Michael Lopardi, WBOC

The former home of pedophile pediatrician Earl Bradley received no bids during a foreclosure auction Tuesday.

Opening bids for the property on Savannah Road in Lewes started at $230,000. None of the roughly two dozen people in attendance raised their hands.

The house was one of roughly 50 properties auctioned as part of foreclosure sales. Records show Bradley owes U.S. Bank more than $560,000.

“I would think anyone in this area would maybe shy away from buying that piece of property,” said deputy sheriff Tina Timmons. “We really don’t know.”

Bradley is serving 14 life sentences for sexually abusing young patients at his former medical office.

Timmons said the sheriff’s office received about a dozen calls – mostly from out-of-state numbers with people likely unfamiliar with Bradley – inquiring about the house. With no bidders, the property reverts back to the bank. An attorney for the bank did not answer questions after the auction.

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Kimberly Miller, Palm Beach Post

A suburban West Palm Beach foreclosure case has even bank employees confused, with internal emails that question whether the wrong entity is repossessing the house – but that then decide to move forward anyway.

Bank attorneys now want to purge the court file with the messages, which were filed mistakenly. The emails also mention trying to avoid mounting community association fees.

“I think the emails basically say the plaintiff doesn’t own the loan, and it belongs to a different lender,” said attorney Peter Snyder, who is representing Abby Lopez. “It may be Bank of America, or Bank of America could just be the servicer. That’s where it all gets crazy.”

Homeowner advocates say the three email exchanges exemplify one of their biggest concerns – that the wrong bank will take their home.

The concern arose when boom-time loans were repeatedly bundled or broken into pieces and sold by the original lender to trusts, investors or other lenders. As a result, a bank may be responsible for collecting payments and daily loan oversight, but not be the true owner.

The emails in Lopez’s case were filed in October with a sworn “affidavit of indebtedness” that details how much Lopez owes on the mortgage, and asserts that Bank of America is the servicer of the loan.

But Bank of America is not listed as a plaintiff in the case. HSBC Bank USA, “as trustee for the holders of Deutsche Alt-A Securities Mortgage Loan Trust, Series 2007-Bar1 Mortgage Pass-Through Certificates,” is the party named as foreclosing on the home.

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The Huffington Post  |  By Bonnie Kavoussi

Bonnie Kavoussi, Huffington Post

That $2 billion trading debacle isn’t all JPMorgan Chase has to deal with this week.

Allan Danforth of Kansas City claims that he bought a house in a short sale in September 2010 from homeowners whose mortgage was held by JPMorgan, KMBC reports. Then two months later and without warning, JPMorgan foreclosed on the home, changing the locks and taking away his furniture, appliances and family items. Danforth is now suing JPMorgan for trespassing and theft.

Danforth’s suit is likely no more than an afterthought to a bank struggling with a large-scale problem — a $2 billion trading loss that’s injured the company’s reputation and prompted some shareholders to propose CEO Jamie Dimon give up his role as chairman.

Short sales, in which properties are sold for less than the amount owed, have become promoted as an increasingly promising alternative to foreclosure, but Danforth’s experience suggests the process can still leave something to be desired. All together,there were more short sales than foreclosures in January, according to data from Lender Processing Services cited by Bloomberg, and many housing experts viewed that as a promising sign that foreclosure alternatives were being pursued.

In addition, critics allege that banks’ mortgage paperwork has been disorganized — so disorganized, in fact, for banks to be able to acknowledge receiving new paperwork.Foreclosures have subsequently been criticized as at times impersonal and sudden, with little opportunity for borrowers to negotiate with banks.

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When Jennifer Anderson’s family could no longer afford their mortgage and lost their home, she expected many years to pass before they would again become property owners.

But less than two years later, in March, they purchased a $297,000 house outside Phoenix, Arizona, after qualifying for a loan backed by the U.S. government.

They joined a small but growing number of Americans who are making a surprisingly quick return to homeownership after defaulting on their loans or being forced into short sales that cost their banks money.

