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Despite Improvement in Loan-Mod Defaults, Report Raises Alarms

Sadly, loan modifications have not been very successful. Have you had your modification denied? Call me - Laura Key 310.866.8422

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There are few defenders of the Obama administration’s signature loan-modification initiative, the Home Affordable Modification Program, or HAMP. But a new report released on Wednesday raised an interesting criticism of HAMP—that borrowers aren’t staying current on modified payments even though HAMP has reduced, on average, borrowers’ monthly payments by more than $400.

The report, from the special inspector general for the Troubled Asset Relief Program, or Sigtarp, said there was an “alarming rate” of homeowners who were defaulting after receiving a permanent mortgage modification.

The report says data show that the longer a homeowner remains in HAMP, the more likely he or she is to redefault out of the program. This is true of almost any mortgage-modification program.

But the report raises broader questions about whether mortgage modifications have been worth the costs, and against what yard stick success in any such program should be measured.

There are plenty of faults to find with HAMP. Officials struggled to ensure taxpayer money wasn’t wasted, so they required lots of documentation. That created new headaches: banks rejected borrowers that they said provided incomplete forms, while borrowers routinely complained that banks lost their paperwork. In an interview last year, Shaun Donovan, the housing secretary, said it was a “fair criticism that programs initially were too complicated and had too many restrictions.”

Mortgage servicers were also overwhelmed. During tense meetings at the Treasury Department throughout 2009 and 2010, officials laid into the banks for not staffing up. Executives groused that HAMP rules changed so often that they couldn’t keep up and that new headline-grabbing initiatives were announced before they could be rolled out to be offered to borrowers.

Others said HAMP didn’t do enough to deal with negative equity, which prompted the administration to launch a belated effort two years ago to encourage principal reduction. The Treasury never made it mandatory because they feared it would both be too expensive and that it would lead banks to opt out of HAMP.

Under HAMP, banks received modest incentive payments to reduce borrowers’ monthly payments to around 31% of their current income, often by extending the loan term and dropping the interest rate. Modifications have resulted in an average monthly payment reduction of $545 or $400, depending on which type of modification lenders provide under the program.

So far, around 860,000 borrowers have active HAMP modifications, and around 290,000 have fallen out of the program. The Sigtarp report said it was “alarming” that 46% of a few thousand permanent modifications made in the third quarter of 2009 had redefaulted, as well as 39% of those made in the last quarter of 2009.

But some industry executives have said that, for all its faults, HAMP succeeded in giving the industry a template for a more sustainable loan modification. Before 2009, many modifications didn’t result in lower monthly payments, and mortgage modifications in the post-HAMP world have performed drastically better than those that came before. Around 25% of borrowers who received a modification in 2011 had fallen behind on payments within one year, down from 57% in 2008, according to banking regulators.

Moreover, more recent HAMP modifications are performing significantly better than earlier HAMP “mods,” something that may be owed to an improving economy as much as any program improvements. Around 11% of HAMP modifications made in late 2011 had defaulted after one year, compared with more than 20% for those made when the program launched in mid-2009.

Data also show that HAMP modifications, which typically offer the most generous payment relief, perform better than privately issued modifications.

Among the bigger questions raised by the report: If mortgage modification redefault rates under HAMP are too high, what’s an acceptable level? And can any mortgage modification program hit those targets?

Source: Wall Street Journal

Allen Iverson Loses Atlanta Mansion in Foreclosure Auction, According to Report

Just one week after declining an invitation to join the Dallas Mavericks' D-League affiliate as he continues his thus-far unsuccessful pursuit of a return to the NBA and days after a family court judge lambasted his parenting during divorce proceedings, former All-NBA guard Allen Iverson has now reportedly lost his Atlanta mansion to foreclosure. The grim news comes, as it so often does, from TMZ:

Iverson allegedly defaulted on a $1.2 million mortgage which sent the $4.5 million home into foreclosure. He briefly fought off an auction ... but ultimately, he couldn't stop it.

Sources close to the sale tell TMZ ... Iverson's bank purchased the mansion [Tuesday] for $2.5 million.

This isn't the first time a mansion owned by Iverson has gone into foreclosure. Back in March 2011, the six-bedroom, nine-bathroom, 6,848-square-foot mansion he'd purchased in Cherry Hills, Colo., while a member of the Denver Nuggets "slip[ped] into foreclosure" after Iverson quit paying a mortgage on which he still reportedly owed $2,572,914. Iverson also met with some strife when parting with the six-bedroom mansion in Villanova, Pa., he'd owned while a member of the Philadelphia 76ers; it sat on the market for three years after he listed it at $6.3 million before eventually selling for just $2.6 million in 2010.

