Wednesday, December 29, 2010
The first wave of foreclosure class action lawsuits, filed by borrowers against their lenders, were filed in October 2010. Most of these actions follow investigations by all 50 states' Attorneys General into the foreclosure documentation practices and processes for most of the major mortgage servicing companies.
The class actions vary in theory including violations of federal and state consumer protection statutes; violations of unfair and deceptive trade practices statutes; abuse of due-process rights; fraud; federal and civil RICO violations; wrongful foreclosure; deprivation of the use, rent, value and income of mortgaged properties (waste); and lack of standing. Similarly, the damages requested are just as broad. Some cases ask to disturb previously entered foreclosure judgments; return houses to their previous owners; injunctive relief; and monetary damages.
However, these cases also have a bit of uncertainty to them. Specifically:
- How will judges rule on the lenders' arguments that the defects in evidence are irrelevant given the borrowers' previous default on the loan obligations?
- Will the courts penalize or ignore the evidentiary impact of allegedly flawed documents and affidavits in terms of evidentiary integrity and compliance with rules of evidentiary procedure?
- Will judges accept corrective affidavits, original promissory notes, mortgages and assignments, or other corrective action to remedy alleged flawed evidence?
- How will title insurance underwriters react, and how will the class action litigation impact title insurance policies written on previously foreclosed properties?
- Will Fannie Mae and Freddie Mac exercise loan repurchase demands for foreclosed loans affected by flawed evidence?
- Will Wall Street claim that utilizing flawed foreclosure evidence is conduct that impairs the value of the bonds and securities in violation of the various pooling and servicing agreements governing securitized mortgages?
The Congressional Oversight Panel predicts that 13 million home mortgages will be in foreclosure by 2012. The impact of these various class action suits and Attorneys' General investigations will go a long way towards further "muddying the waters" or will help lenders create rock-solid evidence supporting foreclosure as soon as a loan is in default.
If you are unsure about your financial future, please contact the foreclosure attorneys at Yesner & Boss, P.L. at (727) 471-0039 today.
Wednesday, December 21, 2010
Florida Banks Adding Insult to Injury
One West Bank assures its customers that they are committed to their "safety, security and privacy," but try telling that to James and Deborah Strassburger. The Boca Raton homeowners were astonished to learn that during negotiations for a loan modification, One West Bank went forward with a foreclosure sale and sold the home the Strassburgers had lived in for the past 19 years. Adding to the disbelief, six months following the foreclosure sale, One West wrote the Strassburgers to congratulate them on an approved loan modification.
Meanwhile, while the bank has informed the Strassburgers that they can get their home back, the Strassburgers note that county records still show One West as the owner of the property. They do not know whether they should move back to the home they were forced out of, or if they should wait before moving back in, in case any more surprises are in store for them.
Federal lawmakers frequently discuss the dangers of dual-track foreclosure and loan modification processes, wherein banks, in order to move defaulted loans through the process as quickly as possible, begin pursuing foreclosure while still negotiating with customers over the possibility of loan modification. Those who defend the dual-track approach point to the length of typical foreclosure actions which can often exceed 12 months and sometimes continue for years.
Although federal guidelines remind financial institutions that they are obligated to pursue alternatives before holding a foreclosure sale, bank participation in federal programs designed to protect consumers' homes is often voluntary, leaving homeowners feeling subject to the whims of their banks.
If you feel unsure about your financial footing, don't hesitate to contact the foreclosure attorneys at Yesner & Boss, P.L. at (727) 471-0039 to schedule a free consultation.
Monday, December 13, 2010
Foreclosure Inventory Rates Reach All Time Highs
The end of October 2010 marked an all time high for the total U.S. foreclosure inventory rate when it reached approximately 3.92%. That percentage represents an amount 7.4 times the historical averages and continues to rise.
Drawing on loan-level residential mortgage information from nearly 40 million loans, the Lending Processing Services, Inc. report shows that the main reason for behind the increase is "accelerated foreclosure referral activity over the last several months."
The total inventory of foreclosures is nearly 2.1 million loans while another 2.2 million loans are seriously delinquent or over 90-days past due, but not yet in foreclosure status. The total U.S. non-current loan rate, that combines foreclosures and delinquencies as a percent of active loans, is currently 13.20% of total U.S. loans. This number was slightly affected by the widespread moratorium that took place last month.