“We didn’t really expect it,” said Anderson, 40. “We were resigned to the fact that we were going to be in a rental property for a while.”

Financial problems arose after she lost her job as a customer service representative for a health insurance company and her husband’s hours at an automaker were cut. To make matters worse, they used up her retirement savings trying to keep their home.

Data is not available, but interviews with more than 30 lenders, builders, Realtors and consumers suggest that a growing number of Americans are getting back into the housing market, even though they went through a foreclosure, bankruptcy or short sale in recent years.

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I have to admit when Bank of America announced last week that they were going to begin issuing principal write downs for a select group of homeowners I was and still am skeptical of anything the banks say will benefit homeowners.  I still believe this announcement by Bank of America is similar to Carnival Barkers luring people into rigged ring tossing tents at travelling carnival.

Then after I made these comments I read a  blog by one of my favorite financial bloggers, Felix Salmon from Reuters. He disagrees with me and believes this the beginning of universal mortgage write downs by the vast majority of mortgage lenders.  I don’t share Felix’s optimism because I have clients who have been burned by the banks by believing what they tell them.

Felix’s optimism is the reason I like his style.  He’s an Englishman who doesn’t blog or write like an stereotypical English finance writer. Most English financial writers dress like the politicians from Stanly Kubrick’s A Clockwork Orange from 1971 and spout outdated Thatcheresque dogma from the 1980s while trashing Americans as if they live high atop some Ivory Tower like Edward Longshanks.

Felix Salmon has shattered that stereotype in a big way.  He understands finance and along with Max Keiser are the two media types in the world that can breakdown very complex financial formulas and explain it so you don’t need a MBA in finance to understand what he’s talking about.  He also writes with a sense of optimism and wonderment that is rare and at one time was considered American.

This why I found his Reuters editorial from last week so fascinating even though I disagree with his overall premise.  He not only breaks down what has gone wrong in the past 4 years but actually gives some common sense approaches to fixing it.   Here’s an excerpt:

So what should happen when people get into trouble making their mortgage payments on a house that is underwater? After 2008, banks tended to do one of two things. They waited for an interminable amount of time, then initiated foreclosure proceedings and kicked the family out of their home. Alternatively, they worked out a mortgage modification that didn’t reduce the amount owed by a single dollar, thereby maximizing the probability of a redefault and of the homeowner’s having to go through the same painful process all over again.

There are multiple ways of doing this better. The simplest is just for the banks to unilaterally reduce the principal amount owed on a mortgage. It’s much more effective, always, for a bank to reduce principal and keep the interest rate constant than it is to do what they tended to do after 2008, which was to keep the principal constant and reduce the interest rate. Why don’t they reduce principal? They don’t because doing so involves writing down the value of the mortgage on their books — something they’re bound to do sooner or later, but which they’d much rather do later than sooner.

You can read the whole article here.  It’s worth the read.

Ingham County Treasurer Eric Schertzing and Register of Deeds Curtis Hertel reported recently that the number of Sheriff’s Deeds in Ingham County for April 2012 compared to April 2011 decreased 50 percent.

The number of Sheriff’s Deeds recorded in April 2012 was 76 — 50 percent less than the 153 recorded in April 2011. In March 2012, there was a 33.7 percent decrease in Sheriff’s Deeds compared to March 2011.

Overall for 2012, the number of Sheriff’s Deeds is 452, which is 26.8 percent lower than the 618 that had been filed by the end of April 2011.

In the mortgage foreclosure process, a Sheriff’s Deed typically starts a six month redemption period for the property.

“I want to encourage citizens who are having trouble making mortgage payments to call 211 or visit www.holdontoyourhome.org for a referral to a financial counselor,” Ingham County Register of Deeds Curtis Hertel said.

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Jon Prior, Housing Wire

Ally Financial will look to sell off the rest of its mortgage business after bankruptcy concludes for its independent subsidiary Residential Capital.

In a conference call with investors Tuesday, Ally executives said they plan to sell an additional $1.3 billion in mortgage servicing rights owned by Ally Bank as part of the wind down.

