Friday, March 30, 2012

Consumers pay car loans, credit cards ahead of mortgages

The latest update to the TransUnion Payment Hierarchy Study sheds new light on how consumers prioritize their payments when money is running short. The credit management bureau found that both mortgage and credit card payments take a backseat to those for auto loans, and that of the three, mortgage payments are still at the bottom of the priority list. The study's authors speculate declining housing prices and persistent unemployment rates explain this pattern.
"With unemployment remaining high and real estate values remaining stagnant or further depreciating, consumers continued to pay their credit cards ahead of their mortgages," said Ezra Becker, vice president of research and consulting in TransUnion's financial services business unit, in a press statement. "However, the importance of their auto loans appears to have trumped even the value they place on their credit cards."

Read the rest of the article at Fox Business

Mortgage Write-Downs Get New Push

The Obama administration's offer to subsidize write-downs of mortgage-loan balances for some heavily indebted homeowners is putting the federal regulator who oversees Fannie Mae and Freddie Mac in a bind by forcing the agency to rethink its long-held opposition.

For years, the federal regulator overseeing the taxpayer-backed mortgage-finance giants has resisted calls to have the firms cut loan balances, often referred to as principal write-downs. But in recent weeks he has come under intense pressure to change course, especially now that the U.S. Treasury is offering to split the cost.

In an interview this past week, Edward DeMarco, acting director of the Federal Housing Finance Agency, said while he's still skeptical about the benefit of principal reductions, "we said all along, if money came from another source, we'd have to reconsider our position." He says his agency will make a decision by mid-April.

The offer by the Treasury Department to help pay for principal write-downs has put Mr. DeMarco in a tough spot: He's consistently argued that his mandate to reduce losses at the firms means putting the narrow interests of the firms ahead of broader housing market policy. The Treasury's subsidies could reduce those costs, but don't change his underlying doubts about whether principal reductions are good policy.

Read the rest of the article at The Wall Street Journal

10 Homeowner Tips to Prevent Foreclosure

1. Don’t ignore the problem. The further behind you become, the harder it will be to reinstate your loan because you’ll have fewer options and the more likely that you will lose your house.

2. Act fast, even if you are not in foreclosure yet. If you are struggling to pay your mortgage, or had a reduction in income or expect an income reduction soon, find free relief now so you are not stretching, don’t wait until you’ve exhausted all of your savings.

Click here for the rest of the article NBC Chicago

BofA Allegedly Called Debtor 38 Times After He Filed For Bankruptcy

A bankruptcy judge in Florida recently sent a message to big banks: When your debtors go into bankruptcy, quit trying to get money out of them or you'll be the one who ends up paying.

The case concerns a debtor who went into bankruptcy, then filed what's known as a debtor's discharge. That's a legal injunction meant to protect a debtor from collection actions, such as letters and phone calls demanding payment, on the part of the creditor. The point of a debtor's discharge is to offer a grace period while the debtor gets their finances in order.

Sometimes, though, banks ignore the discharge. That's what Bank of America did in the recent Florida case. After the debtor filed for bankruptcy protection, BofA proceeded to call the debtor an additional 38 times to ask about the outstanding payments, according to the Bankruptcy Law Network.

In the end, though, it was BofA that had to shell out. The judge -- Arthur Briskman of the Middle District of Florida Bankruptcy Court for Fort Myers Division, according to the Florida Bankruptcy Lawyer Blog -- ordered BofA to pay $12,500 in attorney's fees and damages for emotional distress, BLN reports.

Read the rest of the article at The Huffington Post

The Broke and the Beautiful: Magic Edition

This week on The Broke and the Beautiful, the Los Angeles Dodgers have scored a new owner in basketball superstar Magic Johnson. Also, Dolby is making noise about acquiring naming rights to the former Kodak Theatre.

It was sheer magic—Magic Johnson, that is—that brought forward the beginning of the end of the Los Angeles Dodgers bankruptcy saga this week. According to The Wall Street Journal, the basketball superstar led a group to produce a $2.15 billion bid for the team, a price tag that easily strikes out the record of the $1.1 billion Steve Ross paid for the NFL’s Miami Dolphins three years ago. The Los Angeles Times notes that Johnson, known by his first name of Earvin in the business world, is popular and widely recognized and has one of the most successful careers of any former professional athlete. “He is an extraordinary businessman who has done a great job of executing his strategies,” said former Johnson Development Corp. President Ken Lombard, who mentored Johnson in his transition to the financial world.

But it hasn’t all been good news in the sports world. Miami Beach developer Michael Stern, who filed for bankruptcy in 2009, has been arrested on wire-fraud charges. According to the Miami Herald, Stern allegedly helped cheat Indianapolis Colts defensive lineman Dwight Freeney in a restaurant deal. Stern was charged with taking $68,000 from Freeney, but examiners think his alleged scheme netted $2.4 million before Stern and Freeney’s business manager, Eva Weinberg, were arrested.

Read the rest of the article at The Wall Street Journal

Congress Considers Proposals To Let Private Student Loans Be Discharged In Bankruptcy

Sen. Dick Durbin (D-Ill.) thinks Congress should change the law to allow borrowers to have their debt from private student loans wiped clean when filing bankruptcy.

On March 20, a Senate judiciary subcommittee heard testimony about student debt and bankruptcy. Federal student loans have been ineligible for discharge when filing bankruptcy for two decades. However, it was only in 2005 that a law was passed to ban private student loans from bankruptcy discharge.

"There is no reason why private student loans should get treated differently from other private debt in bankruptcy," Durbin said in remarks at the hearing. "And it is especially egregious that these private loans are non-dischargeable in cases where a student was steered into the loan while the student was eligible for safer federal loans."

Durbin also said the 2005 provision to make private student loans ineligible for bankruptcy discharge is "a mystery amendment. We can’t find out who offered it."

Deanne Loonin, an attorney for the National Consumer Law Center, testified that the law was passed assuming there would be abuse by borrowers.

"Current bankruptcy law treats students who face financial distress the same severe way as people who are trying to discharge child support debts, alimony, overdue taxes and criminal fines," Loonin said in her testimony. "Yet there is no evidence and has never been any evidence to support this assumption."

Durbin introduced legislation in 2011 to allow private student loans to be eligible for discharge in bankruptcy.

Fitch: Student Loan Bankruptcy Protection a Negative for Lenders

Fitch Ratings views legislation in Washington aimed at making private student loans dischargeable in bankruptcy as a negative for lenders heavily concentrated in that product. While passage of bankruptcy reform isn't likely during a presidential election year, the issue is expected to remain a point of interest.

The Consumer Financial Protection Bureau, which has carved out a position as a private student loan ombudsman, estimates that student loan debt in the U.S. is more than $1 trillion, with more than $150 billion of that total in private loans. Default rates on the loans rose meaningfully during the crisis, and many are questioning the affordability of the product as private student loans aren't always accompanied by income-based repayment and forbearance options that come standard with federal loans.

We believe the ability to discharge private student loan debt in bankruptcy could yield higher loan pricing and/or a reduction in credit availability, as lenders would need to account for the added risk. Private student loans are already more expensive than federal products, and higher borrowing rates could have a big influence on a student's choice of college.

SLM Corp. is the leading provider of student loans in the U.S., and has said it would be supportive of bankruptcy reform concerning private student loans as long as borrowers have shown "good-faith effort to repay their student loans over a five- to seven-year period and still experience financial difficulty."

Filing bankruptcy in Arizona: Are businesses included in Chapter 7?

