Scams to try to cash in on the $25 billion settlement with the nation's largest lenders have already begun, and the deal was finalized just last month.
The Arizona attorney general is warning consumers to watch out for companies contacting them about the settlement. People who are eligible for part of the settlement will be contacted directly by one of the five major lenders involved -- BofA, Citigroup, the former GMAC (now known as Ally Financial), JPMorgan Chase and Wells Fargo.
Arizona's portion of the settlement is $1.6 billion. About $1.3 billion of that amount will go toward principal reduction on mortgages and won't be cash paid directly to the state or consumers.
Only borrowers with loans owned by the five lenders involved are eligible for aid from the national settlement, and those lenders are responsible for contacting eligible homeowners in the coming month to offer assistance.
"Consumers should be aware that scammers are already using the media coverage of the settlement to exploit homeowners by promising quicker assistance in obtaining the refinancing, principal reduction or cash payments available to eligible consumers under the settlement," Arizona Attorney General Tom Horne said in the consumer alert issued earlier this week. He warns consumers to be wary of any unsolicited contact about the settlement.
Here are tips from the Attorney General's Office to help consumers eligible for the settlement avoid scams.
Beware of anyone calling and asking for your routing number, checking-account number or other financial information over the phone. Lenders will not do that.
You may receive legitimate mail from your servicer regarding the settlement if your mortgage loan is serviced by one of the lenders in the settlement. If you do receive a call or mail regarding the settlement, examine it closely to make sure it's the same entity handling your mortgage payments.
If you are unsure whether a caller is legitimate, ask for the person's name and title and say you are going to call your bank to confirm.
Here are numbers for the lenders involved in the settlement: Bank of America: 877-488-7814; JPMorgan Chase: 866-372-6901; Wells Fargo: 800-288-3212; CitiBank: 866-272-4749; GMAC/Ally: 800-766-4622.
Lenders also agreed to use part of the funds to reduce borrowers' interest payments and will issue $2,000 payments to people who lost homes in improperly managed foreclosures.
The national settlement does not extend to borrowers with loans backed by federal mortgage giants Fannie Mae and Freddie Mac, who make up more than half of all mortgage holders.
Federal officials estimate that 60,000 Arizona borrowers could see assistance with their principal or interest rates, and the national average for a principal reduction is $20,000 per mortgage.
Horne said homeowners whose mortgage balances are 175 percent or more of their current home values and who are current on their payments probably will be the first to receive principal reductions.
by Catherine Reagor, columnist - Apr. 27, 2012 03:07 PM The Republic | azcentral.com
Reagor: Lenders settlement spurs scams
Showing posts with label loan modification. Show all posts
Showing posts with label loan modification. Show all posts
Tuesday, May 1, 2012
Wednesday, April 11, 2012
Principal forgiveness gains appeal
Fannie Mae and Freddie Mac could save $1.7 billion if they forgave principal on some distressed mortgages, new analysis show.
The Federal Housing Finance Agency-- which regulates the mortgage giants -- may decide in the next few weeks about whether to use principal forgiveness as a foreclosure prevention tactic, said Edward DeMarco, acting director of the FHFA while speaking Tuesday at the Brookings Institution.
The FHFA, and DeMarco, have come under pressure to allow Freddie and Fannie, which own or guarantee 60% of all home loans, to do principal forgiveness.
FHFA's previous analysis has shown that forgiving mortgage debt is no more effective than other loan modification efforts at reducing home loan defaults -- and could cost taxpayers more money since Freddie and Fannie were placed under government control in 2008.
But new incentives from the Treasury Department may change that, FHFA's preliminary assessment shows. With those, Freddie and Fannie could curb losses by $9.9 billion if almost 700,000 homeowners received a mortgage reduction, FHFA says. That's $1.7 billion more than if those homeowners received principal forbearance -- which means they defer payment on a portion of their loan.
DeMarco cautioned that any principal forgiveness would only help the U.S. housing crisis at the "margin," given that 11 million homeowners owe more on their homes than they're worth, based on CoreLogic estimates.
He also warned that some homeowners may stop paying their mortgages to try get a principal reduction. That could wipe out benefits to Freddie and Fannie. Also, Treasury incentives come from taxpayer funds so they'll still be "on the hook," says Anthony Sanders, real estate finance professor at George Mason University.
Principal reduction "is clearly getting more traction" as a foreclosure prevention tactic, says Laurie Goodman, senior managing director of Amherst Securities. The recent $25 billion mortgage settlement requires loan servicers to do at least $10 billion in principal reduction. That doesn't cover Freddie or Fannie loans.
Principal forgiveness supporters say it'll lead to fewer foreclosures and help stabilize housing prices. FHFA's new analysis -- and DeMarco's discussion of it -- signals that a change is likely, says Ira Rheingold of the National Association of Consumer Advocates.
DeMarco is "under enormous heat from the Obama administration" to do so, Rheingold says.
by Julie Schmit - Apr. 11, 2012 08:08 AM USA Today
Principal forgiveness gains appeal
The Federal Housing Finance Agency-- which regulates the mortgage giants -- may decide in the next few weeks about whether to use principal forgiveness as a foreclosure prevention tactic, said Edward DeMarco, acting director of the FHFA while speaking Tuesday at the Brookings Institution.
The FHFA, and DeMarco, have come under pressure to allow Freddie and Fannie, which own or guarantee 60% of all home loans, to do principal forgiveness.
FHFA's previous analysis has shown that forgiving mortgage debt is no more effective than other loan modification efforts at reducing home loan defaults -- and could cost taxpayers more money since Freddie and Fannie were placed under government control in 2008.
But new incentives from the Treasury Department may change that, FHFA's preliminary assessment shows. With those, Freddie and Fannie could curb losses by $9.9 billion if almost 700,000 homeowners received a mortgage reduction, FHFA says. That's $1.7 billion more than if those homeowners received principal forbearance -- which means they defer payment on a portion of their loan.
DeMarco cautioned that any principal forgiveness would only help the U.S. housing crisis at the "margin," given that 11 million homeowners owe more on their homes than they're worth, based on CoreLogic estimates.
He also warned that some homeowners may stop paying their mortgages to try get a principal reduction. That could wipe out benefits to Freddie and Fannie. Also, Treasury incentives come from taxpayer funds so they'll still be "on the hook," says Anthony Sanders, real estate finance professor at George Mason University.
