Owners walk from homes, values erode
March 7, 2010 by admin · Leave a Comment
Greta Guest, Detroit Free Press
With more than 500,000 households in Michigan owing more on their mortgages than the homes are worth, thousands of Michigan residents are choosing to abandon their homes and walk away, even if they can afford to continue making payments.
The number of people who have engaged in such strategic defaults more than tripled between 2005 and 2008 — from 5,100 to 17,250, according to a report by Experian-Oliver Wyman, a credit reporting and consulting firm.
Mark Zandi, chief economist for Moody’s Economy.com, said he expects the problem to get worse this year and next. “As people struggle to make ends meet, they will say this just doesn’t make sense” about continuing to make payments, he said.
The trend is being fueled by the large number of underwater mortgages — those where the bank is owed more than what a sale might net a homeowner. Michigan is fourth in the nation in underwater mortgages, with 38.5% of homes — or 532,774 — underwater.
Those who walk away often do so after failing to negotiate a loan modification or a short sale. Sometimes they need to move out of state for a better-paying job, but they can’t sell their house.
“The good, straight people of the world will feel, ‘How can I walk away?’ ” said Southfield real estate attorney John E. Jacobs. But with an economy still struggling, he and other experts said, the stigma of defaulting on a mortgage even if one can still pay is disappearing.
“When things are that bad, your moral compass, and the obligation to make payments that most people feel, has to give,” Jacobs said.
Walking Away
Sondra Malone, 35, bought a house in Eastpointe in 2005 with an adjustable-rate mortgage. The $1,200-a-month payment on the house, along with high heating bills, an expensive SUV payment and other family expenses, quickly buried her in debt.
At the same time, the bottom was falling out of the housing market with record foreclosures dragging down home values. Malone was soon underwater on her mortgage. She owed $116,000 on a house she listed for $99,000 in 2007.
After trying to work out a lower payment with her bank, and trying to sell her house, Malone rented a condo in Sterling Heights and walked away from her house in 2007.
“I didn’t know what else to do,” said Malone, a social worker. “I’m embarrassed.”
Malone said she has been through too much to worry about the lender coming after her. Soon after walking away, she had to deal with major health issues. And she lost her mother last year.
“They’d better go after a whole lot of other people,” said Malone, adding that the foreclosure is now on her credit report. “When you have 10,000 or 20,000, what’s one?”
Read more here: http://www.freep.com/apps/pbcs.dll/article?AID=/20100307/BUSINESS04/3070529/1318/A-flood-of-underwater-homeowners-walk-away&template=fullarticle
Banks violated mortgage rules, lawsuits allege
February 25, 2010 by admin · Leave a Comment
Two lawsuits filed yesterday in US District Court in Boston claim Wells Fargo and Bank of America have not followed federal rules for mortgage loan modifications, leaving some homeowners stuck in foreclosure “limbo.’’
According to one of the lawsuits, Wells Fargo Bank North America did not honor agreements with Wilfredo and Odalid Bosque of Leominster and Germano DePina of Roxbury that would have made their temporary loan modifications permanent through the US Treasury’s Home Affordable Modification Program.
In a second suit, Patricia Johnson of Salem alleged Bank of America Corp. did not abide by a similar arrangement that was intended to reduce her mortgage payments.
“When a large financial institution promises to modify an eligible loan to prevent foreclosure, homeowners who live up to their end of the bargain expect that promise to be kept,’’ lawyer Gary Klein wrote in the complaints.
Wells Fargo would not comment on specifics of the case, but the bank issued a statement yesterday saying that some customers who participated in the federal program ultimately did not qualify for a permanent loan modification.
“In these instances, we work to determine if another foreclosure prevention option is available to them,’’ the statement said.
Officials at Bank of America said they could not comment on the lawsuit because they had not been served.
Read more here: http://www.boston.com/business/articles/2010/02/24/banks_broke_mortgage_modification_rules_2_lawsuits_say/
Michigan to share in $1.5B for homeowners
February 20, 2010 by admin · Leave a Comment
BY TODD SPANGLER, FREE PRESS WASHINGTON STAFF
Michigan is among five states getting money under a $1.5-billion program announced Friday to help struggling homeowners, but it’s unclear how many people will be helped or how the program would work.
Funds will be targeted to states that have seen the worst drop in home values
— Michigan, Arizona, California, Florida and Nevada.
It’s unknown how much each state will get.
Among the five, Michigan’s experience has been the least severe: Online real estate Web site Zillow says values are off from their 2005 peak by about 28%; financial services information management firm Fiserv puts Michigan’s drop in home values at 35%.
That compares with Nevada, which has seen home values drop as much as 56% in three years.President Barack Obama said the new program will “help out-of-work homeowners avoid preventable foreclosures” as well as let homeowners who are upside-down in their mortgages — owing more than their homes are worth — “find a way to pay their mortgages that works for both the borrowers and the lenders alike.”
Read more here: http://www.freep.com/article/20100220/NEWS06/2200327/1320/Michigan-to-share-in-1.5B-for-homeowners
NY Passes New Foreclosure Protections
The state Legislature has passed a bill that will give New York state homeowners and renters more protection during foreclosures.
It will expand the mandatory 90-day pre-foreclosure notice to all types of home loans, not just subprime mortgages, so all homeowners are given information and time to take action. Read more about the new foreclosure protections…
Do you own a law firm? Would you like to utilize our mortgage auditing services for foreclosure defense cases? Contact MFI-Miami now.
