bubbleinfo.com

From Reuters:

Republicans and Democrats in the U.S. Congress have agreed on a measure that would increase the maximum size of mortgage loans that can be insured by the Federal Housing Administration, a key funding source for U.S. home loans.

The measure to raise the loan limits backed by the FHA still has to pass the Republican-led house and Democrat-controlled Senate before it becomes law, but the agreement by a bipartisan panel of lawmakers from both chambers indicates a strong likelihood of final approval.

The agreement reached among House and Senate leaders excludes those loans guaranteed by Fannie and Freddie, which provide about half of the funding of all U.S. residential home loans. The deal would only impact FHA’s loan limits, restoring the cap for mortgages the government insures to as high as $729,750 in high-cost real estate markets through 2013.

The agreement follows a polarizing debate over the size of mortgages the federal government should back. The measure to increase the legal limits on the size of mortgages the FHA can insure was included in a bill to fund a large swath of government programs, from food inspection to law enforcement, that is seen as must-pass legislation for many lawmakers.

The legislation containing the amendment extends funding on a temporary basis for many government programs through Dec. 16, giving Congress additional time to finalize funding levels.  The House and the Senate must pass the bill by Nov. 18, when current funding expires.

Budget battles have raised the possibility of a government shutdown twice so far this year, as Republicans have pushed for steep spending cuts. Aides say they do not anticipate that this bill will lead to another round of budget brinkmanship.

The divisive debate on the loan limits will continue to play out this week as lawmakers push to pass the short-term funding measures. The Senate had pushed a measure that would raise the maximum size of a home loan backed by Fannie Mae, Freddie Mac and the FHA to $729,750.

The House did not include the higher limits in its bill to fund federal agencies through next September, instead favoring to keep the cap at $625,500.

DOB sent in this latest bank-speak which was seen in a few media outlets, like the SFBT:

CEO Brian Moynihan said Tuesday that the pace of selling its foreclosed home inventory is picking up as “tons” of investor cash comes into the market.

“Where you’ve had the ability to get a hold of properties … get them cleaned up, back on the market, they have moved,” Moynihan said at a conference put on by the bank in New York. “It moves as fast now as it’s ever moved.”

“You’ve seen this thing improve slowly but surely,” he said. “There’s tons of investor money coming in” to the housing market.

BofA’s top brass has been eager to resolve its bad loans by speeding up the foreclosure process, which varies by state. USA Today reported last week that at the current pace of foreclosures moving through the system, it could take decades for the market to clear all that property in some states like New York.

In August, Bank of America picked up the pace of issuing default notices, the first step in the foreclosure process, according to ForeclosureRadar.com, a research firm in Discovery Bay.  Moynihan said today that home prices are “bouncing along a bottom.”

And on a positive note, Moynihan says the bank’s mortgage delinquencies continue to decline.

From HW:

A group of 131 members of Congress sent a letter to House leaders this week, pressing for a restoration of higher limits for mortgages guaranteed by the government.

Congress elevated the conforming loan limits in 2008 to allow the Federal Housing Administration, Fannie Mae, and Freddie Mac to insure and guarantee more mortgages when the credit markets froze.

On Oct. 1, the elevated limits dropped to $625,500 from $729,750 in the most expensive neighborhoods. In each area, the cap dropped to 115% from 125% of the area’s median home price. Previous legislation introduced in the House to extend the limits never made it out of committee.

But the Senate approved an amendment to a spending bill Oct. 20 that would extend the conforming loan limits through 2013.  A joint appropriations committee is scheduled to begin meeting this week and will consider the spending bill.

“Forcing this transition in a weak market, before the private market has shown the willingness to take on additional mortgage risk is not wise policy during a housing crisis,” said Rep. Gary Ackerman (D-N.Y.), echoing calls for restoring from major trade groups from the mortgage and real estate industries.

The effect of the conforming loan limit drop remains in question. A study from the Federal Reserve shows a very small effect from the drop, while a separate study from the National Association of Homebuilders claims millions of homebuyers could be shut out of financing.

The Obama administration and top House Republicans have supported allowing the conforming loan limits to expire as the first step to getting private capital back into the market.

But in their letter to Speak of the House John Boehner (R-Ohio) and Rep. Nancy Pelosi (D-Calif.), the group of lawmakers said there is no evidence of that happening.

“Many of us have hoped that private lenders would be ready to return to the housing markets and enable us to reduce the federal role, but this has not yet happened,” the letter reads. “The reluctance of private lenders to lend coupled with the lower current limits will adversely impact the housing market.”

From Originator News:

Bank of America is working “very hard” on a short sale-to-lease program for distressed borrowers who don’t qualify for government-backed refinance programs.

But the much-maligned bank won’t move forward until it gains assurance from regulators that borrowers are being treated fairly.

