Proposed Bill to Prevent Foreclosure and Speed Up Short Sale Process
To avoid losing homes to foreclosure due to long response times for short sale transactions, three senators introduced legislation to speed up the short sale process.
Senators Lisa Murkowski (R-Alaska), Scott Brown (R-Massachusetts), and Sherrod Brown (D-Ohio) proposed the bill addressing the issue of short sales timelines on February 17. A short sale is a real estate transaction where the homeowner sells the property for less than the unpaid balance with the lender’s approval.
“There are neighborhoods across the country full of empty homes and underwater owners that have legitimate offers, but unresponsive banks,” said Murkowski. “What we have here is a failure to communicate. Why don’t we make it easier for Americans trying to participate in the housing market, regardless of whether the answer is ‘yes,’ ‘no’ or ‘maybe?’”
The legislation, also known as the Prompt Notification of Short Sale Act, will require a written response from a lender no later than 75 days after receipt of the written request from the buyer.
The lender’s response to the buyer must specify acceptance, rejection, a counter offer, need for extension, and an estimation for when a decision will be reached. The servicer will be limited to one extension of no more than 21 days. The bill will also allow the buyer to be awarded $1000, plus “reasonable” attorney fees if the Act is violated.
According to a release from Short Sale New England, short sale homes do not bring down neighboring home values like foreclosed homes do, and 83 percent of short sale buyers are satisfied with their purchase, according to a 2012 Home Ownership Satisfaction Survey conducted by HomeGain.
“The current short sale process can be time consuming and inefficient, and many would-be buyers end up walking away from a sale that could have saved a homeowner from foreclosure,” said Moe Veissi, president of the National Association of Realtors. “As the leading advocate for homeownership, realtors are supportive of any effort to improve the process for approving short sales.” Equi-Trax released a survey last year on the issues real estate agents face when completing short sales. Guy Taylor, CEO at Equi-Trax, said 71.9 percent of respondents reported that a short sale can take four to nine months to complete, and they think that is simply too long.”
The survey also found that 18.2 percent of deals require less than three months to complete, with 10 percent requiring more than 10 months. When agents in the survey were asked to how the short sale process can be improved, 57.6 percent said lenders should take less time to close transactions, 14 percent said borrowers should be better educated about short sales, and 40.4 percent said both of these changes are necessary to improve the process. In April 2011, a similar bill was introduced by Reps. Tom Rooney (R-Florida) and Robert Andrews (D-New Jersey), but this version requested a response deadline of 45 days instead of 75 from lenders. The legislation never came up for debate before a House committee.
A New Study Shows How To Convert Foreclosures into Rental Properties
Las Vegas, Nv - Lewis Ranieri, the co-inventor of the mortgage-backed security, authored a research paper with University of California economist Kenneth Rosen that lays out the case for using federal entities to support private investors who are already converting foreclosed properties into rentals.
This Foreclosure to Rental model can more than likely be adapted into every market the United states currently offers. Mr Ranieri and Mr. Rosen have chosen the top ten markets where their research could benefit greatly. The cities listed are Chicago, Denver, Detroit, Oakland, Seattle, Minneapolis, and Los Angeles. The reasoning behind why these cities were picked is rather quite simple. These cities have a very high rental condition and high levels of bank-owned foreclosures.
Las Vegas, is not well suited yet because we have poor rental fundamentals despite a glut of bank-owned inventory. No matter what our city makes it's way on to every list created, Good or Bad. It just so happens that Las Vegas is one of the worst housing market in the United States, as well as having the highest unemployment rates.
The paper argues that existing industry and government effort to modify mortgages, while necessary, won’t alone be enough to deal with the problem of already vacant properties and those that may not qualify for modifications.
So why is the government needed? There’s two reasons: First, Fannie Mae, Freddie Mac, and the Federal Housing Administration sit on nearly half of all foreclosed properties, making them key sellers to investors that are converting properties into rentals. Second, Mr. Ranieri says investors could soak up the overhang of distressed properties even faster if Fannie or Freddie expanded their investor financing programs.
The paper includes a series of other interesting ideas that build on the rental-conversion idea:
• Employ a “rent-to-own” option that would allow tenants to allow some tenants to ultimately purchase their rental homes. Mr. Ranieri has already employed that option through his company, Selene Finance, which invests in distressed loans and homes.
