Mass AG Coakley Asks Fannie and Freddie For Principal Reductions

February 4, 2012 By Steve Dibert Leave a Comment

Says Current Position Prevents Many Homeowners from Receiving Relief

Concerned that the refusal by Fannie Mae and Freddie Mac to engage in principal forgiveness and loan modifications for struggling homeowners is slowing the nation’s economic recovery, Attorney General Martha Coakley has sent a letter urging Fannie and Freddie to reverse this stance.

Leaders of Fannie Mae and Freddie Mac have expressed an unwillingness to participate in federal loan modification programs, including principal forgiveness. In a letter to the acting director of the Federal Housing Finance Agency (FHFA), AG Coakley insists that the FHFA should allow for principal forgiveness, guided by a net present-value analysis, which would increase loan modifications and help stabilize the housing market and economy.

“More than five million people have lost their homes due to foreclosure in the past five years, and millions more on the brink of foreclosure, struggling to stay in their homes,” wrote AG Coakley. “Fannie Mae and Freddie Mac should be a leader in the arena of loan modification best practices, not an obstruction. Fannie Mae and Freddie Mac should change course to serve both their own interests and those of the public and the economy.”

AG Coakley’s office has brought numerous actions against major banks and financial institutions with goal of keeping people in their homes and avoiding unnecessary foreclosures. These include actions against Fremont, Option One, Countrywide,Morgan Stanley, Goldman Sachs and Royal Bank of Scotland which all resulted in loan modifications designed to remedy unfair and unsustainable loans in Massachusetts. In the letter, AG Coakley points out that these modifications have helped thousands of people stay in their homes in Massachusetts.

The FHFA has acknowledged that principal forgiveness can serve the long-term interests of taxpayers when compared to foreclosure by combining the goal of asset preservation and foreclosure prevention. According to the FHFA’s own reports, fewer loan modifications have been implemented in September, October and November 2011, than any other month since November 2010. AG Coakley says in her letter that this trend must be reversed.

In addition, a comprehensive proposed settlement resolving allegations of servicing fraud with five major banks is expected to provide loan modifications featuring principal write-downs valued at billions of dollars. AG Coakley says that those discussions have brought into focus the unwillingness of Fannie Mae and Freddie Mac to use principal write-downs as part of its loan modification programs, and that their refusal will impact the ability of many homeowners to get the relief that they need.

Filed Under: Massachusetts, Mortgage News Tagged With: Attorney General Martha Coakley, economic meltdown, fannie mae, FHFA, financial crisis, foreclosure, foreclosure crisis, foreclosure defense, foreclosure fraud, foreclosure help, foreclosure rescue, foreclosures, freddie mac, Glenn Russell, Housing Crisis, illegal foreclosures, illegal massachusetts foreclosures, loan modification, loan modification programs, Loan Modifications, massachusetts foreclosure fraud, massachusetts foreclosure help, massachusetts foreclosures, massachusetts mortgage fraud, Massachusetts Supreme Judical Court, massacusetts foreclosures, Mortgage Crisis, mortgage fraud, mortgage help, mortgages, Principal Forgiveness, securitized mortgages

Schneiderman Sues Major Banks Over Alleged MERS Fraud

February 3, 2012 By Steve Dibert Leave a Comment

Loren Berlin, Huffington Post

Three big banks were hit on Friday with yet another lawsuit related to wrongful foreclosures. Democratic New York Attorney General Eric Schneiderman filed suit against Bank of America, JP Morgan Chase and Wells Fargo for deceptive and fraudulent use of a private database used to register mortgages, according to a Friday press release from his office.

Schneiderman has been outspoken in urging the Obama administration to hold the nation’s largest financial institutions accountable for their role in the foreclosure crisis, notably hesitating to join a larger nationwide case against the country’s five largest banks for mortgage fraud. States now have until Monday, according to the Iowa attorney general’s office, to decide to join that deal.

The New York attorney general has yet to announce whether New York will participate in the deal because of concerns that joining the settlement would make it impossible for him to file his own, state-based lawsuits against the banks, said sources close to the negotiations who spoke on the condition of anonymity. The decision to bring this lawsuit on Friday indicates that the larger nationwide settlement is now more to Schneiderman’s pleasing, said a source familiar with the discussions.

“If the deal terms had been decided six months ago, a state couldn’t have pursued this kind of lawsuit,” said the source. “The fact that Schneiderman has filed this case suggests that the terms of the deal have changed since then.”

Last week Schneiderman was named one of five co-chairs of a new task force announced by President Barack Obama to investigate fraud related to bonds backed by mortgage loans.

