Is Mediation the Answer?

Is Mediation the Answer?
By Jennifer Harmon
Foreclosures are costly to the borrower, servicers and the investors who take losses on the sale of those properties. It’s also expensive to the taxpayers in the communities where these foreclosures are taking place. Foreclosures drive down property value. They often result in an increased level of blight and crime, and property tax revenue decreases because of the decline in value.
The Obama administration is doing everything in its power to reduce foreclosures through the Home Affordable Modification Program. While many are focusing on the refi and modification components of the plan, the Center for American Progress says that mandatory mediation should be incorporated into that process to make sure that the people who are eligible for these programs will in fact get the assistance that they need.
The report, “It’s Time We Talked: Mandatory Mediation in the Foreclosure Process,” outlines how foreclosures can be reduced by as much as 75% if the federal government takes a more direct role in providing opportunities for mediation.
Philadelphia and Connecticut are two places that have had mediation programs in place for about a year now. About three-quarters of all cases that go through mediation are able to avoid foreclosure, according to Andrew Jakabovics, the organization’s associate director for housing and economics. “That really shows that there is an alternative to foreclosure that is beneficial to everybody,” he said. “I think it can be wrapped up nicely into the ongoing administration’s efforts.”
Mediation is simply a voluntary negotiation between two parties in the presence of a neutral third party. The important thing about it is that it’s voluntary negotiation. It’s not bankruptcy and it’s not a cramdown.
Mandatory mediation begins when a foreclosure notice goes out to both parties at the beginning of the process. The servicer and homeowner are required to appear at a particular time on a particular date for a mediation session.If a servicer is participating in a mediation session and feels like it is not beneficial and doesn’t think he will make more from settling than in foreclosure, the servicer never has to settle.
One of the potential pitfalls in the program is that borrowers who are eligible for HAMP are not necessarily getting the modifications under the program either because the servicers are applying the wrong numbers or they are actively steering borrowers to non-HAMP-compliant loans, said Mr. Jakabovics.
“One of the things mediation would do is simply say if a borrower in the process of getting foreclosed on goes to a mediation session, the servicer is there and says, ‘Look, you didn’t qualify.’ This gives the borrower basically an appeals process that is currently missing from HAMP so the borrower can say, ‘Here are my numbers. What numbers were you looking at?’ The servicer might go back and look at them and see if they can actually reach a deal.”
Given that the compliance checks on HAMP are several months out, the detailed checks are not likely to start until October. There are problems these compliance checks might not catch. “Certainly, come October if something gets flagged and is eligible for HAMP, but the borrower was not offered the modification, it does the borrower very little good if they are already out of their home,” said Mr. Jakabovics.
Getting borrowers and servicers together in the same room appears to have tremendous value. Mediation might be an ideal way to make sure the servicer is getting it right. They are not going to be making any more deals that are less valuable to them than what they would have gotten in foreclosure.

Home Sales Going Up, but Prices Should Continue to Drop

Home Sales Going Up, but Prices Should Continue to Drop
By Brian Collins
Recent reports that home sales may have bottomed out appear to have stirred some optimism that the worst of the housing crisis could be over.
Unfortunately, house prices and loan performance are lagging indicators in a recovery — and this downturn has seen the biggest price drops and the worst loan performance since the Great Depression.
Historical patterns show that house prices will fall and defaults and foreclosures will continue to rise until there is an improvement in the job market. If the employment numbers start to increase in mid-2010, as many expect, the turnaround in prices and delinquency rates may not come until the first quarter of 2011.
Nevertheless, sales are expected to trend upward and that is an important development, according to David Berson, chief economist for the PMI Group Inc. in Walnut Creek, Calif. "It is the precursor to everything else improving. Sales had to go up first and that is happening now," Mr. Berson said.
The National Association of Realtors reported a 2.9% increase in existing home sales in April and the trade group is forecasting a major jump in sales during the last three quarters of this year. NAR economists expect home sales will rise to a 5.5 million seasonally adjusted annual rate in the fourth quarter, up 19% from the first quarter, as the $8,000 tax credit for first-time homebuyers boosts sales.
Federal Reserve Board chairman Ben Bernanke even told Congress that he is seeing "some signs of bottoming" in the housing market. And he expects overall economic activity to "bottom out, and then turn up later this year."
Despite the improvement in sales, the PMI chief economist says house prices will continue to fall this year. "It will go down 9% to 10% this year and it will be roughly flat next year," Mr. Berson said. "There are just too many homes for sale," he said, and too many vacant homes.
The PMI Group uses First American Loan Performance data in forecasting house prices, which shows prices have declined by 22% since the peak in the third quarter of 2006. From the first quarter of 2008 through the first quarter of 2009 prices have fallen 11.7%.
Meanwhile, the Census Bureau reported that only 345,000 full-time employees lost their jobs in May, compared 700,000 during the winter months. But the unemployment rate jumped to 9.4% from 8.9% in April.
"It is a good sign and it bolsters the argument that the housing market should bottom in terms of sales and perhaps in (housing) starts" possibly in June or July, according to Scott Anderson, senior economist at Wells Fargo & Co.However, the yield on the 10-year Treasury note has risen sharply in the past few weeks and the
Federal Reserve is struggling to keep mortgage rates low. The average rate on 30-year fixed-rate mortgages hit 5.59% during the week of June 12, according to Freddie Mac. This has already impacted refis. The Mortgage Bankers Association refinancing application index has plummeted to 2,600 from 6,800 on April 3.
"Just as we are hitting bottom in the housing market there is a lot of uncertainty about how strong the recovery will be," the Wells Fargo economist said. "The risk factor is mortgage rates," Mr. Anderson said, which could keep home sales stuck at "moribund levels."
His forecast calls for house prices to drop 5%-10% from April 1 through February 2010. He expects the unemployment rate will peak around 9.7% in the fourth quarter of 2009 or the first quarter of 2010 and remain at that level for most of the year. Defaults and foreclosures won't "top out until some time in 2010," Mr. Anderson said.
Meanwhile, declining house prices undermine homeowners' equity and make it difficult to modify mortgages, especially if the owner losses their job.
A Mortgage Bankers Association delinquency report shows there were 600,000 foreclosure starts in the first quarter. And foreclosure starts on prime loans jumped ahead of subprime loans for the first time this decade.
Defaults on prime loans are the "hardest to fix" because they mostly reflects the loss of a job or other life event, according to MBA chief economist Jay Brinkmann. "Since the mortgage performance lags improvement in the job market, that would put us to the end of 2010 or possibly the first quarter of 2011 before we see a nationwide improvement in the performance of mortgages," Mr. Brinkmann said.
He made his comments in releasing MBA's delinquency report, which shows the serious delinquency rate on all single-family loans (90 days or more past due or in foreclosure) hit an all-time high of 7.38% in the first quarter.

