Wednesday, July 31, 2013

More HAMP Defaults

The federal government created the Home Affordable Modification Program (HAMP) in order to help struggling borrowers to stay in their homes.  Over the last many months, we’ve told you about HAMP, its promises to homeowners, and the Obama Administration’s expansion of the program this past June.  In fact, effective June 1, 2012, HAMP was expanded to include additional homeowners in the program.  However, a recent study reported in shows that there’s a shocking amount of loan defaulting going on.
Indeed, there are more defaults on modified mortgages than anyone expected.  According to the Special Inspector General for the Troubled Asset Relief Program (SIGTARP), HAMP doesn’t seem to have helped very many homeowners.  Currently, 26 percent of homeowners in the program have re-defaulted, and that rate actually continues to worsen, says DSNews.
Which Homeowners Are Eligible for HAMP?
We’ve explained the premise of HAMP before: if you’re employed but you’re still having difficulty making your monthly mortgage payment, HAMP is supposed to be able to help lower those payments “in order to make them more affordable and sustainable for the long term.”  The administration expanded the program earlier this year, allowing more homeowners to be eligible for its services, including:
·      Homeowners applying for a modification on a home that’s not their primary residence (the property is a rental property, and it’s either already rented or the owner intends to rent it out)
·      Homeowners who didn’t qualify for HAMP previously because they had a debt-to-income ration of 31 percent or lower.
·      Homeowners who had a HAMP “trial period plan” and defaulted on the trial payments
·      Homeowners who had a HAMP permanent modification and defaulted on their mortgage payments (meaning that they lost good standing in the program)
The expanded criteria were supposed to mean that more homeowners would be able to stay in their homes.  However, the DSNews article suggests that there may be some problems with the HAMP premise.
Massive HAMP Defaults
Since it began in 2009, HAMP has provided nearly 1.2 million modifications to struggling homeowners.  However, of that large number, 306,538 have fallen behind on their modified mortgage payments by more than three months.  In fact, 22 percent of those re-defaulters have already entered into the foreclosure process.  According to SIGTARP, that means that only 865,100 borrowers are still part of the program.  Under the HAMP rules, if you miss three or more payments, you’re disqualified for assistance.
It seems that more borrowers have defaulted in recent years than when HAMP was created in 2009.  According to SIGTARP “the percentage of modified homeowners who end up as redefaulters has steadily increased over time.”  In 2009, only 1 percent had re-defaulted, while the number now stands at 26 percent.
There is hope, though.  Only 1 percent of “homeowners who received modifications in early 2013” have re-defaulted.  With taxpayers losing money on the re-defaults of the past few years, something needs to be done.  In order to continue improving the program, SIGTARP has offered recommendations that the Treasury plans to implement.  The Treasury will “conduct further research into the causes of redefault,” and it will “require servicers to develop and use an ‘early warning system’ to actively reach out to homeowners who may be at risk of redefaulting.”
If you have questions about the HAMP program or are having trouble making your monthly mortgage payments, you don’t need to handle the burden alone.  An experienced foreclosure defense attorney has specialized knowledge about mortgages, modifications, and avoiding foreclosure.  Contact us today to discuss your case.
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Loan Modification Plans May Be Falling Short