I am a bankruptcy attorney in Phoenix, Arizona ($995/Chapter 7) and frequently clients ask me if they can include their businesses in a basic Chapter 7 personal bankruptcy. The other option is filing Chapter 11 bankruptcy for their business, which is much more complex and usually costs at least $5000. Generally, if your businesses don't have any money in them or are essentially defunct, you can fit them into a Chapter 7 bankruptcy. It is when you have multiple employees and intend to keep the business going that you might need to file Chapter 11 for businesses. Chapter 7 requires you to only have $150 in one banking account when you file, no more than that, and if you have businesses with more money than that in them it will be difficult to get one checking account down to that level. Also, you can only have a limited amount of cash on hand when you file, so you can't just take out the money and hide it. If you have your own petsitting business, a couple of LLCs you've formed but done nothing with them, or a business that you are shutting down, you can file Chapter 7 and absolve any debts attributed to them.

The Alexander Bankruptcy Law Firm provides low low cost Chapter 7 and 13 personal bankruptcies. $995 Chapter 7 or $2500 Chapter 13 bankruptcies plus court filing fee. Free consultation with a compassionate attorney who will handle your case personally. Call 24/7, available to meet with you around your schedule. 602-910-6812. Conveniently located in Central Phoenix along the Camelback corridor. AlexanderBankruptcyLawFirm.com

Thursday, March 29, 2012

Why Alexander Bankruptcy Law Firm should be your attorney for Chapter 7 bankruptcies in Arizona



The Alexander Bankruptcy Law Firm provides low low cost Chapter 7 and 13 personal bankruptcies. $995 Chapter 7 or $2500 Chapter 13 bankruptcies plus court filing fee. Free consultation with a compassionate attorney who will handle your case personally. Call 24/7, available to meet with you around your schedule. 602-910-6812. Conveniently located in Central Phoenix along the Camelback corridor. AlexanderBankruptcyLawFirm.com

Wednesday, March 28, 2012

FHA Bailout Risk Looming After Guarantees: Mortgages

The Federal Housing Administration won't be able to earn its way to financial health this year, increasing the chance it will need a taxpayer bailout, based on an updated forecast from Moody's Analytics, which provides the agency's housing-market analysis.

The U.S. government mortgage-insurer, which guarantees $1.1 trillion in home loans, had been counting on "robust growth" in home prices to help rebuild its insurance fund after paying out $37 billion to cover defaults the past three years, according to its annual report to Congress, filed in November.

Read the rest of the article at The San Francisco Chronicle

Refinancings drop as government activity falls

Another drop in refinancings pushed down mortgage application volume last week, as the government reworked fewer loans.

Applications for home loans decreased 2.7 percent for the week ending March 23, the Mortgage Bankers Association said Wednesday in its weekly survey.

The refinance index fell 4.6 percent from the previous week, the sixth consecutive week with a decrease, falling to its lowest level since December. The index is 24.2 percent lower than its peak, which was hit in February.

Most of the decrease can be attributed to a 12 percent drop in government refinance activity, while conventional refinance applications fell by less, decreasing 3.4 percent from the previous week.

Read the rest of the article at The Hill

3 ways to write down mortgages without moral hazard

A plan to offer principal mortgage reductions to struggling homeowners could backfire by encouraging many to stop making their payments. Here are some ways around that.

Over the next few weeks, acting Federal Housing Finance Agency director Edward DeMarco will decide whether he will allow Freddie and Fannie to reduce loan balances. DeMarco is skeptical about the idea. Even as Congress, the Federal Reserve and the Obama administration call on the mortgage companies to write down home loans they own or guarantee, DeMarco points to several reasons why that's a bad idea. His latest argument, as reported by The Financial Times: It would amount to another bailout for the big banks, whose second mortgages are subordinate to the primary mortgages backed by Fannie and Freddie.

Read the rest of the article from CNN

Mortgage Write-Downs Granted Here, There – Not Everywhere

Fannie Mae and Freddie Mac aren’t granting reductions in homeowners’ loan balances, as has been widely noted of late. Nevertheless, some Americans who have gotten into trouble on their mortgages are actually seeing their loan balances cut, as a debate rages in Washington about whether doing so on a wider scale will be effective.

More than 35,000 homeowners received principal reductions from their lender last year, the Office of the Comptroller of the Currency said in a report Wednesday. The total was up about 20% from about 29,000 in 2010. But it was still down 23% from nearly 46,000 in 2009, when banks started to write down loans acquired at a discount from failed institutions.

“Principal reduction modifications can be an effective tool in the overall arsenal,” said Bruce Kruger, the OCC’s lead mortgage expert.

Banks are mainly granting homeowners write-downs if they hold those loans on their balance sheet and tend to do so for loans that are significantly “under water”— meaning that the homeowner owes far more on the property than the home is worth. They are not permitted to do so for loans that they have sold to Fannie Mae and Freddie Mac, the federally controlled mortgage investors.

Read the rest of the article at The Wall Street Journal

Deadline extended for foreclosure cases

People who lost their homes through foreclosure and think they were thrown off their property unfairly now have more time to seek financial compensation.

People who seek a free, independent review of their cases through the federal banking agencies’ Independent Foreclosure Review program now have until July 31 to apply for help.

The Office of the Comptroller of the Currency (OCC) and the Board of Governors of the Federal Reserve System (Federal Reserve) are extending the deadline to submit requests from April 30. The review is for former homeowners who believe they suffered financially because of mistakes in foreclosure actions against them during 2009 and 2010 by mortgage servicers that were part of the April 2011 federal enforcement actions against them.

As part of the enforcement, the federal government required 14 mortgage servicers to hire independent consultants to offer reviews of 2009 and 2010 foreclosures and to find borrowers who may have been financially injured because of improperly applied foreclosures. If the homeowner was improperly foreclosed on and suffered financially because of it, the borrower could receive compensation.

Read the rest of the article at Ocala.com

Bankruptcy court awards Christ Hospital of Jersey City to Hudson Holdco

A bankruptcy court judge in Newark yesterday awarded bankrupt Christ Hospital to the parent company of two for-profit hospitals in Hudson County.
Judge Morris Stern chose the $43.5 million bid by Hudson Holdco, which owns and operates the Hoboken University Medical Center and the Bayonne Medical Center, over the proposal by Community Healthcare Associates, which had planned to lease the hospital to the Jersey City Medical Center.
The Hudson Holdco bid, which had been endorsed by the Christ Hospital Board of Trustees, was roughly $600,000 more than the CHA bid.

Read the rest of the article at The Jersey Journal

Post-bankruptcy, Chevys Fresh Mex tries pilot project, lunch menu

Chevys Fresh Mex doesn’t want to be the same chain it was a few years ago, saddled as it was with poor food quality, a rotating roster of owners, a struggling service staff and an outdated brand.

But its parent company, Cypress-based Real Mex Restaurants, exited Chapter 11 bankruptcy last week after a group of investors acquired an 85% stake in a $129-million deal.

On the heels of the restructuring, Chevys president Brian Wright says the 26-year-old chain is in the midst of a heavy makeover. A new lunch menu with items such as rice bowls and grilled pineapple salsa has cheap prices and fast turn-around time – a key distinction for the casual sit-down company when fast-casual rivals such as Chipotle threaten to poach customers.

“We’re always worried about competition,” Wright said. “But customers now can go to fast food and our price point could still be competitive.”

Former classics that had been removed from the menu to save costs, such as the brie quesadilla with apples and the seafood enchiladas, are coming back. Portion sizes are bigger. More traditional Mexican foods, such as standard issue burritos, were removed.

Read the rest of the article at The Los Angeles Times

American Airlines asks bankruptcy judge to break union contracts, impose cuts on workers

American Airlines asked a federal bankruptcy judge Tuesday to break its labor contracts and impose cost-cutting terms on workers, a move aimed to pressure unions to accept concessions.

