Wednesday, March 27, 2013

Home Prices Rise, But Can You Find a Seller?

Did you know that home sales are on the rise?  Despite the continuing problems with foreclosures in America, it looks like economic relief efforts are working.  The inventory of homes available for sale is “growing a bit,” suggesting that the foreclosure epidemic is waning and market is on its way to returning to normalcy.  More homes are selling, and Americans are buying at the highest prices since the housing bust several years ago.

Rising Housing Prices—A Good Sign?
In fact, according to an article in ABC News, the Standard & Poor’s/Case-Shiller home price index rose by 8.1 percent this past January.  This is the “biggest year-over-year increase since the summer of 2006,” and it suggests that the housing market is beginning to recover from the crash.  The Standard & Poor’s report shows price increases in all of the twenty cities it tracks, including New York (which had been stagnant for the past several months).  The cities showing the highest annual increases were Phoenix, Las Vegas, and San Francisco.  This is especially good news since these cities were among those hit hardest by the recession.
Trapped by Negative Equity, or Why Limited Properties May Be Driving Prices Up
While an increase in home prices is good news, it may have a downside.  The price tags on these homes may be rising “because there’s a lack of properties for sale in many areas, leading to stiffer competition among buyers.”  In fact, the number of houses currently listed for sale is actually at its “lowest point in more than a decade.”
So, fewer homes are for sale.  Why is this bad news?  According a story in the Chicago Tribune, “many homeowners just owe too much to comfortably sell,” even if they’re hoping to put their houses on the market and move into a different house or to a different city.  Mark Fleming, chief economist for First American CoreLogic, said that nearly half of all current mortgage loans in our country are under-equited, meaning they “have less than 20 percent” equity.  According to Fleming, many of these homeowners likely want to sell, but they’re not putting their properties on the market because they’re either “underwater or under-equited.”  Unsettlingly, about 22 percent of all mortgage holders in America “owe more than the value of their properties.”  
But if the housing market seems to be improving according to statistics, why is there still so much negative equity?  Fleming indicates that it’s going to take some time before homeowners will be able to sell their properties for a large enough net that they’ll have the funds for another down payment.  The looming threat of negative equity is going to “cast a shadow over the housing market for years to come,” says Fleming.
Regardless, good news is still good news.  Experts indicate that the “flood of distressed houses on the market” is mostly over, and the rate of foreclosures across America is “at about half the volume” that it was at during the lowest point of the recession.  And there’s still hope for the 10.4 million homes that remain “underwater,” as well.  By the end of 2012, nearly 200,000 homes that had been nearing foreclosure after the housing bust had “returned to positive equity.”
If you have questions about foreclosures in Illinois or the limitations of homeownership with negative equity, a licensed attorney can discuss your concerns with you.  Contact us today.
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Tuesday, March 26, 2013

Dual Tracking Reforms and What They Mean for Homeowners

Near the beginning of 2013, the Consumer Finance Protection Bureau (CFPB) issued new rules to prevent dual tracking, a process by which homeowners are simultaneously in the process of seeking a loan modification while their mortgage servicer moves forward with a foreclosure.