Monday, July 29, 2013

$230 Million GMAC Foreclosure Settlement

In late July, the Federal Reserve Board reached a foreclosure settlement with GMAC Mortgage, according to a Federal Reserve press release.  According to, the settlement will put an end to the “complex and costly foreclosure reviews required through prior enforcement settlements.”  What does this mean for homeowners?  In short, it means more settlement checks to homeowners.  Under the terms of the agreement, GMAC will be paying about $230 million in cash payments to home loan borrowers.
Borrowers in Illinois who used GMAC as a mortgage servicer may be eligible for compensation under the guidelines of the recent settlement.  Did your home go into foreclosure?  Do you suspect that your mortgage servicer used fraudulent practices when dealing with your mortgage terms and instituting foreclosure?  If you have questions about avoiding foreclosure or how to seek compensation from a foreclosure settlement, an experienced foreclosure defense lawyer can discuss your claim with you today.
Previous Foreclosure Settlements
GMAC is one of 13 mortgage servicers that have reached settlement agreements with the Federal Reserve Board and the Office of the Comptroller of the Currency (OCC).  According to the Federal Reserve Board, more than 232,000 borrowers who used GMAC as their loan servicer were in various stages of foreclosure in 2009 and 2010.  It’s those homeowners who are going to receive payment relief as compensation.
According to a government press release, the OCC and Federal Reserve previously entered into amendments with Aurora, Bank of America, Citibank, Goldman Sachs, HSBC, JPMorgan Chase, MetLife Bank, Morgan Stanley, PNC, Sovereign, SunTrust, U.S. Bank, and Wells Fargo.  Now with GMAC Mortgage added to the list, we’ll see an increase in the total amount paid in compensation to borrowers who were harmed by these servicers’ mortgage practices.  In fact, about 4.4 million borrowers in total will receive more than $3.8 billion in monetary compensation, while another $5.8 billion from these settlements will be dedicated to “loss-mitigation assistance, such as loan modifications and forgiveness of deficiency judgments.”
What did GMAC Mortgage Do Wrong?
Compensation for what, you might ask?  Why the settlement?  Like the other servicers mentioned above, GMAC had been subject to an enforcement action for “deficient practices in mortgage loan servicing and foreclosure processing.”  In short, GMAC didn’t follow the rules when it came to dealing with mortgage borrowers whose homes went into foreclosure.  A report on the settlement in Business Week described GMAC’s practices as “faulty foreclosures.”  In fact, allegations include that GMAC “improperly seized homes” under the guise of foreclosure laws and regulations.
Borrowers who have been affected by GMAC’s bad practices and are entitled to a settlement check won’t have to sign a waiver of any legal claims against GMAC in order to accept the relief payment.
A bankruptcy court has been overseeing the proceedings for GMAC Mortgage, and that court approved its entry into the amended enforcement action, according to a press release from the Federal Reserve Board.  The Federal Reserve has indicated that its examiners “continue to closely monitor” GMAC’s work to implement the plan, as well as that of other servicers, to “correct the unsafe and unsound mortgage servicing and foreclosure practices.”
Do you have questions about the settlement or concerns about foreclosure in Illinois?  An experienced foreclosure defense attorney can answer your questions.  Don’t hesitate to contact us.
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Tuesday, July 23, 2013

