More Defaults on Modified Mortgages

After the housing crash and the rise of foreclosures nationwide, many homeowners secured mortgage modifications through the Home Affordable Modification Program (HAMP).  This is a federal program designed for homeowners who aren’t unemployed, but who are still struggling to make monthly mortgage payments.  According to the Making Home Affordable (MHA) program, which administers HAMP and is an official program of the Departments of the Treasury & Housing and Urban Development (HUD), HAMP can lower monthly mortgage payments so that they’re “more affordable and sustainable for the long-term.”

However, according to a recent Congressional report, the Office of the Special Inspector General for the Troubled Asset Relief Program (TARP) found that a surprising number of homeowners who received mortgage modifications through HAMP have defaulted on those loans.  And more surprisingly, that number may continue to ruse.  The Chicago Tribune reported on the problem and its statistics, noting that the longer a homeowner remains in HAMP, the more likely that homeowner is “to re-default out of the program.”

Making Home Affordable through the Federal Government?

The MHA government program was established to “deliver mortgage relief” to families across America.  According to the program’s website, MHA is “a critical part of the Obama Administration’s broad strategy to help homeowners avoid foreclosure, stabilize the country’s housing market, and improve the nation’s economy.”

Within this program, HAMP was created to provide permanent loan modifications to employed borrowers who were unable to make their high monthly mortgage.  Through HAMP, homeowners could have their monthly payments lowered so that they could stay in their homes and avoid foreclosure.  The program is still operative, and struggling homeowners can still apply for mortgage modifications through the system.  Yet, the recent article in the Chicago Tribune suggests that these government programs may not be working as planned.

So what’s going on with borrowers re-defaulting on their mortgages?  And what does it mean for homeowners in Illinois?

Greater Harms for Re-Defaulting Borrowers

According to the U.S. Treasury Department, re-default rates range from 28.9 percent at the lower end, up to 46.1 percent at the high end—that’s nearly half of all borrowers with a loan modification.  And unfortunately, the Treasury doesn’t require lenders or servicers to report specific reasons that borrowers default on loans, so there’s no way to develop an “early warning system,” according to the inspector general.  In other words, there’s no clear data with which to “identify potential problems and correct them.”

Worse than original loan defaulting, re-defaulted modifications are causing borrowers to lose their homes to foreclosure at a quicker pace.  According to the Chicago Tribune, some of the blame may lay with the government funding models.  The article reported that the government “has fallen short of the amount of help it promised to give homeowners when HAMP and its sister Home Affordable Refinance Program debuted in spring 2009.”

In fact, the Treasury promised to provide “affordable and sustainable relief” to nearly 4 million borrowers who could be at risk for losing their homes to foreclosure.  However, to date only 862,279 homeowners have received permanent modifications through HAMP, and that number is likely to drop even further as many of those borrowers are defaulting on their modified loans.  Specifically, more than 300,000 borrowers have already defaulted, and the Treasury expects that number to rise based on its current data.

If you or a loved one have received a modification through HAMP or TARP and are at risk for re-defaulting on your mortgage, an experienced foreclosure defense attorney can talk with you your options with you today.  You don’t want to lose your home to foreclosure.  Contact us to discuss your case.

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Foreclosure Auctions Rise in Cook County

Thinking About Buying a Foreclosure?

Foreclosure Auctions Rise in Cook County

According to a recent article in the Chicago Tribune, the month of April saw nearly 3,000 residential properties in Cook County scheduled for foreclosure auctions.  This is the highest number of foreclosure auctions the county has seen since August 2010.  According to experts, these numbers suggest real estate market recovery and a promise of Chicago neighborhood revitalization.

While we’ve seen news about the real estate market slowly bouncing back from the housing crisis, there are still many homeowners in Illinois who are facing foreclosure.  If you’re a homeowner and you’re currently at risk of foreclosure, experienced foreclosure defense attorneys can advocate on your behalf.

RealtyTrac Data on Residential Foreclosures in the Chicago Area

The numbers reported in the Chicago Tribune come from a set of data collected by RealtyTrac.  Its report shows 2,945 scheduled residential auctions in Cook County in April of this year, a number that has risen considerably since 2012.  In fact, around the same time last year, March 2012 had 1,563 foreclosure auctions, and April 2012 had 1,844.

RealtyTrac considers this good news.  Although all of the properties likely won’t “complete the auction process,” the high number of auctions still suggests that the local housing market is continuing its recovery streak.  In fact, the overall number of properties in foreclosure in and around the Chicago area has fallen considerably since last year—the numbers are down 23 percent since April 2012.