Managing an REO

From walls to floors and cabinets to countertops, asset managers have to cover a lot of ground in order to make sure an REO property is clean and ready to sell.
It is a wise move for asset managers to give their real estate agents, brokers and service providers a guide to use when getting real estate-owned assets spic-and-span, according to CJ Gehlke, president and founder of REO Nationwide in Newport Beach, Calif.
Let's get down to specifics. Inside the home, Ms. Gehlke recommends to take a close look at the kitchen. Remove the refrigerator if it is inoperable and not repairable. If it is in working condition, remove the kick plate at the bottom front of the refrigerator and remove and clean the defrost pan. Defrost the fridge, remove and clean all shelves, racks and drawers. After cleaning, reassemble the refrigerator, and turn it on, setting the control at the warmest setting.
For drawers in the kitchen, empty and clean all stains and food particles by washing them with mild soap and warm water. Remove any worn paper lining. Wipe out drawers. It is important to clean the interior of the dishwasher and remove any food particles. Clean the soap holder, racks and trays. Clean the exterior by wiping with mild soap and warm water.
Next, move down the hallway of home to the washer and dryer. REO Nationwide says it's important to clean the interior thoroughly and include any filters. Remove all mineral and dried soap deposits from the top of the washer.
"For the furnace, remove and thoroughly clean or replace filter in the bottom of furnace. Clean all windows inside and out. Don't forget the screens. Vacuum Venetian blinds to remove dust and spots," says Ms. Gehlke. "Wipe the window sills to remove dust, spots or stains. The walls and ceilings take up a great deal of time. Brush out all corners to remove any dust. Clean the ceiling surrounding all vents."
There's more work to be done. Inside the bathroom, make sure to sanitize all tile and shower doors to remove lime deposits and mildew. Scrub the tub as well as the shower and sinks. "It is important to clean thoroughly any woodwork, including doors, door frames and baseboards."
Also, sweep and mop hardwood floors, title and linoleum. Don't forget to take care of the carpet. Remove stains and shampoo when this is requested. Empty and tidy up shelves, drawers and closets thoroughly. Remove, dust and replace the light fixtures. All fixtures should have an operable 60-watt bulb in each socket, says Ms. Gehlke. "If the house has a fireplace, go over it thoroughly to include the ash compartment. Sweep, clean and remove all trash and debris from the back porch."
Don't forget the garages and carports. Get rid of all trash and debris, and sweep clean these areas of the property. Remove the oil and grease from floor of carport/garage and driveways. Vacuum any vents in the property and haul off items from the storage sheds and make sure to sweep this area clean. And of course, remove all items of personal property.
If the amount of personal property exceeds a certain threshold (industry standards are $500), the personal property goes through an eviction process in accordance to state and local requirements. When it comes with dealing with the outside of the home, Cheryl Lang, president of the Houston-based Integrated Mortgage Solutions, says in the summer, contractors mow the lawn every two weeks and trim the bushes during April to October.
She says part of property preservation means ensuring that all hazardous materials have been removed from the property. This may include removing swing sets, tires, paint, boarding up in-ground pools or removing aboveground pools and draining ponds.
"The process of preserving property has been greatly improved by the use of digital imaging," describes Ms. Lang. "Because contractors may miss something or deem a property vacant when it is occupied, most vendors today require pictures to verify contractor's work. It is estimated that roughly 20% of contractor mistakes are caught using digital photos."
Some vendors today even provide phones with camera capabilities to contractors, so they may collect and share real-time photos in order to expedite the property preservation process. As more and more REO homes need to be monitored and preserved, technology ultimately allows more details to be presented on every property.
Photoinspection.com, a Buffalo, New York based company, provides property inspection services for the insurance and mortgage industries. The company, which was established in 1999, has focused on developing a robust and functional technology platform from the very beginning. The company has built a national network of inspectors, which was not an easy thing to do for a small company that was surviving on a bootstrap financing, says Ted Onyeji, president.
A network that includes several thousand appraisers located across the country has become the backbone of the company, he describes. Inspectors are monitored on their first 10 jobs to make sure they comply with industry standards. "We've noticed a lot of inspection companies are beginning to add inspectors across the country, especially in the areas of Florida and Michigan because of the glut of houses out there."
The biggest goal is to make sure the vacant property is not an eyesore.
Safeguard Properties, a privately held field services company located in Valley View, Ohio, makes sure the grass is cut, that there are no broken windows and if there is a gas or water leak inside the home, the company addresses those types of problems immediately.
Safeguard also offers maid services. Contractors are to follow the maid services checklist included in the work order and leave it at the property signed by the person who completed the services. This is a requirement when completing the initial services order. "You have no idea what we find in some of these properties. We will wash the counters down, clean the fridge, put in air fresheners so it doesn't smell like an REO," says Mr. Klein.
Bleach and household cleaners are used to rid a property of a smell, along with a powder scent put down on the carpet before vacuuming. Contractors bring a hot water supply with them to perform the cleaning. If carpet is in deplorable condition, the contractor will notify Safeguard to have it removed. "The lender wants to sell the REO as soon as possible to a homeowner who will live in the property. You want to make it as attractive as possible. You have to make it look and smell good. We try to do the best we can. We do as much as we can so the neighbors don't have a rundown home with 50 tires in the front yard," he adds.
Properties are becoming more seriously damaged as well. Some homeowners in foreclosure are so frustrated they will do serious damage to the property. They take out appliances, put holes in the walls and holes in the floor, he says. "There is no rhyme or reason. They are taking their frustration out on the system or the process. We are seeing that more and more."
By the time the mortgage company gets a hold of one of these properties, it is sometimes problematic. Safeguard hire various contractors they have built relationships with to do repairs such as re-roof a home. In today's market the industry is seeing an increase in the amount of repairs being done to vacant REOs.
"The goal of the mortgage company is to sell this property as quickly as possible. Every day they hold on to it is costing them money, in addition to the foreclosure process. It's a bigger financial loss. We want to make the house inviting and attractive to the possible homeowner."

