More Errors in Mortgage Settlement Checks

Three weeks ago, Rust Consulting issued a series of bad checks to homeowners from the national mortgage settlement.  As if that error weren’t bad enough, Rust Consulting just issued a new round of checks that were written for the wrong amounts.  In fact, according to a recent article in the New York Times, Rust issued “nearly 100,000 checks for less than the homeowners were owed.”  This costly mistake could have cheated homeowners out of millions of dollars.

This recent egregious errors begs the question of whether the mortgage settlement will actually help homeowners at all.  If the money isn’t in the bank when the checks are sent, and if the checks are written for less than the owed amounts, what are homeowners really getting out of the settlement?

The terms of the mortgage agreement can be confusing enough on their own without the added problems of disbursement errors.  If you have questions about the mortgage settlement or about the funds you may or may not have received, an experienced foreclosure defense attorney can answer your questions today.

Details of the Mortgage Settlement

In an earlier post this month, we mentioned that Rust Consulting is sending out these checks as part of a huge mortgage settlement, which agreed to provide “compensation for foreclosure abuses.”  About a dozen banks were part of the original settlement in 2011.  By 2012, costs had increased, and the banks reached a new settlement in early 2012.  This 2012 settlement required the banks to pay $8.5 billion in cash payments (i.e., the checks that Rust Consulting has been sending) and in mortgage relief.

Major Problems at Rust Consulting?

According to the New York Times, federal regulators forced Rust to fix their mistakes with these recent checks, and a spokesperson from the consulting group indicated that they had “corrected the error” and planned “to mail supplemental checks to affected borrowers as soon as May 17.”  It claimed that the mistake had simply been a “clerical error.”

However, it seems that there may be other problems behind the scenes at Rust.  In fact, consumers are starting to question the government’s decision to hire the consulting firm to handle the settlement disbursements.  The government selected Rust to distribute checks for the cash settlements, which total $3.6 billion.  When so much money is involved, has government oversight of Rust been lacking?  Or did the government make a mistake when it hired Rust in the first place?

Representatives on Capitol Hill are starting to ask those questions, and they’ve begun investigations into potential problems with the settlement.  For example, Representative Elijah E. Cummings from Maryland said that the settlement was the worst one he had ever seen.  He has been a leader in investigating the settlement, as well as the government’s decision to use Rust Consulting for disbursement.

Problems Likely to Continue

The first problems occurred when Rust sent the first round of checks in April, for which it “failed to move money into the bank account used for the settlement.”  As a result, the homeowners who received the checks were unable to cash them.

In addition, homeowners have also complained that Rust sent checks to the wrong addresses, or that they sent checks issued to deceased borrowers.  For example, a California homeowner has been unable to cash her check because it was issued to her deceased husband.

Now, the current problem of issuing checks in the wrong amount is also going to be a difficult one to fix.  Of 220,000 Morgan Stanley and Goldman Sachs customers alone, about 96,000 of them received checks for the wrong amount.

And in addition to this problem, homeowners don’t have access to information about how their compensation is being determined, so they can’t know if they’re even receiving the correct amount in many cases.  According to Cynthia Singerman, a lawyer with Housing and Economic Rights Advocates, indicated that nearly 2 million people—so far—have had problems with their settlement checks.

If you are experiencing problems with the mortgage settlement or with a disbursement from Rust Consulting, you may be entitled to compensation.  Contact an experienced attorney today to discuss your case.

See Related Blog Posts:

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Mortgage Settlement Checks Less Than Promised

The first checks from the $3.6 billion settlement with America’s largest banks went out last month, but they left much to be desired.  After being “accused of wrongful evictions and other abuses,” these banks agreed to pay out to those who had been harmed, according to a recent article in the New York Times.

Yet, it turns out that nearly 80 percent of people receiving checks will end up getting less than $1,000.  On top of the limited relief, some struggling homeowners who received a mortgage settlement check took it to the bank, only to find that there were insufficient funds to cover what seems like a meager amount in relation to the large settlement.

History of the Settlement

You may remember that nearly a dozen big banks reached a settlement in 2011 relating to allegations of robo-signing and other illegal mortgage practices.  In the beginning stages of the settlement, the banks indicated that they’d pay consultants “to review individual loan files to determine who was mistreated and how much they should be compensated.”

