Networked Blogs
Posts Tagged ‘home loans’
Homeowners Can File Individual Suits Over Denied Loan Modifications According to 7th Circuit Court of Appeals
Virtually every real estate agent has heard this story. A homeowner applies with their lender for a loan modification under the federal HAMP program. The lender puts them on a trial modification for a few months. Then the lender sends them a letter stating that they don’t actually qualify for the modification and that they owe the bank back payments, penalties, interest, etc…
Never mind the fact that the homeowner actually made all of their payments on time during their “trial modification period”. And never mind the fact that the lender never tells the consumer why they don’t qualify. They are just turned down. End of story.
Well, not so fast.
Most law suits involving HAMP loan modification Read the rest of this entry »
Share and Enjoy
California Attorney General Sues Fannie Freddie over Foreclosures
California’s Attorney General, Kamala Harris, has filed suit against Fannie Mae and Freddie Mac. She is accusing both companies of hindering her investigation into certain foreclosure practices used within the state.
The suite is an outgrowth of an investigation into foreclosure procedures used by the five largest US banks. A number of lenders have been accused of using foreclosure procedures that are illegal here and in most other states.
California was originally involved in settlement talks with the banks and all other states. Harris withdrew the state from those talks last year because she didn’t believe that California would receive adequate compensation in any settlement. She was also dissatisfied with the fact the banks were asking for immunity from further suits before agreeing to a settlement.
In the suits filed against Fannie and Freddie, Harris is trying to find out if there is any drug dealing or prostitution that takes place in homes that the companies now own. I’m guessing that the answer to those questions is “yes”. I’ve actually had to stand outside a home, waiting to go in for an inspection, while the police arrested squatters in the house on felony drug charges. I’m not sure that the house I’m talking about was a Fannie Mae or Freddie Mac mortgage, but since they own roughly 60% of the foreclosed mortgages in the state, there is a fair chance that one of the companies owned that one.
Harris is also trying to determine if military families have been illegally foreclosed on, and if taxes are being paid on the properties now owned by companies.
Share and Enjoy
Fairness in Foreclosure Act – A Really Bad Idea From Congress
Representative Ed Towns (D-NY) is proposing a new law that is gleefully titled the Fairness in Foreclosure Act (FIFA), according to DS News. The law place serious restrictions on lender lawsuits for deficiency judgments and it would change what lenders can report to the credit reporting agencies. As with all things too good to be true, this proposal would lead to unintended consequences. Among those that are foreseeable, reduced access to credit for borrowers and higher interest rates.
Currently, the window during which a lender may pursue a deficiency judgment varies by state and can be anywhere from six months to six years.
The Fairness in Foreclosure Act (H.R. 3566) would prohibit lenders from pursuing deficiency judgments more than 12 months after foreclosure, except in states with shorter windows for deficiency judgments.
The law apparently doesn’t make any exceptions for anyone who lied to obtain their loan or who engaged in any other form of fraud. It would also place serious restrictions on deficiency judgments for low income families. Again, no exceptions are being made for fraud.
More importantly,
Additionally, if the amount secured through foreclosure sale does not recover the full amount owed to the lender, the bank would not be allowed to report the deficiency to consumer reporting agencies as an unpaid debt from the borrower.
Very simply, this means that lenders will not be able to look at a credit report and determine the risk of lending. And that means that lenders will be forced to increase interest rates and fees for everyone. In turn, that will mean reduced home prices and increase documentation for borrowers.
Hopefully, the bill will never make it out of committee.
Share and Enjoy
Having Trouble Getting Financing? GAO Federal Reserve Audit Will Make Your Head Spin.
We hear about this regularly these days. People and businesses with good credit histories are having trouble getting new loans. Well, it certainly isn’t due to a lack of funds being available.
The Government Accounting Office has just completed and audit of the Federal Reserve. The audit contains a list of banks that received funds from the FED to keep them afloat, and the sums that they received. The dollar amounts will make your hair curl.
What the FED was doing create to funds for the banks was nothing more than making new money out of thin air. They simply went into existing accounts held by the banks and added a few zeros to their balances… that’s not a joke.
Keep in mind as you read through this list that $1 Billion is about $3.30 per person living in the United States. Based on that, Citigroup (which received the most funds of any of the banks) wound up getting around $8,250 per American.
If you are wondering how this might impact you personally, the answer is inflation. Although the FED’s public position is that inflation is very low, they don’t look at either food or energy costs when calculating the inflation rate. That means that if you’ve been able to find a way to kick the pesky habit of eating, and you don’t travel, you’re probably doing OK. But if you’ve been to a grocery store since the financial crisis began, you know that your personal cost for food has gone up significantly. And if you’ve been to a gas station since the end of 2008, you know that your gas prices have also gone through the roof.
It also boggles the mind to consider that more than $3 Trillion of the money the FED created was given to banks that are based overseas. On a per person basis, that amounts to just about $10,000 per American man, woman and child given to the banks of other countries.
Here is the list.
- Citigroup Inc – $ 2,513 Trillion
- Morgan Stanley – $2,041 Trillion
- Merrill Lynch & Co. $1,949 Trillion
- Bank of America Corporation $1,344 Trillion
- Barclays PLC (United Kingdom) $868 Billion
- Bear Stearns Companies, Inc. – $853 Billion
- Goldman Sachs Group Inc. – $814 Billion
- Royal Bank of Scotland Group PLC (United Kingdom) – $541 Billion
- Deutsche Bank AG (Germany) – $354 Billion
- UBS AG (Switzerland) -$287 Billion
- JP Morgan Chase & Co. – $391 Billion
- Credit Suisse Group AG (Switzerland) – $262 Billion
- Lehman Brothers Holdings Inc. – $183 Billion
- Bank of Scotland PLC (United Kingdom) – $181 Billion
- BNP Paribas SA (France) – $175 Billion
- Wells Fargo & Co. – $159 Billion
- Dexia SA (Belgium) – $159 Billion
- Wachovia Corporation – $142 Billion
- Dresdner Bank AG (Germany) – $135 Billion
- Societe Generale SA (France) – $124 Billion
- All other borrowers – $2,639 Tillion
- Total – $16,115 Trillion
In total, the audit reveals that the FED created roughly $52,000 for each and every person living in the United States. The dollar amount created is about $1 Trillion more than the current national debt.
At the same time that all of this money was being created, the public was being told that it was necessary so that banks would have money to loan. Well, if you are an individual with stellar credit and a good job, you will probably be ok. But if your credit is only “good”, then you may not qualify. And if you run a capital intensive business, you probably already know how difficult it is to gain access to new funds.
Follow CalDistressed!
You can follow all of the news posted on CalDistressed.com here.