freddie mac – Fleysher Law

Florida Grabs a Chunk of Foreclosure Settlement Money for State Budget

Posted on July 3, 2012February 22, 2023 by Emil Fleysher

Out of $334 million in cash payments sent to Florida in a multibillion-dollar mortgage settlement with major banks, more than $33 million will help strengthen the state’s budget. In fact, Florida is one of several states taking a portion of the $2.5 billion in cash payments from banks. And, Florida is using it for programs not directly related to the foreclosure crisis. So, Florida’s total take in the $25 billion national settlement is worth about $8.4 billion.

About $334 million of that came in the form of a cash payment to the state. Furthermore, the attorney general’s office has maintained that most of the money will go to directly to help homeowners. Moreover, settlement documents indicate that Bondi negotiated the 10 percent civil penalty; resulting in a $33.4 million cash payment to the general fund. For now, Florida is only using 10 percent of the cash payment to strengthen its general budget. However, some other states are using all or a majority of their funds to plug large budget holes. A few states have clauses similar to Florida’s, directing 10 percent of the money to general revenue as a penalty.

$300 Million to Go

Still, some states have decided to use all of the funds for homeowners. In fact, they are citing that they were the main victims in the robo-signing scandal. The remaining $300 million in Florida’s settlement cash has not yet been allocated. Bondi asked members of the public for suggestions on how to spend the money this month. Moreover, he has stated that it would be used to provide direct relief help for homeowners. Housing groups have advocated for the money to be used for legal aid for homeowners and low-income housing programs.

If you have questions about foreclosure, loan modification, bankruptcy; or other alternatives, please feel free to call my office at 954-484-9987. Or, send an e-mail to emil@fleysherlaw.com, or complete the contact form below.

Lenders Prefer Short Sales to Foreclosures

Posted on July 3, 2012February 22, 2023 by Emil Fleysher

Short sales are exceeding the number of foreclosure sales in South Florida. Broward County had 1,831 short sales in the first three months of 2012, compared with 1,476 foreclosure deals. On a quarterly basis, this is the first time short sales have outnumbered foreclosures in Broward since early 2008. Short sales also exceeded foreclosures in Palm Beach County and across Florida from January through March.

Banks are more motivated to do short sales because of the messiness and the risk of foreclosures. After a homeowner defaults on a mortgage, the bank files a foreclosure lawsuit. But, the two sides often continue to negotiate a resolution. A short sale is when the lender allows the homeowner to sell for less than what’s owed on the mortgage and absolves the homeowner from paying a deficiency. Foreclosures can be lengthy. It takes an average of 861 days to complete a foreclosure in Florida. This is one of the longest timelines in the nation. There’s a backlog of cases in Florida courts because in 2010 some bank employees admitted they had signed off on thousands of cases without proper review. As a result, some major lenders temporarily suspended foreclosures.

Time Frame of Short Sales

A short sale in Florida takes an average of 603 days. Although, many now are happening much faster sometimes within a few months. They are helping the housing market recover. That is because they more quickly put distressed homes in the hands of cash buyers or owners who can afford the mortgages. The number of Broward short sales in the first quarter of 2012 increased 30 percent from the same period a year ago. Statewide, short sales rose 18 percent from a year ago. Some of the biggest lenders, including Bank of America and Chase, now offer thousands of dollars to homeowners to complete them.

If you have questions about foreclosure, loan modification, bankruptcy, or other alternatives, please feel free to call my office at 954-484-9987, send an e-mail to emil@fleysherlaw.com, or complete the contact form below.

National Mortgage Settlement

Posted on July 3, 2012February 22, 2023 by Emil Fleysher

National Mortgage Settlement seems to take some time.

As part of the national mortgage settlement signed in March of 2012, Chase, Bank of America, Citigroup, Wells Fargo, and Ally Financial have agreed to offer at least $10 billion in loan forgiveness or principal reduction. In fact, they are offering it to an estimated 11.1 million homeowners who are in default or underwater. After three months the banks’ distribution of this relief is slow. According to housing counselors that The Huffington Post surveyed, only a few individuals got an offer of a principal reduction. That is out of dozens who applied for modifications. These institutions are not indicating how much principal they have written off. Even though a report to the government on their efforts is due in September of 2012.

Baloon Payment

It seems that principal reductions are very rarely seen. And, banks are more likely to offer the homeowner a principal forbearance. It moves the payment of most of the debt to the end of the loan’s term. In fact, this is identified as a balloon payment. During the first few years of the housing crisis, banks and other institutions that service loans made life difficult for hundreds of thousands of homeowners. All of those who tried to obtain a loan modification and failed. Moreover, the institutions lost paperwork, failed to follow up with borrowers. And, they even pushed homeowners who were current on their payments into foreclosure.