The Friday suit positions Schneiderman to go after another piece of the mortgage securitization system that’s been blamed for foreclosure fraud: the system that banks use to facilitate the creation of mortgage backed securities. Banks use the Mortgage Electronic Registration Systems, or MERS, to register mortgage loan ownership. Before the creation of the system in 1995, registration took place at local courthouses, slowing down the process of bundling individual mortgages into securities. More than 70 million mortgages have been registered with MERS, according to a press release from Schneiderman’s office.

The Friday lawsuit claims that the system led to fraudulent foreclosures, undermined the state’s process for reviewing foreclosure cases and made it difficult for homeowners to access mortgage-related documents, said Schneiderman in the press statement.

Deja Vu All Over Again

February 2, 2012 By Steve Dibert Leave a Comment

White House details mortgage refinancing plan for homeowners

Jim Puzzanghera and Lisa Mascaro, LA Times

The White House hopes to help millions of homeowners lower their monthly mortgage bill with a $5 billion to $10 billion plan to set up a streamlined refinancing program for people who are current on their payments.

The Obama administration on Wednesday released details of the plan, which President Obamaannounced in last week’s State of the Union address. The new proposal also includes a Homeowner Bill of Rights that would call for access to simple mortgage disclosure forms, and protection for homeowners from inappropriate foreclosures.

And the White House said the Federal Housing Finance Agency will announce a pilot program to sell foreclosed properties to buyers who would convert them into rental housing.

Obama will pitch the plan during a speech Wednesday at a community center in Falls Church, Va.

The centerpiece of the housing plan, which faces a tough road to approval in Congress, is an expansion of the administration’s refinancing efforts announced last fall for loans owned by government-owned Fannie Mae and Freddie Mac.

The new proposal would establish a quick refinancing plan open to people whose mortgages are owned by banks or held by investors in mortgage-backed securities.

To be eligible, homeowners must be current on their mortgage payments for the past six months and have missed no more than one payment in the previous six months. Homeowners also would need a credit score of at least 580.

The program would not be open to jumbo loans. It only would be open to mortgages below theFederal Housing Administration‘s conforming loan limits, which are $271,050 in low-cost areas and $729,750 in high-priced markets, such as Southern California.

To speed approvals, lenders would only need to confirm that the homeowner has a job. Borrowers would not need to submit a new appraisal of the property or tax returns. Unemployed homeowners also would be eligible for the refinancing plan, but would require more paperwork.

The refinancing plan would help borrowers save an average of $3,000 a year by taking advantage of historically low interest rates.

But Obama wants to pay for the program through a new fee on large banks, which Congress has balked at in the past.

House Speaker John A. Boehner sounded almost incredulous on Wednesday that the administration was proposing another housing program, saying “none” of the White House proposals have worked and home prices needed to settle on their own.

Boehner Says Its Time For Government To Stop Helping Homeowners

February 2, 2012 By Steve Dibert Leave a Comment

John Boehner: Time For Government To Stop Helping Homeowners

Michael McAulliffe, Huffington Post

House Speaker John Boehner thinks it’s about time for the government to stop trying to aid people with underwater mortgages.

Responding to a plan President Barack Obama unveiled Wednesday to help homeowners refinance, Boehner scoffed at the idea and then suggested government should get out of the way of increasing foreclosures and falling prices.

“One more time? We’ve done this. We’ve done this at least four times where there’s a new government program to help homeowners who have trouble with their mortgages,” the Ohio Republican told reporters on Capitol Hill.

“None of these programs have worked. I don’t know why anyone would think that this next idea is going to work,” Boehner continued. “All it does is delay the clearing of the market. As soon as the market clears and we understand where the prices really are — [that] will be the most important thing we can do in order to improve home values around the country.”

Obama’s plan would require legislation from Congress to permit the Federal Housing Administration to help certain homeowners — specifically, those who are underwater but current in their payments and whose loans are not held by the FHA, Fannie Mae or Freddie Mac — to obtain new loans at better interest rates, saving $3,000 a year on average. A similar plan already aids people whose mortgages are held by one of those government-backed entities, but other homeowners usually cannot get a bank to refinance their loans.

While the administration’s loan modification effort so far have fallen far short of its goals — reaching fewer than 1 million homeowners when it aimed for 4 million with the last initiative — Shaun Donovan, secretary of housing and urban development, argued Wednesday that doing more is vital.

“Economists on all sides of the political spectrum have recognized that a broad-scale refinancing effort is one of the most important things that we can do, not only for families and for the housing market, but also for the economy more broadly,” Donovan said at a White House briefing.

Mass AG Coakley Asks Fannie and Freddie For Principal Reductions

Says Current Position Prevents Many Homeowners from Receiving Relief

Schneiderman Sues Major Banks Over Alleged MERS Fraud

Deja Vu All Over Again

White House details mortgage refinancing plan for homeowners

Boehner Says Its Time For Government To Stop Helping Homeowners

John Boehner: Time For Government To Stop Helping Homeowners

Translation

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