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Strategic defaults continue to rise in U.S.

Strategic defaults continue to rise in U.S.


This is what will do the banks in… Payback will be a bitch!

KSL-

Considered a viable strategy for managing troubled assets in an era of high unemployment, record foreclosures and government bailouts, millions of Americans are considering strategic defaults.

With almost 12 million mortgages underwater, a growing number of homeowners are simply walking away from the places they call home.

Strategic defaults, also known as strategic foreclosures, often take mortgage lenders by surprise because homeowners generally have had excellent credit histories and have previously met all their other financial obligations.

One of the distinguishing factors between a strategic default and other mortgage defaults is that the strategic default is a deliberate business decision. The homeowner has the ability to make payments but simply decides not to because the property value is less than the balance owed on the mortgage.

[KSL]

© 2010-17 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



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Insight: Falling home prices drag new buyers under water

Insight: Falling home prices drag new buyers under water


This is a NO SHIT SHERLOCK moment. As this site has said it time after time, it’s a crime to lend money today very well knowing the housing values are depreciating!

FHA caters to first time buyers and this includes no ownership in a principal residence during a 3year period. This also caters mainly to those who don’t have any money… sounds a lot like the subprime market, now doesn’t it?

This is deliberate F R A U D and another bailout coming your way.

REUTERS-

More than 1 million Americans who have taken out mortgages in the past two years now owe more on their loans than their homes are worth, and Federal Housing Administration loans that require only a tiny down payment are partly to blame.

That figure, provided to Reuters by tracking firm CoreLogic, represents about one out of 10 home loans made during that period.

It is a sobering indication the U.S. housing market remains deeply troubled, with home values still falling in many parts of the country, and raises the question of whether low-down payment loans backed by the FHA are putting another generation of buyers at risk.

As of December 2011, the latest figures available, 31 percent of the U.S. home loans that were in negative equity – in which the outstanding loan balance exceeds the value of the home – were FHA-insured mortgages, according to CoreLogic.

[REUTERS]

© 2010-17 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



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Moody’s Questions Feasibility of Fannie Mae’s Strategic Default Policy

Moody’s Questions Feasibility of Fannie Mae’s Strategic Default Policy


Edit: From a viewer who makes it clear.

The GSE rule is: A borrower is denied equal access to government supported financial markets for seven years unless the borrower “waives” rights to challenge servicer claims? This is a direct attempt to deprive an individual of access to the legal system in order to redress grievances. This is an unconstitutional exercise of power by these quaisi-govt authorities controlled by government. If the govt cannot do that in its own name–how can it be proper to do it under a nameplate of an entity owned and controlled by the government. Aside from implications in respect of civil liberties, it is not even good financial policy for servicers and lenders to be automatically released of liability for predatory lending and collection activities. This rule can have only one effect and that is to encourage more abuses. This is tantamount to abolishing judicial oversight of lending abuses.

By: Carrie Bay 07/26/2010 DSNEWS

Last month, Fannie Mae announced new policy changes intended to deter financially competent homeowners from walking away from their mortgage obligation by imposing stiffer penalties for strategic default – a phenomenon that has become increasingly more common as home prices have plummeted and more and more borrowers find that they owe more on their mortgage than the home is worth.

The GSE says borrowers who intentionally default when they had the capacity to pay or those who do not complete a workout alternative in good faith will be ineligible for a new Fannie Mae-backed mortgage for a period of seven years from the date of foreclosure.

Fannie Mae says the policy change is designed to encourage borrowers to work with their servicers and pursue alternatives to foreclosure. While a bold attempt at preventing unnecessary foreclosures, the analysts at Moody’s Investors Service argue that the GSE may encounter snags ahead since figuring out who to penalize for strategically walking away will be a significant challenge and implementing the policy could be difficult.

Previously, the GSE barred homeowners who’d been foreclosed on from obtaining a new mortgage for five years. However, Fannie Mae’s new policy extends the foreclosure-waiting period to seven years unless the borrower can prove that they faced extenuating circumstances when they defaulted on the loan.

