California Attorney Warning Regarding Short Sale Fraud

June 23, 2010

%Jim Wire %Real Estate Lake Tahoe

Brown Orders Mortgage Foreclosure Consultants to Post $100,000 Bond or Face Prosecution

Threatening possible criminal and civil prosecution, Attorney General Brown ordered 386 mortgage foreclosure consultants to post $100,000 bonds and register with his office. Brown also unveiled a new loan modification fraud website (http://ag.ca.gov/loanmod).

Individuals and Businesses Brown Has Sued

Individuals

  • Sibpun Ampornpet
  • Eli Hassine
  • Quentin Hazell
  • John D H N Nielsen
  • Carol Pencille
  • Eric Pony
  • Paulette Pony
  • Wilma Pony
  • Hakimulla Sarpas
  • Dean Storm

Businesses

  • Lifetime Financial
  • E. Pony, Inc.
  • Nations Mortgage, Inc.
  • Greenleaf Lending, Inc.
  • Virtual Escrow, Inc.
  • Olympic Escrow, Inc.
  • Direct Credit Solutions, Inc.
  • Federal Land Grant (FLG), LLC
  • Land Grant Services, LLC
  • KBS Resources, LLC

5 Tips to Avoid Being Scammed

  1. Don’t pay up-front fees. Foreclosure consultants are prohibited by law from collecting money before services are performed.
  2. Don’t ignore letters from your lender or loan servicer. Responding to those letters is your best bet for saving your house.
  3. Don’t transfer title or sell your house to a “foreclosure rescuer.” Beware! This is a scam to convince homeowners they can stay in the home as renters and buy their home back later. It might also be part of a fraudulent bankruptcy filing. Either way, a scammer can then evict the victim and take the home.
  4. Don’t pay your mortgage payments to anyone other than your lender or loan servicer. Mortgage consultants often keep the money for themselves.
  5. Never sign any documents without reading them first. Many homeowners think that they are signing documents for a loan modification or for a new loan to pay off the mortgage they are behind on. Later, they discover that they actually transferred ownership of their home to someone who is now trying to evict them.

Flood Insurance Update: June 1, 2010

June 23, 2010

Flood Insurance Update: June 1, 2010

Congress, for the third time this year, allowed the National Flood Insurance Program to expire on May 31, 2010.

NAR has launched an all-member Call for Action to urge Congress to take immediate action on a lasting NFIP extension. Additional, information regarding NAR’s policy position are available at www.realtor.org.

Call for action>

After May 31, the NFIP will not have the statutory authority to issue new or renewal policies until Congress reauthorizes the program. This will not affect existing policies, renewal policies within a 30-day grace period, or policies purchased prior to the program’s lapse. Also, FEMA allows buyers to “assume” the seller’s existing policy without having to re-issue it (http://www.fema.gov/pdf/nfip/manual201005/03gr.pdf). The purchase requirement for flood insurance may be met with non-NFIP policies; for instance, Lloyd’s of London, Chubb and AIG have offered such insurance, but it can be very expensive and is limited to a certain number of states, with other conditions.

FEMA May 28 Notice: NFIP Reauthorization Information for WYO Companies and Agents> (PDF: 91K)

NAR has been working with FEMA, FHA, Fannie, Freddie and the VA to provide guidance, similar to what it provided in April, for lenders as to the steps they may take to meet flood insurance purchase requirement during an NFIP lapse. With updated guidance in hand, lenders should have the assurances that they need to continue to close loans. FHA has already issued updated guidance. Fannie Mae, Freddie Mac, the VA, and other lending authorities are expected to release guidance shortly, and NAR will post the guidance at www.realtor.org.

We encourage you to visit or direct your members to the following resources for additional information:

FEMA May 28 Notice: NFIP Reauthorization Information for WYO Companies and Agents> (PDF: 91K)
FEMA>
Office of Thrift Supervision Guidance on NFIP Lapses>
Fannie Mae Notice>
Freddie Mac June 1 Notice>
Veterans Administration (VA) Notice>
Veterans Administration (VA) Home Loan Loan Guaranty Home Loan Program>
FHA Appraisal and Property Requirements>
FHA Single Family Housing>

Flood Insurance Update: June 1, 2010

Congress, for the third time this year, allowed the National Flood Insurance Program to expire on May 31, 2010.

NAR has launched an all-member Call for Action to urge Congress to take immediate action on a lasting NFIP extension. Additional, information regarding NAR’s policy position are available at www.realtor.org.

Call for action>

After May 31, the NFIP will not have the statutory authority to issue new or renewal policies until Congress reauthorizes the program. This will not affect existing policies, renewal policies within a 30-day grace period, or policies purchased prior to the program’s lapse. Also, FEMA allows buyers to “assume” the seller’s existing policy without having to re-issue it (http://www.fema.gov/pdf/nfip/manual201005/03gr.pdf). The purchase requirement for flood insurance may be met with non-NFIP policies; for instance, Lloyd’s of London, Chubb and AIG have offered such insurance, but it can be very expensive and is limited to a certain number of states, with other conditions.

