June 6th, 2010  |  by Neil Published in Reverse Mortgage Daily

Against the backdrop of a recent New York Times story about borrowers in the forward mortgage world electing to stop paying their debt – and living sometimes for years cost-free – concerns in the reverse world about prolonged defaults is drawing more attention, and some official government action.

To wit: Fannie Mae (NYSE:FNM) reportedly has been reminding reverse servicers they must follow HUD guidelines regarding tax and insurance defaults for HECM customers. In the past, Fannie has elected not to have servicers follow these established guidelines – that is, beginning foreclosure when taxes, insurance or maintenance are not current – because of so-called “headline risk.”

Now, however, servicers have been instructed to submit troubled loans to HUD to get approval to start the foreclosure process. Once approved, a demand letter is sent to the borrower(s) who has six months to cure the default. After that, the servicer must start the foreclosure process – one exception is when a borrower refuses to take necessary curative action, at which time the foreclosure process begins immediately.

“Tax and insurance defaults have gone up dramatically in the last few years,” says one servicer, who believes reactive changes now “would turn us into collection agencies.”

At the moment, the industry is waiting for HUD to issue a promised Mortgagee Letter regarding tax and insurance (T&I) defaults. An agency spokesman told RMD: “FHA is working closely with Fannie Mae and servicers of reverse mortgages to develop a plan to notify seniors of the delinquency and provide the necessary support and outreach to these seniors to find solutions to bring delinquent taxes and insurance current.”

Considering low default balances

According to Ryan LaRose, chief operating officer of Celink – a reverse mortgage servicer – an industry committee “presented HUD with a white paper awhile back that included industry recommendations for how to deal with the existing T&I default population. It included an analysis of the loan’s LTV [loan-to-value] and took into consideration those borrowers with a low default balance and put them into a ‘monitoring’ program,” according to LaRose, who is a member of that committee.

“If FHA is smart,” says another servicer, “they will approve foreclosing on high claim amounts because [if they don’t] the situation will come back to haunt us,” he warns, adding: “Fannie wants more loans assigned to HUD.” What’s missing in all this, he says, “is that the industry has no real loss mit program for seniors.”

In the aggregate, T&I defaults are relatively small. HUD’s Erica Jessup puts the current number at less than 2 percent of all reverse mortgages extant. Cheryl MacNally, national sales manager, senior products group, Wells Fargo Home Mortgage, puts a finer point on those numbers: “If we have someone in T&I default for only $500, we don’t want to foreclose [especially] if they have a 700 FICO score – we don’t torture them” with foreclosure threats. However, MacNally predicted that as more full draws are taken on reverse mortgage balances, “T&I defaults will increase.”

As to the aforementioned headline risk, John LaRose, CEO of Celink, expresses concern “over the possibility of thousands of senior homeowners being placed into foreclosure by the end of the year. The timing could not be worse,” he declared, because “those who have a proclivity for making negative comments about our industry could be energized to be even more aggressive in their attacks on us,” said LaRose.

Written by Neil Morse

© 2010-12 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.
www.StopForeclosureFraud.com

Via: 4ClosureFraud

(St. George, UT) June 5, 2010 – A court order issued by Fifth District Court Judge James L. Shumate May 22, 2010 in St. George, Utah has stopped all foreclosure proceedings in the State of Utah by Bank of America Corporation, ;

Recontrust Company, N.A; Home Loans Servicing, LP; Bank of America, FSB;www.envisionlawfirm.com. The Court Order if allowed to become permanent will force Bank of America and other mortgage companies with home loans in Utah to adhere to the Utah laws requiring lenders to register in the state and have offices where home owners can negotiate face-to-face with their lenders as the state lawmakers intended (Utah Code ‘ 57-1-21(1)(a)(i).). Telephone calls by KCSG News for comment to the law office of Bank of America counsel Sean D. Muntz and attorney Amir Shlesinger of Reed Smith, LLP, Los Angeles, CA and Richard Ensor, Esq. of Vantus Law Group, Salt Lake City, UT were not returned.