What is Dual Tracking?
The California Monitor described this process as “the race between foreclosure and loan modification.”  For example, if you’ve submitted a loan modification application on March 1st, and you find out that your mortgage servicer begins foreclosure proceedings on March 10th—without reviewing your loan-modification application—then you’re experiencing dual tracking.  In effect, dual tracking can increase the number of foreclosures that could have been prevented through loan modification programs.
How Do the New Rules Work?
The new rules came about to make sure that homeowners are treated fairly by their mortgage companies and to ensure that borrowers are informed well in advance of the possibility of foreclosure proceedings.
Prior to the CFPB’s issuance of these rules, the 2012 National Mortgage Settlement already included terms to help prevent dual tracking.  For example, under the National Mortgage Settlement, certain dual-tracking reforms can apply to your loan if you meet the following criteria:
·      You have a mortgage through Bank of America, Citi, GMAC/Ally, JPMorgan Chase, or Wells Fargo
·      Your loan is strictly for the home in which you currently live
·      You have already submitted a loan modification application, or you’ll submit one if you can’t make your mortgage payments
These reforms apply to loans owned by Fannie Mae and Freddie Mac, but if your mortgage servicer isn’t one of the banks listed above, under the terms of the Mortgage Settlement you’d have to rely on state laws to help with dual-tracking problems.  The Illinois Supreme Court issued new rules in 2013 to aid struggling home owners with some of the problems that cannot be immediately addressed, or that aren’t covered by the 2012 National Mortgage Settlement.
When the CFPB promulgated its new rules in 2013, it issued a press release that described these legal protections for homeowners.  They include:
·      Restrictions on Dual Tracking—now, mortgage servicers cannot begin a foreclosure when the borrower has submitted a completed loan-modification application.  In addition, mortgage servicers have to wait for a mortgage payment to be delinquent by 120 days before it sends a notice of foreclosure proceedings.  This is intended to give borrowers adequate time to ask for help with a loan modification.
·      Information about Foreclosure Alternatives—mortgage servicers are required to inform borrowers in writing about “loss mitigation options” once they’ve missed two consecutive mortgage payments.
·      Easy Access—borrowers must have easy access to mortgage-servicer employees whose jobs are to help struggling homeowners.  These personnel are designed to inform homeowners about the status of “loss mitigation” applications and other documents.
·      Consideration of all Foreclosure Alternatives—the mortgage servicer must consider all feasible alternatives, prior to foreclosure, in order to “help the borrower retain the home.”  These alternatives can include payment deferment and loan modification.  In addition, a foreclosure sale can’t occur until all other alternatives have been considered.
In addition to these protections for homeowners, the CFPB rules also are intended to make sure there are “no surprises” and “no runarounds” for borrowers.  The rules are set to take effect in January 2014.
In the meantime, if you have questions about loan modifications, dual tracking, or other ways to avoid foreclosure, an experienced foreclosure defense attorney can answer your questions today.
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Thursday, March 21, 2013

FDIC Settlement Policy May Be Too Lenient on Big Banks

Did you know that many of the banks responsible for the financial crisis may be getting a break?  According to a recent article in the Los Angeles Times, the Federal Deposit Insurance Corporation (FDIC) is increasing its focus on settlements with these big banks, shying away from lawsuits and other punitive actions that could act as a deterrent in the future.  And what’s worse?  The FDIC is keeping a lot of its settlement news on the down low.  The government’s most recent $54 million deal with Deutsche Bank includes a “no press release” clause, which requires that the FDIC never mention this settlement unless it’s responding to a “specific inquiry” concerning the terms of the agreement.