However, as the Chicago Tribune explains, the costs “ballooned,” which led to a new settlement in January 2012.  This settlement ended plans for an independent foreclosure review.  Additionally, advocates argued that these reviews were time-consuming and costly, and in the end didn’t actually have an effect on many struggling homeowners.  So instead, the new settlement required “$8.5 billion in cash payments and mortgage relief.”

For example, the 2012 settlement mandated that Wells Fargo pay $766 million in cash and provide $1.2 billion in borrower relief, while Bank of America was scheduled to pay $1.1 billion in cash and to provide $1.8 billion in relief.  Other banks involved include HSBC, MetLife Bank, PNC Financial Services, Sovereign, SunTrust, U.S. Bank, Aurora, Morgan Stanley, and Goldman Sachs.

Details of the Settlement Check Amounts

According to The Charlotte Observer, about 4 million borrowers are eligible to receive funds from the settlement.  However, approximately 77 percent of them will receive under $1,000, while nearly 60 percent will receive only $300.

The $300 checks are the lowest that can be issued from the settlement.  It advertises payments that range between $300 and $125,000, but these figures are somewhat misleading.  While the maximum amount for the settlement checks is actually the advertised $125,000, only about 1,100 people—out of nearly 4 million—will receive checks for that amount.  The majority of these borrowers are military service members whose houses were foreclosed on while they were on active duty.  In short, the majority of borrowers slated to be eligible for mortgage settlement checks won’t receive more than $1,000, and many won’t get any more than $300.

Settlement Checks Bouncing?

In addition to low payouts, some borrowers have indicated that their settlement checks can’t be cashed!  The New York Times reported that Ronnie Edward, whose home was foreclosed on nearly three years ago, received a check for $3,000.  Edward is in the minority of borrowers with his higher-than-average settlement check.  However, when he took it to his bank in Tennessee, the bank told him that the funds “were not available.”

In fact, the article suggests that many of the 1.4 million homeowners who received the first round of settlement checks may have faced similar problems.  Rust Consulting, a firm used to distribute checks, apologized to the borrowers who were unable to cash their settlement payments.  James Parks, the senior vice president at Rust, said that the firm was “working hard and communicating with the banking regulators, the servicers, and other banks to ensure those issues were not repeated.”

If you have questions about foreclosures in your area or about the mortgage settlement checks, contact an experienced foreclosure defense attorney today.

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NeighborWorks America Grants to Aid Illinois Foreclosure Counseling

According to an article from local KSDK News, the Illinois Housing Development Authority recently received two federal grants to aid homeowners in the state who are facing foreclosure.  The grants came from NeighborWorks America, and they total $3 million.

What is NeighborWorks America?

NeighborWorks America seeks to help people across the U.S. to live in affordable homes, and to find ways to improve their lives and strengthen their communities.  The organization set a number of strategic goals that it hopes to meet between 2012-2016, which include:

·      Creating and preserving housing opportunities that are both sustainable and affordable

·      Advancing community development programs and resident involvement in order to achieve a positive community impact.

·      Supporting other NeighborWorks organizations that can help to provide housing and community development expertise, as well as effective business models

·      Strengthening knowledge and skills in our communities related to community development and affordable housing, allowing ground-up or grassroots efforts to thrive

The organization focuses specifically on foreclosure prevention and community development.  NeighborWorks America provides resources to struggling homeowners that include access to foreclosure help, news releases about mortgage scams, and important information about the National Foreclosure Mitigation Counseling (NFMC) Program.

At NeighborWorks America, members of the organization believe that foreclosure counseling can play a big role in preventing foreclosures and aiding struggling borrowers.  They provide foreclosure counseling training in cities across America.  The content covered in these trainings ranges from basic knowledge about foreclosure prevention to advanced certifications in mortgage relief strategies.  The organization’s focus on foreclosure prevention and foreclosure training will play a big role in the use of the $3 million grant money in Illinois.

What Will the Grants Fund?

While the market continues to show signs of recovery, many Illinois homeowners are still at risk of foreclosure.  The funding from NeighborWorks America will provide 10,000 families in our state with access to free foreclosure prevention counseling.  The counseling is through Governor Quinn’s Illinois Foreclosure Prevention Network (IFPN).

Quinn created the IFPN “as a service to Illinois residents to bring together the services and resources of various state agencies and qualified participating non-profit agencies” to guide homeowners through options for staying in their homes.  These services are free.

