Members of Alliance of Californians for Community Empowerment and Service Employees International Union set up tents and blocked the narrow corridor in front of the employee elevators for several minutes as they chanted loudly in support of Rose Gudiel, who is on the brink of being evicted from her La Puente home.

“I’m here because they refuse to meet with me,” Gudiel said. “I believe I qualify for a loan modification, and they refuse to explain to me why I do not.”

Seven Pasadena police officers showed up to deal with the animated protesters, who ignored several requests to leave the private property. No arrests were made.

The group finally agreed to leave when Vice President Brandon Latman agreed to meet with Gudiel and her family.

Latman came to the front lobby, where he listened briefly to Gudiel’s story before asking one of his colleagues to set up a room with his laptop.

Protesters moved to picket the entrance to the building, while Gudiel met privately with Latman for nearly 20 minutes.

Gudiel said Latman would not tell her if he had the authority to authorize a loan modification. He scheduled a meeting this morning between Gudiel and “people with more authority,” she said.

“We asked him if he could postpone the eviction until the paperwork can be reviewed,” she said. “He said no.”

Latman and other bank officials declined to comment.

Gudiel, a state employee, has been attempting to get the bank to modify her loan for almost two years. The request came after her brother was gunned down in La Puente in 2009, causing the household income to drop, she said.

Although the income has long since recovered, the bank has consistently refused to give them a loan modification, she said.

OneWest Bank, which took over embattled Indymac bank two years ago, has been under criticism from consumer rights groups and others for its aggressive foreclosure practices on Indymac loans.

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Associated Press Via LA Times

Banks are dragging their feet when considering so-called short sales, an increasingly prevalent type of real estate transaction in which lenders allow homes to be sold for less than what is owed on them, according to a survey of California real estate agents.

Nearly two-thirds of the 2,150 respondents to the California Assn. of Realtors’ survey of member agents said banks took longer than 60 days to respond to short sale offers and that fewer than three out of every five offers ultimately resulted in a sale.

The response times are much longer than those specified in government guidelines for banks who agreed to participate in programs that help troubled borrowers when they accepted a share of the $700-billion Wall Street rescue.

“The survey results show that the short sale system is clearly flawed,” CAR president Beth L. Peerce said. “Increasing the number of successful short sale transactions is one important way we can help California families and move our economy closer to recovery.”

Although the survey only covered agents in California, National Assn. of Realtors spokesman Walter Molony said similar complaints had come from across the country, especially from states with hard-hit housing markets such as Nevada, Florida and Arizona.

“Banks just have not been equipped or willing to make quick decisions on this,” Molony said. “It’s unfair to all parties concerned.”

Short sales have played an increasingly large role in California’s real estate market, with declines in property values leaving many borrowers with crushing payments on mortgages that are greater than their homes’ worth.

The transactions allow troubled borrowers to dodge the hit to their credit scores that would come from a foreclosure, while banks are able to keep distressed properties off their books without going through the costly foreclosure process.

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A grim echo of the housing bust is building for Michigan homeowners who’ve lost their homes to foreclosure or sold them in short sales. Without even knowing it, they could end up owing tens of thousands of dollars in mounting debts under a previously unenforced provision of the state’s foreclosure law.

Until a few years ago, when someone lost a home to foreclosure in Michigan, the owner walked awayembarrassed and financially battered, but owing nothing more onthe property.

Now, because of dropping property values, mortgage lenders are engineering foreclosures so they can pursue a borrower for the unpaid balance of a home loan for years to come. With added fees and interest, this phantom debt — called a “mortgage deficiency” — could swell to become more than the homeowner paid for the property.

“It’s a huge problem,” said Julia Gordon, senior policy counsel at the Center for Responsible Lending in Washington. “This is the last thing anyone needs.”

There are no figures to show how many Michigan homeowners could be liable for deficiencies, but foreclosure rates suggest there will be plenty.

Since 2006, the number of foreclosures in Michigan has more than doubled to nearly 136,000 last year, and the state has recorded nearly 500,000 filings for homes in or near foreclosure.