Principal reduction "is clearly getting more traction" as a foreclosure prevention tactic, says Laurie Goodman, senior managing director of Amherst Securities. The recent $25 billion mortgage settlement requires loan servicers to do at least $10 billion in principal reduction. That doesn't cover Freddie or Fannie loans.
Principal forgiveness supporters say it'll lead to fewer foreclosures and help stabilize housing prices. FHFA's new analysis -- and DeMarco's discussion of it -- signals that a change is likely, says Ira Rheingold of the National Association of Consumer Advocates.
DeMarco is "under enormous heat from the Obama administration" to do so, Rheingold says.
by Julie Schmit - Apr. 11, 2012 08:08 AM USA Today
Principal forgiveness gains appeal
Monday, February 13, 2012
Arizona gets $1.6 billion in mortgage fraud settlement
Marking a watershed day in the aftermath of the national housing crash, Arizona officials announced a pair of settlements with large banks over allegations of improper lending and foreclosure practices that will result in more than a billion dollars of aid for struggling homeowners.
Arizona's portion of a nationwide, $26 billion settlement with the country's five biggest lenders will be $1.6 billion, the third-largest share after hard-hit California and Florida.
Most of the money in that deal, announced Thursday after negotiations by attorneys general across the country, will be paid out by lenders in the form of principal reductions -- cutting the amount of money that certain borrowers are responsible for repaying on their home loans. Lenders will also dedicate part of the funds to reducing other borrowers' interest payments and will issue $2,000 payments to people who lost homes in improperly managed foreclosures.
A second, smaller settlement with Bank of America ends a state lawsuit over the bank's lending practices and will fund consumer protection and future investigation of mortgage lending.
The national settlement will not deliver assistance to every struggling homeowner. It applies only to mortgages held by the five large lenders and does not extend to borrowers with loans backed by federal mortgage giants Fannie Mae and Freddie Mac, who make up more than half of all mortgage-holders.
Still, federal officials estimate that 60,000 Arizona borrowers could see assistance with their principal or interest rates. And the settlement marks the first time lenders have agreed, on any large scale, to forgive money owed by underwater borrowers.
"These settlements will help Arizona homeowners and the state's economy that is so tied to housing," Arizona Attorney General Tom Horne said. "I think we are holding banks accountable."
Who benefits
Only borrowers with loans owned by BofA, Citigroup, the former GMAC (now known as Ally Financial), JPMorgan Chase and Wells Fargo are eligible for aid from the national settlement. The five lenders are responsible for contacting eligible homeowners in the coming month to offer assistance.
The deal requires the banks to reduce loans for about 1 million households that are at risk of foreclosure. The lenders will also send $2,000 each to about 750,000 Americans who were improperly foreclosed upon from 2008 through 2011. The banks will have three years to fulfill terms of the deal.
Borrowers who had loans originally issued by the five participating lenders but then had their mortgages sold to another bank aren't eligible.
About $1.3 billion of Arizona's $1.6 billion will go toward principal reductions. Federal officials estimate the national average for principal reductions will be $20,000 per loan. In Arizona, where home prices have fallen 60 percent, many homeowners are likely to be underwater by far more than $20,000.
Horne said homeowners whose mortgage balances are 175 percent or more of their current home values and who are current on their payments will probably be the first to receive principal reductions.
Nationally, at least $17 billion of the settlement is to go directly to reducing principal. Details on how much lenders will reduce the amount borrowers owe aren't available yet.
About $86 million of Arizona's share of the deal will go toward offers to modify borrowers' loans by lowering interest rates. An additional $110.4 million has been set aside to compensate Arizona borrowers who lost their homes to foreclosure from 2008 to 2011 and believe they suffered unfair treatment by lender servicers. Each borrower is eligible for $2,000.
Horne said that any former homeowner who thinks he or she qualifies for the $2,000 should contact the lender and that little documentation will be required to receive this compensation.
Shaun Donovan, secretary of the U.S. Department of Housing and Urban Development, said 55,000 former Arizona homeowners will qualify for the $2,000 payments. During the housing crash, more than 175,000 borrowers have had Arizona homes taken back by lenders, though that figure includes loans held by Fannie and Freddie.
Arizona will receive $102.5 million to be used for mortgage-fraud investigations and consumer counseling.
Arizona State University's real-estate analyst Mike Orr said reducing mortgage principal for underwater homeowners will "significantly bolster the housing market" if it entices more people to stay in their homes and keep making payments.
Almost 50 percent of the state's homeowners are underwater, meaning homeowners owe more than their homes are now worth because values have plunged by more than half since the market's peak in 2006.
Patricia Garcia Duarte, president of the Phoenix-based housing non-profit Neighborhood Housing Services, said the settlement looks like a lot of money to help both former and current homeowners. However, she said the damage done to Arizona families and communities has been extreme.
"The funds will definitely help," Garcia Duarte said. "But how the funds are spent in Arizona will determine the success in our housing recovery."
BofA lawsuit
Arizona is also receiving $10 million through the settlement of a lawsuit with BofA over allegations of mortgage fraud and deceiving borrowers trying to obtain loan modifications.
The money will go toward funding criminal loan investigation and consumer education. Horne said it's not clear yet whether the BofA borrowers who served as plaintiffs will be compensated from the $10 million or the state's $1.6 billion from the national settlement.
The suit, filed in December 2010 by the state's attorney general, had to be reconciled for Arizona to participate in the national settlement.
"If we had continued to litigate the BofA lawsuit, we might have recovered more money," Horne said. "But the lawsuit could have taken another five to six years. By settling now and joining the national settlement, more homeowners will receive help sooner."
Enforcement
The deal establishes a regulatory group of local and federal government agencies. It calls for North Carolina's banking regulator Joseph Smith to monitor lenders for compliance.
Horne said lenders will be subject to hefty fines if they don't follow through with the actions to help homeowners laid out in the settlement.
Federal officials said states could receive more funding if more mortgage firms sign onto the agreement. One estimate is for the national settlement to grow to $40 billion if the next nine large lenders join in. The only state not part of the national settlement is Oklahoma. Arizona, California, Florida, New York and Nevada were the last states to join. Arizona's negotiations with BofA over the mortgage-fraud lawsuit went on until almost 11 p.m. Wednesday night.