Full Article: http://www.managingreo.com/feature/?story_id=89

PTC neighbors mow foreclosed lawns

Peachtree City has not escaped the nationwide trend of home foreclosures.
While some of those homes are in the lower price range, some are in the very high price range too, as they are not confined to any area or neighborhood, said Senior Code Enforcement Officer Tami Babb.
Foreclosed homes have ranged from the $60,000 range to upwards of $600,000 or more, she said. One home in foreclosure was listed at $1.5 million in public newspaper notices, the main resource code enforcement uses to track foreclosures, Babb said.
“We’ve dealt with foreclosures before,” Babb said. “What’s different now is that it’s in every area.”
The foreclosed homes have not led to major issues so far, Babb said. But homes in foreclosure limbo, after they have been abandoned but before the banks resume ownership, have caused some trouble, she added.
To secure pool fences on abandoned properties, the city uses nylon straps to prevent trespassers from entering, Babb said. In some cases, neighbors are mowing the lawns of abandoned homes, Babb said.
One homeowner in particular who skipped town was particularly onerous and would have merited a citation with an appearance in city court had he remained here with the property unkempt, Babb said. But the owner moved out of state, so it may be impossible to hold him accountable, she added.
“Lots of people have left town and we can’t find them,” Babb said. “But they are still legally responsible.”
Once banks take possession of foreclosed homes, they generally do a good job of making sure the lawn is kept up and that the house doesn’t fall into disrepair, Babb said.
The city has not had to condemn any foreclosed homes due to structural defects or code violations, she added.
One private company, Safeguard, does a particularly good job of handling such issues including the regular lawn work and also fixing broken windows, Babb said.
Dealing with foreclosures is time-consuming, Babb said, adding that it has been made a bit easier since Fayette County deed records can be searched by computer to find the true owner of a given parcel.
Babb noted that the recently expired three-month moratorium on foreclosures was difficult because most of the city’s homes in the foreclosure process had already been abandoned ... but the banks had been unable to take possession of them during that time.
The code enforcement department also has seen a drop in the number of calls from potential investors looking for a good deal on real estate, Babb added. Yet she remains optimistic that the future will improve.
“I really believe this is going to turn around,” Babb said.
Babb asks anyone with questions about particular homes to call code enforcement. Some neighbors are aware homes are in trouble before the notice is published in the newspaper, she added.

Original Article: http://www.thecitizen.com/~citizen0/node/37030

Florida Cook County Judge Sets Timing Limits to Foreclosure Judgements

Dorothy Kinnaird, the Presiding Judge of the Chancery Division of Cook County, has issued a general order that has a direct impact upon the timing of foreclosure judgments as well as orders approving sales.
Summary
Judge Dorothy Kinnaird, Presiding Judge for the Chancery Division of Cook County Illinois issued a general order that has a direct impact upon the timing of foreclosure judgments as well as orders approving sales. Judge Kinnaird's order is limited to Cook County foreclosure cases filed on or after January 1, 2009
Until the court has set and held a case management conference:
No foreclosure case will be permitted to proceed to judgment
No orders to approve sales will be entered in cases in which a judgment has already been found and a sale completed.
The only exception to this rule is if there is a finding of "good cause." The only example of good cause and the only example provided is where the property is vacant and abandoned.
Each foreclosure case will be assigned a case management date in the month of July or August, 2009. No conferences have been set so far.
The Order does not indicate what subjects or issues will be discussed at the conference.
No motions for entry of foreclosure judgment may be filed until the conference has been held. That does not preclude the possibility of an additional case management conference on the matter.
Under the Order, Lender's counsel carries the burden to notify defendants. This will result in a cost for the lender
Case filed prior to January 1, 2009 may proceed to judgment or order approving sale without the requirement for a case management conference being scheduled. However, the additional backlog will likely delay this process anyway.
Although the Order does not prohibit lenders from filing foreclosures or serving borrowers with the complaint and summons, the general impact of this Order is to stay the matter until a case management conference has been scheduled and held.

View rule: http://www.safeguardproperties.com/pub/pdf/20090408081753273_pp1-3.pdf

CNN's Drew Griffin Foreclosure are not sold

CNN’s Drew Griffin on why millions of foreclosed homes nationwide are so badly damaged they may never be sold.

http://video.aol.com/video-detail/un-saleable-homes/253292954

CNN Money discusses Unemployment Major Factor missed mortgage payment

http://money.cnn.com/2009/04/13/real_estate/foreclosure_unemployment.reut/index.htm

A recent report from CNN Money discusses a survey from the Boston Federal Reserve how unemployment is a major driver of missed mortgage payments.
Unemployment: Big factor in home defaultsReport indicates unemployment is a major driver of missed mortgage payments, and raises concerns that Presidential plan to modify loans may miss the mark.
NEW YORK (Reuters) -- Unemployment is a bigger reason for missed mortgage payments than high interest rates, according to a study from the Boston Federal Reserve that raises questions about President Obama's plan to stem foreclosures by modifying loans.
Borrowers are more likely to default on their payments because they have lost their jobs or because the price of their homes has plummeted than because of tough terms on their mortgages, the study found.
Loan modifications are not necessarily a better deal for investors either, wrote Boston Fed economists Christopher Foote and Paul Willen, Atlanta Fed economist Kristopher Gerardi and Lorenz Goette, a professor at the University of Geneva.
Their research found that policies that directly help homeowners overcome setbacks such as losing their jobs may be more effective in combating foreclosures.
"Foreclosure-prevention policy should focus on the most important source of defaults," the economists wrote in a study released on the Boston Fed's Web site late last week.
The findings challenge the thinking behind a White House plan announced in February that would give up to 9 million families the chance to refinance their mortgages. President Obama's administration has made loan modifications a central plank of its efforts to tackle the housing crisis.
"One of the most influential strands of thought contends that the crisis can be attenuated by changing the terms of 'unaffordable' mortgages," the economists wrote. But policies that focus on loan modification "face important hurdles in addressing the current foreclosure crisis," they wrote.
The economists suggest that the government could instead replace part of an individual homeowner's lost income from a job loss through loans and grants and help those whose predicament is more permanent become renters.
In addition, investors do not necessarily stand to gain if foreclosure is avoided, they said, and that could help explain the relatively small number of loan modifications to date. Estimates that total gains for investors from modifying rather than foreclosing can run to $180 billion may not take into account a number of key factors.
Investors can lose money when they modify mortgages for borrowers who would have repaid anyway. Borrowers with modified loans may default again later, especially if the reason they were driven to default remains, the economists said.