As outlined late this week by B of A executive Ron Sturzenegger at the Urban Land Institute’s fall conference in Los Angeles, the bank would regain title to mortgaged properties under a short sale arrangement, and then lease the houses back to their occupants for three years for rents that approximate the average for their particular areas.

At the end of the 36-month lease, Sturzenegger said during a panel session on capital markets, the institution would re-sell the houses to renters who wanted to buy them back. He did not say what price buyers would have to pay to reclaim ownership from the bank.

Sturzenegger, who is managing director of legacy asset servicing at B of A, said investors are interested in the program, as are borrowers. But two obstacles still need to be overcome before the program becomes operational, he said: governmental clearance and finding someone with the ability to run it.

Excerpts from the nytimes.com:

Cutting to the chase: if you thought this was the deal that would hold banks accountable for filing phony documents in courts, foreclosing without showing they had the legal right to do so and generally running roughshod over anyone who opposed them, you are likely to be disappointed.

As things stand, the settlement, said to total about $25 billion, would cost banks very little in actual cash — $3.5 billion to $5 billion. A dozen or so financial companies would contribute that money.

The rest — an estimated $20 billion — would consist of credits to banks that agree to reduce a predetermined dollar amount of principal owed on mortgages that they own or service for private investors. How many credits would accrue to a bank is unclear, but the amount would be based on a formula agreed to by the negotiators. A bank that writes down a second lien, for example, would receive a different amount from one that writes down a first lien.

Sure, $5 billion in cash isn’t nada. But government officials have held out this deal as the penalty for years of what they saw as unlawful foreclosure practices. A few billion spread among a dozen or so institutions wouldn’t seem a heavy burden, especially when considering the harm that was done.

The banks contend that they have seen no evidence that they evicted homeowners who were paying their mortgages. Then again, state and federal officials conducted few, if any, in-depth investigations before sitting down to cut a deal.

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From dsnews.com:

HUD has approved a program aimed at putting foreclosed homes back into the hands of owner-occupant buyers.

In select states, from now into October of next year, buyers need a down payment of only $100 to purchase a HUD-owned REO home.

The buyer must be an owner-occupant, utilizing financing insured by the Federal Housing Administration (FHA). Standard FHA underwriting guidelines apply, and the sale must be for the full amount of the current list price.

The $100 down payment incentive program has been approved for two of HUD’s four national regions – the regions managed by the Denver Homeownership Center and the Atlanta Homeownership Center. HUD homes in the states listed, as well as the Caribbean are currently eligible for the program.

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From the latimes.com:

Delinquent borrowers who think they’ve been treated unfairly by their mortgage lenders and the companies that service their loans will soon have their day in court.

Well, not court, per se. But within the next few weeks, federal regulators will announce a new complaint procedure for borrowers who think they’ve been unjustly harmed by errors, misrepresentations or other deficiencies in the foreclosure process.

Under the process, which is being spearheaded by the Office of the Comptroller of the Currency, aggrieved borrowers whose primary residence was in any stage of the foreclosure process between January 2009 and December 2010 will be eligible to have their cases reviewed by an independent consultant.

The new complaint procedure isn’t universal. It covers just 14 servicing companies and banks, but they include some of the largest in the field — household names such as Bank of America, Wells Fargo, Citigroup and JPMorgan Chase. An estimated 4.5 million loans are in the pool.

“We are looking not just at those foreclosures that resulted in foreclosure sales, but at foreclosures that were pending at any point” during the two-year review period, acting Comptroller John Walsh said. In other words, a foreclosure action that might have been canceled for one reason or another. Or, given how long the process takes these days — a borrower in foreclosure has gone an average of 599 days since making a payment, according to Lender Processing Services — an action that could still be pending.

Either way, cases would be eligible for review by an independent consultant unaffiliated with the lender or servicer if the borrower thinks he’s been given the runaround, been given wrong information or not been afforded due process under the law.

The process is intended to fix what is wrong in the loan servicing arena. That includes the issue of so-called robo-signing, in which employees and sometimes machines signed off on foreclosure documents they hadn’t read or verified as accurate.

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Excerpted from this article in  ProPublica:

For HAMP’s first two years, the government offered very little public detail about its oversight efforts. It was virtually impossible for the public – or even Congress – to know how well the banks and mortgage servicers were complying with the government’s effort to prevent struggling homeowners from losing their homes. Those years were crucial, because that’s when the vast majority of homeowners eligible for a modification – about three million – were evaluated by servicers.

The documents obtained by ProPublica show auditors finding serious problems at a major servicer during that time. Instead of publicly revealing the findings, Treasury chose to privately request that GMAC fix the problems.

“For two years, they’ve known how abysmal servicers were performing and decided to do nothing,” said Neil Barofsky, the former special inspector general for the Troubled Asset Relief Program, better known as TARP or the bank bailout, which provided the money for HAMP.