Daren Blomquist, a RealtyTrac vice president, said that, “for Illinois as a whole, we’ve now seen seven straight months where foreclosure starts are down from a year ago.”  He emphasized that “that’s a good sign,” as it means that there are “fewer properties being added.”  In other words, the higher number of foreclosure auctions doesn’t mean that more foreclosures are being initiated.  Rather, many of the previous foreclosures that had been tied up in court and in paperwork are now finding their way onto the market.

More People Buying Vacant Properties, Revitalizing Neighborhoods

What does all this mean?  In short, it means that more people in Cook County are buying houses.  More foreclosure auctions means that there are likely more buyers out there.  And this trend isn’t just in Illinois.  In the case of Chicago, “the local data mirror a national trend,” especially in states like Illinois where local courts handle foreclosures.

A Chicago sales company that handles foreclosure sales has had more than 50 properties on its auction calendar per week this past month.  At the same time, however, the local real estate market does face the problem of homeowners who owe more on their mortgages than those properties are worth.  These seriously underwater homeowners make up about 35 percent of all homeowners in the Chicago area.

Nonetheless, the number of homes listed through foreclosure auctions suggests that neighborhood revitalization may have promise in the coming months.  Earlier this year, Katie Buitrago, a senior policy and communications associate at the Woodstock Institute, indicated that increases in foreclosure auctions might help to turn around the vacant properties that seem to be plaguing many Chicago communities.  Buitrago said that the city has “been having a lot of trouble . . . with vacant properties that have been languishing for years.  The longer they’re vacant, the more likely they are to be a destabilizing force in their communities.”

The real estate market can be confusing in the wake of the mortgage crisis.  If you have questions about buying a foreclosure, or if you are concerned that you may be at risk of foreclosure, a licensed attorney can discuss your case with you today.

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Thinking About Buying a Foreclosure?

Over $4 Million in Federal Funds to Help Homeless Families in Illinois

Earlier this month, Shaun Donovan, the Secretary for U.S. Housing and Urban Development (HUD), awarded nearly $4.7 million in grants to a total of 42 homeless housing service programs in Illinois.  These funds may provide much needed help to struggling families who were forced out of their homes during the mortgage crisis.

The money comes through HUD’s “Continuum of Care” programs, and HUD indicated that the recent funds will ensure that local homeless assistance programs can continue to operate throughout the year and into next year, as well.

For the HUD press release on the Illinois grant, Donovan said, “we know these modest investments in housing and serving our homeless neighbors not only saves money, but saves lives . . . .  These local programs are on the front lines of the Obama Administration’s efforts to prevent and end homelessness as we know it once and for all.”

What is Continuum of Care?

According to HUD, Continuum of Care is made up of three competitively awarded programs.  Each of them addresses different problems related to homelessness and works in conjunction with other federal agencies to help individual persons and families who have lost their homes.

The three programs include:

·      Supportive Housing Program (SHP): this program helps to develop housing and other related services for homeless persons and families who are transitioning to independent living.  Its funds also provide other resources to homeless persons and families that can help with finding a stable place to live and acquiring new skills to ensure steady employment income.

·      Shelter Plus Care (S + C): this program helps with rental assistance.  When it’s combined with other social services, it “provides supportive housing for homeless people with disabilities and their families.”  It allows for multiple housing options, including group homes and individual living spaces.  It’s also combined with a variety of other supportive services.

·      Single Room Occupancy (SRO): this program helps with Section 8 rental assistance.  It provides funds for the “moderate rehabilitations of buildings” that contain single-room apartments that are designed for individual use.  Through the program, a public housing authority provides the landlords with Section 8 payments when homeless people rent their rehabilitated units.

What Are Continuum of Care Grants?

HUD explains that these grants are awarded on a competitive basis to “local projects to meet the needs of their homeless clients.”  The funding goes toward programs that deal with with street outreach and assessment for helping homeless people and families to find transition and permanent housing.  According to Antonio R. Riley, HUD’s Midwest Regional Administration, “these programs work and we know these grants can mean the difference between homeless persons and families finding stable housing or living on the streets.”  He went on to note that these programs also “provide meaningful and stable platforms of hope for a better life for the homeless,” which “enhances the entire community.”

These funds could have a serious impact on certain Chicago neighborhoods that have been negatively affected by the housing crisis, and they could help a lot of struggling families in our area to find homes.  If you or a loved one have lost your home as a result of the mortgage crisis, an experienced attorney can discuss your options with you today.

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NeighborWorks America Grants to Aid Illinois Foreclosure Counseling

Community Development and the Section 108 Loan Guarantee Program

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.

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National Mortgage Settlement May Help Some Homeowners Avoid Foreclosure

Mortgage Assistance May be on the Way for Some Illinois Homeowners

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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