Bay Area Resource’s First Educational Distressed Homeowner Event Of 2012

A spirited group of about 18 homeowners, in addition to viewers watching through the live webcast, attended Bay Area Resource’s first Educational Distressed Homeowner event of 2012 on Saturday. The spirited group received straightforward, no BS answers from the professional panel about various tropics about loan modifications (or why they haven’t received answers from their respective banks), tax consequences and short sales.

State Senator Leland Yee made an appearance and spoke to the crowd about his continuing effort to find solutions to the ongoing problem of distressed properties in his 8th Senate District.

The panel which included two HUD certified counselors, CPA, two bankruptcy attorneys, realtor, mortgage lender and a real estate attorney offered a slew of updates and useful info. Some of the highlights included: a discussion about the new HARP program guidelines which allow higher LTV limits for underwater homeowners who wish to re-finance as well as the introduction of “Kill Your 2nd” which offers a new strategy for homeowners to eliminate their 2nd loan while keeping their home.

The big takeaways from the group ranged from being proactive, doing due diligence when seeking professional help, be wary of new homeowner scams and not being ashamed to ask for assistance.

Bay Area Resource Distressed Homeowner Educational Forum Event Tomorrow In San Francisco

Just a quick reminder or in case you hadn’t heard the BayAreaResource distressed homeowner educational forum event is tomorrow January 28, 2012 12-3 pm. For last minute registration click here.

We listed some of the topics to be discussed:

The panel shall be divided into two main sections:

1-options to keep your home

2-options to exit your home with the least amount of financial burden

Section A

Keep your home

1- reinstatement
2- refinance (with new HARP guidelines)
3- kill your 2nd

INTRODUCTION BY SENATOR LELAND YEE

Section B

Loss mitigation

4-Forbearance
5 -Repayment plan
6- Loan mod
7-Tax consequences of loan mod
8-Bankruptcy chapter 13

Section C

Options to Sell

9 – Conventional sale (not underwater but behind in payments)
10- Short sale
11 – Possible tax consequences of short sale
12- Deed in lieu
13- Bankruptcy Chap 7
14 – Foreclosure

Foreclosure Review Scam Warning

We could see these scam artists from a mile away. We reported a few weeks ago about the independent foreclosure reviews as part of the mandate to major mortgage servicers. These reviews come from the Office of the Comptroller of the Currency (OCC) and the Federal Reserve.

Not long after, we learned about several independent review scams.

These independent foreclosure reviews started in November. Eligible borrowers should have received a letter by the end of 2011 detailing the process.

Unfortunately, scam artists have also contacted consumers and offered to conduct an “independent foreclosure home loan review” or a “securitization review” for a fee. Like the loan mod scams of a few years ago, beware of anyone who wants payment to assist with an independent foreclosure review or any other foreclosure prevention program.

Loan Modifications Down – And What Bank Has The Highest Number Of Redefaults?

Did someone mention loan mods? That is so 2010.

Are banks actually doing loan modifications? Hardly. Moody’s Investors Service just reported that servicers have worked through most of their delinquencies and modifications continue to decline. Last year sevicers quickly ditched many of the loan mod strategy for loss mitigation alternatives like short sales and now quickly gaining momentum the deed-in- lieu’s

Moody’s calculated a decline in “Total Cure and Cash Flowing,” measuring successful loss mitigation efforts in the third quarter. We actually think the term “cure” offers some deeper thought. These bank “cures” normally lead to a bank getting two things from the homeowner 1- money 2- information. Only a small percentage of homeowners get a “cure” for their ailments.

Are we surprised that Citi, GMAC, and Chase experienced the greatest decreases in cures?

For subprime loans, Ocwen posted the highest cure rate – 44 percent. The high cure rate at Ocwen is linked to high numbers of modifications relative to other banks.

Moody’s notes that the high cure rate includes “a significant number of re-modifications,” which occur when an initial modification fails. These re-modifications may be one of the most under-publicized occurrences. Many homeowners who qualified for initial loan mods ended up filling the banks coffers while not solving their own issues. It’s just a way for the banks to garner a few additional payments from an owner that shouldn’t be in loan mod in the first place.

Ocwen saw re-defaults among 54.5 percent of its subprime modifications, the highest rate among the banks. Bank of America came in a close second with a 50.5 percent re-default rate on modifications of subprime loans.

B of A also kept at the top of the pack as it posted the highest rate of re-defaults of ALT-A loans (42.3 percent) and the second-highest re-default rate for jumbo loans (35 percent).

Consistent with its high re-default rate, Ocwen ranked highest for re-modifications of subprime loans. Ocwen’s re-modification rate for the third quarter stood at an astounding 24.8 percent. Wells had the second-highest re-modification rate at 6.8 percent.

Consider that the high re-default and re-modification rates at Ocwen may be caused by: 1- Ocwen’s process in evaluating borrowers for a modification, 2- Ocwen simply wants to extract a little more of the homeowners’ money before they re-default.

Is Keep Your Home California Program An “Absolute Failure”?

It’s like the 60s all over again minus the tie-dye. It seems as though protesting financial intuitions (banks) has become de rigueur for groups like Occupy and NACA. A few days ago about 30 homeowners and housing advocates protested at the California Housing Finance Agency claiming that the state agency isn’t doing enough.

The protesters shouted that the Keep Your Home California program has been an “absolute failure” and from what we hear from some of the Bay Area housing counselors who we deal with that the statement offers some degree of truth.