FEMA May 28 Notice: NFIP Reauthorization Information for WYO Companies and Agents> (PDF: 91K)

NAR has been working with FEMA, FHA, Fannie, Freddie and the VA to provide guidance, similar to what it provided in April, for lenders as to the steps they may take to meet flood insurance purchase requirement during an NFIP lapse. With updated guidance in hand, lenders should have the assurances that they need to continue to close loans. FHA has already issued updated guidance. Fannie Mae, Freddie Mac, the VA, and other lending authorities are expected to release guidance shortly, and NAR will post the guidance at www.realtor.org.

We encourage you to visit or direct your members to the following resources for additional information:

FEMA May 28 Notice: NFIP Reauthorization Information for WYO Companies and Agents> (PDF: 91K)
FEMA>
Office of Thrift Supervision Guidance on NFIP Lapses>
Fannie Mae Notice>
Freddie Mac June 1 Notice>
Veterans Administration (VA) Notice>
Veterans Administration (VA) Home Loan Loan Guaranty Home Loan Program>
FHA Appraisal and Property Requirements>
FHA Single Family Housing>

NO MORE STATE TAX ON FORGIVEN DEBT

May 9, 2010

Brought to you by the CALIFORNIA ASSOCIATION OF REALTORS®

NO MORE STATE TAX ON FORGIVEN DEBT

Distressed homeowners no longer have to pay California state income tax on debt forgiven in a short sale, foreclosure, or loan modification.  Enacted into law yesterday, Senate Bill 401 generally aligns California’s tax treatment of mortgage debt relief income with federal law.  For debt forgiven on a loan secured by a “qualified principal residence,” borrowers will now be exempt from both federal and state income tax consequences.  The existing federal exemption is for indebtedness up to $2 million, whereas the new California exemption is for indebtedness up to $800,000 and forgiven debt up to $500,000.

“Qualified principal residence” indebtedness is defined as debt incurred in acquiring, constructing, or substantially improving a principal residence.  It includes both first and second trust deeds.  It also includes a refinance loan to the extent the funds were used to payoff a previous loan that would have qualified.

The tax breaks apply to debts discharged from 2009 through 2012.  Californians who have already filed their 2009 tax returns may claim the exemption by filing a Form 540X amendment.
 
Taxpayers who do not qualify for the above exemptions (e.g., second home or rental property) may nevertheless be exempt under other provisions.  Most notably, taxpayers who are bankrupt are exempt from debt relief income tax.  Also, taxpayers who are insolvent are exempt from debt relief income tax to the extent their current liabilities exceed current assets.

For more information about mortgage forgiveness tax consequences, go to California Franchise Tax Board’s Mortgage Forgiveness Debt Relief Extended webpage and the Internal Revenue Service’s Mortgage Forgiveness Debt Relief Act and Debt Cancellation webpage.  The full text of Senate Bill 401 is available at www.leginfo.ca.gov

C.A.R. provides REALTORS® with many legal articles covering a wide range of topics of interest.  Some of the new or newly revised legal articles available at http://qa.car.org/ are as follows:

Nabbing a Bargain-Basement Mortgage Before Rates Rise .

March 23, 2010

Is it time to rush out and buy a house before mortgage rates go up?

As the Federal Reserve winds down its intervention in the mortgage market, rates on home loans are generally expected to rise at least modestly during the rest of this year from today’s unusually low levels. Some analysts believe mortgage rates will jump to around 6% by year end from 5% in recent weeks, while others see only a slight increase.

%Jim Wire %Real Estate Lake Tahoe

Meanwhile, federal tax credits available for some home buyers are due to expire at the end of April, adding to the sense of urgency many shoppers feel.

“I’d hate to miss out on really low [mortgage] rates” or the tax credit, says Jennifer Hale, a veterinarian who is looking for a new home near Minneapolis with her fiance, Lawrence Nystrom.

If rates do go up sharply, that will have a big effect on home buyers. Richard Redmond, a mortgage adviser at All California Mortgage in Larkspur, Calif., offers the example of a couple with combined pretax income of $100,000 a year and debt obligations (excluding mortgage) of $500 a month. At a 5% mortgage rate, he figures, the couple could qualify for a loan big enough to buy a $590,000 house, assuming a 20% down payment. At 6%, that would fall to $540,000.

Since late 2008, 30-year fixed-rate mortgages have been available for people with strong credit records at around 5%, near the lowest levels since the 1950s, thanks to the Federal Reserve’s heavy purchases of mortgage securities. At the end of March, the Fed is due to stop buying the securities. Most mortgage analysts think the immediate effect of the Fed’s withdrawal will be modest.