Thomas W. Horton, the CEO of American parent AMR Corp., said the company was trying to speed the bankruptcy-reorganization process and avoid the chance that American could be sold or broken up.

AMR’s mounting losses and rising oil prices are adding pressure to act quickly, Horton said.

American plans to cut 13,000 jobs and reduce wages to help itself emerge from bankruptcy with lower costs. The company said Tuesday that there are many reasons for its financial problems but “the greatest single challenge is its labor agreements.” American’s labor costs are higher than those at rivals such as United Airlines and Delta Air Lines.

Read the rest of the article at The Washington Post

Providence, R.I. Bankruptcy Unavoidable, Central Falls Receiver Says

Providence, Rhode Island's capital and biggest city, probably will seek bankruptcy court protection to deal with a budget deficit, Robert Flanders, the state- appointed receiver for nearby Central Falls, said yesterday.

"I don't see how they can get out of it without going there," said Flanders, a former state Supreme Court justice and a partner at Hinckley, Allen & Snyder LLP in Providence. He put Central Falls into bankruptcy in August and has since torn up contracts with city workers and cut pension benefits.

Providence Mayor Angel Taveras has put pressure on Brown University and other nonprofit organizations to help close a budget gap of at least $20 million, while Governor Lincoln Chafee is pressing lawmakers for action on measures to curb municipal pension costs. Unsustainable retiree expenses helped push Central Falls into insolvency. Moody's Investors Service cut Providence debt a step to Baa1, third-lowest investment grade, this week citing its "strained" finances.


Read the rest of the article at the San Francisco Chronicle

How to recover after a bankruptcy

I am a bankruptcy attorney in Phoenix, Arizona ($995/Chapter 7), and after I help someone file Chapter 7 or Chapter 13 bankruptcy, they wonder what to do next to get their life back on track. Will they be eligible for credit? How soon can they buy a house? What about a car? What happens to their credit score? Will anyone find out about their bankruptcy? Will their employer find out and will it hurt their current job or future employment? How long does a bankruptcy last on your credit report? How do they keep from falling in the same rut as they did before? Bankruptcy laws only allow you to file bankruptcy once every few years.

Usually after someone's bankruptcy is discharged, they start receiving credit offers in the mail as soon as a couple of weeks. They're not the greatest offers - they may be for a $500 limit credit card with an 18% rate - but at least it's a start. Usually two years after a bankruptcy discharge you can buy a house. The FHA and a couple other lenders will finance people that soon. Buying a car is also quite easy, some lenders will even finance you DURING your bankruptcy! It is very difficult to find out if someone has filed bankruptcy, because although it is a public court record, those records are kept in a password-protected database by the federal courts. Generally only attorneys who practice law in those courts have access to it. I have never found any record of my clients' bankruptcies doing a Google search.

In most situations, your employer will not be notified of your bankruptcy (generally only if you owe your employer money or your paycheck is being garnished). If they find out, federal law prohibits them from taking any action against you. They also cannot fire you for having your paycheck garnished the first time, although if there is a second garnishment things can change. A potential future employer may find out about your bankruptcy if they run a credit check on you. They *may* choose not to hire you based on a bankruptcy. However, they may also choose not to hire you based on just having bad debts, so filing a bankruptcy may not make things any worse. When a bankruptcy shows up on your credit report, it erases all of the bad debts from showing up anymore. A bankruptcy lasts on your credit report for 7-10 years, but most people's credit scores start improving by 100 points within a year after their bankruptcy.

I advise my clients after bankruptcy to check out a book called "Bounce Back From Bankruptcy," by Paula Langguth Ryan. It walks you through all of the steps needed to get your life back to normal. If making enough money is something that you've struggled with, I recommend successful businessman Chris Widener's Twelve Pillars of Success seminar. He is coming to Arizona on April 7 and will be giving a seminar in Scottsdale for $37. You can register for it here. Bankruptcy may get you off your feet for awhile, but you CAN recover, and it will not take years to do so.

The Alexander Bankruptcy Law Firm provides low low cost Chapter 7 and 13 personal bankruptcies. $995 Chapter 7 or $2500 Chapter 13 bankruptcies plus court filing fee. Free consultation with a compassionate attorney who will handle your case personally. Call 24/7, available to meet with you around your schedule. 602-910-6812. Conveniently located in Central Phoenix along the Camelback corridor. AlexanderBankruptcyLawFirm.com

Monday, March 26, 2012

Arizona State Credit Union Helps Underwater Homeowners Refinance

Arizona State Credit Union has accepted 167 applications for the Home Affordable Refinance Program (HARP) in its quest to help underwater homeowners obtain more affordable mortgages.

Homeowners who are current on their Fannie Mae mortgage and have been unable to obtain traditional refinances because the values of their homes have declined may be eligible for HARP.

“If members can benefit from a lower mortgage payment, then we, as a local financial cooperative, need to meet this need,” said David E. Doss, President/CEO of Arizona State Credit Union. “The opportunity to offer HARP is significant to the Credit Union as it can help Arizona residents rebound from economically challenging times.”

Read the rest of the article at MarketWatch

Wells Fargo to Help Tucson Area Customers Facing Mortgage Payment Challenges

Wells Fargo & Company is hosting a free Home Preservation Workshop in Tucson for Wells Fargo Home Mortgage, Wells Fargo Financial, and Wells Fargo Home Equity customers facing financial hardships. Wells Fargo has invited more than 2,800 mortgage customers in the Tucson area to the free workshop which will be held on Tuesday, April 3, 2012, from 9 a.m. -- 7 p.m., at the Tucson Convention Center, Exhibit Hall A, 260 South Church Ave. Parking is free.

How to register for Wells Fargo’s Tucson Home Preservation Workshop

Walk-ins are welcome, but registration is strongly recommended in order to guarantee the ability to meet one-on-one with a representative. Sign up by Sunday, April 1 at www.wfhmevents.com/leadingthewayhome . For more information call 1-800-405-8067.

Read the rest of the article at MarketWatch

Arizona No. 3 in foreclosures over past year, but rate drops

New CoreLogic data shows Arizona had the third most home foreclosures among states in the past 12 months.
The number was 65,000 between January of 2011 and the same month this year -- the same as Michigan. California had the most completed foreclosures with 155,000, followed by Florida with 86,000. Arizona, however, has dropped out of the top five states in foreclosure rate. Arizona’s rate stands at 2.6 percent, below the national average of 3.3 percent.
According to CoreLogic the highest foreclosure rate is in Florida, where 11.8 percent of homes with a mortgage are in foreclosure. Florida is followed by New Jersey (6.4 percent), Illinois (5.3 percent), Nevada (5 percent) and New York (4.7 percent). Both foreclosure inventory and 90-day delinquency rates are down in Arizona from a year ago.

Read the rest of the article at Phoenix Business Journal

Mortgage Loans with 100% Financing for Military Personnel and Their Families

Qualifying for mortgage loans for military personnel and their families is now an attainable goal, through financial programs from Navy Federal Credit Union. With 100% financing options designed for active or retired servicemen and women and their families, the dream of home ownership can soon become a reality.

Navy Federal Credit Union's Active Duty Choice mortgage loans help members, both active duty and those who have family members that serve in the military, get a loan with more flexibility in qualifying. Mortgage loans at Navy Federal also offer several options for other members. For instance, all military personnel and their families can take advantage of fixed rates, bi-weekly payments, and solutions for other home loan needs. Even if interest rates should change, fixed-rate mortgages offer consistency, because the same amount is being paid each month.

