs the problem.

But other experts say that Fannie Mae’s new policy could make sense, even if prices don’t rebound quickly. The company will get rental income while avoiding costly foreclosure expenses.

It will also help to safeguard the homes, which are less likely to be vandalized when occupied.

“There are a whole lot of costs you avoid,” said Thomas Lawler, a former Fannie Mae economist. “You don’t necessarily have to believe that home prices a year from now will be higher than today.”

Fannie Mae’s sibling company, Freddie Mac, launched a similar effort in March. That policy, however, requires the foreclosure to be completed and only allows month-to-month leases. Freddie Mac declined to detail how many borrowers have participated.

The two companies purchase loans from banks and sell them to investors. Together, they own or guarantee almost 31 million home loans worth about $5.5 trillion, about half of all U.S. mortgages. They have been badly hurt by the housing bust and have required $111 billion in federal aid since being seized by government regulators 14 months ago.

___

To find out whether your home loan is owned by Fannie Mae or Freddie Mac, try these Web sites:

Fannie Mae http://loanlookup.fanniemae.com/loanlookup/

Freddie Mac: http://www.freddiemac.com/mymortgage