• Raise the ceiling on the number of loans that Fannie and Freddie will guarantee to a single buyer. Currently, those limits are set at 10 and four, respectively, but Mr. Ranieri has argued that investors who make large down payments of 30% or 35% should be able to take out 25 mortgages. That would allow smaller investors to get more involved in repairing their local markets, even as federal officials consider structured sales of bulk properties to larger outfits.
• Change appraisal rules for investor purchases to evaluate the value of properties based on the rental income, rather than the traditional metric of “comparable sales.”
Other influential housing analysts, including Laurie Goodman of Amherst Securities, have also strongly backed policies
But the idea remains unpopular with the National Association of Realtors and major real-estate brokerages, which say that foreclosed properties are selling briskly and don’t need to be taken off the market.
Many of Las Vegas residents will not benefit from the $25 billion bank settlement
Las Vegas, Nv - Naturally, federal government officials are getting out the confetti over the recent $25 billion settlement with five of the nation’s top mortgage lenders over abusive practices that led to millions of foreclosures nationwide.
But in Nevada, where the foreclosure crisis is at its worst, the “benefits” of the money are far less encouraging. Distressingly, only a small fraction of those underwater in their homes will be eligible for the refinancing provided under the settlement. Worse, those who have had their homes foreclosed on would receive only $2,000 apiece—for many homeowners in the Valley, not even enough to pay a month’s mortgage installment.
Nasser Daneshvary, director of the Lied Institute for Real Estate Studies at UNLV, says that of the nearly 400,000 Nevadans underwater, only about 22,000 will be eligible for refinancing, adding that the nation’s housing crisis will only improve once the government loans provided by Freddie Mac and Fannie Mae—approximately 60 to 70 percent of Nevada’s loans—are negotiated down. “Currently they’re doing nothing,” he says.
Still, Daneshvary says the amount of money earmarked for Nevada—nearly $2.3 billion—is an encouraging sign. “We have 1 percent of the U.S. population, but we’re getting 6 percent of this money,” he says. And while 22,000 homeowners is a small percentage of the total, it’s a start. “A refinancing which saves you money every month gives you hope so that you maintain your payments, hoping the market eventually comes back.”
Settlement offers help for Nevadans who faced foreclosures
Las Vegas, NV (KTNV) -- Las Vegas is one of the hardest-hit areas in the country when it comes to foreclosures, and residents are wondering how the new national settlement may help them.
There are still many questions regarding how the payout will reach those who need it most, and some worry that it's already too late.
"I went to home modification twice," James Miller, a Las Vegas resident who lost his battle with the banks, said. "And they say, 'we'll see what we can do about it.' Nothing happened."
Miller said he paid cash for his house, but was advised to take out a loan for $182,000. He couldn't keep up with the payments, and despite trying to work with Bank of America, he says they took over his home in August of 2011.
"It was our home," Miller said. "My wife was so aggravated, she had a stroke and died. That's not going to bring her back, nothing will bring her back, but I'd like to get my home back."
The government announced a $25 billion deal reached between 49 states and the nation's five largest banks on Thursday.
Those lenders were accused by the government of a long list of abuses- among them, robo-signing. Under this deal, about 1 million homeowners under water with their mortgages will have their debt reduced by lenders or be able to refinance at lower rates.
Another 750,000 Americans who lost their homes in the last three years will get a check for about $2,000.
Unsure on whether he qualifies for help in this settlement, Miller said he intends to find out.
"I'm 80 years old, and I got nowhere else to turn," he said.
Critics say the settlement will only help a small fraction of the millions of homeowners who are drowning under their mortgages, and it won't move anyone back into the home they lost to foreclosure.
The state Attorney General said Nevada will receive about $1.3 billion in benefits from loan modifications and other relief.
Sen. Reid hosting foreclosure workshop in Las Vegas this weekend!
Las Vegas, NV (Valley West Mortgage) -- Sen. Harry Reid's office will host a home in Las Vegas at the Financial Guidance Center from 10 a.m. to 4 p.m. Saturday, Feb. 11.
Struggling homeowners with a Bank of America or Wells Fargo loan in Nevada who attend the clinic will have the chance to sit down with a HUD-approved housing counselor and a representative from Bank of America or Wells Fargo.
Those who are interested in attending must RSVP by sending an email to email@example.com or by calling Sen. Reid's office at 702-388-5020.
Homeowners must also bring the following documents with them to the clinic:
-- Copies of pay stubs from the past two months;
-- Copies of bank statement from the past two months;
-- If self-employed, the most recent Profit and Loss Statement and a copy of the last full tax return with all schedules;
-- Letter of explanation of the hardship they are currently experiencing;
-- Signed copies of 2009 and 2010 tax returns.