Specifically, counselors through the IFPN can help borrowers to better understand the foreclosure process and to help with communication with mortgage lenders and servicers.  They can also help with debt counseling so that you can maintain a reasonable budget and make your mortgage payments on time.

The recent grants from NeighborWorks America aren’t the only ones that the organization has provided to consumers in Illinois.  Just last month, NeighborWorks America also provided a grant of nearly $100,000 to HomeStart, a non-profit organization in Northern Illinois that assists consumers with foreclosure problems and other homeownership issues.  Like other programs sponsored by NeighborWorks America, this grant will aid housing and community development initiatives.

An experienced foreclosure defense attorney can answer any questions you might have about the foreclosure process, and can speak to your concerns about staying in your home after you’ve missed mortgage payments.  Contact us today.

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Obama Administration’s Housing Scorecard Points to Real Estate Recovery

Earlier this month, the U.S. Department of Housing and Urban Development (HUD) released the March edition of the Obama Administration’s Housing Scorecard.  What is this?  It’s a “comprehensive report on the nation’s housing market.”

According to Realtor Mag, the Housing Scorecard spells good news for the real estate industry.  The recent report on the Housing Scorecard echoes much of the news in the Chicago area—home sales are on the rise, and neighborhoods are slowly recovering from the delinquencies inherent in the foreclosure epidemic.

HUD’s View on Housing Recovery

According to a press release directly from HUD, current data on foreclosures and the real estate market show continuing signs of recovery.  The press release referred to “key indicators” of progress, including home prices that “continue to show strong annual gains” and the sustained purchase of new homes alongside sales of existing homes.  While “the overall recovery remains fragile,” the numbers point to a markedly upward trajectory.

In fact, the HUD Deputy Assistant Secretary for Economic Affairs Kurt Usowski indicated that, “in 2012, homeowners’ equity grew by more than 1.64 trillion and rising home values lifted 1.7 million of them back above water.”  At the same time, he continued to emphasize that there’s still more work ahead of us “since there are so many families and individuals still struggling.”

In order to give you an idea of the positive effects of some of the government programs, you might want to take a look at the key data released in the Housing Scorecard.

Key Data from the Housing Scorecard

The HUD press release identified key points related to “the health of the housing market” and the effects of the Obama administration’s foreclosure prevention programs.  Here is some of the important facts that HUD featured in its press release:

·      Home prices showed large gains between January 2012 and January 2013.

·      New home purchases and existing home sales continued to rise across the year.  In fact, the purchase of new homes in February 2013 showed a 12 percent increase from a year ago, which itself showed an increase from previous studies.  According to HUD, these figures may be due in large part to the First-Time Home Buyer Tax Credit.

·      Foreclosure mitigation programs are working, as they’re providing relief for millions of homeowners.  According to the HUD press release, the Making Home Affordable Program has helped 1.5 million homeowners.  In fact, more than 1.1 million permanent mortgage modifications took place through the Home Affordable Modification Program (HAMP).  And at the same time, the Federal Housing Administration (FHA) “offered more than 1.7 million loss mitigation and early delinquency interventions.”

·      HAMP is still working to help homeowners avoid foreclosure.  The 1.1 million homeowners who received permanent mortgage modifications through HAMP now save about $546 on mortgage payment every month.  To date, that’s $18.5 billion.

What do these statistics mean for Illinois?  As the country continues to recover from the housing crisis, home prices and sales in the Chicago area will also continue to rise.  If you have questions about the real estate market or concerns about avoiding foreclosure, contact an experienced foreclosure defense attorney today to discuss your case.

See Related Blog Posts:

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Community Development and the Section 108 Loan Guarantee Program

In an earlier post, we reported that Cook County received a $30 million loan through the Department of Housing and Urban Development (HUD) for sustainable economic development in the Chicago area.  As we mentioned, the loan came through HUD’s Section 108 Loan Guarantee Program, which provides communities across the country with low-interest loans for large-scale physical development and community revitalization project.

It’s important to know details surrounding HUD’s Section 108 Loan Guarantee Program.  Now that we’re finally starting to see communities improving after years of foreclosures and vacant properties, this program could help with neighborhood rehabilitation in your area.