Indiana Marion County Passed Local Rule on Foreclosure Cases

The Marion County Indiana Circuit and Superior courts (Indianapolis metropolitan area) passed a local rule, LR49-TR 85 Rule 231, effective in March 2009. The Rule requires that settlement conferences be held between the primary borrower and primary lender in all owner-occupied housing foreclosure cases.
Rule Summary
Foreclosure proceedings will be automatically stayed for 90 days, effective once the case is filed, except for proceeding with service, unless the conference is vacated for good cause.
Once service has been made and confirmed, the court will send out the settlement conference notice to the lender and borrower.
The borrower must respond to the court within 15 days of receipt of the notice to confirm they will be attending the conference. If the court does not receive the confirmation, the conference will be waived.
Both the lender and a representative of the lender who has settlement authority, as well as the borrower, may attend the conference in person or by phone.
The borrower must provide the lender's counsel with the borrower's financial information (7) seven days prior to the conference.
Lender's counsel must provide a written report on the conference results to the court within (5) five days of the conference. If no conference was held, lender's counsel must file a statement explaining the reasons that the conference was not held.
Upon notice, the lender needs to make a loan officer available by phone for each conference.
If the conference is not held within 90 days after service is confirmed, or if the borrower fails to appear for the conference, foreclosure may proceed
The immediate impact of this rule will be to delay foreclosure proceedings, unless the settlement conference is waived.

Florida Mandatory Referral to Mediation

Judicial Orders (click here) require mandatory referral to mediation for residential mortgage foreclosures for owner-occupied residences in several Florida counties. The defendants must also be offered foreclosure counseling by HUD approved counselors
The orders apply to the Florida Circuit Courts in the counties of Escambia, Santa Rosa, Okaloosa, Walton [Order 2009-18]; Indian River, Martin, Okeechobee and St. Lucie [Order 2009-01]; and Orange [Orange County Order 2009-02]. At the time the foreclosure complaint is filed, plaintiff's counsel must complete and file "Form A", which contains information regarding the property, the owner, contact information for the Lender's loss mitigation department and a Notice of the Homeowner's Right to Mediation. If owner-occupied, plaintiff must file a copy of the mortgage note, mortgage and any PSA that may affect the plaintiff's ability to settle and resolve the foreclosure. Plaintiff's counsel must affirmatively certify whether the property is owner occupied and if so, plaintiff's counsel must certify the identity of the plaintiff or their representative with full settlement authority, and that counsel has personally spoken to the representative and confirmed they have full and complete settlement authority. If certified as owner-occupied, Form A must be electronically transmitted to the Collins Center within the prescribed time (5-10 days as applicable. The Orange County Order differs from the others in that it requires personal communication between Plaintiff's counsel and the Defendant Debtor to determine whether the Defendant is not interested in or is unable to engage in loss mitigation efforts. If so, the Plaintiff may file a prescribed Notice of Good Faith Communication and be excused from compliance with the Orange County Order Mediation civil procedure, fees and requirements are set forth in each Order. The Collins Center will send a list of HUD approved counseling agencies the defendants at the time mediation is scheduled. All named parties must attend the mediation in person or by representative with full settlement authority

Jeffson County, Kentucky sets pilot Foreclosure Mediation Program

Effective March 30, 2009, the Jefferson County, Kentucky courts (which includes the City of Louisville) have initiated a pilot Foreclosure Mediation Program for owner occupied residential properties. This program will impact all servicers handling defaulted accounts in Jefferson County, and if the program is considered successful, it may be adopted by other Kentucky counties.
Presently, the program only involves new foreclosure actions filed before four of the judges within Jefferson County. However, the Jefferson County Master Commissioner's office anticipates rolling this program out to all divisions of the Court by June or July of this year.Jefferson County's program is considered to be an "opt-in program". In other words, debtors must affirmatively request mediation. This program is anticipated to run parallel to the standard foreclosure process. The request for Mediation is not intended to stall the entry of judgment in the foreclosure, but will delay or stop the actual foreclosure sale if servicers fail to participate in the mediation process.This program uses a state grant to fund social service outreach organizations' efforts to contact borrowers. Retained organizations, working through the Kentucky Housing Corporation, will attempt up to three personal contacts at the residence in order to notify borrowers of the program. If contact is made with the borrowers, these housing counselors will work with the borrowers to complete a request for mediation and a financial package to be provided to their mortgage servicer.Completed packages will be forwarded to the attorney for the servicer, and a hearing will be set at least two weeks from the date the package is delivered to the attorney. The servicer's attorney will be required to forward the completed package to their client to review for possible loss mitigation options.The mediation hearings will be conducted every Thursday morning before the Master Commissioner. Counsel for the servicer will be required to be present, and a representative of the servicer, with true settlement authority, must be available by telephone. In addition, the debtor and the housing counselor must be present, along with a pro-bono attorney to represent the debtor.If the servicer participates in this process, then the foreclosure sale may occur if no settlement can be reached. The Court will encourage servicers to mitigate loans in a way that permits borrowers to stay in their homes, or to allow the borrower time to arrange alternative housing and exit the property in a "more graceful" manner.Our firm is encouraging all servicers to cooperate to the fullest extent in this program. If servicers provide staff to adequately review financials prior to the mediation conference, and give their counsel direct access to dedicated loss mitigation employees with true settlement authority, this program should allow servicers and borrowers to reach settlements in many cases that will benefit all parties concerned.Proactive involvement in this process should increase cure rates, successful loan modifications, forbearance plans, and Deeds-in-Lieu of Foreclosure. In many cases, active participation in this program may drastically reduce loss severity on defaulted accounts, shorten timelines to complete the foreclosure process, and may eliminate the need to manage a larger pool of REO properties in Jefferson County.Servicers who fail to cooperate to the fullest extent with this program, or who are perceived by the Court as being uncooperative, will undoubtedly find prosecution of their cases in Jefferson County to be more difficult, and will likely suffer from substantial timeline delays and possible adverse publicity in the community.The Court has expressed a willingness to work with law firms and servicers to ensure that the financial package that is completed includes all information and documentation that may be necessary to consider a loss mitigation proposal. The Master Commissioner office has asked us to forward them any specific information or documentation requirements that servicers might have. Servicers will be required to accept and review the financial package in the format the Court sets forth. As a result, we are encouraging all servicers to forward us copies of their required financial packages, so that we may provide them to the Court and request that they include the necessary information in the Court package.
If you would like a copy of the court order or if you have any questions regarding this topic, they can be addressed to Richard Nielson at rnielson@nsattorneys.com, or you may contact Rich directly at (859) 655-8010

