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By Morcos Azer | Broker in 90650
  • Bank of America Delinquent Loans Mean Losses: Mortgages

    Posted Under: Home Selling in Riverside County, Financing in Riverside County, Foreclosure in Riverside County  |  January 1, 2013 12:14 AM  |  547 views  |  No comments

    • UEUE
      Bank of America Corp. has amassed $64 billion of mortgages that are at least six months delinquent and have yet to enter foreclosure, more than twice the amount held by its four largest competitors combined.
      The loans are monitored as part of February’s $25 billion settlement between the top five U.S. lenders and state attorneys general over allegations of abusive foreclosure practices. Bank of America’s stockpile of deteriorating debt is mostly from its 2008 acquisition of Countrywide Financial Corp., once the nation’s largest mortgage provider. Wells Fargo & Co. (WFC), the biggest U.S. servicer, has $15.3 billion of such unpaid loans.

      Enlarge imageBank of America Delinquent Loans Mean RMBS Losses
      While Bank of America Corp. has begun modifications for many of its 275,000 homeowners at least 180 days behind as of Sept. 30, some will join the already clogged U.S. foreclosure pipeline. Photographer: Victor J. Blue/Bloomberg
      The data, published last month by the monitor of the settlement, highlight Bank of America’s vast backlog of delinquencies, and the years it will take to work through them as borrowers fall further behind and losses mount for investors in mortgage-backed securities. While the Charlotte, North Carolina-based bank has begun modifications for many of its 275,000 homeowners at least 180 days behind as of Sept. 30, some will join the already clogged U.S. foreclosure pipeline.
      “There’s just a long tail to work out all of these loans, which are severely delinquent at this point,” said Marty Mosby, an analyst with Guggenheim Securities LLC in Memphis, Tennessee. “It just shows the amount of work that’s still left to do.”
      Delays in processing the loans add to the expenses borne by investors because maintenance, property taxes and other costs add up. While rising prices may make the mortgage-backed securities more valuable, servicers can be forced to come up with cash to cover interest payments from the delinquent loans and modifications become more difficult to accomplish as the borrower’s unpaid debt grows.

      930,000 Loans

      Bank of America’s portfolio of loans that are at least six months old and not in foreclosure accounts for 3.3 percent of all of the mortgages it services. Citigroup Inc. (C) has 1.1 percent of its loans in that category and Ally Financial Inc. (ALLY), Wells Fargo and JPMorgan Chase & Co. (JPM) each have less than 1 percent.
      Bank of America has about 930,000 loans that are at least 60 days delinquent, down from 1.5 million from the peak in January 2010, Chief Executive Officer Brian Moynihan, 53, said during a Dec. 14 event at the Brookings Institution in Washington.

      Loan Modifications

      The company’s large share in part reflects an agreement made in conjunction with the mortgage settlement to delay home seizures while attempting to modify loans, as well as with other temporary moratoriums the bank implemented since 2008, said Eric Telljohann, a senior vice president in the mortgage-servicing division, which employs about 50,000 people.
      Bank of America postponed foreclosure sales for more than 200,000 delinquent borrowers who may be eligible for principal reductions, and a portion of those loans were not yet in foreclosure, according to Telljohann. Most of the homeowners have been contacted, and about 40,000 of them are in trial modification plans, he said.
      The bank also has a large portion of delinquent Federal Housing Authority mortgages, which require servicers to follow a more time-consuming process to assess borrowers for loan workouts, Telljohann said.
      “We are definitely in a very thoughtful and deliberate manner trying to work the number delinquent loans down,” he said.

      Record Lateness

      Mortgages on U.S. homes at the time the borrower lost the property averaged a record 728 days late in October, up from 661 days a year earlier, according to Lender Processing Services Inc. in Jacksonville, Florida. The U.S. average was 367 days in December 2008, before PresidentBarack Obama took office and started programs to help struggling homeowners keep their residences.
      While processing delays have given borrowers time to negotiate loan workouts, large lenders often lose documents and ask borrowers to resubmit them repeatedly, said Alan White, a professor who teaches consumer law at the City University of New York.
      “With delinquent mortgages you want to triage them, work out ones that can be worked out and foreclose the ones that can’t,” he said. “But if the only outcome is no outcome, it’s not helping any of the parties affected, including the economy.”
      Bank of America, which has been criticized by housing advocates for delaying loan workouts, has already spent more than $40 billion to clean up the loans inherited from Countrywide and faces a federal lawsuit seeking $1 billion over a program to allegedly sell defective mortgages, called the Hustle.
      The firm is relying in part on falling costs from servicing bad loans to help improve profitability. Moynihan said Nov. 13 that expenses for the unit handling bad loans were peaking and should start to decline next year.

