CRC: Borrowers Not Getting Modifications

The California Reinvestment Coalition says mortgage servicers and lenders are still not working with borrowers who need loan modifications in order to keep their homes.

In a third survey of California mortgage counseling agencies servicing homeowners statewide, CRC said it found that despite lenders’ promises to help borrowers, foreclosure is still the most common outcome for homeowners struggling to make mortgage payments.

“With little accountability, obligation, or oversight, home loan servicers are not doing enough to keep borrowers in their homes”, says Kevin Stein, CRC associate director.

“For some borrowers, this may mean that they will be doubly victimized by predatory lending practices on the front end, and now by unhelpful loan servicing practices that lead to foreclosure on the back end. We must work immediately and diligently towards solutions to avoid this result”.

CRC released the report “The Continuing Chasm Between Words and Deeds III,” at a press conference held at counseling agency in Stockton, Calif. The report analyzes a survey of 42 mortgage counseling agencies that served 11,062 borrowers in April 2008.

Residential properties that are in some state of foreclosure rose 30% in the third quarter and doubled on a year over year basis, to 446,726 units, according to new figures released by RealtyTrac.

Nevada had the highest foreclosure rate in the nation, with one filing for every 61 households.

After Nevada, California (one for every 88 households) and Florida (one for every 95) had the highest incidence of foreclosures.

California, though, saw its foreclosure filings quadruple to 148,147 incidences from those of a year earlier.

Other states ranking among the top 10 in foreclosures include Michigan, Ohio, Colorado, Arizona, Georgia, Indiana, and Texas.

A properly designed bankruptcy bill with firm guidance for modifying loans could reduce the number of expected foreclosures by 500,000, Mark Zandi, chief economist of Moody’s Economy.com, has told a congressional panel.

Mr. Zandi warned that 2 million families could lose their home by early 2009 and that the current cycle of rising foreclosures and falling housing prices could lead to a national recession.

“There is no more efficacious way to short circuit this cycle than by adopting legislation to allow bankruptcy judges the authority to modify first mortgages by treating them as secured only up to the market value of the property,” he testified.

This program is currently being accomplished without legislation AND you do NOT have to go bankrupt! If you would like more information - see Foreclosure Prevention.

He suggested that this legislation should sunset after three years so Congress can review its impact. But he dismissed claims by the Mortgage Bankers Association that such a bankruptcy bill would force lenders to increase mortgage rates and fees.

The founder of Economy.com testified that current voluntary efforts by mortgage servicers to modify loans is unlikely to stop the increase in foreclosures.

Will Subprime Foreclosures Spur $70B in Losses?

Two million households with adjustable rate subprime mortgages could end up in foreclosure by the end of 2009 and lose $71 billion of their housing wealth.

According to a Joint Economic Committee report that breaks down the impact of foreclosures on each state, “The Bush administration needs to take off its ideological handcuffs and act quickly to save financially strapped families from drowning in a tidal wave of subprime foreclosures,” JEC Chairman Charles E. Schumer, D-N.Y., said in releasing the report.

It appears that Charles Schumer does not read the opinion polls. The vast majority of Americans do not favor a government bailout. Most families feel that they should not pay for the mistakes of people that probably should not have ever had a mortgage in the first place.

FACT: From Jan/2007 to June/2007 Bear Stearns paid out over $17 Billion in Bonuses and yet they have 2 bankrupt hedge funds. What should you favor? Is it not time we stand up for what is right?

The Wall Street hedge funds got rich from all the subprime mortgages and all the banks underwrote the mortgages so why make Americans foot the bill? Make those that profited pay!

The report estimates foreclosure losses by state, including projections that neighboring homeowners will see the value of their homes decline by $32 billion.

The congressional report covers subprime foreclosures from the beginning of 2007 to the end of 2009 and assumes that house prices will decline sharply. The Bush administration estimates that foreclosures will not exceed 500,000, Sen. Schumer said, adding, “That is much too low.”

Two million subprime mortgage foreclosures are likely to occur by 2009 if home prices continue their downward spiral, a congressional report said Thursday.

The report also estimated that $71 billion in housing wealth will be destroyed and states will lose $917 million in property tax revenue because of foreclosures.

The report was released by Joint Economic Committee Chairman Sen. Charles Schumer, D-N.Y., and other lawmakers. “State by state, the economic costs from the subprime debacle are shockingly high,” Schumer said in a statement.

“From New York to California, we are headed for billions in lost wealth, property values and tax revenues.” Schumer, along with Sen. Amy Klobuchar, D-Minn., Sen. Sherrod Brown, D-Ohio, and others called on the White House to beef up foreclosure prevention counseling, to let Fannie Mae buy more mortgages and to encourage loan servicers to work out modifications with borrowers.

Before the report was released, the Commerce Department said sales new home sales rebounded in September from summer sales levels that were much weaker than previously reported.

Sales increased 4.8% to a seasonally adjusted annual rate of 770,000 from a revised 735,000 in August. Previously, Augusts’ sales had been reported at a 795,000 pace. The three previous months were revised sharply lower. Last month, the latest Case Shiller home price index showed that U.S. home prices in major cities are falling at their fastest rate in 16 years.

House Democrat and Financial Services Committee Chairman Barney Frank, has drafted a bill that temporarily increases the caps on Fannie Mae’s and Freddie Mac’s portfolios for six months so the two mortgage giants can purchase modified or refinanced subprime loans.

The bill would increase the caps on the companies’ $700 billion portfolios by 10%, but 85% of any mortgages purchased must benefit struggling subprime borrowers.

“The six month/85% bill that I am filing seems to me responsive to the immediate needs to help people avoid foreclosure,” Rep. Frank said. The House committee chairman is also preparing to introduce a bill aimed at stopping abusive lending practices.

Mortgage lenders and servicers are not restructuring loans for troubled homeowners, according to the Center for Responsible Lending and a bankruptcy judge, who urged Congress to amend the bankruptcy code to prevent unnecessary foreclosures.

Marilyn Morgan, a bankruptcy judge in Northern California, said she sees too many foreclosures and has not heard of a “single meaningful workout with a home lender.”

CRL executive Eric Stein told a House Judiciary panel that servicers fear being sued by investors if they restructure mortgages. Amending the bankruptcy code to allow restructurings by judges would “remove the fear” so that servicers can voluntarily modify loans.

Steve Bartlett, president of the Financial Services Roundtable, testified that the industry has adopted principles that encourage loan modifications, and “we should expect more and more homeowners with subprime mortgages to get needed relief.”

NEEDHAM, Mass., Sept. 24 /PRNewswire/ — The effect of the subprime mortgage meltdown continues to radiate out across the credit markets. Alan Greenspan, the former Federal Reserve Chairman, stated in recent interviews there is a one in three chance of a US recession. New research from TowerGroup explores the impact on consumer debt and credit cards.

In analyzing four key economic factors that influence both the US economy and consumers’ spending behaviors — unemployment, consumer debt, consumer confidence, and consumer savings — TowerGroup forecasts that even as consumers moderate their spending in the coming months, the number of consumer mortgage delinquencies will continue to rise. Rate relief from federal regulators is only the beginning of the story. Mortgage lenders are likely to bend to public and government pressure to be more flexible when making repayment arrangements with mortgage customers to prevent foreclosure.

Extensive coverage of the Bush and Bernanke bailout of the U.S. housing market, along with a discussion with economists Mark Zandi and Diane Swonk and their expectations for an upcoming Fed rate cut. This second part also contains a conversation with Mark Shields and David Brooks on this subject and its significance.