The lawsuit filed by John Christian Barlow, a former Weber State University student who graduated from Loyola University of Chicago and receive his law degree from one of the most distinguished private a law colleges in the nation, Willamette University founded in 1883 at Salem, Oregon has drawn the ire of the high brow B of A attorney and those on the case in the law firm of Reed Smith, LLP, the 15th largest law firm in the world.

Barlow said Bank of America claims because it’s a national chartered institution, state laws are trumped, or not applicable to the bank. That was before the case was brought before Judge Shumate who read the petition, supporting case history and the state statute asking for an injunctive relief hearing filed by Barlow. The Judge felt so strong about the case before him, he issued the preliminary injunction order without a hearing halting the foreclosure process. The attorney’s for Bank of America promptly filed to move the case to federal court to avoid having to deal with the Judge who is not unaccustomed to high profile cases and has a history of watching out for the “little people” and citizen’s rights.

The legal gamesmanship has begun with the case moved to federal court and Barlow’s motion filed to remand the case to Fifth District Court. Barlow said is only seems fair the Bank be required to play by the rules that every mortgage lender in Utah is required to adhere; Barlow said, “can you imagine the audacity of the Bank of America and other big mortgage lenders that took billions in bailout funds to help resolve the mortgage mess and the financial institutions now are profiting by kicking people out of them homes without due process under the law of the State of Utah.

Barlow said he believes his client’s rights to remedies were taken away from her by faceless lenders who continue to overwhelm home owners and the judicial system with motions and petitions as remedies instead of actually making a good-faith effort in face-to-face negotiations to help homeowners. “The law is clear in Utah,” said Barlow, “and Judge Shumate saw it clearly too. Mortgage lender are required by law to be registered and have offices in the State of Utah to do business, that is unless you’re the Bank of America or one of their subsidiary company’s who are above the law in Utah.”

Barlow said the Bank of America attorneys are working overtime filing motions to overwhelm him and the court. “They simply have no answer for violating the state statutes and they don’t want to incur the wrath of Judge Shumate because of the serious ramifications his finding could have on lenders in Utah and across the nation where Bank of America and other financial institutions, under the guise of a mortgage lender have trampled the rights of citizens,” he said.

“Bank of America took over the bankrupt Countrywide Home Loan portfolio June 3, 2009 in a stock deal that has over 1100 home owners in foreclosure in Utah this month alone, and the numbers keep growing,” Barlow said.

The second part of the motion, Barlow filed, claims that neither the lender, nor MERS*, nor Bank of America, nor any other Defendant, has any remaining interest in the mortgage Promissory Note. The note has been bundled with other notes and sold as mortgage-backed securities or otherwise assigned and split from the Trust Deed. When the note is split from the trust deed, “the note becomes, as a practical matter, unsecured.” Restatement (Third) of Property (Mortgages) § 5.4 cmt. a (1997). A person or entity only holding the trust deed suffers no default because only the Note holder is entitled to payment. Basically, “[t]he security is worthless in the hands of anyone except a person who has the right to enforce the obligation; it cannot be foreclosed or otherwise enforced.” Real Estate Finance Law (Fourth) § 5.27 (2002).

*MERS is a process that is designed to simplifies the way mortgage ownership and servicing rights are originated, sold and tracked. Created by the real estate finance industry, MERS eliminates the need to prepare and record assignments when trading residential and commercial mortgage loans. www.mersinc.org

© 2010-12 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.
www.StopForeclosureFraud.com

(Reuters) – Bank of America Corp has agreed to pay $108 million to settle government charges that its Countrywide unit, the mortgage lender that became synonymous with risky lending practices, bilked borrowers with misleading and excessive fees.

Housing Market

The Federal Trade Commission said two Countrywide mortgage servicing units deceived cash-strapped homeowners by overcharging them by hundreds or thousands of dollars, sometimes when they were already in bankruptcy.

The alleged activity took place before Bank of America acquired the distressed lender in 2008.