However, there seems to be a reasonable explanation as to why there still has not been much change these last few months. Fannie Mae and Freddie Mac, which are the government-backed mortgage giants that control 60 percent of the mortgage market refused to participate in principal reduction; except for limited circumstances. These two entities hold 29.2 million mortgages, 3.3 million of these loans are underwater. According to Edward Demarco, director for the Federal Housing Finance Agency; loan write-downs are a “moral hazard” since the practice might encourage borrowers now current on their mortgages to stop making payments.

Only time can tell whether or not this new settlement will actually help the millions of homeowners across the country desperately reaching out for help.

Nationstar Buying up Mortgage Servicing Rights

Posted on June 21, 2012February 22, 2023 by Emil Fleysher

Bank of America Corp. has released roughly $10.4 billion in residential mortgage-servicing rights to Nationstar Mortgage Holdings Inc.; as Bank of America looks to alleviate a portion of its mortgage-servicing obligations. This is only a small piece of more than $430 billion mortgage-servicing rights or MSRs. This then makes Nationstar the largest non-bank mortgage servicer in the U.S. Traditional banks, have removed themselves from the servicing business as regulatory scrutiny, new capital requirements weigh on these mainstream lenders.

As a mortgage servicer, Nationstar will provide administrative support on loans; held by banks, government organizations, private funds, and other owners of securities and mortgage loans. Nationstar will generate revenue primarily from the unpaid principal balance of loans serviced.

In 2010 it was discovered that a number of banks had engaged in “robo-signing”. This was when bank officials signed off on foreclosure proceedings without proper documentation, as well as other unethical practices. The incident caused numerous lawsuits by homeowners and investigations by federal and state regulators. This led to a $25 billion settlement earlier this year with the five largest U.S. mortgage servicers, which are Bank of America, Wells Fargo & Co., Citigroup Inc., J.P. Morgan Chase & Co., and Ally Financial Inc.

While a few banks own most of the residential-mortgage-loan servicing rights, Nationstar who is a non-bank servicer believes the industry is shifting toward non-bank servicers. Many banks seek to exit from the servicing business, which has proven to be volatile and capital intensive.

Fannie Mae & Freddie Mac Considering Principal Reduction Policy

Posted on April 20, 2012February 22, 2023 by Emil Fleysher

Fannie Mae and Freddie Mac could save $1.7 billion if they forgave principal on some troubled mortgages. Furthermore, The Federal Housing Finance Agency may make a decision in the next few weeks; whether to change its policy barring the two taxpayer-owned companies from performing such loan modifications. In fact, The FHFA has come under pressure from the Obama administration and consumer advocates to cut principal for underwater borrowers. Moreover, the companies are barred from reducing principal on the seriously delinquent loans they own or guarantee on the grounds that it would hurt their bottom line.

Furthermore, the FHFA will announce additional measures to help troubled homeowners in the next few weeks. Other measures may include a program that would allow delinquent Fannie Mae and Freddie Mac borrowers to continue to live in their houses as renters. That is after turning over the deeds.

Additionally, the FHFA said it would cost Fannie Mae and Freddie Mac an additional $100 billion. Just to write down all 3 million underwater loans to the value of the homes securing them. However, far fewer loans would actually be candidates for principal forgiveness, even if FHFA changes its policy. It is estimated that at best the tactic would help an additional 200,000 to 300,000 families keep their homes. From the perspective of the FHFA, the main goal is to protect taxpayers. They want to be sure the principal reduction strategy is appropriate. And, they believe it is for some types of loans.

More Lenders Offering Plans with Debt Forgiveness

Posted on April 8, 2012February 22, 2023 by Emil Fleysher

Non-government holders of delinquent mortgages are offering more payment plans with debt forgiveness. This is even as government-controlled Fannie Mae and Freddie Mac resist. Of the 116,153 mortgages modified in the fourth quarter of 2011, debt forgiveness takes 16 percent of loans. All of them held by private investors; 25 percent of loans held in bank portfolios, and in none owned by government-run companies. Fannie Mae and Freddie Mac haven’t granted principal reductions because it would cost the taxpayer-funded companies almost $100 billion.

Florida Foreclosure Speed-Up Bill Dies as Session Ends

Posted on March 15, 2012February 22, 2023 by Emil Fleysher

A controversial bill to speed up foreclosure did not pass as the lawmaker session ended. The proposal would have accelerated foreclosure proceedings on abandoned properties. And, it should make it easier for lenders to complete proceedings when both parties agreed to end the process. For consumers, the foreclosure bill would have reduced the length of time lenders could go after a borrower following a foreclosure sale from five years to one year. Proponents said the change would have allowed homeowners to get on with their lives. However, other provisions were more lender-friendly; including relaxing restrictions on foreclosing on abandoned property and limiting damages in foreclosure cases to monetary damages.