Laurie Goodman, a senior managing director at mortgage-bond trader Amherst Securities Group LP in New York, estimates that the Fed move will add a maximum of about 0.25 percentage point to mortgage rates. “There is a lot of private money on the sidelines,” waiting to buy mortgage securities once the Fed stops gobbling most of them up, Ms. Goodman says. She points to banks, money managers and foreign investors.

What happens to interest rates over the rest of this year depends on many factors that are hard to predict, including the strength of the economy, Fed policies and foreign investors’ willingness to buy U.S. debt.

Projections vary widely. At the lower end of the scale, analysts at Credit Suisse and FTN Financial Capital Markets forecast that mortgage rates will be in a range of roughly 5% to 5.25% at the end of 2010. Moody’s Economy.com projects about 5.7%, and Barclays Capital 6%. Barclays cites a general rise in interest rates propelled by heavy government borrowing and a strengthening economy as the main factors.

John W. Anderson, a broker at Twin Oaks Realty of Crystal, Minn., who is helping Ms. Hale and Mr. Nystrom search for a house, says the tax credit and fear of higher interest rates are motivating buyers “to move a little faster.” But he cautions against moving too fast because of the risk of overpaying or ending up with a home you don’t really like. “Getting the right home is the No. 1 thing,” he says.

Write to James R. Hagerty at bob.hagerty@wsj.com

Delinquencies Continue To Climb

September 3, 2009

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Title: Delinquencies Continue to Climb, Foreclosures Flat in Latest MBA National Delinquency Survey
Source: MBA
Date: 8/20/2009
Contacts:

Name: Phone: Email:
 Carolyn Kemp (202) 557-2727 ckemp@mortgagebankers.org

WASHINGTON, D.C. (August 20, 2009) — The delinquency rate for mortgage loans on one-to-four-unit residential properties rose to a seasonally adjusted rate of 9.24 percent of all loans outstanding as of the end of the second quarter of 2009, up 12 basis points from the first quarter of 2009, and up 283 basis points from one year ago, according to the Mortgage Bankers Association’s (MBA) National Delinquency Survey. The non-seasonally adjusted delinquency rate increased 64 basis points from 8.22 percent in the first quarter of 2009 to 8.86 percent this quarter.Top Line Results

The delinquency rate breaks the record set last quarter.  The records are based on MBA data dating back to 1972.

The delinquency rate includes loans that are at least one payment past due but does not include loans somewhere in the process of foreclosure.  The percentage of loans in the foreclosure process at the end of the second quarter was 4.30 percent, an increase of 45 basis points from the first quarter of 2009 and 155 basis points from one year ago. The combined percentage of loans in foreclosure and at least one payment past due was 13.16 percent on a non-seasonally adjusted basis, the highest ever recorded in the MBA delinquency survey.

The percentage of loans on which foreclosure actions were started during the second quarter was 1.36 percent, down one basis point from last quarter and up 28 basis points from one year ago.

The percentages of loans 90 days or more past due and loans in foreclosure both set new record highs, breaking records set last quarter.  The percentage of loans 30 days past due is still well below the record set in the second quarter of 1985. 

Increases Driven by Prime Fixed-Rate Loans

“While the rate of new foreclosures started was essentially unchanged from last quarter’s record high, there was a major drop in foreclosures on subprime ARM loans.  The drop, however, was offset by increases in the foreclosure rates on the other types of loans, with prime fixed-rate loans having the biggest increase. As a sign that mortgage performance is once again being driven by unemployment, prime fixed-rate loans now account for one in three foreclosure starts.  A year ago they accounted for one in five.  While 41 states had increases in the foreclosure start rate for prime fixed-rate loans, 43 states had decreases in that rate for subprime adjustable-rate loans,” said Jay Brinkmann, MBA’s Chief Economist.

“The states of California, Florida, Arizona and Nevada continue to have a disproportionately high share of foreclosure starts, although the share has fallen slightly from last quarter.  Those four states had 44 percent of all of the nation’s new foreclosures during the second quarter of this year, down from 46 percent in the first quarter.

“Florida continues to establish itself as the worst state in the union for mortgage performance, closely followed only by Nevada.  In Florida 12 percent of mortgages were somewhere in the process of foreclosure, the highest in the nation, and another 5 percent were at least 90 days past due as of the end of June.  A total of 22.8 percent were delinquent at least one payment or in the process of foreclosure, which is almost twice the national percentage if the Florida numbers are excluded.  In contrast, the next highest states are Nevada at 21.3 percent, Arizona at 16.3 percent and Michigan at 15.8 percent.

