‘Vultures’ Save Troubled Homeowners

James Hagerty, Wall Street Journal

Anna and Charlie Reynolds of St. George, Utah, were worried about losing their home to foreclosure last year. Then they got a lucky break—from an unlikely savior.

Selene Residential Mortgage Opportunity Fund, an investment fund managed by veteran mortgage-bond trader Lewis Ranieri, acquired the loan at a deep discount and renegotiated the terms with the Reynolds. The balance due was cut to $243,182 from $421,731, and the interest rate was lowered. That reduced the monthly payment to $1,573 from $3,464, allowing the family to stay in their home despite a drop in Mr. Reynolds’ income as a real-estate agent. “It was a miracle,” says Ms. Reynolds.

But Mr. Ranieri isn’t your typical miracle worker. As a fund manager who was once vice chairman of the bond-trading firm Salomon Brothers, he’s a member of the Wall Street crowd that is often pilloried for helping inflate the housing bubble, though he sat out the excesses of recent years. The 1989 book “Liar’s Poker” made him famous for billion-dollar trades in mortgage bonds and junk-food “feeding frenzies” with his trading-desk buddies.

As the nation struggles with the worst foreclosure crisis since the 1930s, Mr. Ranieri’s investment fund and others like it are emerging as the best hope for the roughly seven million U.S. households behind on their mortgage payments. Nimble, flush and willing to strike deals with borrowers, these funds have an edge over banks and other lenders that can be mired in bureaucracy and hampered by government rules about which loans can be renegotiated and how.

Borrowers less lucky than the Reynolds family must work with middlemen—loan-servicing firms that don’t actually own loans, but represent banks and investors, and collect mortgage payments on their behalf. These firms follow often-ambiguous rules set by the owners of the loans. In cases where a loan has been bundled into a security, it might have thousands of owners scattered around the world, making it impossible to know all their preferences.

By contrast, Mr. Ranieri’s Selene is the sole owner of its loans and has a servicing affiliate that can negotiate directly with borrowers. “Every case is individual,” Mr. Ranieri says. “There’s no template.”

But the main reason Mr. Ranieri can strike deals with borrowers is that his firm buys loans, mostly from banks, at steep discounts to the balance due. If his fund pays $50,000 for a loan with a $100,000 balance due, for example, it can make a profit even if the borrower ends up paying back only $70,000.

Read more here: http://online.wsj.com/article/SB10001424052748704720004575377022447064474.html?mod=WSJ_hpp_MIDDLETopStories

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HAMP Has Been Abandoned By Nearly 500,000 Borrowers

ALAN ZIBEL – AP

The Obama administration’s flagship effort to help people in danger of losing their homes is falling flat.

More than a third of the 1.24 million borrowers who have enrolled in the $75 billion mortgage modification program have dropped out. That exceeds the number of people who have managed to have their loan payments reduced to help them keep their homes.

Last month alone,155,000 borrowers left the program – bringing the total to 436,000 who have dropped out since it began in March 2009.

About 340,000 homeowners have received permanent loan modifications and are making payments on time.

Administration officials say the housing market is significantly better than when President Barack Obama entered office. They say those who were rejected from the program will get help in other ways.

But analysts expect the majority will still wind up in foreclosure and that could slow the broader economic recovery.

A major reason so many have fallen out of the program is the Obama administration initially pressured banks to sign up borrowers without insisting first on proof of their income. When banks later moved to collect the information, many troubled homeowners were disqualified or dropped out.

Many borrowers complained that the banks lost their documents. The industry said borrowers weren’t sending back the necessary paperwork.

Carlos Woods, a 48-year-old power plant worker in Queens, N.Y., made nine payments during a trial phase but was kicked out of the program after Bank of America said he missed a $1,600 payment afterward. His lawyer said they can prove he made the payment.

Such mistakes happen “more frequently than not, unfortunately,” said his lawyer, Sumani Lanka. “I think a lot of it is incompetence.”

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US Banks Are Toast If Homeowners Keep Walking Away

Sherry Shen, Huffington Post

Reuters blogger Felix Salmon believes that if more and more struggling homeowners continue walking away from their homes, U.S. banks could be “toast.”

As strategically defaults continue to rise, some homeowners are using their inability to pay their mortgage to live rent free — often for more than ayear, the New York Times reported.

“Trying to renegotiate your mortgage is not a morally reprehensible thing to do,” Salmon said, pointing out that mainstream media organization’s like the New York Timesmagazine has been publishing columns about this trend and how it makes so much “financial sense.” Corporations walk away from commercial mortgages, Salmon said. “It’s not clear to me why an individual should behave any different,” Salmon said.

Wells Fargo is most exposed to the trend, affecting the bank’s livelihood. “Sand state” banks such as those in Florida and California are also far more exposed. Here’s more from Salmon:

“From the bank’s point of view, if this catches on, there’s a very large number of banks in this country who are just toast. And in hindsight they were just much better off dealing in a realistic way with these borrowers a year ago or two years ago when the problem first reeled its head instead of extending and pretending. Now they are in a pickle.”

“If this trend continues, then the banking system is probably insolvent,” he said.