      Countrywide Loans

      About 85 percent of Bank of America’s loans that are more than 60 days delinquent are Countrywide loans, according to Dan Frahm, a spokesman.
      “No mortgage servicer has ever had to address the scale of delinquent loans that Bank of America has as a result of the Countrywide acquisition,” Frahm said in a telephone interview. “We’ve met that challenge by modifying more loans than any other servicer. We’ve participated in every available program to meet the needs of our customers and developed our own programs beyond that.”
      Bank of America, “by choice or otherwise,” appears to be moving loans to foreclosure more slowly than other banks, Mark Kaufman, commissioner of the Maryland Office of Financial Regulation, wrote in a column published on Nov. 20 in American Banker, opposing a proposal to increase mortgage fees in states with long foreclosure timelines.

      Maryland Homeowners

      Maryland homeowners who received notices of intent to foreclose from Bank of America were on average more than 500 days delinquent, Kaufman wrote. By contrast, notices filed by the three next-largest servicers averaged 180 days late. The letters can be sent as soon as 45 days after delinquency, he said.
      “This data suggests that a major statistical driver of time is not the law, but who services your mortgage,” he wrote.
      The top five lenders slowed the pace of foreclosures starting in October 2010 as they negotiated with attorneys general over allegations of faulty and fraudulent paperwork used to repossess homes. The settlement directs $17 billion to writing down debt and restricts banks from foreclosing on borrowers while they’re negotiating loan modifications.

      Anecdotal Reports

      The data on delinquent loans not in foreclosure “seems to confirm anecdotal reports that Bank of America has been much slower than other servicers in dealing with problem loans,” said Thomas Lawler, a former Fannie Mae (FNMA) economist who’s now a housing consultant in Leesburg, Virginia.
      Bank of America customers waited as long as two years to be told whether they qualified for the Obama Administration’s Home Affordable Modification Program, according to testimony from Ryan Quinn, a former employee. Quinn, a customer-service representative on the company’s loan-modification team from April 2010 to March 2011, testified after being subpoenaed last year by the Nevada attorney general as part of a lawsuit against the bank.
      Employees were given minimal training, didn’t have computer passwords to find documents, and were discouraged from spending more than seven minutes speaking to borrowers, he said. Eighty percent of the calls Quinn took were about delays, he said.
      The bank “wanted to make it take as long as possible,” Quinn told investigators. Frahm declined to comment on that.

      Paperwork Delays

      Delays are also occurring because Countrywide loans are getting scrutinized in foreclosure cases for documentation problems such as missing promissory notes and chain-of-title discrepancies, said Tony Plath, a professor of finance at the University of North Carolina in Charlotte who follows Bank of America.
      “Bank of America knows that whenever possible, defendants are likely to mount a judicial challenge at foreclosure hearings, so before they can initiate the foreclosure process they have to make sure the loans in question can withstand judicial challenge in court,” Plath said. “The large number of 180-day delinquencies relative to the other big servicers give a good indication of the magnitude of the problems that face BAC as it tries to clean up the Countrywide mess.”
      The company has a “strong process in place to proceed with foreclosure when other options are exhausted” for its delinquent portfolio, Frahm said.
      While Bank of America was handicapped by the Countrywide portfolio when the foreclosure crisis began, it should be better at processing loan modifications more quickly now, said Diane Thompson, an attorney with the National Consumer Law Center, a Boston-based advocacy group for low-income borrowers.
      “What this is reflecting is Bank of America’s huge bureaucratic difficulties,” Thompson said. “Even five years into the crisis, Bank of America still doesn’t have a handle on how to process loan modifications in a timely matter.”
      To contact the reporters on this story: Prashant Gopal in Boston at pgopal2@bloomberg.net; Hugh Son in New York at hson1@bloomberg.net
      To contact the editor responsible for this story: Kara Wetzel at kwetzel@bloomberg.net
  • 4 Steps to Take When Preparing to Buy a Home

    Posted Under: Home Buying in Riverside County, Financing in Riverside County  |  November 7, 2012 9:34 AM  |  238 views  |  No comments

    Interest rates are at record lows, and many homeowners have priced their homes to sell. Many buyers who waited for rock-bottom prices know that now is the time to buy. Whether you want to buy a home before the end of the year or wait until 2012, there are some things you can do now to prepare.

    1. Find out how much home you can afford. Before you do anything else, find out how much home you can afford. To do this, look online for a quality mortgage calculator (Zillow has one that works well). Mortgage calculators show you how much home you can afford based on your income, an average interest rate, and the length of the loan.

    You also need to calculate your debt-to-income ratio, which shows the amount of your income that goes toward paying your debts. The higher your ratio, the less likely you will qualify for a home loan. Find out if you can get a mortgage before you begin searching for your dream home. If your debt-to-income ratio is more than 36 percent, you should think about getting out of debt, or at least reducing your debt immediately.

    Your credit score also plays a role in your loan eligibility. If you have a higher credit score, you will be eligible for better loan rates. If you have a low credit score, on the other hand, you should first learn how to improve your credit score before you get pre-approved for a loan.

    2. Get pre-approved. Take the time to get pre-approved before you begin looking at homes. In fact, many real estate agents won't work with you until you have received pre-approval for a mortgage. Regardless, you should look to get pre-approved anyway. You might find the perfect home, and then find out the bank denied your loan application. This heartbreaking scenario wastes your time and your agent's time, too.