The CalHFA administers the $2 billion Keep Your Home California program, which uses federal stimulus money to help distressed homeowners

The program offers as much as $3,000 a month to homeowners who have lost their jobs, up to $15,000 to those falling behind on their mortgages, and up to $5,000 in relocation assistance for people who lose their homes.

We’ve heard from many people that the program fails to reach enough people.

However the program info claims that since its launch last year, Keep Your Home California has assisted 11,000 homeowners and has committed about $220 million.

Do you now anyone who has befitted by this program? Let us know.

HOA Clarification For California SB 150

Another year, another new law (for those of us in California). Come January 1, 2012 the new California SB 150, a bill which amends Sections 1368 and 1373 of the Davis-Stirling Act came into effect. It adds a new Civil Code Section to the Act affecting certain rental restriction provisions in CC&Rs. Several people have mentioned confusion over this new law.

We asked one of our top notch local real estate attorneys Barrett Schaffer for an explanation of the new law. We asked him, “Can a HOA restrict or set a cap on the number or percentage of units that may be leased at any one time?”

He answered, “No, unless all the owners in the HOA consent.  Any owner who consents is bound by it.  Heirs and new buyers are not necessarily bound by any such all-owner consent.” With these large HOA complexes it’s not likely that ALL owners will consent.

Barrett made a good point that we have to look at who’s behind SB 150, so it’s easier to understand the reasoning behind it and what the rule says.  Apparently CAR lobbied for the law because they did not want HOAs to restrict how many renters could live at a particular Association.  CAR saw that as limiting the number of buyers, since without the law investor buyers would likely be more restricted in terms of the properties they could buy.

The law may affect the ability to banks to lend on a property. Some banks will not loan on condos with a high percentage of renters. Perhaps that thinking will change with this new law.

So the law does not prevent an HOA from making rules relating to tenancies themselves (present or future); it is more limited to the threshold issue of whether an HOA can limit the number of tenancies in the first place.

W-HOA is that good info or what?

Foreclosure Starts Decline In California

Just when we think we have this whole foreclosure thing figured out, the number s come and throw us an old Barry Zito curve ball. Foreclosure Radar reported that December’s foreclosure timeline in California fell to 250 days, a 16.9 percent drop from November.

Foreclosure timelines declined overall, which California-based Foreclosure Radar found “surprising.”
With a 30.6 percent drop, California posted the greatest decline in foreclosure starts in December. Arizona followed with a 24.2 percent decline.

ForeclosureRadar reported a 45.8 percent rise in foreclosure cancellations in December, which it attributes to the closing of a trustee sale location in Norwalk.

We also find the foreclosure timeline info curious. Don’t the banks continue to state that they will find alternatives to foreclosures? Numbers don’t lie but perhaps others do.

How To Value A Property Or Not – Short Sale 101

When does a seller wish their property to be worth LESS? It’s sort of a trick question but not really. We’ve been privy to some recent short sales transactions where the bank (in this case Wells Fargo) claims the value of a property to be one amount and the seller and real estate agent claim a value much lower.

For some time, we’ve heard that banks have issues with valuation. No big surprise. They continually think that there REO or their Short Sale properties have a value significantly higher than reality.

In these recent cases, the people at the Wells Fargo short sale escalation department have  only allowed the agents to challenge the value using only regular sales. The agent can’t use any REOs or Short Sales to determine value. Anyone can skew value. Say we created a BPO for a condo in Las Vegas. We could certainly find 3-6 regular sales in an area and ignore the values for the 94 REOs and Short Sales. This exact logic that Wells Fargo, Freddie, Fannie and other big banks continue to use represents just another segment of how the system is broken.

If we read through the banks’ valuation guidelines perhaps we would see “cherry picking” alongside “obtuse thinking” within the text.

If the banks and investors continue this idiocy then the distressed property situation for homeowners will only get worse not better.

Experience With Private Student Loans

They say that you can’t afford not to get a college education. In this economy with people remaining in school or returning to school, the need for student loans continues to increase.  So does the debt. Some students end up burying themselves in debt even before they have a chance to balance the ledger.

We got word of a Know Before You Owe student loans project, as well as the Student Debt Repayment Assistant created by the Consumer Financial Protection Bureau.

The same organization seeks info from anyone who ever borrowed a private student loan, and they want student loan borrowers to tell them more about whether this market did or did not work. Why did you take out a private loan? How did you decide to do it? Did it affect your study or career choices?

Interested to share your thoughts? Go to http://www.consumerfinance.gov/students/your-experience-with-private-student-loans/

Bank Of America Cutting Commissions?

In the continuing struggle for anyone to accomplish a short sale (we hear that about 70 percent of short sales fail), we recently heard from several Northern California short sale agents that Bank of America began cutting commissions to 5 percent on most of their deals.

This new commission cutting seems against “guidelines” considering that we saw a top Bank of America VP speak to an auditorium full of real estate agents in San Francisco that Bank of America remains committed to a fair and equitable system of compensation for the work done by real estate agents in the short sale process.  The B of A VP mentioned that the percentage amount may be based on investor and/or mortgage insurance guidelines, gross offer amount, and other factors.

With no specific investor guidance, Bank of America claims they typically pay a 6 percent commission with a $3,000 minimum on the majority of short sale transactions, scaling to a minimum of 5 percent on transactions exceeding $1 million.

Why should this commission cutting matter to anyone expect agents? Homeowners who need to short sale will find that the few short sale agents who know how to structure a short sale will find less incentive to battle the banks on their behalf if they see the banks automatically cutting the commission. If servicers such as B of A claim the cut is result of “investor guidelines” then either the servicers need do a better job of going to bat for the agents (not likely) or the agents will have to show their value directly to the investor.