Role of the Community Development Block Grant (CDBG) Program

The Section 108 loan guarantee provision is part of the Community Development Block Grant (CDBG) Program, which provides communities with various resources to address their “unique community development needs.”  In brief, it works to provide services to the most vulnerable neighborhoods and areas in the nation.  The program began in 1974, and it’s one of the longest-running programs at HUD.  It operates with specific program areas in mind, and some examples include:

·          Entitlement Communities: this program provides grants to large cities and urban counties to “develop viable communities.”  It allocates funds for “decent housing, a suitable living environment, and opportunities to expand economic opportunities” for low-income and moderate-income persons.

·          State Administered CDBG: this program is also known as the “Small Cities CDBG program,” and provides grants to smaller units of local governments for community development projects.

·          Section 108 Loan Guarantee Program: you already know about this one, which enables communities to apply for loan assistance to carry out development projects.

·          Neighborhood Stabilization Program: for this program, HUD provides grant money to “communities hardest hit by foreclosures and delinquencies,” allowing them to purchase homes in the neighborhood for rehabilitation and redevelopment.  The idea is that these projects will help to stabilize neighborhoods.

As part of a larger program, the Section 108 provision has regulations of its own, including the types of projects that can be eligible for funding and specific loan details.

What Kinds of Activities Are Eligible for Section 108 Financing

According to HUD, activities that are eligible for Section 108 financing can include:

·          Economic development activities and housing rehabilitation initiatives as they’re defined by the CDBG Program

·          Acquiring real property (for rehabilitation or redevelopment)

·          Rehabilitating publicly owned real property

·          Constructing, reconstructing, and/or installing public facilities—these can include streets, sidewalks, and various other public sites

·          Relocating, clearing, and otherwise improving specific sites

There are other activities that remain eligible for funding through Section 108, but the ones listed above represent some of the key development projects that the program finances.

Specific Loan Details

In addition to being limited to certain types of activities, Section 108 also carries financing specifics.  The program has particular security requirements, which involve the public entity that is applying for funds, or the state, to pledge the principal security for the loan guarantee.  For all loans under Section 108, financing comes through underwritten public offerings with low interest rates, and a maximum repayment period of 20 years.

Of course, each loan is individually structured to meet the specific needs of the borrower, and to date, no borrower has defaulted under Section 108.

If you have questions about securing funding for community development or rehabilitation, an experienced attorney can answer your questions today.

See Related Blog Posts:

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Cook County Approved for $30 Million Sustainable Development Loan

Earlier this year, Antonio R. Riley, the Midwest Regional Administrator for U.S. Housing and Urban Development (HUD) announced that the department approved a $30 million loan guarantee for Cook County “to help finance four types of sustainable developments in the county.”  According to a press release from HUD, the loan will provide funding for a range of Chicago development projects, from small business projects to larger scale transit projects.  HUD defined these sustainable developments specifically as:

·          Transit-oriented, mostly mixed-use development within a half mile of passenger rail

·          Cargo-oriented projects near freight rail lines

·          Mixed-use hospitality/service sector projects near transit lines

·          Business Development loans

HUD hopes that its Section 108 Loan Guarantee Assistance Program will be a “powerful tool to drive economic development” in the Chicago area.  Riley indicated that the approved $30 million in funds will help for-profit businesses in Cook County to carry out a variety of economic development schemes, which will benefit low-income and moderate-income residents in the city.  In fact, Riley stated that the loan “is expected to create 600 new jobs” this year.

What is Sustainable Development in Chicago?

In Cook County’s application to HUD for the funding, it explains that its Department of Planning and Development “will administer this sustainable economic development initiative” and “will provide financing assistance for the economic development projects that qualify.”  Who will qualify under the scheme?  The County will work together with smaller communities and their organizations to determine eligibility for sustainable development projects, and they’ll partner up to “support these job-creating, economic developments.”

In fact, the City of Chicago actually has its very own Sustainable Development Division, which is “responsible for creating and expanding public open space systems” and “developing policies and programs to advance the sustainability of the City’s building, businesses, and urban form.”  This division is part of Chicago’s Department of Housing and Economic Development.

It has some long-term projects underway, which include improvements to waterfront access, initiatives to expand certain natural habitats and to improve the green quality of development sites, and programs to promote the local food industry.  While many of these aren’t the specific kinds of projects that the HUD loan will help to fund, they showcase Chicago’s interest in sustainable development, whether it deals with environmental and agricultural improvements, or transit-related initiatives that will be at the forefront of the $30 million loan.