President Barack Obama said in a speech Thursday that the $26 billion settlement will allow the nation's biggest banks, "banks rescued by taxpayer dollars," to right wrongs committed in making loans and foreclosing on homeowners during the past several years.
"These banks will put billions of dollars towards relief for families across the nation. They'll provide refinancing for borrowers that are stuck in high interest-rate mortgages," Obama said. "They'll reduce loans for families who owe more on their homes than they're worth. And they will deliver some measure of justice for families that have already been victims of abusive practices."
12 News reporter Melissa Blasius contributed to this article.
by Catherine Reagor - Feb. 9, 2012 09:28 AM The Republic | azcentral.com
Arizona gets $1.6 billion in mortgage fraud settlement
Arizona's portion of a nationwide, $26 billion settlement with the country's five biggest lenders will be $1.6 billion, the third-largest share after hard-hit California and Florida.
Most of the money in that deal, announced Thursday after negotiations by attorneys general across the country, will be paid out by lenders in the form of principal reductions -- cutting the amount of money that certain borrowers are responsible for repaying on their home loans. Lenders will also dedicate part of the funds to reducing other borrowers' interest payments and will issue $2,000 payments to people who lost homes in improperly managed foreclosures.
A second, smaller settlement with Bank of America ends a state lawsuit over the bank's lending practices and will fund consumer protection and future investigation of mortgage lending.
The national settlement will not deliver assistance to every struggling homeowner. It applies only to mortgages held by the five large lenders and does not extend to borrowers with loans backed by federal mortgage giants Fannie Mae and Freddie Mac, who make up more than half of all mortgage-holders.
Still, federal officials estimate that 60,000 Arizona borrowers could see assistance with their principal or interest rates. And the settlement marks the first time lenders have agreed, on any large scale, to forgive money owed by underwater borrowers.
"These settlements will help Arizona homeowners and the state's economy that is so tied to housing," Arizona Attorney General Tom Horne said. "I think we are holding banks accountable."
Who benefits
Only borrowers with loans owned by BofA, Citigroup, the former GMAC (now known as Ally Financial), JPMorgan Chase and Wells Fargo are eligible for aid from the national settlement. The five lenders are responsible for contacting eligible homeowners in the coming month to offer assistance.
The deal requires the banks to reduce loans for about 1 million households that are at risk of foreclosure. The lenders will also send $2,000 each to about 750,000 Americans who were improperly foreclosed upon from 2008 through 2011. The banks will have three years to fulfill terms of the deal.
Borrowers who had loans originally issued by the five participating lenders but then had their mortgages sold to another bank aren't eligible.
About $1.3 billion of Arizona's $1.6 billion will go toward principal reductions. Federal officials estimate the national average for principal reductions will be $20,000 per loan. In Arizona, where home prices have fallen 60 percent, many homeowners are likely to be underwater by far more than $20,000.
Horne said homeowners whose mortgage balances are 175 percent or more of their current home values and who are current on their payments will probably be the first to receive principal reductions.
Nationally, at least $17 billion of the settlement is to go directly to reducing principal. Details on how much lenders will reduce the amount borrowers owe aren't available yet.
About $86 million of Arizona's share of the deal will go toward offers to modify borrowers' loans by lowering interest rates. An additional $110.4 million has been set aside to compensate Arizona borrowers who lost their homes to foreclosure from 2008 to 2011 and believe they suffered unfair treatment by lender servicers. Each borrower is eligible for $2,000.
Horne said that any former homeowner who thinks he or she qualifies for the $2,000 should contact the lender and that little documentation will be required to receive this compensation.
Shaun Donovan, secretary of the U.S. Department of Housing and Urban Development, said 55,000 former Arizona homeowners will qualify for the $2,000 payments. During the housing crash, more than 175,000 borrowers have had Arizona homes taken back by lenders, though that figure includes loans held by Fannie and Freddie.
Arizona will receive $102.5 million to be used for mortgage-fraud investigations and consumer counseling.
Arizona State University's real-estate analyst Mike Orr said reducing mortgage principal for underwater homeowners will "significantly bolster the housing market" if it entices more people to stay in their homes and keep making payments.
Almost 50 percent of the state's homeowners are underwater, meaning homeowners owe more than their homes are now worth because values have plunged by more than half since the market's peak in 2006.
Patricia Garcia Duarte, president of the Phoenix-based housing non-profit Neighborhood Housing Services, said the settlement looks like a lot of money to help both former and current homeowners. However, she said the damage done to Arizona families and communities has been extreme.
"The funds will definitely help," Garcia Duarte said. "But how the funds are spent in Arizona will determine the success in our housing recovery."
BofA lawsuit
Arizona is also receiving $10 million through the settlement of a lawsuit with BofA over allegations of mortgage fraud and deceiving borrowers trying to obtain loan modifications.
The money will go toward funding criminal loan investigation and consumer education. Horne said it's not clear yet whether the BofA borrowers who served as plaintiffs will be compensated from the $10 million or the state's $1.6 billion from the national settlement.
The suit, filed in December 2010 by the state's attorney general, had to be reconciled for Arizona to participate in the national settlement.
"If we had continued to litigate the BofA lawsuit, we might have recovered more money," Horne said. "But the lawsuit could have taken another five to six years. By settling now and joining the national settlement, more homeowners will receive help sooner."
Enforcement
The deal establishes a regulatory group of local and federal government agencies. It calls for North Carolina's banking regulator Joseph Smith to monitor lenders for compliance.
Horne said lenders will be subject to hefty fines if they don't follow through with the actions to help homeowners laid out in the settlement.
Federal officials said states could receive more funding if more mortgage firms sign onto the agreement. One estimate is for the national settlement to grow to $40 billion if the next nine large lenders join in. The only state not part of the national settlement is Oklahoma. Arizona, California, Florida, New York and Nevada were the last states to join. Arizona's negotiations with BofA over the mortgage-fraud lawsuit went on until almost 11 p.m. Wednesday night.
President Barack Obama said in a speech Thursday that the $26 billion settlement will allow the nation's biggest banks, "banks rescued by taxpayer dollars," to right wrongs committed in making loans and foreclosing on homeowners during the past several years.
"These banks will put billions of dollars towards relief for families across the nation. They'll provide refinancing for borrowers that are stuck in high interest-rate mortgages," Obama said. "They'll reduce loans for families who owe more on their homes than they're worth. And they will deliver some measure of justice for families that have already been victims of abusive practices."