The FDIC’s Recent History
In fact, the FDIC has dealt similarly with a number of other bank settlements since the mortgage meltdown.  The Los Angeles Times suggests that this is evidence of a “major policy shift” from past financial crises, “when the FDIC trumpeted punitive actions against banks as a deterrent to others.”  These prior punitive actions were taken against banks involved in the “savings and loan debacle in the late 1980s and early 1990s,” including: American Savings & Loan Association of Stockton in 1988, First RepublicBank Corp. of Dallas in 1988, Sunbelt Association of Dallas in 1988, and Lincoln Savings in 1989.
Regarding the trend toward settlement, the Los Angeles Times acquired more than 1,600 pages of FDIC documents through the Freedom of Information Act.  In these papers, the Times found that the banks with whom the FDIC has settled have been implicated in serious acts of fraud and negligence, including providing reckless loans to homeowners and falsifying documents.
On top of this, these settlements may be more costly than the punitive measures taken previously.  While some of the largest bank failures occurred in the late 1980s, 471 banks have failed since 2007.  These failures have left the FDIC deposit-insurance fund with losses totaling nearly $92.5 billion.  Through its settlements (in lieu of lawsuits or other measures), the FDIC only collected $787 million for bank failures between 2007 and 2012.  As you can see, this is a mere fraction of its losses.     
So what does this mean for consumers?  Many of us want to see the banks responsible for the mortgage meltdown held accountable, regardless of whether we’ve been immediate victims of the financial crisis.
What is the FDIC and How Does it Impact Homeowners?
The federal government describes the FDIC as an entity that “preserves and promotes public confidence in the U.S. financial system by insuring deposits in banks and thrift institutions.”  In order to do this, the FDIC identifies and monitors potential risks to its deposit insurance funds, thereby “limiting the effect on the economy and the financial system” in cases of bank failure.
The FDIC is involved in a number of actions that affect consumers every day.  It supervises banks for “operational safety and soundness,” and it ensures that banks comply with consumer protection laws that affect our credit ratings and ability to secure loans.  For example, it oversees banks’ compliance with the Fair Credit Billing Act, the Fair Credit Reporting Act, the Truth-In-Lending Act, and the Fair Debt Collection Practices Act.
In its dedication to consumer protection and dealing with the foreclosure crisis, the FDIC insists that it is “working vigorously to help consumers . . . avoid unnecessary foreclosures” and to put a stop to fraudulent “foreclosure rescue scams.”  It provides information for individual homeowners, as well as for community-based organizations.  Yet, its new policy to settle with banks, rather than to hold them more saliently accountable, should concern consumers.
While FDIC spokesperson David Barr indicated that the recent policy of “settlement first” is nothing new, many consumer advocates insist that the FDIC should be criticized for “their reluctance to make examples of Wall Street firms by taking them to trial.”
If you have been a victim of the mortgage meltdown, you may have a claim.  Speak to an experienced foreclosure defense attorney today to discuss your case.
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Thursday, March 14, 2013

Recent Robo-Signing Case Dismissal Reignites Mortgage Fraud Concerns

Since the foreclosure epidemic began, banks have been foreclosing on homes at record rates.  However, some of these foreclosures may not have been legal.  Homeowners have alleged claims of “robo-signing” against banks and mortgage firms, but according to a recent article in the Chicago Tribune, robo-signing prosecutions may not lead to especially harsh penalties.  In fact, while “five giant mortgage firms” are paying nearly $25 billion to settle claims of “robo-signing and other foreclosure abuses,” only one robo-signing case has actually gone before a jury.  As of March 1st, only two robo-signing prosecutions were pending, and a judge recently decided to throw out one of those cases.

What does this mean in Illinois?  Although mortgage companies are paying money to settle these claims, they may not be held accountable for robo-signing abuses and other fraudulent foreclosure mechanisms.  If you’ve been a victim of robo-signing or another foreclosure abuse, you may be able to challenge your foreclosure in court with help from an experienced attorney.

What is Robo-Signing?

The term was coined in 2010, as consumers realized that the mortgage lending industry was using false affidavits to support thousands of foreclosure cases.  This sparked a “robo-signing scandal,” in which several large banks and mortgage lenders put a temporary freeze on pending foreclosures until the mess could be sorted out.

So what does this term mean for homeowners?  In nearly half of U.S. states, foreclosing on a home requires the lender (i.e., the bank) to go to court in order to finalize that foreclosure.  In court, the lender also must show two things: 1) that the borrower defaulted on the mortgage, and 2) that the lender is the owner of the mortgage.

The lender proves that the borrower defaulted and that it owns the mortgage by submitting documents to the court, as well as an affidavit.  What is an affidavit?  According to, it’s a written statement, signed under oath, by a person who has looked at all of the mortgage documents and has found them to be true.  The affidavit is typically signed by an employee of the bank, and it’s supposed to prevent any foreclosures in situations where the borrower either hasn’t defaulted, or in situations where the bank can’t prove that it owns the mortgage.  In other words, it’s intended to prevent a fraudulent foreclosure.    