HUD Shows Increase in Median Home Price

According to a news release from the U.S. Department of Housing and Urban Development (HUD), the median price for a U.S. home has noticeably risen over the past several years.  Earlier this month, a statistical profile from the American Housing Survey showed that homes purchased in 2011 cost a median price of $110,000, which is a 2.3 percent increase from the median price of $107,500 paid by Americans in 2009.
HUD sponsors the American Housing Survey, and the U.S. Census Bureau conducts its research.  According to HUD’s own admission, the American Housing Survey is “the most comprehensive housing survey in the United States.”
Why are we only now getting information from 2011?  It’s simple: national data gets collected every odd-numbered year (that means data is again being collected as we speak for the 2013 report), and metropolitan area data is collected on a rotating basis.  In addition to the news about general American housing trends, the Census Bureau also released profiles for 29 metropolitan areas in the United States.
The news has important implications for housing costs, mortgage statistics, and “a variety of other physical and financial characteristics about housing in the U.S.”  According to Kurt Usowski, the HUD Deputy Assistant Secretary for Economic Affairs, the recent data report stresses the significant link between American real estate and our country’s general financial health.  He explained, “the last five years remind us how central housing is to each of us personally, to the fiscal health of our cities and counties, and the national economy.”
He also emphasized the importance of the American Housing Survey for keeping everyday Americans and government officials up to date on the status of the housing market in our country.  “For 40 years,” Usowski highlighted, “the American Housing Survey has provided a unique set of data that connects the detailed characteristics of who is living in homes to the detailed characteristics of the homes themselves.”  From the survey, he explained, “we can see why people chose to move, how often homes need repairs, and the extent to which housing costs are outpacing home growth.”  In other words, the survey provides us with key information for tracking the shifts in housing across the country.
The survey results are also significant for homeowners who continue to struggle with mortgage payments—it provides important information that can help policymakers find solutions to the housing crisis and to speed financial recovery.  The key to financial recovery, many commentators suggest, is housing.  Indeed, Usowski echoed this sentiment as he noted that “all the information” from the survey “can help inform policymaking around continued recovery in the U.S. and in metropolitan areas around the country.”
As a result of its collaboration with the American Housing Survey, the Census Bureau plays a key role in housing recovery, too.  Arthur Cresce, Jr., the Assistant Division Chief for Housing Characteristics at the Census Bureau, indicated that he’s pleased to be able to collaborate with HUD on American housing profiles.  He also reiterated Usowski’s emphasis on the connections between housing trends and financial recovery: “Analysts in government and business study the nation’s housing very closely, and the AHS yields a wealth of information that can be used by professionals in nearly every field for planning, decisionmaking, and market research.”
What does all this information mean?  In short, the collaboration among HUD, the Census Bureau, and the American Housing Survey shows that the median price of homes in America has increased.  And when it comes to financial recovery, that’s a good thing.  What’s more, the data collected through this collaboration can help policymakers and analysts to speed housing recovery (and general financial recovery) in our country.
In the meantime, many families are still at risk of foreclosure.  While statistics continue to show promise for our economy and the housing market, don’t wait to seek foreclosure advice if you’ve had trouble making your mortgage payments.  An experienced foreclosure defense attorney can speak to you today.
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Thursday, July 18, 2013

Foreclosure Filings at Lowest in Six Years

For several months, the housing market has shown signs of recovery.  According to a recent article in, “foreclosure activity was sluggish in June,” falling 14 percent since May and a whopping 35 percent since June 2012.
Just a few months ago, we reported that foreclosure auctions were on the rise on Cook County.  Moreover, some commentators suggest that signs of housing recovery are only temporary.  So what does the latest data mean for the foreclosure epidemic in Illinois?  It’s always a good idea to keep an eye on the latest foreclosure news, but if you have specific questions about avoiding foreclosure and staying in your home, an experienced foreclosure defense attorney can discuss your case with you today.  
Key Facts and Figures
A RealtyTrac report reveals that the 127,790 properties that received a foreclosure filing last month ranks foreclosure activity at its lowest since December 2006.  And it doesn’t look like the number of June foreclosure filings is an anomaly.  In fact, the year-to-date total filings number is just over 801,000, which is actually down 23 percent from the same period last year.
In addition to the decrease in foreclosure filings, it also looks like foreclosure starts are rapidly falling.  According to RealtyTrac, they’ve decreased by 45 percent year-over-year in June.  Now, they’re at the lowest level we’ve seen since December 2005.  The number of foreclosure starts itself isn’t too encouraging—it’s likely that 2013 will see more than 800,000 of them.  However, that number looks good when we compare it to the 1.1 million foreclosure starts in 2012.
While fewer properties faced foreclosure, the number of foreclosure auctions rose in judicial states, according to  The statistics show that foreclosure auctions “jumped 34 percent in June compared to a year ago.”  By state, New Jersey jumped by 103 percent, Florida by 100 percent, Maryland by 94 percent, New York by 66 percent, and Illinois by 65 percent.  So does that 65 percent increase mean that there are more financially stable homeowners in Illinois than last year?
What Do the Recent Statistics Mean?
The increase in judicial foreclosure auctions indicates first and foremost that previously delayed foreclosures “are now being moved more quickly through to foreclosure completion,” according to Daren Blomquist, the vice president of RealtyTrac.  According to Blomquist, as home prices continue to rise in Illinois and throughout the United States, lenders are recognizing that it’s an “opportune time” to “dispose of these distressed properties.”
The Chicago Tribune echoed these sentiments, making clear that the statistics mean improvement in the Illinois real estate market.  Emphasizing that the “local numbers” in Chicago “mirror national trends,” the article stressed that those figures “point to continued improvement in the housing market.”  In the Chicago area specifically, the number of initial foreclosure filings dropped dramatically while the “number of homes scheduled for court-supervised foreclosure auctions soared.”  In fact, 5,674 foreclosures were set for auction this past month in the Chicago area alone.  That number is up from 3,181 properties in June 2012.  
In short, the housing market does seem to be improving.  But there are still many families in our state who are at risk of losing their homes to foreclosure.  If you or a loved one have questions about making your mortgage more affordable and remaining in your home, don’t hesitate to contact a licensed foreclosure defense lawyer.
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Tuesday, July 16, 2013