12 News reporter Melissa Blasius contributed to this article.
by Catherine Reagor - Feb. 9, 2012 09:28 AM The Republic | azcentral.com
Arizona gets $1.6 billion in mortgage fraud settlement
Thursday, February 2, 2012
Government Triples Payout to Servicers for Principal Reduction Under Revamp of HAMP | Mortgage News | Daily National and State Headlines
The Making Home Affordable Program deadline will be extended for an additional year, through Dec. 31, 2013. This date conforms to the extended deadline for HARP. The U.S. Department of the Treasury will also triple the incentives provided to investors who agree to reduce principal for borrowers by paying from .18 to .63 cents on the dollar, depending on the degree of change in the loan-to-value (LTV) ratio.
HAMP borrowers who have loans owned or guaranteed by the government-sponsored enterprises (GSEs)—Fannie Mae or Freddie Mac—do not currently benefit from principal reduction loan modifications. To encourage the GSEs to offer this assistance to underwater borrowers, Treasury has notified the GSEs’ regulator, the Federal Housing Finance Agency (FHFA), that it will pay principal reduction incentives to both Fannie Mae or Freddie Mac if they allow servicers to forgive principal in conjunction with a HAMP modification.
"Fannie Mae and Freddie Mac currently have 470,000 permanent HAMP modifications on their books, but also have active another 530,000 non-HAMP modifications since 2009, or roughly one million total," said FHFA Acting Director Edward J. DeMarco. "The GSEs have also completed one million nonmodification foreclosure prevention actions, ranging from forbearance plans to short sales, for
a total of some two million actions that have helped homeowners in trouble avoid foreclosure and,
in most cases, keep their home."
In response to the announcement of the HAMP expansion, FHFA has announced the following with regards to the GSEs:
►Both Fannie Mae and Freddie Mac will extend their use of HAMP Tier 1 as the first modification option through 2013 in line with the Treasury’s HAMP extension.
►Fannie Mae and Freddie Mac will continue in their respective roles as financial agents for Treasury in implementing the changes announced.
►The HAMP Tier 2 option is based on the GSEs’ standard modification that FHFA announced and the enterprises implemented last year under the Servicing Alignment Initiative, meaning Fannie Mae and Freddie Mac will not need to adopt further changes to be in alignment with HAMP Tier 2.
►FHFA has been asked to consider the newly available HAMP incentives for principal reduction. FHFA recently released analysis concluding that principal forgiveness did not provide benefits that were greater than principal forbearance as a loss mitigation tool.
“HOPE NOW is pleased that the Obama Administration has reviewed its existing HAMP program and decided that expanding it to reach more homeowners and extending it for another year is the appropriate course of action," said Faith Schwartz, executive director of HOPE NOW, a voluntary, private sector alliance of mortgage servicers, investors, mortgage insurers and non-profit counselors. "We have worked very closely with Making Home Affordable since its inception. HAMP has not only helped nearly a million distressed homeowners nationwide, it has established a standardized process for allowing mortgage servicers to determine the proper solution for each individual case, whether it be a HAMP modification, proprietary modification or short term solution."
HAMP has helped more than 900,000 U.S. homeowners permanently modify their mortgage loans, resulting in a median savings of more than $500 every month in most cases. Since December of 2009, 80 percent of proprietary modifications have included reduced principal and interest payments and 60 percent of proprietary modifications have had those payments reduced by 10 percent or more.
"This initiative shows that President Obama’s strong language on the foreclosure crisis and holding bankers accountable during his State of the Union speech is more than mere rhetoric," said Richard L. Trumka, president of the American Federation of Labor and Congress of Industrial Organizations (AFL-CIO). "The expansion of principal reduction alternatives to foreclosure complements the President’s new working group of state and federal officials who are investigating bank wrongdoing in mortgage-backed securities. Homeowners who have been harmed by fraudulent bank practices must receive real relief in the form of meaningful principal reduction on their mortgages."
by nationalmortgageprofessional.com Jan 27, 2012
Government Triples Payout to Servicers for Principal Reduction Under Revamp of HAMP | Mortgage News | Daily National and State Headlines
Tuesday, December 13, 2011
Mortgage battle vs. bank gets new ally - USATODAY.com
Phoenix resident June Geffre has found an ally in her fight to stop the bank from taking her home.
How to seek help
The Homeowner Advocacy Unit will accept clients referred by the Arizona Foreclosure Prevention Task Force as well as those referred by other community organizations that work with distressed homeowners.
Homeowners with mortgage problems or facing foreclosure can contact the Arizona Foreclosure Prevention Task Force for assistance at 877-448-1211 or azforeclosureprevention.org.
Geffre, a 69-year-old widow who says Bank of America refused to honor a loan-modification agreement it had negotiated with her late husband, is being represented in court by a new homeowner-advocacy group at Arizona State University's Sandra Day O'Connor College of Law.
The ASU Homeowner Advocacy Unit, a student-faculty initiative launched in August under which law-college students litigate real cases, chose Geffre as its first client.
"This case is an example of why this clinic is so important," said Mary Ellen Natale, director of the unit. "The bank's conduct is egregious."
Under the guidance of faculty supervisor M. Robert Dauber, who is licensed to practice in Arizona, the unit filed a lawsuit Monday in Maricopa County Superior Court against BofA on Geffre's behalf. The complaint demanded that the Charlotte, N.C.-based lender cease its pending foreclosure, reinstate the loan-modification agreement and compensate Geffre for damages, including extreme emotional distress.
The Arizona Republic e-mailed a copy of the lawsuit to BofA early Tuesday at the request of a bank representative. The bank representative later said the company could not comment because of the pending litigation.
Law-school advocacy
The litigation program is one of two to be created by the ASU law school in the 2011-12 academic year in response to issues created by the region's housing-market meltdown.
The Phoenix area experienced a record 58,157 home foreclosures in 2010. Jim Belfiore, president of Belfiore Real Estate Consulting, said the area is on pace to have about 54,000 foreclosures by the end of the year and predicted about 38,000 foreclosures in 2012.
The Homeowner Advocacy Unit, which opened in August, allows students to litigate on behalf of clients who believe they have fallen victim to illegal mortgage-related activity.
The college's Foreclosure Mediation Unit, scheduled to open in the spring semester, will put students to work as impartial mediators assisting in the resolution of mortgage-related disputes.