For veterans or active duty personnel who qualify, the Veterans Administration offers military-specific loans that also include mortgages with 100% financing. This makes home buying within your reach, no matter your rank or tenure.

Navy Federal also offers other types of mortgages. Military personnel can choose a loan package that meets their specific needs. An FHA mortgage, for instance, is available as a fixed-rate or an Adjustable Rate mortgage (ARM). An ARM may be ideal for those planning on moving more frequently or expecting an increase in income in the years to come. Mortgage loans through Navy Federal Credit Union are designed to meet the exceptional needs of our servicemen, women and their families.

Read the rest of the article at MarketWatch

Strangled by Mortgage Red Tape

Six months of writing, faxing and calling his mortgage company got Gary Palagruti nowhere.

He didn’t owe them $1,200 a month. He owed them $800 a month. He had the paperwork to prove it, and they wouldn’t admit it until last week, when The News Tribune began asking questions.

“The government gave them money to help us,” Palagruti said. “So why is it so damn hard?”

Palagruti, 57, has lived in his South Tacoma home on South 49th Street since 1983. Last fall, he fell into a bureaucratic rabbit hole visited by millions of Americans since the housing crisis erupted.

Dealing with mortgage companies can involve endless frustration, often requiring hours on the phone and repeatedly providing the same documents. Corporate ineptitude was so widespread that a recent settlement

between 50 states and five big banks set new rules about how they deal with customers.

Read the rest of the article at LoanSafe

Finally, A Commonsense Proposal in the Mortgage Foreclosure Crisis

For years before the housing bubble burst, the argument was that you could never lose by investing in -- or betting on -- real estate. That was the "logic" used not only by a segment of shady mortgage lenders but by the mainstream industry, and by every president in modern times -- all backed by publicly-guaranteed lenders like Fannie Mae and Freddie Mac.

For the past four years, we've faced the consequences of what turned out to be a false premise: millions of homeowners with homes under water; thousands who've already lost their homes; neighborhoods and whole communities scarred and sinking under the weight of abandonment and the lowering of property values that abandonment brings.

And for four years, community leaders, mayors and just plain folks have been calling for a commonsense solution that holds promise for individual homeowners, ravaged communities, and cities and towns alike: the write-down of the principle for underwater homes.

With this simple and somewhat elegant solution, principle and interest payments would be lowered, making payments not only reflective of real values but more importantly bringing them into line with what homeowners can afford. The benefits: homeowners could save their homes (into which most have already poured their life savings); neighbors' property values would end their free fall; communities would be safer; cities and towns would be spared the unnecessary (and ever more unaffordable) cost of extra policing, fire and demolition; and -- perhaps most important to the overall economy -- the housing market would stabilize.

Read the rest of the article at The Huffington Post

Fannie and Freddie Mortgage Write Downs – Another Bailout For Big Banks

Fannie and Freddie regulator Edward DeMarco, the acting Director of FHFA, is taking a lot of heat for his reluctance to write down first mortgages for underwater homeowners. But DeMarco is rightly pointing out that the push to write down the first mortgages is merely a form of protectionism for the four largest banks in the U.S. – JP Morgan Chase, Wells Fargo, Citigroup, and Bank of America.

But aren’t mortgage write downs beneficial for homeowners who are underwater?
What’s really happening here is not an attempt to help homeowners who find themselves with too much debt on their homes. As DeMarco points out, writing down senior first mortgage balances held by taxpayer-backed Fannie Mae and Freddie Mac makes no sense, when you consider that many of these homes also have second mortgages that are held by the four banks named above. In fact, these four banks are holding almost 50% of all of the second mortgages in the U.S. housing market. This is a lot of money currently showing as assets on bank balance sheets. If the first mortgages are supposed to be senior to a second mortgage, then why aren’t they considering writing down the second mortgages first?

Read the rest of the article at Realty Biz News

FTC cracks down on foreclosure-rescue scheme

The agency wins a court order shutting down a Santa Ana operation that charged struggling homeowners as much as $10,000 each to jointly sue mortgage firms.

The FTC said that at its request a judge this week shut down one of the alleged scams, a Santa Ana mortgage-relief operation headed by Sameer "Sammy" Lakhany, 31, of Chino Hills.

The operation — five companies and three websites controlled by Lakhany — took in more than $1 million from hundreds of consumers, according to an FTC lawsuit filed in U.S. District Court in Santa Ana.

His websites — HouseHoldRelief.org, FreeFedLoanMod.org and MyHomeSupport.org — were shut down on orders from U.S. District Judge Cormac J. Carney, who issued a temporary restraining order against the companies and froze their assets.

The websites, featuring republished news stories describing the mortgage industry's legal troubles, suggested that the operation was a nonprofit effort to help right wrongs suffered by borrowers, said FTC consumer protection attorney Mark L. Glassman.

Read the rest of the article at The Los Angeles Times

Churches see surge in foreclosures

"More and more churches are facing this problem," said the Rev. Jesse Jackson Sr., founder of the Rainbow PUSH Coalition civil rights advocacy group. Its 1,000 Churches Connected Project acts as a mediator between struggling churches and their lenders. Program Director Axel Adams said he's talked to about 40 churches in California and many more nationwide that are straining to make property payments.

"Churches are full of members who lost jobs, who face home foreclosures themselves," Jackson said. "Church is their place of refuge. If the refuge closes, they have no place to go."

Financial issues span denominations but often are most acute for small to mid-size evangelical churches that are relatively new and are located in areas hard hit by the economic downturn.

They are not unlike struggling homeowners: When the economy was booming, some churches took on extra debt to expand, rehabilitate or move to larger spaces. Risky lending fueled the situation.

Read the rest of the article at The San Francisco Chronicle

New Wave of Foreclosures Will Sink the Housing Market Rebound

The long-anticipated housing market rebound will hit a speed bump this year as the number of foreclosures rises again.

With January's mammoth $26 billion settlement between five major banks and a group of state attorneys general, foreclosures that had been held up for a year or more are now moving forward.

The spike in foreclosures will arrive just as other data, such as the 5.1% increase in new construction permits reported on Tuesday, had begun to point to a housing market rebound.

"We expect to see foreclosure-related sales increase in 2012, particularly pre-foreclosure sales, as lenders start to more aggressively dispose of distressed assets held up by the mortgage servicing gridlock over the past 18 months," Brandon Moore, CEO of RealtyTrac, told CNN Money.

Read the rest of the article at Money Morning

Foreclosure Relief for Millions Expanding Via Various Channels

The first quarter of 2012 has been flush with new or expanded efforts to assist homeowners facing foreclosure and compensate those who have been victims of unfair or deceptive lender practices.

A landmark $25 billion settlement between federal-state officials and the top five lenders is the largest effort to ease the U.S. foreclosure crisis. The settlement could affect as many as 2 million home loan borrowers.

Meanwhile, a separate review by regulators of foreclosures filed in 2009 and 2010 could touch the lives of 4 million borrowers. A deadline for those who can seek a review of their foreclosure has been extended to July.

Both efforts seek to right the wrongs borne of the housing bubble.

However, there are ongoing federal programs designed to reduce mortgage payments or refinance the loans of “underwater” homeowners. They either have been expanded or are about to be enhanced to assist a greater pool of Americans who could face foreclosure.

Here’s a rundown of the efforts by regulators and the Obama Administration to stem the tide of foreclosures:

Read the rest of the article at eCredit Daily

Watchdog says banks impeded foreclosure inquiry

Top banks impeded a federal inquiry into their foreclosure processes, according to a report released Tuesday, dragging their feet on turning over documents and blocking investigators' attempts to interview bank employees.