Take Root Chicago to Help Illinois Homeowners

Late last month, WBEZ Chicago announced that Take Root Chicago, a program created to help currently struggling homeowners, launched in Cook County.  Designed to bring together lenders, housing nonprofits, and advocacy groups “under one umbrella,” Take Root has an online portal where potential homeowners and those who face foreclosure will find access to a “plethora of programs” that can help to educate them about the housing market.
The housing market continues to show signs of recovery, but many Illinois homeowners continue to struggle with monthly mortgage payments and the looming threat of foreclosure.  If you have questions about foreclosure in our state, don’t hesitate to speak to an experienced foreclosure defense lawyer.
History of Take Root
With the Take Root program, consumers don’t have direct access to funding.  Instead, the program is designed to “marshal resources of numerous agencies and promote them to consumers under the Take Root umbrella.”
Take Root actually began in Milwaukee in 2010.  Since then, Take Root programs have been launched in Denver, Co., Jacksonville, Fl., and in areas of South Florida.  When Take Root began in Milwaukee, 32 organizations in the area quickly became participants.  And according to the Chicago Tribune, the program assisted thousands of families in the region.  In fact, it helped 2,400 families to avoid foreclosure.  Nearly 450 families purchased a home with the help of Take Root, and 150 of those families actually purchased a foreclosed property.
Details for Take Root Chicago Program
Take Root Chicago will provide services that “range from how to buy cheap vacant homes to financial counseling to finding lending options for first-time buyers.”  The program has both local and federal funding, with sponsorship by the Chicago Urban League and Freddie Mac.  Why the dual partnering?
According to the Federal Housing Finance Agency, 82,000 homeowners in Illinois with mortgages supported by Fannie Mae and Freddie Mac hadn’t made their mortgage payments.  The Chicago Tribune reported that those homeowners make up about 6 percent of all Illinois loans backed by Fannie and Freddie.  Additionally, Fannie and Freddie owned 16,903 Illinois properties that had been repossessed through foreclosure as of March 31.
Take Root is “part foreclosure prevention and part homeownership education and promotion,” according to the Chicago Tribune.  Housing advocates in the Chicago area emphasize how the city “still needs the kind of cohesive marketing effort” that defines the Take Root program.
What will it provide specifically?  First, through the efforts of Take Root Chicago, “delinquent borrowers who haven’t responded to calls from their mortgage servicer will receive letters from Freddie Mac and the Urban League.”  The letters will encourage these borrowers to get proactive when it comes to their homes—they’ll need to get information to save their homes from foreclosure.  Hopefully, with a local organization like Take Root Chicago, homeowners in Cook County will feel more comfortable reaching out.  With this program, homeowners can avoid the anxieties that come with dealing with big banks or with other bureaucratic structures.  There are “folks who say they don’t know what to do,” said Christina Diaz-Malone, the vice president of community outreach at Freddie Mac.  Take Root can help.
Take Root also seeks to assist potential homebuyers.  With Take Root’s homebuyer education classes, first-time homebuyers can learn about programs to help creditworthy individuals and families who are in the low- to moderate-income brackets to purchase properties.  Earlier in July, in fact, Illinois promised $6.6 million to help potential homeowners to purchase vacant single-family homes.
Programs like Take Root Chicago can provide important educational tools for delinquent homeowners and potential homebuyers.  But if you’re at risk of foreclosure, it’s always important to have an advocate on your side.  Contact a licensed foreclosure defense attorney today.
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Monday, July 8, 2013