Iverson's personal finances have long been a matter of inquiry — since his last NBA stint with the 76ers ended in February 2010, there have been reports that, despite earning more than $154 million in salary over the course of his 14-year NBA career, plus plenty more in endorsements, the 2000-01 NBA Most Valuable Player is broke.

Those reports picked up steam last January, when a Georgia judge garnished Iverson's wages to settle a reported six-figure jewelry bill, leading to fast-money/publicity-grab offers for the former 76ers, Nuggets, Detroit Pistons and Memphis Grizzlies guard to play basketball in Puerto Rico and indoor soccer in Rochester, N.Y. They waned shortly thereafter, thanks to the revelation that Iverson actually has tens of millions stashed away in a trust, the lion's share of which he can't access until age 55 (Iverson turns 38 in June), and that he receives a $1 million annual stipend with which he can do as he pleases.

This latest round of reports, however, indicates that in spite of the funds he has available and in reserve, Iverson wasn't able to stay above water with the bank. His continued real-estate-centric turmoil, however, pales in comparison to the strife detailed in the final decree of a messy, long-term divorce between Iverson and his ex-wife Tawanna, which resulted in Iverson reportedly agreeing to a$3 million settlement late last month. The details on the decree:

TMZ.com reported that the [Atlanta family court] judge, who was not named by the website, blasted Iverson, who was married to Tawanna for 11 years. The couple have five children together.

The website, citing the couple's final divorce [decree], reported that the judge wrote, "[Iverson] does not know how to manage the children; has little interest in learning to manage the children and has actually, at times, been a hindrance to their spiritual and emotional growth and development.

"For example, he has refused to attend to an obvious and serious alcohol problem, which has caused him to do inappropriate things in the presence of the children while impaired.

"He has left the children alone without supervision. He has left his young daughters in a hotel room with men who are unknown to the mother."

According to TMZ, the judge ordered Allen Iverson to see a psychiatrist, and to attend Alcoholics Anonymous meetings for a year.

The website also reported that the judge awarded Tawanna custody of the children and that Allen can visit them under certain conditions.

Among them, according to the report, is that he can't drink alcohol within 24 hours of visiting.

All of this, obviously, is awful. As much as I once wanted to see Iverson return to the league on the off chance that he could, just for a moment, showcase the same singular spark of brilliance that made him so endlessly watchable and inspiring on the court during his time at Georgetown, in Philly and (to a lesser extent) in Denver, I've come to accept that his on-court life, at this stage, is likely over; now I only hope he can find some stability and balance in his off-court life. Continually reading and writing about his unsuccessful attempts thus far just hurts my heart.

Source: Yahoo Sports - By Dan Devine | Ball Don't Lie

Call Laura Key with all your foreclosure and short sale questions! 310.866.8422 www.KeyCaliforniaHomes.com

Thinking of Buying A HUD Home? Part 1

Ok, so it's 2am and you can't sleep.  You are flipping through mindless and endless infomercials trying to figure out why the sandman has not visited your home and you come across a commercial that says "BUY A HUD HOME FOR $1 - JUST SEND US $19.95 for a complete list of listings!"  Ok, it sounds too good to be true, you figure $19.95 is not that much to spend and I was thinking I am ready to purchase home!

Let me save you the money and explain to you a little about HUD homes.  There is no special list and there are homes available for a special price but buying a HUD home for $1 is a way to catch your attention and if there is one, believe me, it is only for a special group of people or organizations.

HUD homes are an excellent way to purchase your first home, heck you can even buy a HUD home if you have purchased before.  HUD's are usually FHA approved which means you can obtain a loan with only 3.5% down.  And in some areas, HUD runs a wonderful incentive for buyers by offering only $100 for the downpayment.  Be aware, that program is not in all states and areas but it is out there!  I  have closed quite a few!  But I digress....HUD homes are generally a good value, most of the time they are priced a little lower than the value in the area, but if it's been on the market a while and they have lowered the price a few times, you have magically walked into a bit of equity! (NICE PERK)

What is the difference between a HUD home and a foreclosure.  Not much really...a HUD home is a home that was financed by a government loan and if someone lost a home, they buy it back from the lender so it becomes a government home.  Foreclosures are generally, not not always, homes purchased with a conventional loan.