The inquiry led to the wide-ranging $25 billion mortgage settlement with the five largest mortgage servicers that was announced last month and filed in federal court on Monday.

But the banks hampered an early investigation into whether they were pursuing unlawful foreclosures through shoddy paperwork and lax controls, the inspector general's office at the U.S. Department of Housing and Urban Development said in its report.

Bank of America (BAC.N), for example, provided only excerpts of files, incomplete documents, and conflicting information to government investigators, and refused to provide some of its foreclosure policies.

It also limited employee interviews, and refused to let employees answer certain questions, the report said.

Read the rest of the article at Reuters

Fannie Mae, Freddie Mac Resistance To Principal Reduction Costs Taxpayers

After two years of bewildering futility, John and Linda DeCaro thought they had finally found a way to hang on to their home.

They could no longer afford their mortgage payments and had slipped into delinquency. They could not refinance to take advantage of low-interest rates because they were among the nearly 11 million American homeowners who are "underwater," meaning that they owed the bank more than their house was worth. Bank of America had already initiated foreclosure proceedings.

Then in the spring of 2011, a nonprofit lender, Boston Community Capital, presented a potential fix, one it has used to aid some 200 underwater borrowers in Massachusetts over the last two years. The bank would buy the DeCaros' home at market value -- about $87,000, which was barely half of their mortgage balance -- and then sell it back to them for a little more, providing a manageable loan. Bank of America affirmed the sale price as fair value.

But one powerful obstacle stood in their way: Freddie Mac, the government-controlled mortgage giant, owned the DeCaros' loan. Freddie has a policy of refusing to approve so-called short sales -- those where the purchase price is lower than the mortgage balance -- unless the buyer signs a legal document promising not to resell the property to the original homeowner. The document bars the buyer from even renting the home to the initial owner.

Read the rest of the article at The Huffington Post

The $25 Billion Mortgage Servicing Agreement : What About Non-Fannie Mae and Freddie Mac Loans?

The details of the recent Servicer settlement will have a noticeable impact on the values and prices of non-agency loans (i.e., loans not sold to either Fannie Mae or Freddie Mac, or insured by FHA).

Last Monday, the US Department of Justice, HUD, and 49 state attorneys general filed the $25 billion servicer settlement with Bank of America, JPMorgan, Wells Fargo, Citibank, and Ally for approval in the US District Court of DC.

Servicers will receive credits for every completed modification as well for other activities such as facilitating short sales. This means that these companies will receive "bonus points" for helping borrowers.

The banks are required to meet 75% of their prescribed modification targets within two years and 100% of their targets within three years or face monetary penalties.

Three banks -- Wells Fargo, Citigroup, and Ally -- have indicated that, at least for now, they will not be applying servicer settlement modifications to non-agency loans. Non-agency loans are often jumbo loans, or loans that fit into a particular portfolio. If that is the case, the effect of this headline-grabbing servicer settlement news on private-label securitizations serviced by these three banks will be limited.

Read the rest of the article at The Mortgage Reports

HARP Program : The Complete HARP II Eligibility Requirements

If you're underwater on your conforming, conventional mortgage, you may be eligible to refinance without paying down principal and without having to pay mortgage insurance.

Here are the details of the government's new 2012 HARP refinance program.

What Is HARP?

HARP was started in April 2009. It goes by several names. The government calls it HARP, as in Home Affordable Refinance Program.

The program is also known as the Making Home Affordable plan, the Obama Refi plan, DU Refi +, and Relief Refinance.

In order to be eligible for the HARP refinance program :

Your loan must be backed by Fannie Mae or Freddie Mac.
Your current mortgage must have a securitization date prior to June 1, 2009
If you meet these two criteria, you may be HARP-eligible. If your mortgage is FHA, USDA or a jumbo mortgage, you are not HARP-eligible.

Read the rest of the article at The Mortgage Reports

Bank of America to ‘rent’ foreclosures to homeowners in AZ, other states

Bank of America has announced a program that will let homeowners facing foreclosures stay in their homes as renters.

The "Mortgage to Lease" program will start as a limited pilot program for up to 1,000 homeowners in Arizona, Nevada and New York selected by the bank. The bank said that if the program proves successful, it could be expanded to the broader group of at-risk homeowners with BOA mortgages.

Homeowners can not apply to be part of the program at this time.

Those selected for this initial pilot program will be more than 60 days delinquent on their home loans, have high loan balances in relation to their current property value, have no other liens on their property, and have an income level high enough to afford the rent.

Read the rest of the article at KSLA

Tax Rebates Boost Bankruptcies, and Why That's Not So Bad

While saving up to declare bankruptcy sounds odd, that’s exactly what many people have had to do since the 2005 Bankruptcy Abuse Prevention and Consumer Protection Act was passed. Many families wait for their tax rebate to file for bankruptcy, and this trend has been increasing as costs related to filing have gone up.

Dr. Gross notes that bankruptcy, for all its negatives, can be an economic boon. Bankruptcy allows for renewed spending, he adds, acting as an economic stimulus. For these reasons, he says, “Lowering barriers to bankruptcy, as long as they don’t encourage excessive consumer borrowing, would be a win-win.”

Read the rest of the article at Forbes

Bankruptcy Filings Delayed Until Tax Refund Arrives

While some debate whether to save or spend their tax refunds, others are just waiting on the money so they can go totally broke.

New research from economists at Columbia University, the University of Chicago, and Washington University in St. Louis reveals that bankruptcy filings actually increase after Americans receive tax refunds. The issue: It costs money to file for bankruptcy and many Americans could not afford to pay the average of $1,477 in fees necessary, write economists Tal Gross, Matthew Notowidigdo, and Jialan Wang.

Read the rest of the article at The Huffington Post

Bankruptcies Hit People Challenging Health Insurance Rule

Facing “a very tight monthly budget” after the recession hurt his Michigan solo law practice, John Ceci has cut back on movies and restaurant meals, drives a 1996 Honda and has higher priorities than health insurance.

“I would prefer to purchase a new car rather than pay a monthly health-care premium,” Ceci said in a court affidavit after suing to block President Barack Obama’s health-care law, which requires most people to have insurance by 2014. “I cannot afford both.”

The recession hit Ceci hard enough that, 13 months before his March 2010 lawsuit to overturn the insurance requirement, he filed for bankruptcy relief from almost $120,000 of unpaid balances on 20 credit cards, according to court records.

As the U.S. Supreme Court prepares to review the health- care law next week, Ceci’s case is one of three lawsuits, filed by 11 individual plaintiffs, in which federal appeals courts have ruled on the insurance mandate. Four of the people who objected to getting health coverage, including Ceci, have gone to bankruptcy court to discharge debts they couldn’t pay, court filings show.

Read the rest of the article at BusinessWeek

National Mortgage Complaint Center Urges All US Bankruptcy or Consumer Attorneys to Join in Their Vital Initiative for Struggling US Homeowners That Will Grow Their Practices

National Mortgage Complaint Center is creating a vital national initiative to do everything possible to make sure every US homeowner struggling with a foreclosure, a possible mortgage work out or a loan modification finds competent local legal advice from a bankruptcy attorney, a bankruptcy law firm, real estate attorneys, plaintiffs attorneys, and/or law firms that have capabilities doing foreclosure defense, bankruptcy, mortgage work outs and/or loan modifications. The National Mortgage Complaint Center says, "At this moment we have the atmospherics of the Wild West, for homeowners facing a foreclosure, for homeowners attempting to get a loan modification or a mortgage workout. These individuals desperately need competent attorneys or law firms in every state and every top 200 US metro area to assist them. There is a very modest fee for attorneys or law firms that elect to join us in this effort, and we expect every participating attorney or law firm will charge their normal fees. We believe this will be an amazing win for homeowners because most are not even aware legal services like these even exist and, at the same time, we believe this could me a great time for bankruptcy attorneys, real estate attorneys or plaintiffs law firms to dramatically grow their practices. Everyone wins." For more information interested attorneys, or law firms are encouraged to call the National Mortgage Complaint Center anytime at 866-714-6466, or simply go to their web site and sign up for this vital initiative. http://NationalMortgageComplaintCenter.Com

Read the rest of the article at Times-Union

Friday, March 23, 2012

Watch out for credit counseling and repair companies!

