Mortgage servicers, who collect monthly payments on home loans, are allowed to charge homeowners for items such as property inspections, lawn mowing and other services designed to protect the lender’s financial interest in the property, the FTC said.  But as the housing market collapsed, Countrywide created subsidiaries to do the work, then marked up the price of those services by 100% or more, charging homeowners the fees to increase profits from default-related services in bad economic times, the FTC said.  “Life is hard enough for homeowners who are having trouble paying their mortgage. To have a major loan servicer like Countrywide piling on illegal and excessive fees is indefensible,” FTC Chairman Jon Leibowitz said.

Countrywide also failed to tell borrowers when it added new charges to their home loans and made “false or unsupported claims” to borrowers about the how much they owed on their loans, the agency said. The marked-up fees were collected as part of repayment plans, mortgage modifications, foreclosures or bankruptcies.  The settlement creates a $108-million fund to provide refunds to homeowners who were overcharged before July 2008, when the company was bought by Bank of America.

Bank of America agreed to settle the charges “to avoid the expense and distraction associated with litigating the case,” it said in a statement. The settlement involved no admission of wrongdoing, BofA said. The settlement requires the company to stop the practices.  Once the court approves the settlement, the FTC said it would notify eligible homeowners in a process that could take several months. The agency has a website with more information, at the FTC website.

One reason is that figuring out whether to stay or walk requires calculations too complicated and time consuming for the average homeowner to perform. For those who don’t want to do the calculations themselves, the online “Does It Make Financial Sense To Walk Away & Rent?” The calculator at YouWalkAway.com can help.

Just enter in your home’s value, what rent you would pay for a comparable home, your annual mortgage tax savings, your housing debt and mortgage interest only payment, how long you plan to stay in your home and expected depreciation or appreciation of your home, among other figures. To estimate your home’s value, the site Zillow.com and this Home Price Calculator can help. To estimate depreciation or appreciation, the average of how much your property would go up or down over the designated years you would plan on staying in the home, you may want to stick with the historical appreciation rate of around 3 to 4 %, Professor White said.  The calculator will then tell you how much you’ll save or lose by walking away. You’ll need to decide whether the savings, if any, are worth walking away. In making your decision, you may also want to consider foreclosure costs and the impact on your credit as well as other factors in the equation.

According to Professor White, even if it would make financial sense to walk away, many people don’t because of emotional constraints, including the desire to avoid shame and guilt as well as an exaggerated fear of the consequences of foreclosure — emotions encouraged by everyone from the government to the media. “This moral norm is perpetuated by all kind of institutions and individuals,” Professor White said. How much would you save or loss if you walked away? Will you stay or walk?  Article was written by JENNIFER SARANOW SCHULTZ

When it comes to loan modification plans, the industry is crowded with many self-proclaimed “loan-modification consultants” who often end up being scam artists.  Hopefully, Arizona’s new law will help eliminate the loan mod companies profiting on their scams that have given good loan modification companies a bad name in Arizona.  Do your research when considering a loan modification law firm or foreclosure prevention lawyers.  The article was written by Bob Hertzog who is a mortgage broker operating in Phoenix, Arizona.

Ohio attorney general Richard Cordray singled out Uri Gofman of Beachwood, Ohio, as the scam’s ringleader, saying he enlisted family, friends and others to invest in his real estate company, Real Asset Fund, with promises of profit. Mr. Gofman’s alleged enterprise began with seed money from an investor who transferred funds from a bank account in Latvia.

The scheme involved using straw buyers to purchase homes, falsely claiming home improvements were performed on houses in order to refinance them and then selling houses to unqualified buyers with the assistance of real estate agents, mortgage brokers and title companies. The defendants, who were unavailable for comment, allegedly siphoned off more than $31 million in profits from their criminal enterprise. Eventually, 358 of the homes fell into foreclosure. The Cuyahoga County Mortgage Fraud Task Force was formed in December 2007. To date, 289 defendants have been indicted on mortgage fraud charges involving $111 million in loans on 812 homes, 616 of which are now in foreclosure.

The Home Affordable loan modification program maintains a specific criteria so it is imperative to understand if you qualify for refinancing or loan workouts. Borrowers must currently have a mortgage serviced by Fannie Mae or Freddie Mac.