What is the Section 108 Loan Guarantee Assistance Program?

Section 108 is part of a loan guarantee provision of the Community Development Block Grant (CDBG) program.  It’s intended for communities that are strapped for cash but need money for housing rehab, distressed public facilities, and other large-scale development initiaives.

Aimed at projects like those underway through Chicago’s Sustainable Development Division, the Section 108 Loan Guarantee Assistance Program helps local governments to borrow funds from private investors at interest rates that are reduced from typical loans.  With these lower interest rates, cities like Chicago can use the funds to “promote economic development, stimulate job growth, and improve public facilities.”  The loan program is intended to encourage private contributions and seed money to large-scale public projects in distressed areas.  It is HUD’s hope that the funding provided through this program might be able to “renew entire neighborhoods.”

If you have questions about acquiring a loan to purchase a foreclosure or other property in need of rehabilitation, contact an experienced attorney today.

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Hispanic Homebuyers Offer Hope for the Market

In recent months, we’ve seeing encouraging reports about the real estate market and an overall decline in nationwide foreclosures.  Although it might be tougher to find a property to buy in the current climate, home prices are finally on the rise and banks even seem to be turning better profits.  According to a recent article in the Chicago Tribune, Hispanic consumers are at the forefront of new homeownership.  The National Association of Hispanic Real Estate Professionals (NAHREP) agrees, reporting that “Latino potential first-time buyers have increased 38 percent since 2010.”  In fact, the NAHREP publishes an annual report on the state of Hispanic homeownership, and the most recent report contends that the Hispanic homebuyer market “is poised, due to its population size, high desire, and buying clout, to drive first-time homebuyer purchases and accelerate the nation’s economic recovery.”

However, the article suggests that these first-time buyers could be “stymied by a shortage of homes to buy and by competition from deep-pocketed investors.”  These potential limitations are echoed through an article in the Huffington Post last month, which voiced concerns about Hispanic homeownership being threatened by unfair housing practices.

Limiting Factors in Hispanic Homeownership

Perhaps if we know what’s limiting this budding market base, we might have a better idea of how to advance Hispanic homeownership in the Chicago area.

The Chicago Tribune alludes to the problem of a lack of inventory.  There are fewer houses on the market, and they have high price tags.  These factors can lead potential homeowners to make multiple offers on properties, and to be continuously outbid by others who are willing to bid even higher than the stated value of the property.  After months of this type of bidding, many first-time homeowners grow discouraged, and many stop bidding.

Often, individuals and families lose out to deep-pocket investors who can pay cash and closing costs up front.  The Huffington Post explains that “they get beat up by cash buyers and pool investors who offer a fast closing even at lower prices.”  This hurts many first-time Hispanic homebuyers, who often have to wait up to 60 days to close on their contracts based on the terms of loans backed by the Federal Housing Administration (FHA).

The NAHREP, despite its encouraging statements, has suggested that banks have also been more willing to offer low prices on foreclosure properties to cash buyers, which ends up hurting these individual homebuyers.  In many ways, the NAHREP suggests that “townships and municipalities can do their fare share” to ensure that foreclosures and other for-sale properties are in move-in condition.  In addition, they encourage banks to entertain serious offers from individual homeowners.  

In brief, the organization would like to see a focus on getting owner-occupants into foreclosures and other vacant homes, and it would like banks to move away from policies that “favor large investors.”

Encouraging Facts and Statistics for Hispanic Homebuyers

Gary Acosta, the co-founder and executive director of the NAHREP, said that despite the obstacles Hispanic homeowners face, they “seem to be very resilient, especially coming off the housing crisis.”  He indicates that Hispanic Americans are “forming households at a faster rate than the general population,” which is an arrangement that is “much more aligned with the purchase of a home.”

Acosta explains that there are some “nuances to working with the Hispanic market,” including language barriers and limited credit histories in certain cases.  Yet, he’s optimistic.  The Chicago Tribune quoted him as saying that “the major players in housing now understand, or are starting to understand, how important the Latino market is.”

If you have questions about homeownership or current terms surrounding mortgages and foreclosures in Illinois, contact an experienced attorney today to discuss your concerns.

See Related Blog Posts:

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