For borrowers who can prove hardship or document that they attempted to contact their servicer to obtain a loan workout, the waiting period could be reduced to as little as three years. For borrowers who attempt to “gracefully exit” their mortgage obligation by means of a short sale or a deed in lieu may only have to wait two years to obtain a new Fannie Mae mortgage.

Continue reading… DSNEWS.com

© 2010-17 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in concealment, conspiracy, deed in lieu, fannie mae, fico, foreclosure, foreclosure mills, foreclosures, servicers, short sale, STOP FORECLOSURE FRAUD, walk awayComments (1)

Short sales not immune to debt collectors

Short sales not immune to debt collectors


DinSFLA here…take note on this “Banks usually have four years in which to file a deficiency judgment, but they can sell it to a third-party collection agency — “and the collection firms can chase you down for 20 years,” Davis said.”

This being said any of these fool third-party collection agencies that DO NOT do their due diligence will be in a world wind of a surprise! Now not only are they buying of fraud they will have a hard time getting repaid on fraud!

They are going to try to suck the living day lights out of us…Do NOT let your guard down.

ORLANDO, Fla. – July 6, 2010 – With more than half of the Central Florida’s homeowners owing more for their homes than the properties are worth, the question for some has become: How do I get out of this?

Of all the existing-home sales reported by Realtors in the core Orlando market in May, 23 percent were short sales. They are called “short” sales because the sales price come up “short” of, or less than, the amount owed on the mortgage.

What these homeowners, whose loans are “underwater,” may not realize is that they could successfully complete a short sale of their house but then face a lawsuit from their lender for not paying off the entire loan, a shortfall known as a “deficiency.”

At particular risk of being hit with such a debt judgment are owners of second homes and investment properties, homeowners who haven’t faced any kind of financial hardship, and owners who have a second mortgage.

“That’s going to be a huge problem moving forward in the next few years,” said Orlando lawyer Matt Englett, who specializes in home foreclosures. “These people who use Realtors to advise them on the transactions can end up facing deficiencies, and the deficiency notes will go to third-party collections agencies, and they will start suing and progressively pursuing those people.”

Homeowners have several options if they wish to avoid getting calls and lawsuits from debt collectors.

In a mortgage document called the “payoff letter,” a lender may include a blanket provision stating that it reserves the right to sue the seller at any time for unpaid mortgage debt. At the very least, Englett said, sellers need to make sure they do not give lenders that right.

Some lenders, particularly smaller ones, have been willing to state just the opposite — that they will not pursue any mortgage debt from the seller, he added.

Simply asking the lenders to cooperate by removing any wording about collections isn’t enough, Englett said. The seller is usually faced with building a case that details errors and omissions made by the lender in its mortgage documents, to gain leverage and force the lender to forgive the debt.

A new option that emerged in June is a federal program that calls on banks to forgive some of the mortgage debt of certain, qualified short-sale sellers. To qualify, sellers must:

Meet the criteria of the federal government’s Home Affordable Modification Program.

Have the house as their primary residence.

Face a financial hardship, and their mortgage payment must be more than 31 percent of their gross income.

The new program makes short sales a good option for homeowners facing a financial hardship, though it’s not meant for homeowners who can afford their mortgage but want to walk away from an upside-down loan, said Frank Rubino, vice president of the Chase Homeownership Center in Orlando.

“It’s not right. It’s not moral. It’s not the right thing to do,” Rubino said. “Why should customers look to the bank to substantiate a loss for the house they bought? … If they bought the house and sold it for $100,000 more than they paid, they wouldn’t share those profits with the bank.”

The decision of whether to pursue a former homeowner for outstanding debt varies from mortgage servicer to mortgage servicer, Rubino said, and can hinge on such things as whether the customer mismanaged his or her finances, Rubino said.

Sellers with a second mortgage face particular challenges if they try to walk away from a short sale without any remaining debt.

Jennifer Davis, a real estate agent for Lifestyles Home Sales Inc. of St. Cloud, said she recently almost lost a sale because of outstanding debt the seller owed on the house. Fortunately, she said, the buyer wanted the house badly enough to cover the outstanding note.