Both programs are funded by a grant from the Arizona Attorney General's Office, ASU officials said.
Loan-modification dispute
According to Geffre's complaint, her late husband, Thomas Geffre, had been approved for a trial home-loan modification under the federal Home Affordable Modification Program in summer 2009.
In January 2010, BofA approved a permanent modification and mailed documents for Thomas Geffre to sign and return to the bank, the lawsuit said.
However, Thomas Geffre had died in November 2009 from complications of pancreatic cancer, the lawsuit said.
When June Geffre received the loan-modification forms in the mail, she said she signed them and mailed them to BofA, along with a copy of her husband's death certificate.
The lawsuit alleged that the lender refused to accept June Geffre's signature, saying that her late husband's signature was required for the permanent-modification agreement to become effective.
Geffre explained to BofA representatives on multiple occasions that her husband was dead and therefore unable to sign the documents and that she repeatedly sent copies of the death certificate as proof he had died, the lawsuit said.
Meanwhile, the lender continued to accept Geffre's modified-loan payments, the lawsuit said. The original monthly mortgage payments were roughly $1,200, Geffre said, and under the modification agreement, they had been lowered to about $800.
After accepting 18 payments at the modified amount, BofA rejected Geffre's July payment and told her she owed about $20,000 for incomplete payments and penalties, she said.
"They dropped the bombshell on me," Geffre said.
The bank initiated foreclosure proceedings in September, she said.
Bid to stop foreclosure
Along with the complaint, the ASU unit filed a motion Monday for a temporary restraining order to stop the foreclosure sale of Geffre's home, which had been scheduled for 10 a.m. Tuesday.
Judge John Rea granted the order, temporarily halting the sale. A preliminary hearing on Geffre's request for a permanent injunction against BofA is scheduled for Thursday morning, court documents show.
Natale, the advocacy unit's director, said Geffre's case is a perfect example of why the unit is needed.
"Here we have an elderly widow willing and able to make the agreed-upon payments, and the bank would rather take her home and render her homeless," Natale said. "It makes no sense, and it is just wrong."
Student attorneys are seeking to have the loan modification deemed valid and enforceable, have the foreclosure sale canceled and garner compensatory and punitive damages for Geffre.
Geffre is grateful for assistance.
"I'm just amazed at the help they are giving and what they're doing for me," she said.
By J. Craig Anderson The Arizona Republic Dec 7, 2011
Mortgage battle vs. bank gets new ally - USATODAY.com
How to seek help
The Homeowner Advocacy Unit will accept clients referred by the Arizona Foreclosure Prevention Task Force as well as those referred by other community organizations that work with distressed homeowners.
Homeowners with mortgage problems or facing foreclosure can contact the Arizona Foreclosure Prevention Task Force for assistance at 877-448-1211 or azforeclosureprevention.org.
Geffre, a 69-year-old widow who says Bank of America refused to honor a loan-modification agreement it had negotiated with her late husband, is being represented in court by a new homeowner-advocacy group at Arizona State University's Sandra Day O'Connor College of Law.
The ASU Homeowner Advocacy Unit, a student-faculty initiative launched in August under which law-college students litigate real cases, chose Geffre as its first client.
"This case is an example of why this clinic is so important," said Mary Ellen Natale, director of the unit. "The bank's conduct is egregious."
Under the guidance of faculty supervisor M. Robert Dauber, who is licensed to practice in Arizona, the unit filed a lawsuit Monday in Maricopa County Superior Court against BofA on Geffre's behalf. The complaint demanded that the Charlotte, N.C.-based lender cease its pending foreclosure, reinstate the loan-modification agreement and compensate Geffre for damages, including extreme emotional distress.
The Arizona Republic e-mailed a copy of the lawsuit to BofA early Tuesday at the request of a bank representative. The bank representative later said the company could not comment because of the pending litigation.
Law-school advocacy
The litigation program is one of two to be created by the ASU law school in the 2011-12 academic year in response to issues created by the region's housing-market meltdown.
The Phoenix area experienced a record 58,157 home foreclosures in 2010. Jim Belfiore, president of Belfiore Real Estate Consulting, said the area is on pace to have about 54,000 foreclosures by the end of the year and predicted about 38,000 foreclosures in 2012.
The Homeowner Advocacy Unit, which opened in August, allows students to litigate on behalf of clients who believe they have fallen victim to illegal mortgage-related activity.
The college's Foreclosure Mediation Unit, scheduled to open in the spring semester, will put students to work as impartial mediators assisting in the resolution of mortgage-related disputes.
Both programs are funded by a grant from the Arizona Attorney General's Office, ASU officials said.
Loan-modification dispute
According to Geffre's complaint, her late husband, Thomas Geffre, had been approved for a trial home-loan modification under the federal Home Affordable Modification Program in summer 2009.
In January 2010, BofA approved a permanent modification and mailed documents for Thomas Geffre to sign and return to the bank, the lawsuit said.
However, Thomas Geffre had died in November 2009 from complications of pancreatic cancer, the lawsuit said.
When June Geffre received the loan-modification forms in the mail, she said she signed them and mailed them to BofA, along with a copy of her husband's death certificate.
The lawsuit alleged that the lender refused to accept June Geffre's signature, saying that her late husband's signature was required for the permanent-modification agreement to become effective.
Geffre explained to BofA representatives on multiple occasions that her husband was dead and therefore unable to sign the documents and that she repeatedly sent copies of the death certificate as proof he had died, the lawsuit said.
Meanwhile, the lender continued to accept Geffre's modified-loan payments, the lawsuit said. The original monthly mortgage payments were roughly $1,200, Geffre said, and under the modification agreement, they had been lowered to about $800.
After accepting 18 payments at the modified amount, BofA rejected Geffre's July payment and told her she owed about $20,000 for incomplete payments and penalties, she said.
"They dropped the bombshell on me," Geffre said.
The bank initiated foreclosure proceedings in September, she said.
Bid to stop foreclosure
Along with the complaint, the ASU unit filed a motion Monday for a temporary restraining order to stop the foreclosure sale of Geffre's home, which had been scheduled for 10 a.m. Tuesday.
Judge John Rea granted the order, temporarily halting the sale. A preliminary hearing on Geffre's request for a permanent injunction against BofA is scheduled for Thursday morning, court documents show.