LPS, Inc. reports that currently a payment has not been made in more than a year on about one-third of all loans that are 90 or more days delinquent. An additional 18% are seriously delinquent loans, not yet in foreclosure, that have not had a payment made in two years. Also, it is not clear when many of the seriously delinquent loans will enter the foreclosure inventory.
On a positive note, the number of newly delinquent or "first-time" troubled loans remained relatively stable during the last several months. Florida has the highest delinquency rates reported, followed by Nevada, Mississippi, Georgia, and Louisiana.
Whether you are located in Tampa, St Petersburg, Brandon, Sarasota, New Tampa or anywhere else in the State of Florida contact the offices of Yesner & Boss, P.L. today to find out exactly how our attorneys can assist you.
Friday, December 10, 2010
What Do the Statistics Tell Us?
Statistics surrounding foreclosure rates, loan modifications, and troubled debt restructuring options continuously emerge, usually with vague interpretations and foggy predictions about the future of the housing market. So what exactly do all of these facts and figures mean? Luckily, there's some promising news for struggling homeowners.
Community banks, those with less than $200 billion in assets, have increased their numbers of troubled debt restructurings (TDRs) by 64% in the past year, while larger banks increased TDRs by a whopping 75%. Financial analysts predict that the number of TDRs offered by both small and larger banks will only continue to rise.
Temporary debt restructuring is a contractual change where the bank and borrower agree to change the terms of the lending agreement. The biggest difference between a TDR and a loan modification is that a TDR actually reduces the amount the borrower owes to the lender by lowering the principal or the interest rate. A loan modification, on the other hand, usually allows borrowers to extend the life of their loan, thereby reducing monthly payments, but not reducing the overall amount owed.
The reason for the rise in TDRs and banks' willingness to offer them to struggling debtors is largely the realization that banks will likely have to take some sort of loss on the loans, and they can either take all of that loss at one time by not offering to restructure a loan, or they can mitigate the hard hit by taking a small loss up front while still allowing for the possibility that the client's financial situation will improve during the grace period offered with a TDR.
As the statistics show that TDRs are on the rise and can provide favorable solutions for struggling business and homeowners with yet another alternative to foreclosure, contact the attorneys at Yesner & Boss, P.L. today to discuss your eligibility.
Wednesday, December 1, 2010
Are Uncooperative Mortgage Services Being Properly Punished?
As the Treasury Department and Federal Housing Administration order mortgage servicers to comply with government loan modification guidelines, state representatives and homeowners worry that not enough is being done to enforce the orders and punish the offenders. The Treasury and FHA operate two different programs. For the Treasury, representatives suggest that, while the department is reprimanding mortgage servicers that fail to comply with the requirements of the Home Affordable Modification Program (HAMP), what they continue to refuse to do is financially punish those who do not follow the guidelines. As of November 15th, treasury reports indicated that not a single mortgage servicer has been subject to monetary sanctions as a result of their non-compliance with HAMP guidelines. In fact, not only have no fines been issued, but funds continue to be appropriated by the Treasury to servicers known to be non-compliant with stated requirements.
The Treasury Department has shied away from financial penalties, in part because HAMP is a voluntary program for loan servicers, and therefore, harsh fines may reduce overall participation in the program. Further, Treasury statistics show that, of the servicers reprimanded by the department, less than 5% remained non-compliant.
FHA, on the other hand, has issued financial sanctions upon non-compliant mortgage servicers. Unlike HAMP, FHA approval is mandatory for all mortgage servicers, and as a result, FHA can punish offenders without fear of lowering participation in the program. FHA is permitted to fine, suspend, and even ban servicers as a result of noncompliance, and since May have issued $4.25 million in fines.
Critics point out, however, that the financial burdens issued by FHA have fallen disproportionately upon the smaller servicing companies. True, FHA has largely declined to take action against the nation's largest servicers, like Wells Fargo and Bank of America, though it is thought that this is because suspending or banning large servicers would necessitate that their business go to the smaller servicers, which are theoretically unable to take on the magnitude of loans serviced by those giants.
Despite disagreement over the approaches taken by the Treasury and FHA, it seems everyone can agree that bank regulators were the groups best equipped to handle the oversight of mortgage servicers in the first instance and had those regulators done their jobs, the burden would not have fallen to the Treasury or FHA.
If you have any questions or for information on this topic please contact us today.