First-Time Buyers Interested in Buying Foreclosures

A recent survey from the National Association of Realtors (NAR) suggests that first-time homebuyers may have an incentive to buy foreclosures.  In fact, 65 percent of first-time buyers said they’d consider a foreclosure when looking for a new home.  According to, first-time buyers often have smaller budgets compared to individuals and families who have purchased a home previously.  As a result of limited funding, first-time homebuyers might head toward the foreclosure market.
As many Chicago neighborhoods still contain foreclosed homes and are in need of rehabilitation, this could be good news.  But at the same time, the article in suggests that many first-time homebuyers may not know what they’re getting themselves into when they begin looking at foreclosures.
Does it Makes Sense to Buy a Foreclosure?
According to a collection of surveys on, there are three primary reasons that first-time buyers think about buying foreclosures.  First, very few first-time buyers have a lot of knowledge about the buying process, and as a result they don’t know the ins and outs of buying a foreclosure.  In other words, they have “little reason to fear a foreclosure.”
Second, the average first-time buyer spends about $65,900 less on a house than a repeat buyer.  Repeat buyers tend to spend, on average, $220,000 on a new home, while first-time buyers come in at an average of $154,100.  The smaller budget leads first-time buyers “to hunt for a bargain.”
And finally, the market is inundated with foreclosures!  Since the market has seen more foreclosures in the past few years than ever before, first-time buyers are likely to see a lot of options in the foreclosure market.  In fact, reports that that are currently 4.56 million properties that are currently past due, and 1.52 million of those have moved into foreclosure inventory in the past month or two.  With the “widespread availability,” first-time buyers might consider a foreclosure purchase as a reasonable risk that also saves some money in the long run.
Foreclosures can make for a good deal financially, but is it worth the extra headache?  When buyers begin to look at foreclosures, suggests that there are three primary reasons that drive those buyers away.  Often, buyers can’t find a foreclosure that satisfies “enough of their wants and needs.”  While this can be true of many homes on the market, the other reasons deal more closely with problems we tend to think about when we hear “foreclosure.”  For many buyers, the foreclosed property was in such bad condition that it didn’t seem worth it to put in the money or the effort for repair.  And for many others, they found that the process of buying a foreclosure was too difficult.
Tips for First-Time Buyers
Given the news that first-time buyers might be interested in foreclosures, offers some tips for first-time buyers:
·      Check the selling prices of comparable properties in your area so you know what you should expect to pay
·      Use a mortgage calculator to see what you can afford
·      Make sure you know the total monthly housing cost associated with a property, including insurance and taxes
·      Find out how much you’ll have to pay in closing costs—this can add a lot of expense onto the purchase price
·      Can your budget handle the monthly mortgage?  According to Fannie Mae, you shouldn’t be spending more than 28% of your income on your housing costs, and if you spend more than 30%, you could become house poor
·      Speak to experienced real estate agents and attorneys in your area
·      Keep the big picture in mind—while purchasing a home can be a great investment, it can also come with unexpected costs for repairs and other problems
Experienced foreclosure attorneys are familiar with the real estate market and the process of buying a foreclosed property.  If you have questions, don’t hesitate to contact us.
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