Natale, the advocacy unit's director, said Geffre's case is a perfect example of why the unit is needed.
"Here we have an elderly widow willing and able to make the agreed-upon payments, and the bank would rather take her home and render her homeless," Natale said. "It makes no sense, and it is just wrong."
Student attorneys are seeking to have the loan modification deemed valid and enforceable, have the foreclosure sale canceled and garner compensatory and punitive damages for Geffre.
Geffre is grateful for assistance.
"I'm just amazed at the help they are giving and what they're doing for me," she said.
By J. Craig Anderson The Arizona Republic Dec 7, 2011
Mortgage battle vs. bank gets new ally - USATODAY.com
Sunday, November 27, 2011
Details of refinancing eligibility trickling in
Many Arizona homeowners underwater with their mortgages are anxiously awaiting more information on how they can lower their interest rates and payments through the expansion of the government's Housing Affordable Refinance Program.
But details on the program have been delayed. Information on which homeowners are eligible and how to apply was supposed to be released by now but will likely come out next week. However, government mortgage giants Fannie Mae and Freddie Mac have begun providing lenders information on how to handle the expansion of HARP. Only homeowners with loans held by those entities are eligible to refinance, no matter how much more they owe on their home than its actually worth.
From the new information sent to lenders, it's now clear not all borrowers with Fannie Mae and Freddie Mac mortgages are eligible. A loan-to-value ratio of 105 percent is still in effect for borrowers with mortgages that have longer terms than 30 years or adjustable-rate mortgages with terms of five years or higher.
While some borrowers can start applying to refinance as soon as Dec. 1., others with loan-to-value ratios above 125 percent will have to wait until at least February of next year.
Some questions and answers:
Q: Phoenix-area homeowner Marla Griggs knows she's not eligible for the refinancing program but is coming up on the end of the five-year point of her option-adjustable mortgage. The loan is not owned by Fannie Mae or Freddie Mac, and she wants to know her options for keeping her home by refinancing and lowering her payment.
"Many people are not eligible for this program. Why can't it be applied to all mortgages?" she asks.
A: The federal government hasn't been able to make privately owned lenders readily participate in its programs, including loan modifications, to help homeowners avoid foreclosure. When U.S. Department of Housing and Urban Development Secretary Shaun Donovan talked to The Arizona Republic a few weeks ago, he was well-aware that the refinancing program wouldn't help everyone. He said the government has to do what it can do to help the most homeowners now, and then hope the plans will catch on with lenders.
Jay Luber of Phoenix-based Galaxy Lending said early instructions from Fannie and Freddie show it won't be until March when the refinancing programs to help many metro Phoenix borrowers will likely be available.
Sorry, Marla, that doesn't help you. But housing advocates say to call Arizona's foreclosure hotline at 877-448-1211.
Q: Bruce Robinson asks, "What about all of us poor souls out here with FHA (insured) mortgages? We represent a huge portion of the outstanding mortgage market, and yet I read nothing indicating that the administration is doing anything for us.
"FHA's existing 'Streamline' refinance program is nothing more than a hollow promise. First, the fees are incredible, with FHA requiring a whole new up-front guarantee fee. Then, FHA is charging monthly 'mortgage insurance,' which is more than double that which is charged on most existing loans. Many mainstream national mortgage lenders appear to be simply avoiding 'Streamline' since it is so disadvantageous to most FHA borrowers."
A: I am hearing the same issues from many FHA borrowers. But mortgage brokers are beginning to report more success with the streamlines, partially due to more government focus on the program. The big issue is you have to stay in your home several years after the streamline for the additional fees to make sense. Donovan mentioned that some changes could be made to the FHA program, as well. I will write about those as soon as information is available.
by Catherine Reagor The Arizona Republic Nov. 26, 2011 12:00 AM
Details of refinancing eligibility trickling in
But details on the program have been delayed. Information on which homeowners are eligible and how to apply was supposed to be released by now but will likely come out next week. However, government mortgage giants Fannie Mae and Freddie Mac have begun providing lenders information on how to handle the expansion of HARP. Only homeowners with loans held by those entities are eligible to refinance, no matter how much more they owe on their home than its actually worth.
From the new information sent to lenders, it's now clear not all borrowers with Fannie Mae and Freddie Mac mortgages are eligible. A loan-to-value ratio of 105 percent is still in effect for borrowers with mortgages that have longer terms than 30 years or adjustable-rate mortgages with terms of five years or higher.
While some borrowers can start applying to refinance as soon as Dec. 1., others with loan-to-value ratios above 125 percent will have to wait until at least February of next year.
Some questions and answers:
Q: Phoenix-area homeowner Marla Griggs knows she's not eligible for the refinancing program but is coming up on the end of the five-year point of her option-adjustable mortgage. The loan is not owned by Fannie Mae or Freddie Mac, and she wants to know her options for keeping her home by refinancing and lowering her payment.
"Many people are not eligible for this program. Why can't it be applied to all mortgages?" she asks.
A: The federal government hasn't been able to make privately owned lenders readily participate in its programs, including loan modifications, to help homeowners avoid foreclosure. When U.S. Department of Housing and Urban Development Secretary Shaun Donovan talked to The Arizona Republic a few weeks ago, he was well-aware that the refinancing program wouldn't help everyone. He said the government has to do what it can do to help the most homeowners now, and then hope the plans will catch on with lenders.
Jay Luber of Phoenix-based Galaxy Lending said early instructions from Fannie and Freddie show it won't be until March when the refinancing programs to help many metro Phoenix borrowers will likely be available.
Sorry, Marla, that doesn't help you. But housing advocates say to call Arizona's foreclosure hotline at 877-448-1211.
Q: Bruce Robinson asks, "What about all of us poor souls out here with FHA (insured) mortgages? We represent a huge portion of the outstanding mortgage market, and yet I read nothing indicating that the administration is doing anything for us.
"FHA's existing 'Streamline' refinance program is nothing more than a hollow promise. First, the fees are incredible, with FHA requiring a whole new up-front guarantee fee. Then, FHA is charging monthly 'mortgage insurance,' which is more than double that which is charged on most existing loans. Many mainstream national mortgage lenders appear to be simply avoiding 'Streamline' since it is so disadvantageous to most FHA borrowers."