    Going through the mortgage-approval process can be a frustrating experience, so be prepared. In addition to all of the paperwork, you have to answer a lot of very pointed questions about your income, net worth, and credit worthiness. If you have a 20 percent downpayment, a high creditscore, and a steady job, then you have a better chance of being pre-approved for a loan.

    3. Find a real estate agent. Once you've improved your credit score and you know how much home you can afford, you need to find a great real estate agent. Your agent acts as your representative, provides you with information about market prices, and helps you find a home. Finding a real estate agent you can trust can take time. Talk to friends, family, and co-workers for potential referrals, and use your intuition. If you feel uncomfortable with a real estate agent, keep looking.

    4. Take stock of your financial situation, again. By the time you get ready to buy a home, you may be sick of thinking about money. After following each of these steps, look at your available income one more time, and review your short- and long-term financial goals. Ask yourself: Do Ireally want to invest $100,000 or more into a home? Do I want to stay in this neighborhood, or state, for the next several years? Or do I want to put that money towards some other dream?

    Final thoughts. We're currently experiencing a buyer's market. You can find wonderful deals on homes, and you may qualify for a low interest rate. However, this also means that if you buy a home in the next year, you may need to stay in it for several years until home prices begin to significantly appreciate. Review your short and long-term goals carefully to make sure buying a home is right for you. Follow the steps outlined here, and when the time is right, get ready to buy your home.

    If you're looking to buy a home in the next few years, what steps are you taking to prepare?

    Heather Levin writes about real estate, green living, and sustainability on Money Crashers, a personal finance website aimed at educating young people about important financial issues.

  • HELP FOR BORROWERS UNDER Mortgage Servicing Settlement

    Posted Under: Home Selling in Riverside County, Financing in Riverside County, Property Q&A in Riverside County  |  October 4, 2012 10:43 PM  |  134 views  |  2 comments

    The National Mortgage Settlement negotiated by the state Attorneys General and the federal government and announced in February 2012 impacts borrowers serviced by the following major lenders: 
    • Ally/GMAC
    • Bank of America
    • Citi
    • JPMorgan Chase
    • Wells Fargo

    You can find out who services your loan by looking at your monthly mortgage statement or you can search for your loan’s servicer by going online to MERS® Servicer Identification.

    Because of the complexity of the mortgage market and this agreement, which will be executed over a three-year period, borrowers will not immediately know if they are eligible for relief. Borrowers from Oklahoma will not be eligible for any of the relief directly to homeowners because Oklahoma elected not to join the settlement.

    The settlement provides assistance for:

    • Homeowners needing loan modifications now, including first and second lien principal reduction.  The servicers are required to work off up to $17 billion in principal reduction loan modifications and other forms of loss mitigation nationwide. Eligible borrowers will by contacted by the Servicers and will receive letters offering principal reductions or other modifications starting in June 2012.  This modification process will continue for approximately 3 years. 
      State attorneys general anticipate the settlement’s requirement for principal reduction will show other lenders that principal reduction is one effective tool in combating foreclosure and that it will not lead to widespread defaults by borrowers who really can afford to pay.
    • Borrowers who are current, but underwater.  Eligible borrowers will be able to take advantage of today’s historically low interest rates by refinancing their mortgage despite their negative equity.  Servicers will have to provide up to $3 billion in refinancing relief nationwide. 
    • Borrowers who lost their homes to foreclosure between Jan. 1, 2008 and Dec. 31, 2011. Cash payments will be distributed to borrowers who receive and return a claim form. There is no requirement to prove financial harm and borrowers will not have to release private claims against the servicers nor will they have to relinquish the right to participate in the independent review process being conducted by federal banking regulators.  $1.5 billion is expected to be distributed nationwide to some 750,000 borrowers.
  • LANDMARK SETTLEMENT

    Posted Under: Financing in Riverside County, Foreclosure in Riverside County, Property Q&A in Riverside County  |  September 30, 2012 12:00 AM  |  154 views  |  1 comment
     Federal Government & Attorneys General reach landmark                                settlement with major banks

    Roughly $25 billion in relief for distressed borrowers, states and federal government...

    In February 2012, 49 state attorneys general and the federal government announced a historic joint state-federal settlement with the country’s five largest mortgage servicers:

    The settlement provides as much as $25 billion in relief to distressed borrowers and direct payments to states and the federal government. It’s the largest multistate settlement since the Tobacco Settlement in 1998.

    The agreement settles state and federal investigations finding that the country’s five largest mortgageservicers routinely signed foreclosure related documents outside the presence of a notary public and without really knowing whether the facts they contained were correct.  Both of these practices violate the law.  The settlement provides benefits to borrowers whose loans are owned by the settling banks as well as to many of the borrowers whose loans they service.

    For mor Info, visit the following website:
    http://www.nationalmortgagesettlement.com/

 
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