“We also saw a major jump in FHA foreclosures.  The percentage of loans with foreclosures started, the percentage of loans in foreclosure and the percentage of loans 90 days or more past due are all records for FHA.  While the foreclosure starts rate for FHA loans at 1.15 percent is lower than all other loan types with the exception of prime fixed-rate loans, the FHA percentages have remained low due to a large increase in the number of loans outstanding, the so-called “denominator effect”.  If the number of FHA loans had stayed the same as a year ago and we saw the same number of foreclosures, the FHA foreclosure rate would be almost 1.5 percent.

“As for the outlook, it is unlikely we will see meaningful reductions in the foreclosure and delinquency rates until the employment situation improves.  In addition, in some areas where a number of borrowers have mortgages that are larger than the current value of their homes, any life events such a divorce or loss of a job are likely to translate into foreclosures until prices in those areas recover, not just flatten.

“Finally, while the various loan modification programs continue to have an impact on holding foreclosure rates below where they otherwise would be, the issue is that many of the foreclosures involve homes that are vacant, borrowers who no longer have jobs, or loans where there was fraud involved.  Therefore, in measuring the effectiveness of industry or government loan modification programs it is necessary to compare the results not with the total foreclosure and delinquency numbers reported here but with the smaller subset of borrowers who can and want to qualify,” Brinkmann said.

Change from last quarter (first quarter of 2009)

The seasonally adjusted delinquency rate increased 35 basis points for prime loans (from 6.06 percent to 6.41 percent), 40 basis points for subprime loans (from 24.95 percent to 25.35 percent), and 58 basis points for FHA loans (from 13.84 percent to 14.42 percent), but decreased 15 basis points for VA loans (from 8.21 percent to 8.06 percent).

The percentage of loans in the foreclosure process increased 51 basis points for prime loans (from 2.49 percent to 3.00 percent), and increased 71 basis points for subprime loans (from 14.34 percent to 15.05 percent). FHA loans saw a 22 basis point increase in the foreclosure inventory rate (from 2.76 percent to 2.98 percent), while the foreclosure inventory rate for VA loans increased 14 basis points (from 1.93 percent to 2.07 percent).

The non-seasonally adjusted foreclosure starts rate increased seven basis points for prime loans (from 0.94 percent to 1.01 percent) and increased five basis points for FHA loans (from 1.10 percent to 1.15 percent). This rate decreased 52 basis points for subprime loans (from 4.65 percent to 4.13 percent) and decreased four basis points for VA loans (from 0.72 percent to 0.68 percent).

The seriously delinquent rate, the non-seasonally adjusted percentage of loans that are 90 days or more delinquent, or in the process of foreclosure, was up from both last quarter and from last year. This measure is designed to account for inter-company differences on when a loan enters the foreclosure process.

Compared with last quarter, the non-seasonally adjusted seriously delinquent rate increased for all loan types. The rate increased 74 basis points for prime loans (from 4.70 percent to 5.44 percent), 164 basis points for subprime loans (from 24.88 percent to 26.52 percent), 41 basis points for FHA loans (from 7.37 percent to 7.78 percent), and 27 basis points for VA loans (from 4.42 percent to 4.69 percent).

Change from last year (second quarter of 2008)

On a year-over-year basis, the seasonally adjusted delinquency rate increased for all loan types. The increase was 248 basis points for prime loans, 668 basis points for subprime loans, 179 basis points for FHA loans, and 124 basis points for VA loans.

Compared with the second quarter of 2008, the percentage of loans in the process of foreclosure increased 158 basis points for prime loans and 324 basis points for subprime loans. The rate increased 74 basis points for FHA loans and 74 basis points for VA loans.

The non-seasonally adjusted foreclosure starts rate increased 40 basis points for prime loans, 20 basis points for FHA loans, and 11 basis points for VA loans. The starts rate decreased 13 basis points for subprime loans.

The seriously delinquent rate was 309 basis points higher for prime loans and 867 basis points higher for subprime loans. The rate also increased 235 basis points for FHA loans and 169 basis points for VA loans.

If you are a member of the media and would like a copy of the survey, please contact Carolyn Kemp at ckemp@mortgagebankers.org or John Mechem at jmechem@mortgagebankers.org. If you are not a member of the media and would like to purchase the survey, please call (800) 348-8653.

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The Mortgage Bankers Association (MBA) is the national association representing the real estate finance industry, an industry that employs more than 280,000 people in virtually every community in the country. Headquartered in Washington, D.C., the association works to ensure the continued strength of the nation’s residential and commercial real estate markets; to expand homeownership and extend access to affordable housing to all Americans. MBA promotes fair and ethical lending practices and fosters professional excellence among real estate finance employees through a wide range of educational programs and a variety of publications. Its membership of over 2,400 companies includes all elements of real estate finance: mortgage companies, mortgage brokers, commercial banks, thrifts, Wall Street conduits, life insurance companies and others in the mortgage lending field. For additional information, visit MBA’s Web site:  www.mortgagebankers.org.