A: I am hearing the same issues from many FHA borrowers. But mortgage brokers are beginning to report more success with the streamlines, partially due to more government focus on the program. The big issue is you have to stay in your home several years after the streamline for the additional fees to make sense. Donovan mentioned that some changes could be made to the FHA program, as well. I will write about those as soon as information is available.
by Catherine Reagor The Arizona Republic Nov. 26, 2011 12:00 AM
Details of refinancing eligibility trickling in
Saturday, October 29, 2011
Reagor: Revised program targets underwater homeowners
The housing market is confusing and difficult to navigate for most these days. One month prices are up, the next they are down. The same with foreclosures. In one metro Phoenix neighborhood, there are more short sales than regular sales. In another area less than a mile away, homes are selling for the asking price.
As a real-estate reporter for The Arizona Republic since 1996, I have been watching the market closely for a while. I have owned more than one home in the region. My stomach churns with other homeowners' when prices fall, and I am elated when I see even the slightest positive signs in the housing market. But it all has to be put into perspective.
Starting today, I'll be answering real-estate questions from you, often with the help of experts, at least once a month.
Question: When will the (expanded refinancing) program be available to homeowners? How do you know you are eligible? Also, are the banks being given any incentives to help homeowners who qualify for the program? Right now, it is next to impossible to get anyone from my bank on the phone to talk about my options. -- Carl S.
Answer: Since Monday's announcement by the Obama administration about the expansion of the Home Affordable Refinancing Program, I have heard from dozens of readers who want to know the same thing: Are they eligible?
Homeowners must have a mortgage backed by government-owned Fannie Mae and Freddie Mac. To determine if your mortgage is backed by Fannie or Freddie, call your mortgage servicer or go to makinghomeaffordable.gov, where you can look it up.
Homeowners must be underwater and not have missed more than one payment in the past year. Now, there aren't supposed to be any limits on how much more a homeowner owes on a house compared with what it's worth. This is known as the loan-to-value ratio. Previously, HARP capped the LTV at 125 percent, which is of little help to homeowners in metro Phoenix.
The federal government won't release all details of the program until December. But HUD and Treasury officials said this week that they would cut fees and work on other ways to get lenders to participate quickly. I will continue to follow the program and track its success or failure.
Q: How will I know when new-home prices have hit bottom? I have been looking for a new house in the Gilbert/Chandler area, and it looks like homes now cost half what they did a few years ago. -- Michelle in Tempe
A: Homebuilders are competing with foreclosure homes. They are trying to build and sell houses for the lowest prices they can and still eke out a profit. Housing analysts say it's a great time to buy a new home. In most cases, you don't have to compete with investors paying cash because they are buying foreclosure homes.
Also, the number of new foreclosures is slowing. That means fewer inexpensive homes on the market, which will stabilize prices. The number of homes listed for sale is down, so prices could climb again next year, even in the new-home market.
If you have the cash for a 10 to 20 percent down payment, interest rates are still at new record lows, making it a great time to get a mortgage if you have decent credit. But don't buy unless you plan on holding onto the house for at least a few years, housing advocates warn. No one really knows when the housing market will recover.
by Catherine Reagor The Arizona Republic Oct. 28, 2011 05:12 PM
Reagor: Revised program targets underwater homeowners
As a real-estate reporter for The Arizona Republic since 1996, I have been watching the market closely for a while. I have owned more than one home in the region. My stomach churns with other homeowners' when prices fall, and I am elated when I see even the slightest positive signs in the housing market. But it all has to be put into perspective.
Starting today, I'll be answering real-estate questions from you, often with the help of experts, at least once a month.
Question: When will the (expanded refinancing) program be available to homeowners? How do you know you are eligible? Also, are the banks being given any incentives to help homeowners who qualify for the program? Right now, it is next to impossible to get anyone from my bank on the phone to talk about my options. -- Carl S.
Answer: Since Monday's announcement by the Obama administration about the expansion of the Home Affordable Refinancing Program, I have heard from dozens of readers who want to know the same thing: Are they eligible?
Homeowners must have a mortgage backed by government-owned Fannie Mae and Freddie Mac. To determine if your mortgage is backed by Fannie or Freddie, call your mortgage servicer or go to makinghomeaffordable.gov, where you can look it up.
Homeowners must be underwater and not have missed more than one payment in the past year. Now, there aren't supposed to be any limits on how much more a homeowner owes on a house compared with what it's worth. This is known as the loan-to-value ratio. Previously, HARP capped the LTV at 125 percent, which is of little help to homeowners in metro Phoenix.
The federal government won't release all details of the program until December. But HUD and Treasury officials said this week that they would cut fees and work on other ways to get lenders to participate quickly. I will continue to follow the program and track its success or failure.
Q: How will I know when new-home prices have hit bottom? I have been looking for a new house in the Gilbert/Chandler area, and it looks like homes now cost half what they did a few years ago. -- Michelle in Tempe
A: Homebuilders are competing with foreclosure homes. They are trying to build and sell houses for the lowest prices they can and still eke out a profit. Housing analysts say it's a great time to buy a new home. In most cases, you don't have to compete with investors paying cash because they are buying foreclosure homes.
Also, the number of new foreclosures is slowing. That means fewer inexpensive homes on the market, which will stabilize prices. The number of homes listed for sale is down, so prices could climb again next year, even in the new-home market.
If you have the cash for a 10 to 20 percent down payment, interest rates are still at new record lows, making it a great time to get a mortgage if you have decent credit. But don't buy unless you plan on holding onto the house for at least a few years, housing advocates warn. No one really knows when the housing market will recover.
by Catherine Reagor The Arizona Republic Oct. 28, 2011 05:12 PM
Reagor: Revised program targets underwater homeowners
Tuesday, October 25, 2011
Arizona underwater homeowners to get refinance help
More Arizona homeowners may soon be able to refinance to current low mortgage-interest rates, no matter how far underwater they are in their homes.
The Obama administration on Monday announced long-awaited details of an expansion of a program that helps homeowners refinance to reduce their payments.
Mortgage rates have fallen to record lows, and many homeowners would save hundreds of dollars a month if they could reduce the amount of interest they pay. But the housing crash has created a huge barrier.
A refinanced loan typically requires the home have enough value to cover the entire amount of the new loan. But plunging home values means many owners owe far more on their loans than their homes are worth. An estimated 40 percent of metro Phoenix homeowners are currently underwater.