“You can live in your car if you don’t pay your mortgage,” said Ally CEO Michael Carpenter. “I don’t mean to be cute, but the fact is people make their car payment before they pay their mortgage.”

A bid from Nationstar Mortgage Holdings ($15.98 0.29%) to buy $374 billion in MSRs from ResCap is pending as part of the bankruptcy filed Monday.

Ally Bank will continue to sell new mortgages to Fannie Mae andFreddie Mac rather than through ResCap, but it does still have the ability to sell Federal Housing Administration and other Ginnie Mae home loans to ResCap until the bankruptcy is completed at the end of the year.

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Just like the last VICTIM OF WELLS FARGO I wrote about, Wells Fargo claimed that Norman and Oriane Rousseau had missed a mortgage payment.  But the payment HAD been made in person at a Wells Fargo branch by Cashier’s Check, and Mrs. Rousseau has the receipt for the transaction.

The Rousseaus file a dispute with Wells Fargo over the supposed missing payment.  Wells Fargo “investigates” and comes back saying that the Rousseaus had stopped payment on the check.  They stopped payment on a Cashier’s Check?  Seriously?

I don’t want to spend too much time on this ridiculous point, so here’s how Rousseau’s lawyer explains this technical yet wholly insipid issue, and then we’ll move on…

The teller’s receipt establishes that the cashier’s check was in the custody and control of Wachovia on April 1, 2009, and the research by the Cashiering Department should have concluded that Wachovia screwed up by not applying the cash-equivalent funds to the Rousseau’s account. After delivery and acceptance to the branch office, it was Wachovia’s responsibility to safeguard the instrument; Wachovia itself effectively stopped payment on the cashier’s check.

Okay, so let’s get back to the meat of the story…

Concerned that they could not resolve the payment dispute but told they should apply for a loan modification, the Rousseaus hired a law firm and submitted a loan modification application.  After that it was standard operating procedure at Wells Fargo… we lost this, and we lost that, resend this, and resend that… for almost a year.

Good Lord, Wells Fargo, could you please do something differently just once?  This article is almost becoming a form letter.

Wells Fargo then of course told the Rousseau family not to make their payments, that they were being considered for a loan modification and that making their payments would immediately disqualify them.

So, they saved their payments just in case Wells decided to deny them a modification.  Saved every single one just in case the bank decided to act like… well, Wells Fargo Bank.

Then Wells sent them a Notice of Default, but when they called to say they wanted to reinstate their loan, Wells said what they always say… IGNORE IT… don’t worry about it, everything’s fine, it’s just an automated sort of thing… why, you’re being considered for a loan modification.

Then Wells filed a Notice of Sale on October 28, 2010.  Their home would be sold on November 22, 2010.  And still Wells said… IGNORE IT… it’s just another automated sort of thing… your loan modification is still pending… and please re-submit some documents.

It was November 10, 2010… just 12 days before their home was to be sold… when the Wells Fargo representative told the Rousseau’s that their loan modification had been denied.  The reason: Insufficient income.

Yeah, but you know the funny thing about that is that their income hadn’t changed a nickel since they applied for the loan modification.  So, what’s the deal?  Did it take Wells Fargo a year to figure out the Rousseau’s income was insufficient?  Is that the story I’m supposed to be buying into?

You’re a liar, Wells Fargo.  Either you knew you weren’t going to approve their loan modification, or you’re the most incompetent financial institution in the history of the world.  And you don’t just do this sometimes, you do this all the time… and especially to people in their 60s or older.  Why is that do you suppose? 

In case you’re wondering what I’ve been up to, I’m actually collecting Wells Fargo stories at this point.  I figure it’ll be a hoot to put them all together into a book.  What do you think?  Should I autograph a copy for you when it’s done?

That same day the Rousseaus found a lawyer and discovered they had a RIGHT TO REINSTATE their loan.  (Nice of Wells not to tell them that, by the way.)  They contacted Wells and requested a reinstatement quote… TWO DAYS LATER Wells finally gave them the phone number for RCS, the trustee.

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