Iowa sets new laws on foreclosure notices

On April 9th, Governor Chet Culver signed SF 364 titled, "an Act relating to civil actions including certain limitations on actions, judgments, and executions and including actions relating to the foreclosure of real estate mortgages, and providing effective date and applicability provisions".
Additional information is provided in the following article from the Quad-City Times.
Iowa Senate votes to help people facing foreclosure
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DES MOINES — The Iowa Senate voted Tuesday to provide more leeway for a growing number of Iowans facing foreclosure because they are behind in making their mortgage payments.
Senate File 364, which passed on a 50-0 vote, is designed to improve the opportunity for mortgage holders to work with their lenders to stave off civil default judgments.
“This is a major issue facing Iowans,” said Sen. Rob Hogg, D-Cedar Rapids. “This bill will help us address the foreclosure crisis and provide additional protections for the homeowner whose property is being foreclosed.”
The number of Iowa properties subject to civil mortgage foreclosure action has nearly doubled from 5,507 in 2002 to nearly 11,000 last year, according to the preliminary estimates.
The bill requires mediation notices “prior to commencing an action” on a residence — a provision that is effective through July 1, 2011. The legislation allows for a 60-day delay in foreclosure sales, and it also provides that lenders may rescind foreclosure action to negotiate a voluntary workout.
Hogg said the proposed change should help reduce unnecessary cost to parties involved in foreclosure proceedings. The bill also should help communities by reducing bureaucratic red tape that stops foreclosed property from being resold or returned to productive use, he said.
In separate action, the Senate voted 50-0 to establish licensing requirements for mortgage loan originators to ensure the lending industry is operating without unfair, deceptive or fraudulent practices.
“Senate File 355 toughens state laws governing mortgage bankers and brokers to fight shady operators who helped cause the national mortgage mess,” said Sen. Swati Dandekar, D-Marion, the bill’s floor manager.

Entire Bill: http://coolice.legis.state.ia.us/Cool-ICE/default.asp?Category=billinfo&Service=Billbook&menu=false&hbill=SF364

Wachovia asks REALTORS to help with Short Sales

Distressed homeowners with Wachovia, formerly World Savings, as a lender are seeing a glimmer of home when it comes to saving their homes from foreclosure.
Unlike other banks, Wachovia has short sale managers in the field to talk to distressed homeowners and help them explore options before going to foreclosure. The process is simple and straight forward for the homeowner.
The Wachovia Short Sale manager meets with the homeowner to determine that there is truly a hardship. The seller may be asked to provide a financial statement as well as other information such as tax returns. The Short Sale Manager assess the situation, orders a Brokers Professional Opinion, and then is able to approve the hardship in just a matter of days. Of course if there is a chance that the seller may qualify for a loan modification, that is also an option.
This does several things for the distressed homeowner:
It gives them piece of mind knowing that they are dealing with their lender directly and not some third party collection team;
It gives them faith in their Realtor, and the industry, by seeing the two entities work together to provide help and assistance;
It stops the foreclosure process and takes away the burden and the embarrassment of a foreclosure;
It expedites the short sale process into a period of weeks, as opposed to months, allowing the homeowner to move on with their lives;
It allows the homeowner to reestablish credit faster than if they had to go to through the foreclosure process.
This also helps Wachovia:
Wachovia's short sale managers are a great public relations team for Wachovia to the industry, and to distressed homeowners;
It ultimately saves Wachovia time and money by properly pricing the home and determining the hardship from the start - as opposed to the extended process, which results in a greater loss, especially in a declining market.
Wachovia should be applauded for their efforts and held up as an example for other financial institutions. Working together only helps the distressed homeowner and our industry.

Currently have a World Savings, Wachovia, Golden West, Home Loan and your property is upside down. You would like to List your property than please contact me today.

Modifying Loans Under the Affordable Home Modification Plan‏

This will only apply to the first mortgage on your primary residence.

To qualify, you must:
Have originated your mortgage before Jan. 1, 2009.
Be an owner-occupant.
Have an unpaid balance that is equal to or less than $729,750 (for a single-family home).
Have trouble paying your mortgage due to financial hardship. That could be because you have had an increase in your mortgage payments, or because your income was reduced or you suffered a hardship (like medical problems) that increased your bills, or, you can show that you soon will be unable to make your payments. You will be required to enter an affidavit of financial hardship.
Your monthly mortgage payment must also be more than 31% of your gross (pre-tax) monthly income.To seal the deal, you must successfully complete a three-month trial period at the modified rate. If you make all payments on time, you will keep this lower rate that will be fixed for five years.

What if I am About to be Foreclosed On?
The foreclosure process will stop while you’re being considered for the program (or for any alternative foreclosure prevention option).

What Will it Cost?
Under the program, the borrower does not have to pay any charges or fees. Any fees are supposed to be paid by the company that holds the loan, and the servicer of the loan will pay for your credit report.

Is There a Deadline?
New borrowers will be accepted until Dec. 31, 2012.
How Do I Start?
Gather these required loan modification documents and call your mortgage servicer (the company you make payments to). Your servicer is not required to join the program, but the government hopes that the incentives, along with the fact that this could help millions avoid defaulting on their mortgage, will motivate them to participate.


