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Category Archive: ‘Bailout’

Mayor Gets Forgiven

mayor

Hat tip to daytrip for sending in this article on mortgage forgiveness:

http://www.clarionledger.com/story/news/local/2016/05/21/jackson-mayors-mortgage-vanishes-after-election/83615172/

A few weeks after being elected Jackson mayor in 2014, Tony Yarber stood in his pulpit at Relevant Empowerment Church and spoke of his blessings — the bank “washing away” his nearly $100,000 mortgage.

“Election is over. We trusted God. Y’all talked all that noise,” Yarber said in his sermon. “And while they was running their mouth, a letter came in the mail from Wells Fargo. The letter said, ‘Dear Mr. Yarber, concerning loan number whatever it was, at 1605 whatever street you stay on, we have no more interest in that property. Consider the $92,000 that you owe us washed away.’”

The audience cheered.

Two years later, and about a year out from the next mayoral election, that revelation is fodder for Yarber detractors, who believe his house was paid off.

Yet evidence suggests Wells Fargo forgave his mortgage.

Sure enough, records in Hinds Chancery Court show the release of his mortgage, which typically indicates the remaining lien has been satisfied. But at the time Yarber was in financial straits, having not paid his house note in several months.

Bank records show that Wells Fargo authorized the release of the remaining lien, $91,621.94, on April 22, 2014, the day of his election. Essentially, they wrote it off, Yarber said.

“Wells Fargo said don’t worry about sending no more money,” he told The Clarion-Ledger.

Read More

Posted by on Jun 1, 2016 in Bailout, Jim's Take on the Market, Mortgage News | 4 comments

Squatters Still Squatting

squ

Collateral damage from the on-going No Foreclosure era – hat tip to Richard!

http://www.nytimes.com/2016/05/15/us/las-vegas-squatters-housing-collapse.html

LAS VEGAS — On a drive through this desert city, the blight from the housing collapse of eight years ago can be seen on almost every block: Overgrown yards and boarded-up windows identify the foreclosed and abandoned homes that still pockmark southern Nevada.

But not all of the dwellings are empty.

Squatters have descended on every corner of the Las Vegas Valley, taking over empty houses in struggling working-class neighborhoods, in upscale planned communities like Summerlin, and everywhere in between. And they often bring a trail of crime with them.

While some unauthorized tenants are families seeking shelter, police officers here say they are more frequently finding chop shops, drug dealers and counterfeiters operating out of foreclosed homes. One man who the police say was squatting has been charged with murdering a neighbor during a burglary.

But with a transient population of down-and-out gamblers and a glut of homes that have already been foreclosed, opportunists can still take their pick of thousands of empty houses. Inside one, squatters had scrawled a warning to stay away on a wall: “Violent tweekers on guard.”

In North Las Vegas, Deborah Lewis has seen just about every kind of squatter at the house next door since the owners walked away four years ago.

First, two women said they had just bought the middle-class home, but they stole water from the neighbors’ outdoor spigots at night, because like most abandoned homes this one had no running water. Then came a group of counterfeiters, who left their printing materials visible from the window, Ms. Lewis said. Later groups tore out the stove, refrigerator and copper wire; broke windows; and burned the kitchen floor. Since water at the house had been shut off, they left feces all over one room, a common problem that creates health hazards. (For electricity, those who can afford it can set up accounts with the power company; those who cannot often run wires to nearby utility boxes.)

“It’s been a total circus — you name it, we’ve had it next door,” Ms. Lewis, 58, said. “It’s scary, because you don’t know if these people are packing. One guy came over here, and he was looking in our window. Scary.”

But squatters are getting creative as well. Some repair broken windows and other damage from past squatters, pretending they own the place, neighbors say. At least one group of alleged squatters filed a federal lawsuit in an attempt to keep possession of the $800,000 home in the hills they were occupying, with its pool and views overlooking the Strip. (Repeated calls and knocks on the door at that house went unanswered, even though four people were visible in the living room. The police raided the house and arrested four people on Wednesday.)