The federal Home Affordable Refinancing Program has allowed certain loans to be refinanced if the borrower owed up to 125 percent of the home's value. But many underwater borrowers in Arizona owe more.
The plan announced Monday would lift the value requirement completely, allowing some borrowers to refinance no matter how much their home's value has dropped, if their mortgage is backed by one of the two largest federal mortgage agencies and they meet other requirements.
Borrowers can start to apply as soon as December, according to the few details released Monday, and the program would run through the end of 2013.
Speaking on a temporary stage in a Las Vegas neighborhood, Obama touted the plan as a way to allow struggling homeowners to save money.
"Probably the single greatest cause of the financial crisis and this brutal recession has been the housing bubble that burst four years ago," he said. "And as long as this goes on, our recovery can't take off as quickly as it would after a normal recession."
The plan
The HARP program has helped about 900,000 homeowners nationally to refinance. Arizona figures aren't available.
The plan described by Obama and the Federal Housing Finance Agency on Monday would expand HARP by changing the rules and costs associated and extending the time period in which borrowers can apply.
Among the key elements:
- Refinancing will be available to homeowners with loans backed by Fannie Mae or Freddie Mac in 2009 or earlier.
As with the current refinancing program, the option would be open only to borrowers with mortgages backed by the two largest federal mortgage agencies. Borrowers whose banks hold their loans privately would not qualify. Still, federally backed loans make up a majority of the existing mortgages in the state and the country.
The federal government did not give an official count of how many people will be able to refinance, but U.S. Housing and Urban Development head Shaun Donovan estimated 4 million families could be eligible.
Current federal programs have encouraged lenders to refinance such loans or modify loan-payment amounts for borrowers in financial trouble, but the banks that handle the payments in many cases have been slow to respond. Obama said the new program will allow other lenders to compete to make the new loans.
"Some lenders, frankly, just refuse to refinance," he said Monday. "So, these changes are going to encourage other lenders to compete for that business by offering better terms and rates, and eligible homeowners are going to be able to shop around."
The program is designed to help borrowers who took loans before the housing crash, and only applies to loans backed by the federal agencies on or before May 31, 2009.
Market-watchers say the key will be to see whether banks and the mortgage giants actually follow through.
"The new refinancing program sounds like a good idea, but it has to have teeth," said John Smith, president of the Mesa-based non-profit Housing Our Communities, which counsels homeowners on avoiding foreclosure. "The government has to make Fannie and Freddie go through with these deals."
- Refinancing will be available to homeowners who are current on their mortgage payments.
To qualify, homeowners must not have missed more than one payment in the past year.
The plan differs from other programs that were meant to help borrowers who could no longer afford their mortgages. The federal loan-modification program was open only to borrowers who were already late on making their payments.
Instead, the refinancing is open to borrowers who have made their payments.
Although it could help some people who have struggled to make those payments avoid foreclosure, it also could simply help other homeowners free up more money each month.
- Refinancing will be available no matter how much the home is currently worth.
The loan simply must be backed by Fannie or Freddie and be within standard sizes - for example, oversize "jumbo" loans will not qualify.
Borrowers who meet the financial requirements could refinance no matter how much the amount of the loan exceeds the home's current value, known as the loan-to-value ratio.
The previous HARP plan called for a 105 percent loan-to-value ratio, meaning homeowners who owed 5 percent more than their houses were worth could refinance under the plan. That ratio was quickly criticized for helping few in the hardest-hit housing markets of Arizona, California, Nevada, Florida and Michigan. It was raised to 125 percent but still wasn't enough for many homeowners who bought during the past decade in metro Phoenix.
"If the limit is lifted completely, then that will make a big difference for Arizona," said housing analyst Michael Orr, who publishes an online daily analysis of metro Phoenix's housing market called the "Cromford Report." "Many people have a loan-to-value of over 200 percent."
- Refinancing will cost less.
The changes announced Monday would also limit fees associated with refinancing, in hopes of making the move more affordable. Homeowners who qualify don't have to pay additional excessive fees for an appraisal or processing.
Jay Luber, president of Phoenix-based Galaxy Lending, knows many homeowners who will qualify for this program.
He believes it could "accelerate the stabilization of values in metro Phoenix by decreasing foreclosures and short sales."
The doubts
Housing advocates point to past programs that have garnered bad reputations.
The Housing Affordable Modification Program, HAMP, was announced in conjunction with the original refinancing program two years ago.
Tens of thousands of homeowners in Arizona alone were promised loan modifications and put in trial programs. These borrowers made the trial payments for more than a year in some cases only later to be denied a permanent modification.
Overall, the federal housing plan called for helping 7 million to 9 million homeowners. Fewer than 2.5 million have been helped with all of the plan's programs.
Phoenix real-estate agent Kevin Kaufman is skeptical of the new plan.
"I'm honestly very, very pessimistic about any government program actually helping people," he said. "Having been in the trenches for four years now and seen so many empty promises. I don't believe the government will actually help."
Too late?
When Obama unveiled federal efforts to stem foreclosures two years ago, he traveled to Mesa to make the announcement. At the time, foreclosures were surging.
Today, foreclosures have been steadily slowing in metro Phoenix. So the latest move has been criticized as coming too late.
Also, many market observers note that for many homeowners, the real problem is not just their monthly payment but the fact that they will still owe so much more than their houses are worth, making them unable to sell or move.
The Obama administration is hinting about more aid for people who have lost homes to foreclosure and neighborhoods with many empty foreclosure homes.
But this expansion of HARP does help the homeowners who continued to pay as others walked away.
Tom Schroder was turned down for a refinance last year because he owes at least 40 percent more than his Scottsdale home is worth. He said he is angry because he feels like he's being penalized for other people's foreclosures and bad decisions.
"I keep paying my mortgage on time and watching others buy homes at 5 or now even 4 percent (interest rates)," he said. "The changes to the refinancing program sound good. I just want to see some action on it from lenders and fast."
Patricia Garcia Duarte, president of the Phoenix-based non-profit homeownership counseling service Neighborhood Housing Services, said the new refinancing plan rewards homeowners with good credit who have not missed many payments.
"Owing more on a property than it is worth is still problematic for many in Arizona," she said. "Revamping HARP is a good thing, not the entire solution."
by Catherine Reagor The Arizona Republic Oct. 25, 2011 12:00 AM
Arizona underwater homeowners to get refinance help
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