Home Affordable Modification Program Guidelines

FULL DETAILS CLICK THE FOLLOWING LINK PRINT & REVIEW:

http://www.ustreas.gov/press/releases/reports/modification_program_guidelines.pdf

Wisconsin State Tenant Protection Act help foreclosed owners stay in Home 90 days

The Wisconsin Economic Recovery Act, Act 2 was recently enacted, with an effective date of March 7, 2009. Sections 847 through 850 of Act 2 contain the Tenant Protection Act.
The Act requires that the plaintiff in a foreclosure action provide notice to tenants three different times during the foreclosure.
The first notice must be provided to tenants within five (5) days of filing the foreclosure action. The next notice must be provided within five (5) days of the Judgment Entry showing the redemption expiration date. The third notice is sent once notice of confirmation of hearing is scheduled. This is notice of the hearing date and time. All notices must be sent by Registered Mail or personal service.
The Act also gives a tenant the right to remain in a foreclosed property for ninety (90) days after the foreclosure process has concluded. There is a $250.00 penalty, plus attorney fees for noncompliance.

http://www.legis.wi.gov/2009/data/acts/09Act2.pdf

Click the link above to learn more about this law.

Reissuance of the Introduction of the Home Affordable Modification

This Announcement (09-05R) is a reissuance of Announcement 09-05, which was originally
issued on March 4, 2009. This Announcement provides additional policy clarification and
instruction and supersedes Announcement 09-05 in its entirety. Policy clarifications and
new instructions that are incorporated into this Announcement are identified by bold type.
(Other minor editorial changes are included in this document but not identified in bold.)
Background
On February 18, 2009, President Obama announced the Homeowner Affordability and Stability
Plan to help up to 7 to 9 million families restructure or refinance their mortgage loans to avoid
foreclosure. As part of this plan, the Treasury Department (Treasury) announced a national
modification program aimed at helping 3 to 4 million at-risk homeowners – both those who are
in default and those who are at imminent risk of default – by reducing monthly payments to
sustainable levels. Treasury issued uniform guidance for loan modifications across the mortgage
industry in Supplemental Directive 09-01 on April 6, 2009. This Announcement provides
guidance to Fannie Mae servicers for adoption and implementation of the Home Affordable
Modification Program (HMP) for Fannie Mae loans.
Under the HMP, servicers will use a uniform loan modification process to provide eligible
borrowers with sustainable monthly payments. The HMP implementation guidelines set forth in
this Announcement apply to all eligible one- to four-unit owner-occupied properties securing
Fannie Mae portfolio mortgage loans and MBS pool mortgage loans guaranteed by Fannie Mae.
The HMP will replace the Streamlined Modification Program introduced in Announcement 08-
33 and the Early Workout™ program announced in Announcement 08-31. The HMP will expire
on December 31, 2012.
All Fannie Mae-approved servicers must participate in the program for all eligible Fannie Mae
portfolio mortgage loans and MBS pool mortgage loans guaranteed by Fannie Mae.
Announcement 09-05R Page 2
Servicers may also elect to participate in the HMP for other qualifying mortgage loans that:
 are not subject to Fannie Mae’s credit loss guarantee, and
 are held by servicers in their own portfolios or are serviced for other portfolios or
securitization trusts or investors.
These other qualifying mortgage loans are referred to as Non-GSE Mortgages in this
Announcement.
As announced in Supplemental Directive 09-01, in order for a servicer to participate in the HMP
with respect to Non-GSE Mortgages, the servicer must execute a servicer participation
agreement and related documents with Fannie Mae in its capacity as financial agent for the
United States (as designated by Treasury).
This Announcement also introduces a new HomeSaver Forbearance™ foreclosure prevention
option and a new Fannie Mae loan workout hierarchy. The HomeSaver Forbearance provides an
additional foreclosure prevention option for borrowers who are NOT eligible for the HMP.
This Announcement covers the following topics:
 HMP Eligibility
 Underwriting
 Modification Process
 Servicer Delegation, Duties and Responsibilities
 Reporting Requirements
 Fees and Compensation
 FHA HOPE for Homeowners
 Compliance
 HomeSaver Forbearance
 New Workout Hierarchy
 Retirement of the Streamlined Modification Program (SMP) and the Early Workout Program

To read the entire document with detailed information please visit the link below:
https://www.efanniemae.com/sf/guides/ssg/annltrs/pdf/2009/0905.pdf

Freddie Mac Release a bulletin

Freddie Mac has issued the following Single Family Seller/Servicer Guide Update regarding Bulletin 2009-10
Today we issued Single-Family Seller/Servicer Guide Bulletin 2009-10, which announces important updates to requirements for the Home Affordable Modification program, including new criteria for determining whether a borrower is in imminent default, information and tools for Servicers to perform the required Net Present Value (NPV) test, and other changes to borrower eligibility and underwriting requirements.
Criteria for Determining Imminent Default
The Guide Bulletin provides criteria for determining whether a borrower who is current or less than 31days delinquent, and claims a hardship, is in imminent default. Using the process, requirements, and definitions outlined in our revised Guide Section C65.4, Servicers must consider the borrower for a modification under the Home Affordable Modification program if, after using the screening criteria outlined in this Guide section, the Servicer determines:
The borrower’s Debt Coverage Ratio is less than 1.20 and
The borrower’s cash reserves are less than three times the current monthly PITIA payment.
The Borrower Qualification Worksheet may be used to determine if a borrower, who is current or less than 31 days delinquent, is in imminent default. The updated Freddie Mac Borrower Qualification Worksheet will be available as a secure link on our Home Affordable Modification program Web page on Thursday, April 23. In addition, Freddie Mac is developing an automated solution to assist Servicers with the imminent default evaluation, and it will be available at a later date.
Net Present Value Calculations
All mortgages that meet Home Affordable Modification program criteria must be evaluated using the standardized NPV test that compares the NPV result for a modification to the NPV result for not modifying the mortgage. Today’s Bulletin and newly revised Guide Section C65.6 include detailed requirements for performing this test. These requirements include revisions for determining the amount of principal forbearance that may be permitted in order to achieve the Target Payment.
To assist Servicers, we are also introducing the Net Present Value (NPV) Calculator. The NPV Calculator is available on the Home Affordable Modification Servicer Web page. A user ID and password are required for access to the Servicer Web page. Servicers must complete and submit the HMP Registration Form to obtain a user ID and password.
Additional Updates
With today’s Bulletin, we are also announcing revisions and updates to these and other program requirements:
Revising requirements for verification of income when the Servicer uses stated income to create and send the borrower a Trial Period Plan, along with revising the income documentation requirements.
Revising the timeframe for when a borrower must respond to the Trial Period Plan offer package from 14 days to 30 days, and providing additional guidance if the borrower does not submit the required documents by the specified deadline.
Updating the definition of Interest Rate Cap.
Updating requirements for Servicers to continue to report “full-file” status reports to the four major credit repositories when borrowers enter the Trial Period, with criteria for borrowers who are current and borrowers who are delinquent when they enter the Trial Period.
Revising collateral valuation requirements used for the NPV test and for determining the mark-to-market LTV ratio.
Revising eligibility requirements to allow modifications of FHA, VA, and RHS mortgages, in accordance with guidance issued by the respective agency.
Revising documentation requirements for verifying that eligible mortgages are occupied primary residences.
Updating requirements for verifying installment debt and other expenses that must be included in the calculation of the borrower’s total monthly debt payment-to-income ratio.
Providing further guidance on the Servicer’s “Pay for Success” and Borrower’s “Pay for Performance” incentive fees.
Revising the Hardship Affidavit to now include a section for the collection of government monitoring data.
Adding requirements for reporting data to Fannie Mae in its capacity as Financial Agent.
Adding requirements provided by Freddie Mac, the Compliance Agent for the U.S Department of the Treasury.
Reminders
As a reminder, Servicers should continue to:
Suspend all foreclosure sales on owner-occupied properties for borrowers who may be or are eligible for a modification under the Home Affordable Modification program.
Report weekly Home Affordable Modification activity each Monday using the Program Performance Reporting Spreadsheet.