The Obama administration’s program has two parts: one to work with lenders to restructure the loan terms for up to 4 million homeowners; the second, to refinance up to 5 million homeowners into more affordable fixed-rate loans. For the loan modification program, borrowers who are eligible will have to provide their most recent tax return and two pay stubs, as well as an “affidavit of financial hardship” to qualify for the loan modification program, which runs through 2012. Homeowners are only allowed to have their first and second mortgage loans restructured once, and the loan relief program is only applicable for home loans that closed prior to January 1 2009, or earlier. Home mortgage loans for single-family homes that are valued more than $729,750 are not eligible for the federal loan modification plan.

There was also skepticism that mortgage lenders and banks would be willing to participate. “I’ve just seen so many of the refinancing and foreclosure prevention programs not work,” said Jason Cardiff, president of Kelly Media Group, a full-service marketing company that services mortgage lenders, law firms and loan modification companies. Cardiff continued, “Southern California borrowers with mortgages above the $700,000 loan amounts are not excited that they have been excluded from this financial relief funded by the recent stimulus package.” Mr. Cardiff was asked about the fairness of the mortgage relief bill and he responded, “No it’s not fair, but helping some borrowers is better than not helping any homeowners.”

Nationalization is scary, but so is the alternative: The malaise and mismanagement we have witnessed since the financial system started breaking down last summer.  US Government looks to quell nationalization fears; FDIC says additional mortgage relief and financing aid will hinge on stress test without nationalization yet taxpayers have invested billions bailing out subprime lenders and banks, with precious little to show for it.

Can nationalization be much worse?  Granted, there are great risks to nationalization. For starters, there is the basic philosophical quandary. It’s tough for a country to take over a large swath of its banking sector and still tout itself as the first, best bastion of capitalism.  Execution risks abound too. University of Chicago business school professor Raghuram Rajan notes that nationalized banks would be subject to political pressures. They might weaken the economy by keeping failing companies alive. And nationalization would amount to a government rescue of bank bondholders, who don’t deserve the help.  The economic arguments are persuasive. But they ignore policy realities that indicate a well-managed and limited nationalization effort could be a net benefit. Nationalized banks could serve broader interests, such as increasing lending and providing mortgage relief.  The effort to spur mortgage lending has had little discernible effect on private-sector banks.

Taxpayers have invested $350 billion in the bank bailout so far, with $350 billion more on the way. The money has not had the intended effect of spurring lending or eliminating so-called toxic assets. One sign of how this could be different came from Great Britain. Northern Rock, a bank nationalized last year by the British government, on Monday announced a plan to write $7 billion in new mortgage loans this year and nearly double that next year.  Read complete article by David Greising. 

Q1. -- When does this bill take effect and become law?

A1.- SB 1137 passed the California Senate and Assembly as urgency legislation to take effect upon execution by Governor Schwarzenegger in an effort to help California homeowners prevent foreclosure with a loan modification.. The Governor signed the bill on July 8,2008 and the statute took effect immediately. However, the new requirements in Section2 for Notices of Default and Notice of Sale and Section 4 for Notices of Sale become operative 60 days after the effective date, or September 8, 2008.

Watch Foreclosure Relief Video for California Homeowners

Q2.- If I already have a Notice of Default recorded, do I have to start over?

A2.- No. You can proceed as before the enactment of SB 1137 as long as your Notice of Sale is not posted and published after September 8, 2008. Beware of documents prepared in advance.

Q3.- What if I have an existing Notice of Default and the Notice of Sale will be after September 8, 2008?

A3- If your security is (1) residential owner occupied property on a loan made from January1, 2003 to December 31, 2007, and the Notice of Sale will be after September 8, 2008,you will need to comply with the Section 2 requirements adding CC §2923.5 for a Notice of Sale declaration of contact or list the efforts made at contact, or (2) if your security is residential property and if the billing address “for the note” is different from the property address, you will need to comply with the Section 4 requirements adding CC §2824.8 for the posting and mailing of the Notice to Residents, regardless if the loan was made between January 1, 2003 and December 31, 2007.

Q4.- If on September 8, 2009 I already have a Notice of Sale posted and published, can I proceed. with my sale?