I am a bankruptcy attorney in Phoenix ($995/Chapter 7) and, many of our bankruptcy clients come to us after having a bad experience with a credit counseling company.  Some of them are so bad the IRS has prepared a watchdog document about them. The FTC has compiled a list of signs that a credit counseling company is a scam. Congress passed a law providing protection for people from being victimized by these organizations, called the Credit Repair Organizations Act.

Very few of these companies are legitimate. Some are paid by creditors to provide this service, so they don't have your best interests in mind, but instead their interest is in getting you to pay the maximum possible amount to your creditors!

One red flag is if they require money upfront. The Credit Repair Organizations Act prohibits these companies from charging until after you have completed their services.

Another red flag is if the company doesn't offer you free advice and counseling, but instead forces you into a debt repayment plan immediately.

Any company that promises to get rid of all or most of the negative information in your credit report is not being honest. Credit rebuilding takes a long time.

Some credit counseling companies form as nonprofit 501(c)(3) organizations in order to avoid being accountable to credit counseling laws. The public is fooled into thinking since they are formed as nonprofits they must be more reputable! Ameridebt, organized as a nonprofit, was shut down by the FTC when it was discovered it had charged consumers over $170 million in hidden fees.

Watch out for companies that instruct you not to contact the three major credit reporting agencies, avoid telling you what your legal rights are, suggest that you apply for an EIN (Employer Identification Number) to use instead of your Social Security number, or tell you dispute everything regardless of what it is on your credit report.

Always check and see if the organization is listed with the Better Business Bureau and has a good rating. See how long it has been in business or whether it has suddenly appeared. If you have been victimized by a credit counseling company, contact your state Attorney General.

The vast majority of people who attempt credit counseling end up filing bankruptcy anyways. In order to file bankruptcy, you are required to take a credit counseling course anyways (which can be taken online in a few minutes). Unlike credit counseling services, you can rest assured that the bankruptcy process is completely governed by federal law (and in some states, some state law as well).


The Alexander Bankruptcy Law Firm provides low low cost Chapter 7 and 13 personal bankruptcies. $995 Chapter 7 or $2500 Chapter 13 bankruptcies plus court filing fee. Free consultation with a compassionate attorney who will handle your case personally. Call 24/7, available to meet with you around your schedule. 602-910-6812. Conveniently located in Central Phoenix along the Camelback corridor.

Sunday, March 18, 2012

Phoenix-area homebuyers squeezed out by investors

Many potential homebuyers who sat on the sidelines watching metro Phoenix's house prices fall during the past five years are back in the market, ready to take out a mortgage and move in.
But many are finding they cannot buy.
Armed with a preapproved mortgage and even enough cash for a hefty down payment, they bid on foreclosed homes and houses up for short sale -- but are outbid by investors buying houses for cash on the spot.

Read the rest of the article at AZCentral

Arizona No. 3 in foreclosures over past year, but rate drops

New CoreLogic data shows Arizona had the third most home foreclosures among states in the past 12 months.
The number was 65,000 between January of 2011 and the same month this year -- the same as Michigan. California had the most completed foreclosures with 155,000, followed by Florida with 86,000. Arizona, however, has dropped out of the top five states in foreclosure rate. Arizona’s rate stands at 2.6 percent, below the national average of 3.3 percent.
According to CoreLogic the highest foreclosure rate is in Florida, where 11.8 percent of homes with a mortgage are in foreclosure. Florida is followed by New Jersey (6.4 percent), Illinois (5.3 percent), Nevada (5 percent) and New York (4.7 percent). Both foreclosure inventory and 90-day delinquency rates are down in Arizona from a year ago.

Read the rest of the article at Phoenix Business Journal

More Arizonans are filing for bankruptcy without legal help

As the national and local economies continue to drag along the bottom, bankruptcy filings continue to pile up.
Overall bankruptcy filings in the United States have soared by nearly 100 percent over the last five years, according to a report from the Administrative Office of the U.S. Courts.
At the same time, the report notes, pro se bankruptcy filings, those that individuals file without a lawyer, have grown 187 percent.
“I think a lot of it has to do with costs,” said Eric S. Sparks, a Tucson-based bankruptcy attorney.
Sparks said the average Chapter 7, the most common form of bankruptcy, can cost a person $2,500 or more.

Read the rest of the article at Inside Tucson Business

The Banks Win, Again

Last week was a big one for the banks. On Monday, the foreclosure settlement between the big banks and federal and state officials was filed in federal court, and it is now awaiting a judge’s all-but-certain approval. On Tuesday, the Federal Reserve announced the much-anticipated results of the latest round of bank stress tests.

How did the banks do on both? Pretty well, thank you — and better than homeowners and American taxpayers.

That is not only unfair, given banks’ huge culpability in the mortgage bubble and financial meltdown. It also means that homeowners and the economy still need more relief, and that the banks, without more meaningful punishment, will not be deterred from the next round of misbehavior.

Read the rest of the article at The New York Times

States diverting foreclosure settlement funds

The landmark foreclosure deal reached last month was filed in federal court Monday, and state governments are already planning how they'll use the money. Unfortunately, it won't all be going to distressed homeowners.

When it was announced, the pact was criticized for not offering enough help to homeowners. It turns out they may not even get the meager amount that was first discussed.

Each state's portion of the settlement, which in its entirety is reported to be somewhere between $25 and $26 billion, is supposed to be used for principal reductions and refinances. But with states struggling to close budget gaps and fund programs, many governments are planning to divert money from the settlement to other areas of their budgets.

Read the rest of the article at CBS News

How short sales stack up against foreclosures

Short sales and foreclosure are two things that can cause confusion to many people whenever their real estate properties are going through difficulties.

There are people who say foreclosures are better, while some say short sales are better.

Both have their valid reasons why they think one is better, but in order to give you more detailed information, I will show you the difference between these two very common real estate terms.

Read the rest of the article at Gannett HTR News

U.S. Foreclosure Fraud Settlement Documents Highlight Lawlessness of the Banks

On Monday, the settlement between five major banks and the federal and state governments of foreclosure-related fraud charges was filed in federal district court in Washington, DC. The agreement must be approved by the court to take effect.

The settlement, reported to be worth $25 billion, was announced February 9 and hailed by President Obama as a serious rebuke to the banks and boon to distressed homeowners.

It is nothing of the kind. It quashes investigations by 49 state attorneys general into wholesale fraud and illegality committed by the five biggest mortgage servicers in their rush to foreclose on homeowners and seize their houses. The abuses first surfaced in the fall of 2010, amid reports of “robo-signing” of foreclosure papers and court submissions.

Read the rest of the article at The Market Oracle

How This Foreclosure Victim Just Scored An $18 Million Settlement

"Look closely at the paperwork if you ever get foreclosed on. It could pay off," says Alexander Eichler at The Huffington Post. It sure did for Lynn Szymoniak, a struggling homeowner who rose to national prominence by exposing a "robo-signing" scandal in which big banks forged documents to push through thousands of foreclosures. With Szymoniak's help, five banks eventually agreed to a "landmark" $25 billion settlement with the government, which was formally concluded this week. As a whistle-blower in a government investigation, Szymoniak was entitled to a chunk of the settlement — a pretty huge chunk actually, coming out to $18 million.

