About Me 0026: foreclosure homes

Ash was in the middle of working out a loan modification when this happened. “This is in essence a burglary,” Ash remarked. The bank took her late husband’s ashes.

But it doesn't look like there's going to be any concerted effort to fix any of these problems -- if the Fed has its way anyway:

Top policymakers at the Federal Reserve are fighting efforts to rein in widely reported bank abuses, sparking an inter-agency feud with the FDIC and the Treasury Department. The Fed, along with the more bank-friendly Office of the Comptroller of the Currency, is resisting moves to craft rules cracking down on banks that charge illegal fees and carry out improper foreclosures. The FDIC supports such rules, according to an FDIC official involved in the dispute.
The new regulations would rein in debt collection, loan modification and foreclosure proceedings at bank divisions called "mortgage servicers." Servicers have committed widespread fraud in the foreclosure process. While the recent robo-signing of fraudulent documents has received the most attention, consumer advocates have complained about improper fees and servicer mistakes that lead to foreclosure for years.

"Given that we've seen a massive failure in servicing practices and a massive failure to address servicing in an honest way, I think this is important," says Joshua Rosner, a managing director at Graham Fisher & Co., and longtime critic of the U.S. mortgage system.

Last week, the National Consumer Law Center and the National Association of Consumer Advocates published a survey of 96 foreclosure attorneys from around the country, attesting that servicers have pushed 2,500 of their clients into the foreclosure process, even as the borrowers were negotiating loan modifications with the same servicers.

The Fed is run by bankers, after all ...

I think this story tells itself. But if you haven't been following the details I highly recommend dday's coverage on this over the past few months if you want to catch up. It's an astonishing story.

Meanwhile, the wonks at Naked Capitalism have put together a petition to ask the regulators to do their jobs.

As readers may know, the banking industry is trying to prevent the FDIC from moving forward with its proposed reforms on securitizations and is also attacking related SEC reforms, namely amendments to Rule A/B.

To further the effort to curb servicer abuses, please visit the website, StopServicerScams, and sign the petition. As we have written, and as experts and foreclosure defense lawyers have reported in Congressional testimony, and as pending lawsuits by attorneys general in Arizona and Nevada allege, servicer abuses are a significant cause of foreclosures. These include including delaying and misapplying payments, using false hopes of pending mods to extract more payments from consumers, and applying compounding junk fees.

We will submit the signed petition in early January. Thanks for your support in this important effort.

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Annual Holiday Fundraiser going on right now. If you can help support the blog, I appreciate it. Cheers!

digby 12/22/2010 10:30:00 AM

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Foreclosures Increase As Mortgage Modification Programs Lose Steam

Even with the foreclosure moratoriums that a few of the nation’s biggest banks instituted following the robo-signing scandal, foreclosures for this year will likely top one million. According to a report released yesterday by the Office of the Comptroller of the Currency and the Office of Thrift Supervision — two of the federal bank regulators — foreclosure activities were up significantly in the last quarter:

The number of new foreclosures increased to more than 382,000 — 31.2 percent more than in the previous quarter and 3.7 percent more than a year earlier. The number of foreclosures in process increased to 1.2 million — 4.5 percent more than in the previous quarter and 10.1 percent more than a year earlier. The number of completed foreclosures also increased to nearly 187,000 — 14.7 percent more than in the previous quarter and 57.5 percent more than a year earlier.

A large reason for the jump, according to the report, is that mortgage modifications under the Home Affordable Modification Program (HAMP) — the Obama administration’s signature foreclosure prevention effort — have dropped significantly. Mark Zandi, chief economist of Moody’s Analytics, said that a main problem driving the foreclosure machine is the “inadequacy of loan modification programs”.

For months, it’s been apparent that HAMP and the administration’s other programs designed to keep borrowers in their homes are going to fall woefully short of their goals. HAMP has processed only about 500,000 permanent loan modifications, out of 1.4 million trial modifications that have been initiated. The redefault rate (the number of borrowers who again fall behind on their mortgages, post-modification) for the program is an ugly 21 percent.

The Congressional Budget Office estimates that just $12 billion of the $50 billion dedicated to foreclosure prevention will be spent. The Congressional Oversight Panel for TARP, which also oversees HAMP, estimates that at the current rate HAMP will only benefit 700,000 homeowners, far less than the 3-4 million that the Obama administration said would receive aid. “Absent a dramatic and unexpected increase in HAMP enrollment, many billions of dollars set aside for foreclosure mitigation may well be left unused. As a result, an untold number of borrowers may go without help,” the panel said in a report.

There are still plenty of things that can be done to fix HAMP and ensure that the full resources dedicated to foreclosure prevention actually wind up in the hands of homeowners. Here are some recommendations.

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Thursday, January 6, 2011

foreclosure homes

Foreclosures Increase As Mortgage Modification Programs Lose Steam

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