Buying a HUD is a bit different.  There is a bidding period.  You will need a registered real estate agent to perform the process for you. (Shameless plug....contact me at Laura.A.Key@gmail.com) You do not know how many bids are in the system and once the bidding process is done and you are determined the winner, you will be on a timeline to get the paperwork into the correct people. 

But Laura, my Realty Goddess....what about the $1 HUD homes?  There are special programs out there to help non-profits and special people who serve our community.  The $1 homes (if any) are usually presented to the non-profits.  The special programs are usually offered to the following: Police Officers, Teachers, EMT's and Firefighters.  Those homes are won on a lottery bidding system.

*This ends Part 1 of "Thinking of Buying a HUD Home" tune in to the next episode where we will discuss the bidding progress and steps to closing the deal.

Contact me with any questions you may have! Laura.A.Key@gmail.com

www.KeyCaliforniaHomes.com

*By Laura Key, please do not use without permission.

The Joys of Life! Om Shanti

I really enjoy sharing all the wonders of real estate with you. I know you just can't wait to read my blogs about foreclosures and short sales.  It's such an exciting world and I know you hang on every word like a soap opera, (SMILE) but what I love the most about blogging is I can share my own personal world with you.  I am more than a Real Estate Agent, more than a wife, more than a mother....I am a being with dreams, hopes aspirations and goals.  We all are and although we all have important roles in our life they all fall apart if we don't take care of "self"!

Since moving to Los Angeles, I have been blessed with the opportunity to attend new things.  I have always been interested in meditation and on Wednesday evenings I have been attending classes at the Brahma Kumaris Raja Yoga center.  What a blessing and it is also FREE.  

In this busy world, I feel its important to have some time of calm and peace in your day and meditation has so many benefits! So as I learn and grow in this adventure I will share it with you along the way.  If you are interested in mediation the Brahma Kumaris Yoga  Meditation centers have locations across the world!  You can check out their official website at: www.bkwsu.org 

Even though I have started with the Braham Kumaris Yoga, there are so many other types of meditation, so if one does not fit your personality you have many to chose from.  Check out these types of meditation: Mindfulness Meditation, Spiritual Meditation, Focused Meditation, Movement Meditation and Mantra Meditation.  Here is a great beginners website: www.fitsugar.com/5-Types-Meditation-18949375

My beginning goal is just to be able to quiet my mind and block out outside distractions.  Sounds easy right....well, I'll let you know how that works out for me.  

I am enjoying my journey and I hope you share in my adventures, it seems I have become a California girl quite quickly!

Om Shanti (I am a peaceful soul)...and I hope  you are too!

Follow me on twitter, facebook, yelp, google+ and foursquare! Maybe we can share some laughs and smiles along the way.

California House Dems Call for Recess Appointment at FHFA

Brian Beutler writes that President Obama will likely have to make more recess appointments if he wants to staff key positions, including the newly-created vacancy at the Office of Management and Budget, as Jack Lew has become White House Chief of Staff. The assumption here is that Republicans will react to recess appointments at the CFPB and the NLRB by refusing to confirm any other Presidential appointee, and that’s a reasonable assumption.

But the President won’t get pressure just from Republicans on naming recess appointments. House Democrats in the California delegation, the largest in the Congress, wrote a letter late yesterday to Obama asking him to recess-appoint a new director to the Federal Housing Finance Administration. That institution has been without a confirmed director for over two years, since David Lockhart left.

The President has never had his own nominee at FHFA. And Democrats believe that FHFA, which currently oversees Fannie Mae and Freddie Mac, is uniquely positioned to help the country out of the housing mess. They accuse acting director Ed DeMarco of obstructing efforts to aid the housing market and keep borrowers in their homes. Here’s an excerpt from the California Dems’ letter, which I’ll put in its entirety on the flip:

As part of the FHFA’s ability to promote policies that will prevent foreclosures, they have the authority to establish rules over residential mortgages that Fannie Mae, Freddie Mac and other government enterprises are able to underwrite. FHFA has consistently and erroneously interpreted its mandate far too narrowly and as such has failed to take adequate action to help homeowners and has brought an end to successful, local initiatives—such as the PACE (Property Assessed Clean Energy) program [...]