In North Las Vegas, Officer Scott Vaughn has investigated 80 squatting cases so far this year, and said he had seen everything: prostitution rings; teenagers using vacant homes for parties; and even a squatter who tried to pull a Jedi mind trick.

“He was staring at me and telling me, ‘You don’t want to arrest me. You want to let me go,’” Officer Vaughn said. “I said, ‘The Force is not on your side today. You’re going to jail.’”

Posted by on May 16, 2016 in Bailout, CA Homeowners Bill of Rights, Jim's Take on the Market, No-Foreclosure as Banking Policy | 4 comments

Solutions For The Non-Super-Rich

paloalto

Hat tip to Eddie89 for sending in this article – he also wondered when we’ll see this around here!

http://sanfrancisco.cbslocal.com/2016/03/22/250k-per-year-salary-could-qualify-for-subsidized-housing-under-new-palo-alto-plan/

Excerpts:

Palo Alto is seeking housing solutions for residents who are not among the Silicon Valley region’s super-rich, but who also earn more than the threshold to qualify for affordable housing programs.

The city council has voted to study a housing plan that would essentially subsidize new housing for what qualifies as middle-class nowadays, families making from $150,000 to $250,000 a year.

The plan would focus on building smaller, downtown units for people who live near transit and don’t own cars, along with mixed-use retail and residential developments.

“Prices have just gone through the roof, making it unaffordable for middle-class people, your firefighters, your teachers, and, frankly, some of your doctors,” Palo Alto Vice Mayor Greg Scharff said.

Scharff worries that losing middle-class workers will hurt the city. “What the council is proposing is that we work together to fund and subsidize, what is basically middle-class housing; which, traditionally, has not been subsidized,” Scharff said.

Bean can hardly believe it.

“We have people struggling to make it at a quarter-million dollars a year,” Bean said. “That’s a terrible thing.”

 

Posted by on Mar 23, 2016 in Bailout, Jim's Take on the Market, Local Government, Market Conditions | 6 comments

National Housing Policy

Embedded image permalink

I saw these questions from Ed DeMarco on Twitter. My answers:

1. Have the M.I.D. apply towards primary residence only (not second homes), and lower from $1,000,000 to $500,000.  Those buying in hopes of a bigger write off will still buy a house, and take the partial benefit – and be in it for the appreciation and to raise a family (make wifey happy).

2.  Have the mortgage interest deduction be in effect for the first ten years of ownership only.  It would encourage borrowers to pay off mortgages in the ten years, and not refinance every year.

3.  Require that only the buyers can pay for mortgage insurance (sellers can pay in full now).

4.  Redirect the disadvantaged folks to subsidized rentals until they aren’t disadvantaged. Only stable, secure, affluent people should buy a house – it’s too late for the rest, unless they drive to the suburbs/outer edge of town.

5.  There are several loan programs available to help the disadvantaged already.  NACA is still around, helping buyers purchase with no down payment and no closing costs (H/T daytrip):

https://www.naca.com/naca/purchase/purchase.aspx

6.  Lower the capital-gains tax for 1-2 years to incentivize those reluctant-but-motivated possible sellers to unload a rental property or two.  Cut federal rate to 10% for the first year (currently 20%), and then back to 15% in the second year.  The crotchety old guys still won’t sell, so there won’t be a flood.  But more inventory = more sales while stabilizing prices.

7.  Keep Fannie/Freddie the way they are for now. If they can keep operating in the black, let’s allow the mortgage industry to enjoy the fluidity. I attended a seminar today on the new loan disclosures coming on October 3rd, and it is clear that Fannie/Freddie will be extremely strict on compliance. It doesn’t mean tougher credit, it means the mortgage industry needs to submit the cleanest loan packages ever – which is good for the taxpayers.

8.  The new compliance crunch will virtually eliminate mortgage brokers – wholesale lenders won’t want to take a chance on them. Yes, we still have room for you over here to be a realtor – there’s only 11,000 of us chasing 3,500 sales each month.

9.  Encourage a private jumbo-MBS market without subsidizing it.  Eventually, a private MBS marketplace could help shift the burden from Fannie/Freddie.