Please read the original bulletin: http://www.freddiemac.com/sell/guide/bulletins/pdf/bll0910.pdf

President Barack Obama's ambitious plan to rescue the housing market

At the heart of the President Barack Obama's ambitious plan to rescue the housing market is the conviction that restructuring distressed mortgages will keep struggling borrowers in their homes and help insert a floor beneath plummeting property values. With $75 billion dedicated to reworking troubled loans, that's a big bet—especially considering that a top banking regulator said last December that almost 53 percent of loans modified in the first quarter of 2008 went bad again within six months. But supporters argue that mortgage modifications need to be properly engineered to work—and many early ones weren't. To that end, the Obama administration on Wednesday unveiled fresh details on its plan to restructure at-risk loans and help as many as four million home owners avoid foreclosure. Here are seven things you need to know about Obama's loan modification program.
1. Payments, not prices: The plan centers on the belief that struggling borrowers will stay in their homes—even as values decline sharply—as long as they can make their monthly payments. Although not everyone agrees with this, billionaire investor Warren Buffett endorsed the philosophy in his most recent letter to shareholders. "Commentary about the current housing crisis often ignores the crucial fact that most foreclosures do not occur because a house is worth less than its mortgage (so-called “upside-down” loans)," Buffett wrote. "Rather, foreclosures take place because borrowers can’t pay the monthly payment that they agreed to pay."
2. Thirty-one percent: To that end, the administration's plan requires participating loan servicers to reduce monthly payments to no more than 38 percent of the borrower's gross monthly income. The government would then chip in to bring payments down further, to no more than 31 percent of the borrower's monthly income. In lowering the payment, the servicer would first reduce the interest rate to as low as 2 percent. If that's not enough to hit the 31 percent threshold, they would then extend the terms of the loan to up to 40 years. If that's still not enough, the servicer would forebear loan principal at no interest. The plan does not, however, require servicers to reduce mortgage principal, which Richard Green, the director of the Lusk Center for Real Estate at USC, considers a shortcoming. "For underwater loans, if you don't write down the balance to be less than the value of the house, people still have an incentive to default," Green says. "Writing down the principal first instead of last—which is what [the Obama administration is] proposing—makes sense to me."
3. Cash incentives: To encourage participation, servicers will be paid $1,000 for each modification and will get an additional $1,000 payout each year for as many as three years, as long as the borrower continues making payments. Borrowers, meanwhile, can get up to $1,000 knocked off the principal of their loan each year for as many as five years if they make their payments on time. Neither party can receive the cash incentives until the modified loan payments have been made for at least three months.
4. Financial hardship: The Obama administration is pitching its plan as an effort to help responsible homeowners ensnared in the historic housing slump and painful recession—not speculators. As such, only owner-occupied, primary residences with outstanding principal balances of up to $729,750 are eligible. Occupancy status will be verified through documents, such as the borrower's credit report. In addition, the program is designed to target homeowners who are undergoing "serious hardships"—such as a loss of income—which have put them at risk of default. To participate, borrowers will have to sign an affidavit of financial hardship and verify their income with documents. "If we would have had such stringent verification over the last four or five years, we probably wouldn't be in as bad a position as we are in," says Richard Moody, the chief economist at Mission Residential. But while Moody has no objection to such verification, obtaining documents from so many homeowners could be an onerous effort. "It's going to be a very time-consuming process," he says. Only loans originated on or before Jan. 1, 2009, are eligible, and modified payments will remain in place for five years. Now that the administration's plan is out, lenders are free to begin modifying loans.
5. Net present value: To determine if a particular mortgage will be modified, the servicer will perform a so-called net present value test. The test compares the expected cash flow that the loan would generate if it is modified with the expected cash flow it would generate if it isn't. If the modified loan is expected to produce more cash flow for the mortgage holder, the servicer is to restructure the loan.
6. Second liensThe Obama plan also addresses the issue of second liens—such as home equity loans or home equity lines of credit—by offering incentives to extinguish them. But key details on this component of the plan remained unclear.
7. Will it work? Moody argues that while the plan may reduce foreclosures for primary residences, it could lead to a spike in defaults for another group of homeowners. Although he supports the administration's efforts to focus the initiative on primary residences, Moody notes that "it could be the case that a lot of [real estate speculators] have been just hanging on waiting to see exactly what the details are of this [plan]," Moody says. Now that it's clear the Obama plan leaves speculators out, "we could actually see a spike in foreclosures or at least mortgage defaults among this group."