The settlement is a small win for regulators trying to hold to account those who contributed to the deep financial crisis.

The agency called the $108 million settlement one of the largest in an FTC case and the largest in a mortgage servicing case. The FTC has no jurisdiction over banks but does have jurisdiction over deceptive practices by non-bank financial services and products firms.

Countrywide, which was once the nation’s top mortgage lender, “profited from making risky loans to homeowners during the boom years, and then profited again when the loans failed,” said FTC Chairman Jon Leibowitz, noting that some fees during the foreclosure process were marked up more than 400 percent.

Bank of America said in a statement that it agreed to the settlement to void the expense and distraction of litigating the case. There was no admission of wrongdoing.

The FTC said the $108 million, which represents the amount consumers were overcharged, would be used to repay borrowers but could take months to sort out.

“The record-keeping of Countrywide was abysmal,” said Leibowitz. “Most frat houses have better record-keeping than Countrywide.”

In May, Countrywide agreed to a $624 million settlement of a class action lawsuit accusing it of misleading investors about its lending practices. The case was led by several pension funds, including the New York State Common Retirement Fund, that state’s $129.4 billion public pension fund, and five New York City pension funds.

Once the largest U.S. mortgage lender, Countrywide and its long-time chief executive, Angelo Mozilo, became known for risky lending practices that helped fuel the U.S. housing boom and subsequent bust.

Countrywide nearly collapsed as credit markets tightened, before Bank of America agreed to buy it in January 2008 in a stock deal valued at about $4 billion.

Mozilo and two other former Countrywide executives remain defendants in a U.S. Securities and Exchange Commission civil fraud lawsuit.

The SEC alleges that Mozilo hid from investors the deteriorating prospects of Countrywide, and conducted insider trading by entering a systematic stock selling plan in late 2006, knowing that the mortgage lender’s prospects would worsen.

The SEC claimed Mozilo violated insider trading rules in generating a $139 million profit by exercising stock options in 2006 and 2007.

It said the exercises came after he admitted in an email to colleagues that Countrywide was “flying blind” as to the quality of its loans.

Sen. Charles Schumer, a New York Democrat and a member of the panel working out final wording on a comprehensive overhaul of Wall Street, called the FTC settlement “a major breakthrough that closes one of the ugliest chapters of the entire subprime mortgage crisis.”

“Anyone who believes the blame for the housing crisis rests with borrowers should read this settlement and learn just how shameless these lenders were during these years,” Schumer said.

(Additional reporting by Diane Bartz in Washington and by Joe Rauch in Charlotte; editing by John Wallace and Gerald E. McCormick)

© 2010-12 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.
www.StopForeclosureFraud.com

Boy have these Banks really shot themselves! This is what WILL destroy AMERICA!

Foreclosure Glut: Is ‘Shadow Inventory’ Really a Threat?

Millions of New Foreclosures Will Stifle, Not Crush Housing Market, Say Economists

Every once in a while, the term “shadow inventory” makes it into the business headlines. Invariably, stories warn of a looming flood of foreclosures that will drag the housing market down as soon as homeowners begin to feel optimistic again.

But what is shadow inventory — and is it really such a big threat?

Different experts have different definitions. Some only include homes that have already been repossessed by banks and are awaiting distressed sales. Others include those whose owners are long-overdue on mortgage payments, while others still count homes whose owners would like to sell but are waiting for conditions to improve.

8 Million More Foreclosures May Be Waiting

“The definition of shadow inventory has gotten out of control,” says Rick Sharga, senior vice president at RealtyTrac, an online market for distressed homes.

As a result, estimates of homes in the shadows vary widely between 2 million and 8 million. By comparison, approximately 5.5 million homes are expected to change hands this year, of which about a third are in some kind of distress.

High estimates usually include include repossessed homes that have not yet been listed for sale, homes that have been moved from the delinquent bucket and into foreclosure, and homes that are more than 60 days delinquent.