10. Run a tight ship.  We can handle it.

The powers-that-be have made some great moves to get us this far, now bow out gracefully and let free enterprise take care of the rest.

Posted by on Aug 20, 2015 in Bailout, Housing Tax Credit, Interest Rates/Loan Limits, Loan Mods, Local Government, Mortgage News, Mortgage Qualifying | 0 comments

Boomerang

From the SD Union-Tribune:

http://www.utsandiego.com/news/2015/jun/05/foreclosure-shortsale-boomerang-buyers-real-estate/?

An excerpt:

When Chad Sanfillipo got the keys to his house in Ramona last year, he had come full circle in the real estate market.

After losing his home to a short sale during the crash of the housing market, Sanfillipo was once again an owner.

“It felt so exciting to be able to buy again, to have something I own,” said Sanfillipo, 45, who rented for a couple of years before a bank would lend him money again. “There’s no landlord or rent check. I get to say what I get to do with my house.”

Sanfillipo, a systems engineer, is one of roughly 116,000 San Diego County residents who had either a short sale or foreclosure between 2006 and 2014, before and after the Great Recession, according to CoreLogic, a real estate data company.

The good news for Sanfillipo and others who lost their homes during the downturn is that there’s ultimately forgiveness in the lending market. Each month, thousands of San Diegans who went through short sales or foreclosures are completing waiting periods that render them eligible to once again apply for government-backed loans. In the worst case, some must wait seven years, but others can get new loans in just one, depending on whether they go through the Department of Veterans Affairs, Federal Housing Administration, Fannie Mae or Freddie Mac.

People who lost their homes during the recession but own again are called boomerang buyers, and they’re becoming a larger part of the market.

Boomerang buying is becoming a nationwide movement. The National Association of Realtors says that 9.3 million homeowners underwent foreclosures between 2006 and 2014. Already, 1 million of them purchased homes again, and an additional 1.5 million will become eligible over the next five years.

boomerang buyers

http://www.utsandiego.com/news/2015/jun/05/foreclosure-shortsale-boomerang-buyers-real-estate/?

Posted by on Jun 20, 2015 in Bailout, Foreclosures/REOs, Jim's Take on the Market, Market Conditions | 7 comments

Kitchen-Sink Foreclosure Avoidance

Hat tip to daytrip for sending this along:

http://www.vice.com/read/this-former-bank-regulator-quit-his-job-to-fight-for-his-house-518

Eric Mains is fulfilling a dream many Americans have had since the onset of the financial crisis seven years ago: He’s attacking fraud in the banking industry as aggressively as he can, using every possible tool under the law to achieve justice —and win some money back for himself.

Mains, a former team leader with the Federal Deposit Insurance Corporation (FDIC), has become so bitterly embroiled in a six-year dispute with his mortgage lender that he left the regulatory agency, fearing that he might have to eventually name it as a defendant in a federal lawsuit. He’s one of a small yet determined band of people still fighting foreclosure (the seizure of property) cases with obscure and sometimes arcane arguments, built on a simple yet mind-blowing premise: The true ownership of millions of mortgages issued during the housing bubble was fatally corrupted, and now it’s impossible to prove who actually legally controls those mortgages.

Recent Supreme Court precedent suggests that by rescinding his mortgage—canceling it, basically—Mains and people like him can put the onus on banks to prove they have the right to assets like his house in the first place. If Mains or his allies succeed, they would rip open a wound that virtually everyone in power has tried to stitch up and forget. But such a long-awaited victory wouldn’t make up for the years of stress and personal hardship Mains has suffered, including a failed marriage and now the end of his career in public service.

“I had to ask myself a question: Will I do this no matter if it hurts?” Mains told me. “I said yes. If I can afford to fight these suckers and bring this illegality to light, that’s why I went to law school.”