Read more here: http://www.huffingtonpost.com/2010/06/02/felix-salmon-us-banks-wil_n_597942.html

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MFI-Miami was In The Huffington Post

Homeowner Road Trip: Rally In Tallahassee

In a time when you can stroll over to the computer and rattle off an e-mail to your elected official because you think your taxes are too high or leave an anonymous comment on a blog or article voicing your disapproval with a particular reporter, it would seem that the days of face-to-face action and rallies are unfortunately a thing of the past.

Not for a group of activists in Florida heading to the Capitol in Tallahassee on Wednesday, April 21.

Michael Redman (4closureFraud), together with the Law Offices of Carol C. Asbury, Attorney Matt Weidner, and Lisa Epstein of Foreclosure Hamlet, in an effort to convince Florida legislators to listen to their constituents, are organizing a transport to the capital. An old fashion road trip of attorneys, advocates, and homeowners. Transportation is being organized and buses will be available from key areas throughout Florida and along major roadways. Redman and Epstein had initially dipped into their own pockets to charter buses for the event.

As of April 16th, according to Redman’s blog, in a Friday post,

“Team Ice in West Palm has sponsored their bus and now one of Pinellas County’s toughest foreclosure fighters has generously agreed to sponsor a bus to make sure any attorney and homeowner who wants to go to Tallahassee and make his or her voice heard has the opportunity to get up there and meet face to face.”
“One of the most inspiring things about all of this is seeing how the defense attorneys are all throwing their time, talent and treasure into this fight.  We all share our ideas, insight and experience because doing so serves the interests of not just our clients but those folks out there who cannot afford an attorney and it especially serves the Constitution we took an oath to protect and the judiciary we respect,” Redman says.

The most important piece of legislation the group was trying to stop was a push by bankers to change the way Florida handles foreclosures. Florida currently, and always has had Judicial foreclosures. The bank’s proposed legislation would have allowed banks to foreclose on Florida homes without going to court. According to Matt Weidner, a Florida attorney, the bill for now appears to have been stopped in the House, but the Senate will meet next week and according to an old Florida saying, “No one’s safe while the legislature is in session.”

A non-judicial foreclosure would mean that, “you the homeowner won’t automatically get your day in court if your lender tries to take your house away. The way it works right now is the lender is required by law to file a civil lawsuit against you in order to foreclose. You then have to answer it. If you don’t answer it or don’t show up to court, the judge issues a summary judgment against you. In a non-judicial foreclosure everything is done administratively and your right to due process is compromised and you have to beg for your day in court,” as explained by Steve Dibert of MFI-Miami.

Although the bill appears to have died, and the bankers appear to have conceded, this motivated band of advocates doesn’t want to leave anything to chance.

An e-mail from Weidner reads:

As Mark Twain said, ‘News of My death was greatly exaggerated.’ Although the legislation appears to have died, the passion and concern that its introduction incited has only increased with word of its demise.  Tapping into broad based anxiety and concern felt by homeowners all across Florida, the group has turned its focus from defeating this legislation to demanding legislation that will increase protections for Florida homeowners. Talk about turning the tables.  They are meeting with Senator Mark Aronberg and Rep. Darren Soto who introduced a “Homeowner’s Bill of Rights“. They’re asking that this legislation be resurrected… at the very least they want to make sure their legislators are fully aware of their concerns and the problems they’re facing.

According to Weidner’s press release,

“The response from legislators to this movement has been awe-inspiring. Our leaders in Washington may have trouble hearing the voices of their people, but the leaders who represent us in Tallahassee hear the voice of the people loud and clear! Already leaders from both houses have graciously agreed to meet with their voters, we’re confident many more will agree to meet with us when we arrive.”

Michael Moore spoke of the apathy and lack of action he witnessed despite his tireless work drawing attention to key issues affecting millions of Americans.

“Two years ago, I tried to get the health-care debate going, and it did eventually, and now where are we? We may not even have it. What am I supposed to do at a certain point?, ” Moore said in an 2009 Toronto press conference.

I wrote about that similar frustration with apathy in “Where are the Screaming Liberals?,” back in September 2009.

It’s refreshing and inspiring to think that may be changing.

Denise Richardson (givemebackmycredit.com) posted the following from Lisa Epstein on her blog:

This is not just for homeowners!We are ALL reduced by the actions behind the mortgage frauds and scams. Tenants! Anyone who relies on any public service funded by our now shrunken tax revenues! Anyone owning any property at all, fully paid off or not. Any business owner! Unemployed family members! Credit card/bank account fees victims! Those with drained 401Ks and college savings accounts!

We will be heard as was the Florida Bankers Association on their own “Capitol Day” on March 10, 2010. Florida Bankers, guess what? You wanted a “Taste of Florida”? You are gonna get one! We are having our own “Capitol Day”! But our collective voices will be a harmony; louder, clearer, unwavering, and with a foundation firmly planted in the historical roots of our country as a nation for WE, THE PEOPLE!

Bankers and other stealth foreclosing entities, listen up! We are NOT boobs, chumps, doormats, dupes, easy marks, fools, goats, gulls, patsies, pigeons, pushovers, saps, scapegoats, schmucks, sitting ducks, stooges, suckers, victims, or weaklings, And we most certainly are not “deadbeats”!

To find out more about the rally and let them know you’ll be along for the ride, see Redman’s site at 4closurefraud.org or Weidner’s blog for more information.

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