Banks usually have four years in which to file a deficiency judgment, but they can sell it to a third-party collection agency — “and the collection firms can chase you down for 20 years,” Davis said.

In cases where the seller has a second mortgage or can’t qualify for the federal programs, Davis said, she usually directs them to a real estate lawyer and a tax adviser.

Copyright © 2010, The Orlando Sentinel, Fla., Mary Shanklin, Knight Ridder/Tribune Business News. Distributed by McClatchy-Tribune Information Services.

© 2010-17 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



Posted in Bank Owned, deficiency judgement, deficiency judgment, foreclosure, foreclosure fraud, foreclosures, mortgage modification, walk awayComments (1)

Florida woman files BP claim over botched home sale

Florida woman files BP claim over botched home sale


We all saw this coming…and so did they.

By Grace Gagliano | Bradenton.com

The island resident had her two-bedroom house on the market for about two years before buyers came forward with an offer she was willing to accept.

Then, the unthinkable happened. The buyers walked.

“In my contract, the reason they stated they were not going to close on the home was the BP oil spill,” said Dickinson, whose beachfront home is listed for $848,000. “I was supposed to close my home on May 17, and May 7, the buyers walked away. Every month I’m here in my home past May 17 it’s an economic damage.”

Dickinson said she filed a claim with BP but has gotten the “run around” from the company on whether it has been reviewed. She declined to say how much money she is hoping BP will pay.

Dickinson’s case appears to be a rare instance of the oil spill threatening local property sales. And, while Manatee County remains free of tar balls and sheen, island Realtors say the Deepwater Horizon spill has sparked concern among buyers.

“About 40 percent of the people that call in mention or ask about the oil spill,” said Liz Blandford, a sales agent for Island Real Estate. “They’re worried. I think people who don’t live here when they watch the news they make the assumption that oil’s covering our beaches. We’re just trying to let them know our beaches are clean.”

Still, Blandford said a few buyers have delayed purchase decisions.

“I think there is a real concern that the values can still drop,” Blandford said. “That’s why I think a small percentage of buyers are holding back, hoping prices will still drop.”

At Fran Maxon Real Estate, Stephanie Bell said the oil spill hasn’t led to cancellations on property purchases nor on vacation rentals listed with the Anna Maria real estate agency.

© 2010-17 FORECLOSURE FRAUD | by DinSFLA. All rights reserved.



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Default can spur revenge desire…

Default can spur revenge desire…


Maybe they are staying there for free because they are jobless…and the government that keeps bailing out the CROOKS …probably don’t give a “hoot” what happens to these families. For Mr. Sanchez…you should be ashamed for yourself!

You got that right…WE ARE PISSED OFF… YES!!

TAMPA, Fla. – April 6, 2010 – The mortgage crisis is causing more than just heartburn for homeowners. It’s changing their moral compass.

Homeowners are walking away – even when they can afford their payments. Some loot on the way out the door, carting off light fixtures, appliances, anything of value.

Others trash the home to ruin the bank’s chances of selling it. They pour cement down the drains, flood the house or punch holes in the walls.

A few years ago, such behavior would have been considered reprehensible.

But today’s homeowners are tired of watching the lenders who triggered the financial meltdown get bailed out while they suffer. They want revenge.

They feel entitled.

“It went from being a shame to being behind on your mortgage to feeling like it’s a big joke,” said Jim Kelly, a Tampa homeowner who said numerous neighbors have stopped paying. “The big talk at cocktail parties is how underwater is your house and how long have you lived there for free.”

Homeowners’ attitudes are changing as they realize their home values have dropped below what they owe. Nearly one-quarter of U.S. mortgages are underwater.

In some neighborhoods, experts say, it could take a decade or longer for prices to catch up. Some people blame lenders for steering them into a bad loan. Even homeowners who have faithfully paid their bills are angry. With so many of their neighbors defaulting, more people are giving in to the temptation.