Because large American banks were foreclosing on thousands of properties, some of their employees began signing these affidavits without playing by the rules—the bank employees either hadn’t reviewed the documents properly, or they had “no basis for believing that the homeowner was in default or that the bank owned the loan.”  Since the affidavits were signed so quickly and without proper knowledge, this fraudulent act became known as “robo-signing.”

The Tampa Bay Times summed up “robo-signing” as a “back-office system of quickly signing off on foreclosure documents like affidavits without actually doing what the affidavits say was done.  Also known as cheating and lying.”

Where are Robo-Signing Cases Now?

Huge banks such as JPMorgan Chase, Wells Fargo, GMAC, and Bank of America were implicated in the robo-signing scandal.

The Chicago Tribune noted that, of only two prosecutions in the country, the first involved 100+ felony counts against title officers from a Jacksonville, Florida mortgage servicer.  A Nevada District Court Judge who heard this case ruled that the “prosecutors committed misconduct” in the case, leading the judge to dismiss the indictments.  The second robo-signing prosecution led to guilty pleas of conspiracy, forgery, and falsifying documents. The defendant in that case now faces up to five years in federal prison and at least two in state prison.

Are you facing a foreclosure?  Do you think you may have been a victim of robo-signing?  Contact us today to discuss your case.

See Related Blog Posts:
Huge Flaws in Independent Foreclosure Review Process?
More Funds Committed to Illinois Foreclosure Victims

Tuesday, March 12, 2013

Community Organization Seeks to Revitalize Chicago Neighborhoods

The Southwest Organizing Project (SWOP), a nonprofit group committed to community organizing, is striving to reclaim Chicago’s Southwest side.  Its recent community-based campaign, known as “Reclaiming Southwest Chicago,” is seeking funding from the National Foreclosure Settlement Awards in order to rebuild communities that were especially “hard-hit by the housing crisis.”  

A recent article in the Chicago Tribune praised the nonprofit group for its work in our city.  The story emphasized the group’s broad reach in areas negatively affected by foreclosures, and noted that the group was even recognized nationally last month when it received a MacArthur Award for “Creative and Effective Institutions.”  SWOP received the award because of its success in “empowering the community to help itself.”

According to the MacArthur Foundation’s mission statement, it “supports creative people and effective institutions committed to building a more just, verdant, and peaceful world.”  Among the Foundation’s many emphases, it works to “make cities better places,” which is precisely what SWOP is hoping to do for Chicago.

History of the Community Group

SWOP describes itself as a group designed to improve neighborhood life and well-being in certain Chicago communities.  In the past fifty years, the Southwest side has seen “large and rapid demographic shifts” that have led to a breakdown of neighborhood networks in the area, and a declining sense of community.

The Southwest Organizing Project’s early work began in 1989 through funding from the Southwest Catholic Cluster Project.  These early efforts were intended to strengthen community bonds among the “increasingly diverse residents and neighborhoods.”  After several years of successful work, SWOP was officially created in 1996.

How is SWOP Revitalizing the Southwest Side?

SWOP is now known for its “fight to end predatory lending” in the region, specifically in relation to local immigrant communities.  The Chicago Tribune emphasized that SWOP has been able to make headway into combatting the effects of foreclosure by gaining trust within the community and working directly with residents in its ground-up efforts.  

Notably, SWOP executive director Jeff Bartow was interviewed for comments early on in the foreclosure legislation process.  In April 2009, just after the signing of foreclosure grace period legislation in Illinois, Bartow emphasized the importance of providing homeowners in foreclosure with additional days to remain in their homes.  SWOP has been working to help neighborhood families since, and it is now focusing on revitalization efforts.

With the $750,000 of funding it has received from the MacArthur Foundation, SWOP is identifying prospective renters and homeowners who may be interested in renting or buying some of the empty properties on the Southwest side.  In addition, SWOP hopes to use the grant to “move into its own offices, improve its technological capacity, and boost employee training.”