A4.- Yes. Although not specifically addressed in the bill, we are advised that there will be a letter lodged in the Senate Journal stating that the provisions of the bill do not affect a foreclosure subject to an existing Notice of Sale when Section 2 and Section 4 become effective on September 8, 2008. UTA plans to obtain a copy of the exact language of the Senate Journal when available.Q5.- If the billing address is different from the property address, where does the trustee get the Spanish, Chinese, Tagalog, Vietnamese and Korean language translations of the

Q5. Notice to Residents required to be posted and mailed to the resident of the property with the Notice of Sale if the billing address is different from the property address’s?

A5.- The State of California is to provide these translations. The UTA will advise its membership upon the state making these translations available.

Q6.- Is there any harm in treating all residential loans assigned for foreclosure as being a non-owner occupied loan made from January 1, 2003 to December 31, 2007 and complying with the Section 2 requirements adding CC §2923.5, rather than making that determination for each residential loan going into foreclosure?

A6.- Probably not, however the Section 2 requirements are only for owner-occupied residential properties. You would still have to comply with the new Section 4requirements of posting and mailing the Notice to Residents in all six languages for loans where the “note address” is different from the mailing address, and the Section 4 notice is regardless of the date when the loan was made.

Q7.- Is there any harm in treating all foreclosures of loans secured by residential properties as having a “note address” different from the mailing address and complying with the Section 4 Notice to Residences requirement to avoid differentiating between loans?

A7.Again, probably not. The statute places different foreclosure requirements in Section 2 on owner occupied residential properties with loans made within a certain period than in Section 4 on a residential property with a different billing address regardless of when the loan was made, which can be problematic. It would seem understandable to want as a standardized process.

Q8.- Who is to sign the declaration re Contact, Due Diligence, or Surrender to be included in a Notice of Default filed after September 8, 2008?

A8.- The beneficiary or their authorized agent. Since all the requirements are to be made at least 30 days prior to initiating foreclosure, the beneficiary or servicer will usually be performing these requirements as part of their pre-foreclosure loss mitigation program.  However, this is a complicated question that may require that the trustee consult with experienced legal counsel to integrate this new declaration procedure into its policies, practices and forms. Different trustee’s and beneficiaries have different systems relating to who actually signs notices of default, etc and passage of SB 1137 should trigger a review of those policies, practices and forms prior to the September 8, 2008 effective date.

Q9.- If the trustee-to-be is requested to execute the Section 2 Notice of Default declaration reContact, Due Diligence, or Surrender as the authorized agent, similar to the execution of many current Notices of Default, will it affect the trustee’s ability to claim the protections of Civil Code §2924l to file a Declaration of Nonmonetary Status in a subsequent civil action?

A9.- Not by merely executing the declaration. Civil Code §294l protects the trustee and the acts of an authorized agent performing duties within CC §2924, et. seq. and named in a civil action. However, the authorized agent would be relying upon the beneficiary or their servicer as to the validity of the declaration and any authorized agent should review their power of attorney or agency documents and may wish to consult their legal counsel regarding indemnification.

Q10. -- Can the Section 2 declaration required re Contact, Due Diligence, or Surrender to be included in the Notice of Default be added to the language of the Notice of Default or does it have to be a separate declaration?

A10. There is no requirement in SB 3711 that the Notice of Default declaration re Contact, Due Diligence, or Surrender be a separate document, or that it be notarized

According to data from Bal Harbour-based Condo Vultures LLC, the number of foreclosure filings was up 128 % in 2008 over 2007. The filings include lis pendens, or notices of default, as well as other legal filings.  Peter Zalewski, a principal with Condo Vultures, said there were 75,730 filings in South Florida during 2008, versus 33,154 in 2007. 

Other organizations have slightly different numbers, but the overall trend is the same.  From January through October, there were 78,676 condominium and single-family home foreclosure filings, according to data from the Florida Association of Realtors.  Foreclosure filings for the tri-county area break down as follows:

o    Palm Beach County: 24,091

o    Broward County: 32,271

o    Miami-Dade County: 22,314

“We’re looking at 100,000 to 150,000 home foreclosure filings of all kinds in South Florida during 2009, unless there is a sea change in outlook – and, so far, it looks pretty grim, McCabe said.”  He cites a huge proportion of mortgages with adjustable teaser rates and payment options resetting as major challenges.  Read the complete article.