If you have questions about foreclosure, loan modification, bankruptcy, or other alternatives, please feel free to call my office at 954-484-9987. Or, send an e-mail to emil@fleysherlaw.com, or complete the contact form below.

Homeowners in the 7th Circuit can Sue Banks over Mortgage Modification Malfeasance

Posted on March 15, 2012February 22, 2023 by Emil Fleysher

Although the Home Affordable Mortgage Program doesn’t allow for private federal actions against banks over their implementation of the program, a homeowner can bring state law claims, the 7th U.S. Circuit Court of Appeals ruled. The Home Affordable Mortgage Program and its enabling statute do not contain a federal right of action. But, neither do they preempt otherwise viable state-law claims. Permitting suits such as this will not expose mortgage servicers to multiple and varied standards of conduct. So long as state laws do not impose substantive duties that go beyond HAMP’s requirements, loan servicers need only comply with the federal program; to avoid incurring state-law liability.

Wells Fargo

In this case, Wells Fargo put the plaintiff on a four-month so-called trial period plan. A few months later Wells Fargo sent her a letter. They stated the bank was unable to adjust the terms of her mortgage due to investor guidelines. She sued the bank on behalf of all U.S. homeowners who signed TPP agreements with Wells Fargo. And, she complied with all the terms but was denied permanent loan modifications. The judge ruled that Wells Fargo had not identified the specific criteria that she had failed to satisfy. And that a reasonable person in her position would read the TPP as a definite offer to provide a permanent modification that she could accept so long as she satisfied the conditions.

This ruling is a major victory for homeowners. It is going to provide hope to millions of homeowners. All of those whom all the major banks mistreated. Of the more than 80 cases that have been filed nationwide against banks’ implementation of HAMP, very few have gotten past the pleading stage. Courts that have dismissed these cases stated that the law does not provide a private right of action. But now, the 7^th Circuit (which includes Illinois, Indiana, and Wisconsin) says that doesn’t mean state law claims are barred.

Real Estate Investors to get Foreclosure Aid from Obama

Posted on March 15, 2012February 22, 2023 by Emil Fleysher

The Obama administration will extend mortgage assistance for the first time to real estate investors. That is to those who bought multiple homes before the market imploded. Landlords can qualify for up to four federally-subsidized loan workouts starting around May; as long as they rent out each house or have plans to fill them. This will be done under HAMP. And, it will pay banks to reduce monthly payments by cutting interest rates, stretching terms, and forgiving principal.

The Obama administration announced last month that it would triple incentives to owners of mortgages that reduce home-loan debt and expand eligibility to borrowers struggling with other liabilities. Moreover, the program extension will apply to all loans, including those held by Fannie Mae and Freddie Mac. This should make about 700,000 landlords eligible under the revisions to HAMP.

The government’s need to protect neighborhoods from decay and renters from eviction by keeping the current owners in place is outweighing the concern that taxpayers will end up bailing out real estate investors. Vacant properties push down a neighborhood’s property values and keep the housing market from recovering. The government said that providing multiple property owners assistance and blanket modifications regardless of occupancy would be more efficient. In comparison to restrictive programs. Critics of the revisions state that taxpayers should not come to the aid of individuals who took bets in the housing market and lost.

Freddie Mac Bets Against Homeowners and Refinancing

Posted on March 4, 2012February 22, 2023 by Emil Fleysher

A new report claims that Freddie Mac betrayed American homeowners. That is after placing multibillion-dollar bets that will pay off if homeowners remain shackled by costly mortgages with interest rates well above current rates. Interest rates now reach as high as seven percent. The company does not want borrowers to default on their mortgages. However, it’s also not in its best financial interest to have them shift to less expensive mortgages. This is because when borrowers refinance, they pay off their first loan early, and Freddie loses the interest payments.

As the economy declined, interest rates plunged and millions of homeowners sought refinancing. But, they were unable to qualify for lower rates because lenders rejected them. Freddie Mac was one of those lenders which prevented homeowners from refinancing, while at the same time betting against the possibility of their being able to do so. The fact that Freddie Mac’s financial health strengthens when homeowners can’t refinance their homes creates a conflict of interest.

Essentially, Freddie Mac has prevented households from being able to take advantage of today’s mortgage rates. This seems drastically out of line with their mission and out of line with what Congress wanted them to do.