As the fiduciary of government-backed entities, there are steps that the FHFA can take to help prevent future foreclosures while also protecting taxpayers. Installing a permanent Director of the FHFA will allow the FHFA to move forward to make key decisions that will help keep families in their homes and improve our economy. We appreciate your recent appointment of Richard Cordray as the new Director of the United States Consumer Financial Protection Bureau over similar Republican opposition and we urge that you take the same action to put in place a permanent Director to the FHFA.

I’m of two minds on DeMarco. He has interpreted his mandate very narrowly. It’s a bad thing when he refuses to engage in principal reductions for troubled borrowers, even though that would make more money for Fannie and Freddie in the long run, because he doesn’t want to take the short-term financing hit. But it’s a good thing when he sues 17 banks over misrepresentations of the mortgages in the securities they sold to Fannie and Freddie, with the hope of forcing repurchases of those mortgage pools.

There have been signs that DeMarco is warming to a more activist stance. He agreed to the changes to HARP, which is more of a stimulus program than a program that will save homes, but which will allow expanded refinancing come March of this year on GSE-owned properties. Freddie Mac just initiated a program for a 12-month forbearance (where the borrower can skip payments) for unemployed borrowers, although Democrats maintain that not everyone eligible will receive that forbearance.

Most promisingly, DeMarco is considering a principal pay-down program put forward by a California Democrat, Zoe Lofgren, that would allow underwater homeowners with GSE loans to have their mortgage payments go entirely to equity for five years, waiving the interest payments. DeMarco said he would look into the idea back in October, and there have been leaks since then suggesting that principal pay-down would happen. However, there has been no final word, and officially FHFA “continues to evaluate” the Lofgren proposal, even though in a meeting with House Dems they promised an assessment within two weeks.

I don’t think some in the Administration would have any problem getting rid of DeMarco – they don’t particularly like his aggressive stance on bank repurchases. But that would not necessarily be the best news for the housing market or the rule of law. If anything, the California Dems’ action shows that the previous recess appointments have opened a Pandora’s box for the Administration, and now everyone wants a recess appointment tailored to their concerns.

The entire letter from the Congressional Dems in California is below the fold.

The President The White House Washington, DC 20500

Dear President Obama:

We urge you to act on behalf of the American people and immediately make an appointment for the Director of the Federal Housing Financial Agency (FHFA). For two and a half years, Senate Republicans have been blocking the appointment of this position, causing there to be no permanent Director. The FHFA regulates and oversees Fannie Mae and Freddie Mac, which together hold 70% of mortgages in the US. The current economic crisis began in the housing market and our economic recovery is dependent on the important work pending before the FHFA. It is time to move forward and put in place a permanent FHFA Director.

According to RealtyTrac, 224,394 U.S. properties had foreclosure filings in November, 2011. This means that 1 in every 579 housing units received a foreclosure filing nationwide. In California, 1 in every 211 housing units received a foreclosure filing. And there are fears that a new set of foreclosure waves may come in the next few months. According to RealtyTrac cofounder, James Saccacio, “November’s numbers suggest a new set of incoming foreclosure waves, many of which may roll into the market as REOs or short sales sometime early next year…some bellwether states such as California, Arizona and Massachusetts actually posted year-over-year increases in foreclosure activity in November.”

It is clear that we must take immediate steps to prevent more foreclosures. As part of the FHFA’s ability to promote policies that will prevent foreclosures, they have the authority to establish rules over residential mortgages that Fannie Mae, Freddie Mac and other government enterprises are able to underwrite. FHFA has consistently and erroneously interpreted its mandate far too narrowly and as such has failed to take adequate action to help homeowners and has brought an end to successful, local initiatives—such as the PACE (Property Assessed Clean Energy) program. The PACE program allows property owners to finance energy efficiency measures and renewable energy projects for their homes and commercial buildings, thereby reducing their energy costs and making them better able to make mortgage payments. It has been successful in many of our districts, however, in July of 2009 FHFA issued a decision that essentially put an end to PACE programs across this country.

As the fiduciary of government-backed entities, there are steps that the FHFA can take to help prevent future foreclosures while also protecting taxpayers. Installing a permanent Director of the FHFA will allow the FHFA to move forward to make key decisions that will help keep families in their homes and improve our economy. We appreciate your recent appointment of Richard Cordray as the new Director of the United States Consumer Financial Protection Bureau over similar Republican opposition and we urge that you take the same action to put in place a permanent Director to the FHFA.

By: David Dayen Wednesday January 11, 2012 7:00 am