As a result, property values in southeast Michigan have plummeted. Home prices dropped 34 percent during the past decade and recently hit their lowest point since the summer of 1994.

Before the real estate meltdown, few lenders ever pursued borrowers for mortgage deficiencies, said bankruptcy attorney Stuart Gold of Southfield.

“We used to see it maybe once a year or very infrequently,” Gold said. “In the last two years it’s become more and more prevalent.”

From The Detroit News: http://detnews.com/article/20110216/BIZ/102160332/Even-after-foreclosure–debt-collectors-still-pursue-borrowers-for-repayment#ixzz1E85SxSdr

Jenifer McKim, Boston Globe

Tens of thousands of Massachusetts property owners are living in their homes without making mortgage payments as they fight foreclosure, plead with lenders for loan modifications, or simply take advantage of free housing while awaiting eviction.

About 36,000 borrowers statewide have not written a mortgage check in at least three months, and one-third of those borrowers are a year or more in arrears, according to the most recent data from Lender Processing Services Inc., a Florida company that collects mortgage data nationwide.

Most homeowners fail to pay their mortgages because they are out of work, have had their wages cut, or are saddled with ballooning interest rates on subprime loans, housing advocates say. Some abandon hope of ever catching up, staying put for months — sometimes years — while lenders slog through the increasingly long process that leads to foreclosure.

“We have bank tenants that have been in their foreclosures after a number of years,’’ said Melonie Griffiths, a community organizer with City Life/ Vida Urbana, a Jamaica Plain nonprofit that works with tenants and homeowners in foreclosure. “Some people slip through the cracks.’’

Housing advocates say the extended time it takes to foreclose upon a property and evict someone gives homeowners an opportunity to save their homes or put away money to rent an apartment, and prevents neighborhood blight by reducing the number of abandoned properties. But economists worry the unresolved ownership of so many properties will imperil an already fragile real estate market.

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As Virginia’s new legislative session gets underway, lawmakers are considering an overhaul of the state’s foreclosure process aimed at combating alleged shortcuts and abuses by lenders seizing borrowers’ homes.

Homeowners, who currently face one of the fastest foreclosure processes in the country, would be given more time to defend themselves under one proposal. Another bill would require lenders to get the approval of a judgebefore seizing a home. A third would give homeownersa last-minute chance to avert foreclosure by catching up on overdue payments.

The effort to transform Virginia’s foreclosure process faces an early test Monday, when one of the more far-reaching bills is scheduled for a hearing and a vote in a House subcommittee. The measure would force banks to maintain up-to-date records on Virginia loans in government offices, potentially restraining global trade in these mortgages.

The proposals come as high unemployment and the real estate meltdown have made foreclosures commonplace. Overwhelmed by defaults, some lenders have been accused of using bogus or “robo-signed” documents to seize property from delinquent borrowers.

The Virginia Bankers Association strongly opposes the overhaul, saying it would gum up the process. Members of the group visited the General Assembly this week to make their arguments.

Some key lawmakers, including the speaker of the House, say the system works well and that proposed revisions could make matters worse.

Bills filed in the House and Senate call for a variety of changes.

Homeowners would be given greater warning – 30 or 45 days – before their houses could be auctioned. Current law requires that foreclosure notices be sent at least 14 days in advance, which has left some homeowners with too little time to mount a defense.

Under the new proposals, lenders would face penalties for foreclosing on the basis of false documents, and would have to seek court review before foreclosing.

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Lilla Roberts is a 73-year-old retired physical therapist, a pleasant, engaging woman who moved to this country from Jamaica 46 years ago. In 1988, she bought a small house in Jamaica, Queens, putting down $25,000, and taking out a mortgage for around $120,000. For many years, she religiously made her mortgage payments.

Like most homes in this part of Queens, this one is a little on the ramshackle side: a small, two-story home, part brick, part faded gray siding, with a red awning out front and a large backyard. But she raised her children and several of her grandchildren in this home. Her life’s memories are in this home. It means a lot to her.

“My whole life is here,” she said on Tuesday, when I visited her. “Every penny I ever had I put into this house.”