Read the rest of the article at Business Insider

Foreclosures rise in 26 states

Foreclosure activity surged last month across about half of the nation's states, as banks tackled a backlog of homes with mortgages that had gone unpaid yet remained in limbo due to delays stemming from foreclosure-abuse claims.

The increase occurred across 26 states where the courts supervise the foreclosure process. In contrast, the 24 states where the courts do not play a role in the process saw activity decline in February, foreclosure listing firm RealtyTrac Inc. said Thursday.

While uneven, the pace of foreclosures is accelerating following a $25 billion settlement reached last month between the nation's biggest mortgage lenders and state officials. The settlement was over the industry's alleged foreclosure abuses.

Read the rest of the article at the Christian Science Monitor

Foreclosures ‘stacked' against borrowers

California Attorney General Kamala Harris recently unveiled a legislative package aimed at ending mistreatment of homeowners and tenants caught in the cross hairs of the foreclosure crisis. The plan includes measures to guarantee of a single point of contact for questions to their lenders about their mortgage, the restriction of “dual-track” foreclosures, and an increase in penalties for “robo-signing.”

Read the rest of the article at the Orange County Register

The Biggest Bankruptcy in American History

First there was Harrisburg, Pennsylvania. Then, Jefferson County, Alabama. Now, hold onto your hats folks -- we could be just days away from seeing the biggest municipal bankruptcy in U.S. history.

In California, the city of Stockton boasts a population of almost 300,000 ... and a fiscal emergency. The first number means that if Stockton winds up filing for Chapter 9 bankruptcy protection, as its officials are threatening to do, it will be the most populous U.S. municipality ever to declare bankruptcy. And the fiscal emergency? Such problems are going to become increasingly common as city after city follows the downward path that Harrisburg, Jefferson Co., and Stockton have blazed.

Read the rest of the article at Daily Finance

Bankruptcy of Native American ‘Tribe’ Raises Intriguing Legal Questions

The Western Mohegan Tribe & Nation of New York has filed for bankruptcy protection.

Against the Native American community’s grip of sovereign rights, the request for protection from a federal court would be a jarring development—that is, if only the group seeking protection were one of the 566 tribes that have been officially recognized by the U.S. government.

In fact, the Western Mohegan Tribe failed to get that federal recognition after its leader, Ronald A. Roberts, known as Golden Eagle, submitted a request to the Interior Department’s Bureau of Indian Affairs 15 years ago. (Note: At one point, Roberts had also sued New York state, asking for two centuries worth of rent for thousands of acres of public land.)

Read the rest of the article at The Wall Street Journal

Harrisburg leaders believe bankruptcy is inevitable for city

Q: Where do things stand in the city now?
Dan Miller: We’re going into bankruptcy. The question is will we have the assets or won’t we have the assets [when we do]. Just because we adopt a plan, that’s not going to solve the problem. I think [receiver] David Unkovic knows the same thing.

Q: How significant was the city’s general obligation default on March 15?
Miller: I suspect we’re not paying any more debt for the rest of the year. I’m not the decision maker, but if you’re not going to pay it now, you’re not going to pay it anymore. Unkovic is projecting a $9.5 million deficit. I’m calculating $15 million. We’re both acknowledging it’s a big deficit for this year. Our general debt service is about $11 million a year. Even if you sell the assets, it’s not going to impact the budget. We’re out of money.

Read the rest of the article at Penn Live

Owe The IRS? TaxMasters Bankruptcy Shows Why Not To Get Help From TV Pitchmen

If you’ve got problems paying the Internal Revenue Service, don’t look for help from the ads on late night cable television. That’s one of the lessons from an SEC filing Friday by TaxMasters Inc., disclosing the publicly-traded company will file for voluntary bankruptcy. As ABC reported last April, even after Houston-based TaxMasters had been accused of deceptive business practices by the attorney generals of Texas and Minnesota, it continued to buy millions of advertising on CNN, FoxNews and other cable channels. (The ads featured Patrick Cox, the red-bearded TaxMasters CEO, assuring potential clients that his staff of tax pros, including former IRS agents, had helped “many good people just like you.”)

Moreover, this is just the latest bankruptcy by a “tax resolution” service that advertised heavily—and made allegedly exaggerated claims–on cable TV. JK Harris & Co., a South Carolina-based firm which once operated hundreds of locations in dozens of states, filed for bankruptcy last October after being sued by both states and unhappy customers. Last December, it ceased operations and went into liquidation, leaving 5,400 active clients in the lurch. Harris’ former clients, including those who won legal judgments against it, aren’t likely to see any money from the liquidation. (Another firm, Resolute Tax Services, has purchased access to JK Harris’ customer list; according to the privacy terms set by the bankruptcy court, customers must contact Resolute and agree to the transfer of their files, at which point Resolute says it will offer them a “credit of up to 50%” of the fees they paid JK Harris.)

Read the rest of the article at Forbes

Friday, March 2, 2012

Mortgage giant Fannie Mae asks government for almost $4.6 billion after posting 4Q loss

Mortgage giant Fannie Mae said Wednesday that it lost money in the fourth quarter and is asking the federal government for nearly $4.6 billion in aid to cover its deficit.

Washington, D.C.-based Fannie said it lost roughly $2.4 billion in the October-December quarter, stung by declining home prices. Revenue was about $4.5 billion.

The government rescued Fannie and sibling company Freddie Mac in September 2008 to cover their losses on soured mortgage loans. Since then, a federal regulator — the Federal Housing Finance Agency — has controlled their financial decisions.

Taxpayers have spent more than $150 billion to prop up Fannie and Freddie, the most expensive bailout of the 2008 financial crisis. The government estimates that figure could top $259 billion to support the companies through 2014 after subtracting dividend payments.

Fannie has received more than $116 billion so far from the Treasury Department, the most expensive bailout of a single company.

Read the rest of the article at The Washington Post

Housing Still Drowning in Underwater Mortgages

$715 billion is a lot of money.

That’s the estimated amount of “underwaterness” hobbling the housing sector in the fourth quarter. A mortgage is considered underwater when the amount of the loan is larger than the value of the underlying property, resulting in a negative equity position for the owner.

The more negative equity a homeowner has, the more likely the owner will default. The resulting foreclosures are a negative rippling through the entire recovery.

As Federal Reserve Chairman Ben Bernanke told Congress this week, “problems in U.S. housing and mortgage markets have continued to hold down not only construction and related industries, but also household wealth and confidence.”

Read the rest of the story at The Wall Street Journal

Rates for 30-Year Fixed Mortgages Fall to 3.9%

Mortgage rates in the U.S. declined as more Americans sought financing for home purchases.
The average rate for a 30-year (NMCMFUS) fixed loan fell to 3.9 percent in the week ended today from 3.95 percent, Freddie Mac (FMCC) said in a statement. The rate dropped to 3.87 percent earlier last month, the lowest in Freddie Mac records dating to 1971. The average 15-year (NMCM15US) rate decreased to 3.17 percent from 3.19 percent, according to the McLean, Virginia-based mortgage- finance company.
Mortgage applications for house purchases jumped 8.2 percent in the period ended Feb. 24, the most in six weeks, according to a Mortgage Bankers Association index. The Washington-based group’s refinancing gauge fell 2.2 percent. While housing demand is improving, sales have been restrained by tight credit and a jobless rate holding above 8 percent.
“Affordability has increased dramatically as a result of the decline in house prices and historically low interest rates on conventional mortgages,” Federal Reserve Chairman Ben S. Bernanke said yesterday in testimony to the House Financial Services Committee in Washington. “Unfortunately, many potential buyers lacked the down payment and credit history required to qualify for loans. Others are reluctant to buy a house now because of concerns about their income, employment prospects and the future path of house prices.”