“Theoretically you could say up to 7 million homes are in the pipeline, but not all of them will go into the market and if even if they do, not all of them will hit at once,” says Sharga. Given the current pace of sales, Sharga believes shadow inventory could be cleared by the end of 2013, at which point the housing market can begin a real recovery.

Shadow Inventory Can Be Lethal

The problem with shadow inventory is that it does not simply represent additional supply. It’s supply of the worst kind: distressed homes that are often in hard-hit regions, often in a state of disrepair. Homes in foreclosure have more power to drag down real estate prices and keep them depressed for years to come.

“If you can buy a cheap foreclosed home next door to a normal home, many people will choose to buy the discounted home,” says Celia Chen, housing analyst at Moody’s Economy.com. She estimates that 4.6 million homes are currently waiting in the shadows, almost a whole year’s worth of housing supply.

Shadow Inventory Stuck In Limbo

Like many other analysts, Chen believes we still have a long way to go before real estate prices begin recovering. Some expect a recovery to begin in the middle of next year, others don’t see it coming for several more years.

There are many reasons that shadow inventory is so difficult to gauge.

For one thing, financial institutions that own distressed mortgages are not saying exactly how many homes they hold. Firms have generally been releasing their supply of distressed homes slowly into the market for fear of crushing prices.

Another problem is that nobody knows exactly how many homes will make it out of the government’s “Home Affordable Modification Program.” Chen estimates that only 45 percent of the 1.2 million loans that are aiming for a modification will actually succeed, while the rest will likely end up in foreclosure.

While these numbers certainly are cause for concern, the good news is that this shadow inventory is unlikely to cause a shock to the system similar to the initial crash.

No Nuclear Event in Housing

“Much as during the arms building between the U.S. and the Soviet Union, neither one ever launched a nuclear attack for fear of causing complete destruction,” says RealtyTrac’s Sharga. “You’re not going to see a nuclear event happen in the housing market either.”

Esmael Adibi, economics professor at Chapman University says shadow inventory is actually a good thing bcause it means that financial institutions – primarily lenders and investors who own the delinquent mortgages – are holding on to the inventory instead of dumping it into the market.

Adibi says financial institutions are not only holding on to their inventory in order to avoid crushing the market, but also because they believe they might get a better deal once prices have recovered slightly.

“Can you imagine if all those homes ended up in the market now?” he says. “Things would be much worse.”

© 2010-12 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.
www.StopForeclosureFraud.com

via: Mandelman

Hi JPMorgan Chase People!

Thanks for taking a moment to read this… I promise to be brief, which is so unlike me… ask anyone.

My friend, Max Gardner, the famous bankruptcy attorney from North Carolina, sent me the excerpt from the deposition of one Beth Ann Cottrell, shown below.  Don’t you just love the way he keeps up on stuff… always thinking of people like me who live to expose people like you?  Apparently, she’s your team’s Operations Manager at Chase Home Finance, and she’s, obviously, quite a gal.

Just to make it interesting… and fun… I’m going to do my best to really paint a picture of the situation, so the reader can feel like he or she is there… in the picture at the time of the actual deposition of Ms. Cottrell… like it’s a John Grisham novel…

FADE IN:

SFX: Sound of creaking door opening, not to slowly… There’s a ceiling fan turning slowly…

It’s Monday morning, May 17th in this year of our Lord, two thousand and ten, and as we enter the courtroom, the plaintiff’s attorney, representing a Florida homeowner, is asking Beth Ann a few questions…  We’re in the Circuit Court of the Fifteenth Judicial Circuit, Palm Beach County, Florida.

Deposition of Beth Ann Cottrell – Operations Manager of Chase Home Finance LLC

Q.  So if you did not review any books or records or electronic records before signing this affidavit of payments default, how is it that you had personal knowledge of all of the matters stated in this sworn document?

A.  Well, it is pretty simple, I have personal knowledge that my staff has personal knowledge of what is in the affidavit on personal knowledge.  That is how our process works.

Q.  So, when signing an affidavit, you stated you have personal knowledge of the matters contained therein of Chase’s business records yet you never looked at the data bases or anything else that would contain those records; is that correct?