“It demonstrates that if you have a set of rules for which compliance is completely voluntary and no meaningful consequences for those who violate them, having all the audits and reviews in the world are not going to make a bit of difference,” he continued. “It’s why the program has been a colossal failure.”

Treasury continued to release few details about its audits until this June, when it began publishing quarterly reports based on the audits’ results. The public report showed what Treasury called “substantial” problems at four of the ten largest servicers – Bank of America, JPMorgan Chase, Wells Fargo, and Ocwen – and Treasury for the first time withheld taxpayer subsidies from three of them.

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An agent said it yesterday, and I talked to a loan rep who confirmed it.

FHA has expanded their underwriting guidelines for those who have a short sale on their record.

They already allow borrowers to come back three years after a foreclosure or short sale, but now there is an additional option.

People who have short-sold their previous home can now buy their next home immediately, rather than having to wait 2-3 years, as long as:

• They have a legitimate hardship,
• Have made their last 12 months of mortgage payments on time, and
• They ”aren’t taking advantage of the market”, meaning that they aren’t buying a much more-expensive home.

The thought of convincing the existing lender to approve a short sale when the borrower is current on payments sounds a bit daunting, but the loan rep said that they have closed several of these already!

Hat tip to SM for sending this along, from Yahoo.com:

It’s no secret that Bank of America wants to put its mortgage-related woes behind it. But it appears that a key $8.5 billion settlement with large investors is playing a role in pushing many more people into foreclosures.

The number of homes across the country that received an initial default notice — the first step in the foreclosure process — jumped 33 percent in August from July, the foreclosure listing firm RealtyTrac reported last week. It was the largest monthly increase since August 2007, right after the housing bubble had burst.

Now a preliminary analysis reveals the largest escalation of foreclosures came from Bank of America. Just in California, default notices sent by Bank of America soared 96 percent in August from the previous month.

The dramatic rise is particularly evident in certain California towns and cities. For instance, notices surged 95 percent in Fresno and 76 percent in Sacramento.

Bank of America says that taking action on its foreclosure pipeline will set the stage for a housing market recovery. However, consumer advocates say Bank of America and the other lenders are ramping up foreclosures without cleaning up shoddy paperwork practices, which led to a moratorium in foreclosures last October.

“Bank of America has a ticking time bomb in its books and it needs to show investors that it is moving,” said Ira Rheingold, an attorney and executive director of the National Association of Consumer Advocates.

“‘Does that mean it has improved its practices?’ No. But Bank of America is in a desperate place,” said Rheingold.

On June 29, the Charlotte, N.C. bank struck an $8.5 billion settlement with a group of large investors– including Pimco, the New York Fed and Blackrock– who claimed the bank had sold them poor quality investments based on faulty mortgages. The settlement is still subject to court approval; a decision is expected in November. Several other investors and homeowners have also filed objections with the court to block the settlement.

Bank of America spokesman Richard Simon said the bank’s increased foreclosure actions had nothing to do with the settlement. Instead it stems mainly from a return to more timely filings on new defaults. He also noted that the bank has improved quality controls and was moving homes into foreclosure “only after all other options with homeowners have been exhausted.”

Clearing the backlog of foreclosures and defaulted loans is a key part of the terms of the settlement. Bank of America has to reduce the number of risky mortgage loans and find third-party companies that can help speed up the process. This includes helping homeowners modify loans or herding defaulted loans into foreclosure sales.

The bank’s actions to start clearing the backlog started from the date the settlement was signed, said Scott Humphries, a partner at law firm Gibbs & Bruns, which represented investors in the settlement. “It does not have to wait for court approval,” he said.

Bank of America is hopeful that the settlement will be approved, as it’s a key part of the process to enable management to focus on other issues.

The bank’s stock has been decimated this year — falling more than 50 percent since January. That’s because Bank of America has been hit by a spate of lawsuits from large investors, the government and corporations who say the bank should either buy back the billions of dollars of faulty mortgages or pay damages. Most of the mortgages were written by Countrywide Financial Corp., the country’s largest mortgage lender which Bank of America bought in 2008.

On the national level, there wasn’t any immediate reason, other than the Bank of America settlement, to explain the spike of defaults in such places as Tallahassee, Fla., where an additional 81 percent of homeowners received default notices. In Carson City, Nev., default notices rose by 185 percent.

Consumer advocates say there aren’t any signs that the shoddy paperwork practices have been cleaned up even as foreclosures are being sped up.

“Bank of America will do the exact same thing now, except faster,” said Don Barrett, partner at the Barrett Law Group, which is representing homeowners who seek to block the settlement. Barrett is a former tobacco lawyer who represented cases for attorneys general of several states against the tobacco industry.

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Is BofA continuing to surge? Here are the monthly counts of NODs in SD County and statewide (September’s count is month-to-date):