The Financial Guidance Center is located at 2650 S. Jones Blvd.
More Nationwide mortgage dels are headed to state officials
Las Vega, Nv - An early draft settlement between the nation's major banks and U.S. states over deceptive foreclosure practices has been sent to state officials for review.
Many home owners have lost their homes and will not benefit from the possible $1,800 check, assuming that the settlement is for $25 billion dollars, that will show up by mail. 750,000 people would be likely to receive a check. That is not the surprising part.
The surprising part about this settlement is how it just might re-form the mortgage guidelines for good. This could make it easier for those at risk of foreclosure to restructure their loans. Roughly 1 million homeowners could see the size of the mortgage become lowered.
Five major banks - Bank of America, JPMorgan Chase, Wells Fargo, Citibank and Ally Financial - and U.S. state attorneys general could adopt the agreement within weeks, according to two officials briefed on the discussions. They spoke on condition of anonymity because they are not authorized to discuss the agreement publicly.
Our current President Barack Obama will address this issue in his 2012 State of the Union Address on the 24th of January.
The settlement would only apply to privately held mortgages issued between 2008 and 2011, not those held by government-controlled Fannie Mae or Freddie Mac. Fannie and Freddie own about half of all U.S. mortgages, roughly about 31 million U.S. home loans.
As part of the deal, about 1 million homeowners could also get the principal amount of their mortgages written down by an average of $20,000. One in four homeowners with a mortgage - or roughly 11 million people - owe more than their home is worth. These so-called "underwater" borrowers have little chance at refinancing.
Democratic attorneys general are meeting Monday in Chicago to discuss the deal with Housing and Urban Development Secretary Shaun Donovan. Republican attorneys general will be briefed about the deals via conference call later in the day.
Under the deal:
- $17 billion would go toward reducing the principal that struggling homeowners owe on their mortgages.
- $5 billion would be placed in a reserve account for various state and federal programs; a portion of that money would cover the $1,800 checks sent to those homeowners affected by the deceptive practices.
- About $3 billion would to help homeowners refinance at 5.25 percent.
Negotiations have been dragging on for more than a year over fraudulent foreclosure practices that drove millions of Americans from their homes during the housing crisis.
In October 2010, major banks temporarily suspended foreclosures following revelations of widespread deceptive foreclosure practices by banks. Discussions then began over a national settlement.
But some states have disagreed over what terms to offer the banks. In September, California announced it would not agree to a settlement over foreclosure abuses that state and federal officials have been working on for more than a year.
New York, Delaware, Nevada and Massachusetts, which sued five major banks earlier in December over deceptive foreclosure practices, have also argued that banks should not be protected from future civil liability. The deal will not fully release banks from future criminal lawsuits by individual states.
And both sides have also fought over the amounts of money that should be placed in the reserve account for property owners who were improperly foreclosed upon. Many of the larger points of the deal, including a $25 billion cost for the banks, have long been worked out, officials say.
Last month the Las Vegas City Council passed a Home Upkeep Ordinance to all Lenders that requires lenders to upkeep their properties on foreclosed homes in holding, or face some pretty steep penalties. So far the last 2 months in Las Vegas has brought some amazing changes to the once "Worst Housing Market ANYWHERE".
The White House Support Gained on Forclosure Halt, No on Moratorium
Secretary Robert Gibbs of the White House mentioned today that the Obama Administration will accept the probe into the faulty foreclosure proceedings, but against a moratorium.
This response hopefully will prevent the consequences of a widespread foreclosure freeze, while allowing banks such as Bank of America to “probe” the incidents relating to the 'robosigners', employees/agents who signed off on hundreds or thousands of foreclosure documents due to their lack of due-diligence to follow protocol.
Bank of America Halts Foreclosures Across U.S
Last Week Bank of America halted foreclosures on homes across the country for the purposes of double checking improperly filed paperwork for tens of thousands cases. Among Bank of America Ally’s Financial’s GMAC Mortgage unit, JPMorgan Chase also announced similar plans.
Some say that the Bank felt the need to review improperly filed paperwork due to pressure from State Attorney General and other public officials inquiring about the accuracy of foreclosure documents.
Dan Fram said “We feel the need to address that and demonstrate that our process is accurate”.
So, with this being said, if you are a Bank of America Borrower and are thinking of foreclosing, it may take weeks, months, who knows. We’re hoping that once they cleanse the foreclosure paperwork, they’ll also streamline the foreclosure process making foreclosures happen faster.