A.  That is correct.  I rely on my staff to do that part.

Q.  And can you tell me in a given week how many of these affidavits you might sing?

A.  Amongst all the management on my team we sign about 18,000 a month.

Q.  And how many folks are on what you call the management?

A.  Let’s see, eight.

And… SCENE.

Isn’t that just irresistibly cute?  The way she sees absolutely nothing wrong with the way she’s answering the questions?  It’s really quite marvelous.  Truth be told, although I hadn’t realized it prior to reading Beth Ann’s deposition transcript, I had never actually seen obtuse before.

In fact, if Beth’s response that follows with in a movie… well, this is the kind of stuff that wins Oscars for screenwriting.  I may never forget it.  She actually said:

“Well, it is pretty simple, I have personal knowledge that my staff has personal knowledge of what is in the affidavit on personal knowledge.  That is how our process works.”

No you didn’t.

Isn’t she just fabulous?  Does she live in a situation comedy on ABC or something?

ANYWAY… BACK TO WHY I ASKED YOU JPMORGAN CHASE PEOPLE OVER…

Well, I know a homeowner who lives in Scottsdale, Arizona… lovely couple… wouldn’t want to embarrass them by using their real names, so I’ll just refer to them as the Campbell’s.

So, just the other evening Mr. Campbell calls me to say hello, and to tell me that he and his wife decided to strategically default on their mortgage.  Have you heard about this… this strategic default thing that’s become so hip this past year?

It’s when a homeowner who could probably pay the mortgage payment, decides that watching any further incompetence on the part of the government and the banks, along with more home equity, is just more than he or she can bear.  They called you guys at Chase about a hundred times to talk to you about modifying their loan, but you know how you guys are, so nothing went anywhere.

Then one day someone sent Mr. Campbell a link to an article on my blog, and I happened to be going on about the topic of strategic default.  So… funny story… they had been thinking about strategically defaulting anyway and wouldn’t you know it… after reading my column, they decided to go ahead and commence defaulting strategically.

So, after about 30 years as a homeowner, and making plenty of money to handle the mortgage payment, he and his wife stop making their mortgage payment… they toast the decision with champagne.

You see, they owe $865,000 on their home, which was just appraised at $310,000, and interestingly enough, also from reading my column, they came to understand the fact that they hadn’t done anything to cause this situation, nothing at all.  It was the banks that caused this mess, and now they were expecting homeowners like he and his wife, to pick up the tab.  So, they finally said… no, no thank you.

Luckily, she’s not on the loan, so she already went out and bought their new place, right across the street from the old one, as it turns out, and they figure they’ve got at least a year to move, since they plan to do everything possible to delay you guys from foreclosing.  They’re my heroes…

Okay, so here’s the message I promised I’d pass on to as many JPMorgan Chase people as possible… so, Mr. Campbell calls me one evening, and tells me he’s sorry to bother… knows I’m busy… I tell him it’s no problem and ask how he’s been holding up…

He says just fine, and he sounds truly happy… strategic defaulters are always happy, in fact they’re the only happy people that ever call me… everyone else is about to pop cyanide pills, or pop a cap in Jamie Dimon’s ass… one or the other… okay, sorry… I’m getting to my message…

He tells me, “Martin, we just wanted to tell you that we stopped making our payments, and couldn’t be happier.  Like a giant burden has been lifted.”

I said, “Glad to hear it, you sound great!”

And he said, “I just wanted to call you because Chase called me this evening, and I wanted to know if you could pass a message along to them on your blog.”

I said, “Sure thing, what would you like me to tell them?”

He said, “Well, like I was saying, we stopped making our payments as of April…”

“Right…” I said.

“So, Chase called me this evening after dinner.”

“Yes…” I replied.

He went on… “The woman said: Mr. Campbell, we haven’t received your last payment.  So, I said… OH YES YOU HAVE!”

Hey, JPMorgan Chase People… LMAO.  Keep up the great work over there.

© 2010-12 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.
www.StopForeclosureFraud.com