Ultimately, SWOP plans to work with local developers, including the successful Brinshore Development, to “acquire and rehab” more than 600 “chronically vacant buildings” on the Southwest side

The grant funding comes just months after SWOP worked together with Illinois Attorney General Lisa Madigan and other community-based organizations to tour neighborhoods impacted by the housing crisis and to hear residents’ concerns about the vacant buildings in their areas.  In addition to the MacArthur funding it has just received, SWOP hopes to add to its revitalization efforts through monies received from the National Foreclosure Settlement Awards.

Do you have questions about foreclosures or community rehabilitation in your area?  Contact a foreclosure attorney today.

See Related Blog Posts:
Illinois Land Bank Aims to Revitalize Communities
More Funds Committed to Illinois Foreclosure Victims

Monday, March 4, 2013

Freddie Mac Says Mortgage Rates Are Easing

Are you hoping to become a homeowner this year?  There’s good news.  According to a recent article in the Chicago Tribune, mortgage rates are easing.  By the end of February, Freddie Mac reported that interest rates had fallen, meaning better rates for borrowers.  This news comes after weeks of rising rates.

Dropping Interests Rates Mean Good News for Potential Borrowers

Which loan terms is Freddie Mac referring to?  In fact, most terms have shown that they’re easing a bit.  For well qualified borrowers, 30-year mortgage rates have dropped from 3.56 down to 3.51 percent (the average this year was 3.7 percent), 15-year fixed loans dropped from 2.77 to 2.76 percent, and even the start rates for “popular types of adjustable mortgages” fell slightly.  Of course, these rates are typically offered for buyers who have “good credit scores, 20 percent down payments or home equity, and the financial wherewithal to afford payments.  But even if you don’t have excellent credit or have dealt with foreclosure issues in the past, you may still be eligible for a home loan, such as a dignity mortgage.

Despite the fact that rates are easing, the Mortgage Banker Association reported that the number of mortgage applications dropped toward the end of February, approximately 3.8 percent.  If you have questions about obtaining a mortgage after a foreclosure, an experienced attorney can answer your questions today.

Do You Know Enough About Home Loans?

But in the meantime, do you know enough about mortgages?  The Los Angeles Times published a mortgage quiz, intended to test its readers’ knowledge.  As you may know, you’re likely going to need a mortgage in order to become a homeowner.  But in the past years, a “multitude of risky home loans, many of them made without documenting borrowers’ incomes.”  These loans prevented millions of Americans from life-long homeownership and led to the bursting of the housing bubble, which has shown itself in the “shock waves of foreclosures” across our country.

What you may not know is that, in reaction to the housing collapse, the Federal Reserve has worked to make interest rates lower than ever to encourage borrowers to buy a house, despite the stringent mortgage standards.  In fact, interest rates for a 30-year fixed home loan averaged nearly 16.6 percent thirty years ago, compared to 3.7 percent in 2012.  According to the Los Angeles Times, there are a few other pieces of information you might like to know about mortgages.  The Federal Housing Administration created the popular 30-year mortgage with a fixed interest rate to allow millions of Americans to become homeowners.  Next to mortgages, nearly all other homeowners—people who don’t need a mortgage loan—are “investors who are flush with cash.”  In other words, if you want to own a home, you’ll likely need a mortgage, and home ownership can seem tricky amidst all the foreclosures in our state.

If you already have a mortgage, lower interest rates mean good news for you, too.  The Mortgage Bankers Association reported that 80 percent of home loan applications in recent months have been for refinances rather than purchases—like large numbers of other Americans, you can save money even if you’re already a borrower.  If you have questions about home loans, foreclosures, or other real estate matters in Illinois, a licensed attorney can provide answers.  Contact us today to learn more.    

See Related Blog Posts:
Dignity Mortgages May Offer Help in the Homeownership Crisis   
Reestablish Your Credit and a New Loan May Be Possible Sooner than you Think