Read the rest of the article at Bloomberg

Valley home to go on block, cent by cent

Penny auctions are popular for selling everything from gift cards to cars at discount prices. Now in metro Phoenix, a former foreclosure home is scheduled be auctioned off cent by cent.

Real-estate agent Todd Talbot plans to hold an online penny auction for a Glendale home next week. The house at 6214 W. Acoma Drive, Glendale, was purchased for $81,000 in January. Talbot said he spent an additional $20,000 fixing it up.

He said as with most penny auctions, the potential to make money is the charge for bidding. Bidders must pay 60 cents for every penny they up the bid on the home.Talbot believes this is the first house in Arizona, and potentially in the country, to be auctioned off penny by penny. Bidders are allowed to bid only one cent at a time. So he and his partner have the potential to make money off the 60-cent fee per bid, if there are enough bids.

Read the rest of the article at The Arizona Republic

A third of the time, lenders don’t have paperwork in foreclosure mediation sessions

When homeowners headed for foreclosure sit down with their bank to see if they can work out an agreement, state law requires the lender come equipped with documents proving who owns the home, among other things. In one-third of those mediation meetings, however, banks failed to produce the required documents, according to an analysis of the last six months of 2011.

The figures appear to provide statistical evidence to support what many homeowners have claimed — that banks aren’t negotiating in good faith to help them stay in their houses.

Read the rest of the article at The Las Vegas Sun

Fannie and Freddie drop the ball

Home prices plunged by almost a third in major U.S. cities after the housing bubble burst, and the glut of foreclosures has kept the market from rebounding. The seemingly relentless pace of foreclosures also is dampening the demand for new homes, which is one reason construction industry unemployment remains significantly higher than the rate for the rest of the economy.

State and federal officials have tried to delay or avert foreclosures, with limited success. Their most recent, and promising, effort is a settlement that requires the nation's five leading banks to forgive some of the debt of borrowers in hardship, provided that the write-downs would cut the banks' losses over the long haul. But the two biggest players in mortgage finance, Fannie Mae and Freddie Mac, have refused to follow suit. It's a shortsighted position that could lead to billions more dollars in losses from unnecessary foreclosures.

Read the rest of the article at The Los Angeles Times

Pressure Grows on Fannie and Freddie to Cut Principal on Loans

California’s attorney general, Kamala D. Harris, has ratcheted up the pressure on Fannie Mae and Freddie Mac to allow debt reduction on their home loans by asking the mortgage finance giants to halt foreclosures in the state.

Edward J. DeMarco, the regulator who controls Fannie Mae and Freddie Mac.
In a letter to Edward J. DeMarco, the regulator who controls Fannie and Freddie, Ms. Harris asked that foreclosures be suspended until his agency, the Federal Housing Finance Agency, completes a promised review of its policy forbidding debt reduction for delinquent homeowners who owe more than their home is worth.

Her letter, which was sent on Friday and disclosed on Monday, requests “a thorough, transparent analysis of whether principal reduction is in the best interest of struggling homeowners as well as taxpayers.”

Mr. DeMarco has come under increasing pressure to allow debt forgiveness, also called principal reduction, since the announcement of a multibillion-dollar foreclosure abuse settlement that requires banks to write down mortgage debt for some eligible homeowners. Loans backed by Fannie and Freddie — more than half of all outstanding mortgage loans — are not eligible for relief under the settlement.

Read the rest of the article at The New York Times

Fannie Mae Begins Marketing Foreclosed Homes as Rentals

Fannie Mae plans to sell nearly 2,500 foreclosed properties to investors in the first phase of an initiative to aid the U.S. housing market through bulk sales of distressed homes.

The company’s regulator, the Federal Housing Finance Agency, on Monday released details of a planned pilot transaction under which the government-controlled mortgage-finance firm will offer the properties to investors in bulk and require those investors to rent them out.

The program is designed to test the market for larger sales of foreclosed properties that haven’t yet been converted to rentals. Fannie is starting off by selling homes that were already rented out when the company acquired the property through foreclosure.

Investors and nonprofit groups will be able to bid on homes in eight locations, including Los Angeles and Riverside, Calif., which account for around 23% of the units being marketed, and Atlanta, which accounts for 21%. The other locations include Southeast Florida (15%), Phoenix (14%), Las Vegas (9%), Florida’s west coast (7%), Central and Northeast Florida (7%), and Chicago (4%).

Read the rest of the article at The Wall Street Journal

'How we're losing our multi-million dollar home'

Like millions of Americans, Joanne and John Buchanan are facing foreclosure. But at a value of more than $2 million, the home they stand to lose isn't your average delinquency.
For the Buchanans, it's the dream house they built from the ground up in a resort community near Breckenridge, Colo., in 2003. It took them almost two years and about $2.2 million to build -- and soon they will have to move out.
For years, homeowners at the high end of the housing market were able to postpone the foreclosure process, but now multi-million dollar homes are becoming more commonplace in America's foreclosure pipeline. In fact, America's wealthiest families are now losing their homes to foreclosure at a faster rate than the rest of the country, according to RealtyTrac.

Read the rest of the article at CNN

Bankruptcy’s Odd Twist With Union Contracts

The pilots union has sued AMR, the parent company of American Airlines. And the complaint, at the end of this post, illustrates nicely one oddity in the bankruptcy code with regard to collective bargaining agreements — a point that is relevant in the many other cases pending currently that involve questions of unionized employees.

In bankruptcy, a debtor has the choice to assume (perform) or reject (breach) any of its contracts. The benefit of rejecting a contract is that that the code backdates the breach to right before the bankruptcy filing. This means that the counterparty’s claim for damages gets paid along with other unsecured claims — at cents on the dollar.

In Chapter 11 – and only in Chapter 11 – this rule gets changed a bit for collective bargaining agreements. After a Supreme Court opinion in the 1980s that held that collective bargaining agreements were contracts like any other for bankruptcy purposes, Congress enacted section 1113. In short, the section provides that rejection can only happen after the debtor has tried to negotiate with the union.

But section 1113 provides that the court can also order an intermediate step: Namely, “if essential to the continuation of the debtor’s business” the court can permit the debtor to make changes to the collective bargaining agreement, while still keeping the agreement in force.

Read the rest of the article at The New York Times

Stroller Giant Maclaren Declares Bankruptcy. But Is It a Scam?

"Contributing Design Editor, The Wall Street Journal. Interior designer. Founder of NettoCollection, ex-Creative Director of Maclaren Nursery by David Netto."
So reads the Twitter bio of acclaimed designer David Netto, the end bit indicating the residual fallout from his bombshell tweet on Feb. 27 announcing that he had "resigned as creative director of maclaren nursery today and am disassociating myself from the company." The abrupt resignation as creative head of the British stroller brand's nursery division came three days after Maclaren US ever so quietly announced it was seeking Chapter 7 bankruptcy protection.
Yes, the more-affordable-than-a-Bugaboo stroller brand that also appealed to celeb parents such as Brad and Angie, that The New York Times once compared to swine flu as a "major health threat" for jamming New York's gentrified Brooklyn sidewalks, has quietly filed for Chapter 7 and apparently, forgive the pun, folding. What the hell happened that Netto forcibly ejected himself from the chic crib he had constructed for the British-owned Maclaren?

Read the rest of the article at BrandChannel