“The social norms are changing,” said Luigi Zingales, a professor at the University of Chicago’s Booth School of Business. “The more people hear about their neighbors doing these things, the more acceptable it is.”

About 36 percent of the nation’s defaults in December were what Zingales calls “strategic defaults,” meaning homeowners deliberately let the home go into foreclosure. That’s up from 25 percent in March 2009, according to research Zingales conducted with colleagues at Northwestern University’s School of Business.

“People are afraid to walk away if they don’t know what will happen to them,” Zingales said. “Once they learn it’s not that bad, they’re more likely to do it.”

Consider Lutz’s Shawn Aaron, a friend of Kelly’s.

Expensive paintings and flat-screen TVs line the walls of his 5,800-square-foot home in the Cheval community. A Corvette sits in his garage. He paid $1.3 million for the home in November 2004.

More than two years ago, he stopped paying his mortgage and thinks a lot of other homeowners should follow his example. The way Aaron sees it, after the lender to which he agreed to make payments sold his mortgage, he doesn’t have a contract with the loan’s new owner. That lender, he says, has filed for foreclosure but has yet to prove it owns his loan.

“No one has answered my questions about my mortgage,” Aaron said. “I hope I win the case and stay here long term.”

Aaron said he also has stopped paying the mortgage on an investment property.

Aaron has such intense feelings about the housing crisis that he started a company, US Lender Audit, to help homeowners fight banks. The company reviews mortgages and finds what it thinks are problems with loans. Attorneys then use the report to fight for their clients in foreclosure cases.

“People have a right to question their mortgage,” Aaron said.

Aaron’s rationalization puts Kelly in an uncomfortable spot. The two are good friends, but have conflicting views on the mortgage crisis. They agree to disagree and don’t let it affect their friendship.

Kelly paid off his mortgage 17 years ago and never tapped his equity, even though he saw the appraised value jump a couple of hundred thousand dollars.

Neighbors of his took a different approach. That couple bought a house 25 years ago for $80,000, took out home-equity loans, and bought furniture and went on exotic trips. They owe $250,000 and stopped paying the mortgage.

“It’s a moral issue,” Kelly said. “You borrowed the money and because of the world credit issues that have nothing to do with your house, you think you’re entitled to something.”

Tampa real estate agent Paul De La Torre said he often sees the entitled attitude. Clients who are trying to sell their homes for less than the mortgage – called a short sale – are increasingly asking to take items with them.

“They want to take the appliances and other things they bought with their equity money,” said De La Torre, of Keller Williams. “I tell people that if you didn’t pay for it with your own money, it should stay with the house. Taking it just makes it more difficult to find a buyer.

“I just sold one house where the guy took the wall plates,” De La Torre said. “Those are like 60 cents at Home Depot.”

De La Torre said he has come across homes for sale that look great on the outside but are destroyed inside. Some people left food in the sink to stink up the house. They ripped out cabinets and toilets.

“Everybody says: Look what the bank did to me,” De La Torre said. “But when people were selling their homes for $100,000 profit, no one complained.”

Alex Sanchez, president and chief executive of the Florida Bankers Association, said people who destroy homes or deliberately stop paying should be ashamed.

“What happened to the American values of pulling yourself up by your bootstraps?” he said. “By the time we get our hands on these homes, they are ruined. People take sledgehammers to them. … It’s something our parents would not be proud of.”

Professor Zingales said his research has shown that the economy is continuing to change homeowners’ perceptions of right and wrong.

“We asked homeowners, ‘Would you walk away if your value dropped $50,000 below what you owe? What about $100,000 or $150,000?’” he said. “Eighty percent said they thought it was immoral to walk away. But that doesn’t mean they won’t.”

That leaves Kelly, who owns his house free and clear, feeling stuck.

“I feel like a jerk in some respects,” Kelly said. “I paid my mortgage and worked hard to pay off my house and send my kids to college. Others lived like champs, and they’ll end up getting their houses for free.”

Copyright © 2010 Tampa Tribune, Fla., Shannon Behnken. Distributed by McClatchy-Tribune Information Services.

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