Financially Stressed Taxpayers

California taxpayers facing income tax troubles are encouraged to contact the California Franchise Tax Board (FTB). An FTB specialist can review accounts and explain available programs that offer assistance. The FTB generally can grant relief from state tax liens within two weeks for financially distressed homeowners trying to sell or refinance their homes. When a home sells for less than the loan balance, FTB sometimes can remove its tax lien from the property to allow the homeowner to complete the sale. Tax liens typically must be paid before a real estate escrow can close. The tax lien remains in effect on any other property the taxpayer currently holds or later acquires.FTB also can help individuals who are refinancing or modifying an existing home loan if homeowners request that the new or modified loan have priority over the tax lien. This allows prior home loans to be refinanced or modified without first having to pay the lien.

Buying Time Against Foreclosure

Buying “T I M E”Never before has the expression “If I could just buy some time” meant so much to people. When you are facing foreclosure you need time to discover your options, analyze your situation and implement an action plan. Your most precious commodity is time…And it’s running out. When your money is running out… You don’t have time to wait for the trickle down effect of the stimulus package to make a difference in your personal situation. While the package will make a significant difference over the long haul for thousands of Americans, anyone who thinks it is going to quickly make a difference for EVERY American is kidding themselves. Facing reality is hard, but necessary. As a country, we have ignored hard truths with disastrous consequences for too long. Nothing will be gained by continuing to point fingers. However, we must immediately recognize that each of us has a role to play in correcting the serious housing problem we face as a country. (Even if your home is paid off, FREE and CLEAR). The housing market holds the key to stabilizing our country, so anything we can do to keep people in their homes is a step in the right direction.First thing’s first...DO NOT ABANDON YOUR HOME. Even when you are behind on your mortgage, no matter how far behind you are, DO NOT abandon your home until the entire legal process has been played out. You can stay in YOUR house until your right to possession has ended. Exactly when that time is will be determined by three (3) factors:1. Type of foreclosure in your state: judicial or non-judicial2. Whether you have a mortgage or a deed of trust3. State statutes regarding sheriff or trustee sale and possession timeframesFind out the answers to items 1, 2 and 3, and then abide by them. Make sure your lender abides by them as well. Things could improve while you are holding out. Hold on.Things are changing radically and very quickly because of the magnitude of the housing problem. Your local courts could dramatically change the way they process pending foreclosures so that you have a chance to work things out with the lender. Stay in our home and fight for the chance to work things out. More banks are willing to work with borrowers today simply because they really can’t manage the huge backlog of homes which have already been lost to foreclosure. If you can present a viable plan, your chances of retaining home ownership are pretty good.Second thing’s second… I know you know that, but I needed to get your attention. Probably the second most valuable thing anyone will ever tell you to do to save your home from foreclosure is to:1. Demand the lender or servicer who is threatening to sue you for foreclosure produce the original note/deed of trust which says you owe them. In legal terms you are asking them to demonstrate that they are the “real party of interest.” In common language that means, prove I owe you. Prove you have the right to demand payments from me. (This has been discussed on our blog, which can be found at homeownershipmatters.blogspot.com).2. The most effective way to demand this documentation is with a “qualified written request”. You are entitled to request that and any other information you want which is related to servicing on your loan (any mortgage loan in the United States) under federal RESPA regulations.What Choices do I have?Let’s consider the answer to that question. It is critical that you start with an honest inventory of your situation. How far behind are you? Do you have the resources to resume payments? If not now, when will you be able to do so? What do you want to do? What are you ABLE to do? Why should the bank consider your proposal? You’ll need to able to defend it as being reasonable, based on your current circumstances.Space in this article will not allow me to go into detail but I will provide you with the options you can consider. Do further research on each of them, online, in the library, on websites such as HomeOwnershipMatters.com Or at the blog: HomeOwnershipMatters.blogspot.com.a. Options to keep the house—special forbearance, loan modification or a partial claim. You need to learn what each of these means and how it worksb. Options to let the house go—short sale, assumption or deed-in-lieu. All of these options are better than foreclosure but you need to know exactly how they work to avoid creating yet another problem for yourself down the road.c. Reverse mortgage could be considered, it could be your solution. Be sure to use a government backed reverse mortgage if you decide to use this option.d. Receiving disability payments (if you have a claim pending) could make the difference. Hold on until you know what you will be receivinge. Acquiring a roommate could change your finances—get started working on it (I mean a roommate who will PAY—not one who will add to your expenses)f. Selling unnecessary items in order to cover the gap until you get a permanent solution. Ebay or Craigslist could bring in some immediate cash. (Stop crying—we are trying to save your home and Buy “T I M E”).g. Some other solution which has not even occurred to me“Answer” the summonsThe summons is your official notification that the lender has moved to legal action. The court notifies you via the “summons”. Your response should be to the clerk of the courts, the lender/servicer and their attorney. It is critical that your answer be received within the legally stipulated timeframe in your state. It is strongly recommended that the answer be sent by certified mail, with a signature required. This is a task which you can handle on your own, with a little coaching.Basically, an answer should acknowledge that you are aware of your situation and that you are working with the lender on a plan. Specify what that plan entails. If you are challenging whether or not the lender has the legal right to foreclose (due to failure to produce the original note or demonstrate that they are the “real party of interest”) this is your time to say so. The foreclosure is likely to be stalled based on the quality of a timely, well prepared “answer”.Local initiative is neededWe all have high expectations of the new administration but our President has said repeatedly, and has demonstrated with his grassroots campaign, that the masses can make a difference, when they choose to become involved. If every person who reads this article would share it with the people in your personal database, you would help several people to avoid foreclosure.If the leaders of organizations would share the articles and the link to the blog with your entire company, you might save not only their home but the home of some of their family members or friends. Driving people to the blog and website so that they can get practical, easy to understand information to help them with their personal choices could make a big difference. Anyone reading this who has the connections to have a workshop in your city or a program aired on Public Access or Government Access television or local radio show could reach thousands of folks with some concrete/self help which could make all the difference in your community. I am a teacher and a writer. I know the role I am to play. I ask each of you to find your role in helping our country get back on its feet. We must find some resolution to our housing problems. Mildred Wilkins, founder and president of Home Ownership Matters, LLC.