Mains has gotten divorced, lost custody of his kid, and wound up in the hospital – read the full article here:

http://www.vice.com/read/this-former-bank-regulator-quit-his-job-to-fight-for-his-house-518

Posted by on May 18, 2015 in Bailout, Foreclosures, Foreclosures/REOs | 4 comments

More Free Cheese

max cheese

More foreclosure-avoidance incentives were announced this week:

http://www.mortgagenewsdaily.com/12052014_hamp_mfa_programs.asp

An excerpt:

“While the housing sector has strengthened in recent years, there are still many homeowners struggling to make their mortgage payments,” said Secretary of the Treasury Jacob J. Lew. “The changes we are announcing today offer meaningful incentives for borrowers to stay current in their modifications, increase their opportunity to build equity in their homes, and provide vital safety nets for those facing greater financial strains.”

The Home Affordable Modification Program (HAMP), established in 2009, offers homeowners loan modifications with lower monthly payments achieved through lowered interest rates and modified loan terms.  Many homeowners with HAMP modifications have been eligible to earn up to $5,000 if they adhere to modification terms for five years.  The amount is applied to their outstanding principal balance.

Under the revisions an additional $5,000 will be available to homeowners after a sixth year of on-time payments and they will then have the opportunity to re-amortize the reduced mortgage balance, thus further lowering their monthly payment.   HUD/Treasury estimate some one million borrowers with HAMP modifications may be eligible for the new incentive.

HAMP Tier 2 was developed as an alternative for homeowners who can’t qualify or are unable to sustain a HAMP Tier 1 modifications.  It provides modifications with a low fixed rate for the life of the loan.  The revision announced this week will include reducing the interest rate for these modified loans by 50 basis points which will also make more borrowers eligible for the program.  It also extends the sixth year $5,000 pay-for-performance incentive to Tier Two borrowers.

Posted by on Dec 6, 2014 in Bailout, Loan Mods, Mortgage News | 8 comments

QE3 To Facilitate Next Bubble?

From David D. at FDL:

Analysts have tried to parcel out whether QE3 will really help the economy.

The way almost everyone looks at this is about the impact on housing, specifically mortgage prices. But mortgage rates haven’t changed at all since the announcement of QE3, and if the Fed was trying to influence the expectations channel, the impact really should have been that immediate.

Then again, rates didn’t rise, either. It could be that QE3 arrested a trend toward increasing mortgage financing costs. But more likely, banks are taking the profits out of the eased cost of mortgage financing for themselves:

The banks are choosing not to reduce mortgage rates further. One reason: By keeping the rates elevated, they are able to earn much larger profits when they sell the mortgages into the bond market. If the level of profits on those sales stayed at recent average levels, borrowers might, for instance, pay $30,000 less in interest payments on a $300,000 mortgage, according to a recent New York Times analysis.

The fact that banks haven’t prepped for a backlog of mortgage applications, meaning that the benefits of QE3 cannot possibly get to customers in a reasonable amount of time, leads us more toward this conclusion. Banks have no problem securing cheap backstopping of mortgages, but they don’t have to channel those savings into the mortgages they sell. It’s a form of collusion, because nobody else has dropped their rates to gather the lion’s share of the business. And nobody can actually get a loan to move, either, because that would require hiring staff. This way, banks can benefit from lower rates for themselves on one side and higher rates for customers on the other. The arbitrage between those two prices equals massive profits.

Let me add another postulate to all this. When you have this delay in financing, the beneficiaries are those who have the working capital to purchase in cash. Furthermore, the cheap market for foreclosures invites groups who can accumulate capital to come in and scoop up the housing stock. This is what we’re seeing all over the country – institutional investors buying up foreclosed properties to rent out in the short term and sell at a profit in the longer term. They are securing very large amounts of capital to pull this off.

This is the next bubble, happening right here, and QE3 facilitates it.

Investment firms can scoop up cheap housing stock and flip it into rentals. There’s also talk of securitizing the rental income streams, which really reinflates the bubble machine. Meanwhile the character of neighborhoods completely changes, homeowners get nudged out for properties by the investors, the phenomenon of absentee slumlord-ism takes hold, and power relationships change when one company owns a substantial amount of the housing stock in a city.

What’s happening in housing right now should absolutely terrify people. The forces that are being coordinated to show positive statistics at the macro level are also creating a dangerous environment for the future.

Posted by on Sep 17, 2012 in Bailout, Real Estate Investing | 8 comments