Ms. Roberts pointed down. “I finished the basement,” she said. She pointed up. “I had to put in new windows and repair all the rotting wood,” she said, referring to an upstairs apartment she rents out.

She pointed toward the back of the house, to the yard beyond her cramped kitchen and her two crowded bedrooms. “I love my garden,” she said. She paused, and then sighed. Between her pension, Social Security and rental income, she said, “I have enough income to pay my mortgage. I would love to enjoy the rest of my life here.”

Sitting across from Ms. Roberts was Elizabeth Lynch, a 30-something lawyer who works for MFY Legal Services. Ms. Lynch is a foreclosure specialist who has spent the last few months trying desperately to keep Ms. Roberts from losing her home. In 2007, a year after a refinancing, Ms. Roberts suffered a temporary setback that caused her to stop paying her mortgage for less than a year. Given her situation — steady income, a history of reliability — you would think that she would be a perfect candidate for a mortgage modification.

Instead, her servicer, Bank of America, foreclosed on the property in late August and handed it off to Fannie Mae, which owned the mortgage. Ms. Roberts first learned this when she saw Fannie Mae’s eviction notice taped to her front door.

As part of her effort to save Ms. Roberts’ house, Ms. Lynch filed a lawsuit to undo the foreclosure, on the grounds that fraud had been committed at various points along the way. Although such suits rarely succeed, a judge agreed to hear the case in early January.

Another part of her effort, though, was to try to create some media interest, which is how I got involved. “With all of the foreclosure cases I have seen,” Ms. Lynch wrote in an e-mail, “this is the one that gets at me the most.”

Truth to tell, Ms. Roberts’s story got to me too. Even putting aside the possibility of fraud, nobody should have to endure what she’s been through. Since March 2008 — that’s right, two and a half years — she has spent nearly $30,000 trying to hold onto her home. She has had to deal with a nasty foreclosure mill law firm, with servicing employees who gave her the runaround and with a foreclosure process that took place behind her back. And she has had to deal with the anxiety of not knowing whether she would be able to keep her home.

Yes, there are people who took out mortgages knowing they could never pay the money back. Ms. Roberts is not one of them. Rather, she is one of the many Americans, mostly poor and lower-middle class, who have been devastated by a system that is as rapacious, uncaring — and sloppy — in tossing people out of their homes as it once was in foisting predatory mortgages on them.

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Consumer advocates and lawyers warned federal officials in recent years that the U.S. foreclosure system was designed to seize people’s homes as fast as possible, often without regard to the rights of homeowners.

In recent days, amid reports that major lenders have used improper procedures and fraudulent paperwork to seize properties, some Obama administration officials have acknowledged they had been aware of flaws in how the mortgage industry pursues foreclosures.

But the officials said they could take only limited action to address the danger. In part, this was because they wanted lenders’ help carrying out federal programs to modify mortgages that had fallen into default or were poised to do so.

New concerns about improper practices – such as those involving faked documents or “robo-signers” who signed tens of thousands of documents without reviewing them – have prompted the mortgage servicing arms of the country’s largest banks to freeze millions of foreclosures. As momentum builds for a national moratorium, the administration has begun assessing the potential impact, examining the threat it could pose for the ailing housing market and the wider financial system.

There is no evidence so far that the specific abuses made public in the past few weeks were known to government officials. Nor is it clear whether they were aware that the process of the selling and reselling of mortgages among financial firms – which became extremely common and highly profitable during the housing boom – was raising legal questions about who actually owned the loans and had the right to foreclose if they want bad.

But government officials were told repeatedly that the mortgage servicing industry was deeply troubled, according to administration officials, consumer advocates, housing lawyers and congressional aides.

“Have we talked to them about servicer incompetence? Repeatedly. Have we talked to them how the servicer system is broken? Yes,” said Ira Rheingold, executive director of the National Association of Consumer Advocates. “Have we talked to them about the costly stream of errors made by servicers? Yes.”

Read more here: http://www.washingtonpost.com/wp-dyn/content/article/2010/10/09/AR2010100904125.html?sid=ST2010100904153