Recovering from a Short Sale

July 1, 2014 By

Borrowers who owe more money than their homes are worth sometimes can get out from under by negotiating a short sale with their lender. A short sale is when a lender agrees to accept less than is owed on a property and in result, the borrower can walk away and avoid foreclosure. Yet, short-sellers are branded as high-risk borrowers, so new loans will not come quickly or easily. Fannie Mae, the federally controlled mortgage investor, sets a minimum amount of time that must elapse before a short-seller is eligible for another loan. For example, for those who can only put down 10 percent on their next home, Fannie Mae requires a four-year waiting period. Yet, borrowers who can put down 20 percent of their next home, the waiting period is shortened to two years. This waiting period is a penalty on borrowers who did not fully repay a previous loan and even if you could put 30 or 40 percent down, you would still have a two-year borrowing period. Short-sellers who are getting back into the housing market should keep detailed records of their income sources and should avoid loans which require very little money or no money down.

A Fix for the Mortgage Market?

The Senate Banking Committee is set to vote on a bipartisan bill, which aims to rejuvenate the housing market while guarding against the excesses of the past. This bill has been named the Housing Finance Reform and Taxpayer Protection Act of 2014, with the goal to ensure broad and steady access to sustainable and affordable mortgages by providing an explicit government guarantee to attract investment in 30-year fixed-rate mortgages and other loans. In addition, this bill includes a new financing provision, a fee on government-guaranteed securities, to generate money for affordable housing. Essentially, this bill would end Fannie Mae and Freddie Mac—federally backed mortgage companies with implicit government guarantees and confusing ownership status—but would continue vital federal support for mortgages though the Federal Mortgage Insurance Corporation. Overall, this bill hopes to ensure that mortgage loans are broadly available, while giving taxpayers a housing market that serves the long-term interests of families and the broader economy. Yet, this bill is overly complex and is subject to being misinterpreted and falling short, especially on the subject of fostering affordable mortgages.

Fallout from Refinancing

Homeowners who refinanced when fixed mortgage rates dropped below 4 percent are less inclined to put their homes on the market as interest rates increase. As a result, the limited property supply already impending sales in many markets may not ease anytime soon. A recent survey by Redfin showed that even recipients of low-refinance rates who decided that they want to move may want to make money by renting out their own homes while waiting for prices to rise, rather than selling right away. Most borrowers cannot afford to buy another home without using equity from their first down payment. Yet, those who take advantage of low refinance rates tend to be “premium consumers” with very good credit and stable income. Before these people decide to rent out their homes, they may want to consider a few other factors. For example, managing a rental property is a very large effort. In addition, there is a greater financial risk for those who own two homes in the same market if home prices take a dive. Lastly, the reasons for renting a home always change.

Contact Our Office

We provide a free initial consultation to anyone with concerns about foreclosure or who is involved in foreclosure proceedings. To schedule an appointment, call our foreclosure hotline at 855-289-1660 or contact us online. Evening and weekend meetings can be arranged upon request. We will travel to your home if necessary to meet with you.

Filed Under: Foreclosure, Foreclosure Defense, Mortgage Debt Forgiveness, Mortgage Lending, Mortgage Modification, Short Sales Tagged With: , , , , , , , , , ,

THE ELUSIVE HOUSING RECOVERY

June 26, 2014 By

With all the happy talk recently about the nation’s housing recovery, much of eastern Pennsylvania and central and southern New Jersey real estate markets still have a significant amount of homes that are underwater (when the mortgage balance is greater than the value of the home). Many of these properties were purchased or refinanced by homeowners during the housing bubble which collapsed in 2007.

Recent reports continue to suggest that the best solution for all parties (banks, homeowners, investors, states and municipalities) is for the approach of “principal reduction.” By this method, if lenders rewrote the loans to reflect fair market values, then owners would have lower monthly payments which would put more money and tax dollars into local economies. Cities and towns could have more stable property tax revenues and lenders may ultimately benefit by having fewer delinquent loans.

The solution is not so simple because many banks no longer own the loans they made. Many of the underwater home loans have been pooled into private securities, and sold off to investors. The companies who service these securities and loans generally will not reduce the principal because, since they do not own the loan, they do not have the authority to reduce the principal balance. With all the talk over the last 12 to 18 months about settlement agreements between the Justice Department and the big banks, none of these initiatives require the banks or their investors to reset loans as a condition of getting Federal funds. Even the government’s Home Affordable Modification Program (HAMP) has helped barely 25% of the 4 million homeowners it was supposed to reach. Worse still, the Federal Government itself is an obstacle to a lot of the reform measures because the Federal Housing Finance Agency, which oversees Fannie Mae and Freddie Mac, will not allow these two mortgage giants to reduce the principal on any of the underwater mortgages they own or guarantee. The new FHFA director, former-Representative Melvin Watt, could change that policy and he could do it without Congressional approval. It remains to be seen if the Administration will embark on principal reduction.

Contact Our Office

We provide a free initial consultation to anyone with concerns about foreclosure or who is involved in foreclosure proceedings. To schedule an appointment, call our foreclosure hotline at 855-289-1660 or contact us online. Evening and weekend meetings can be arranged upon request. We will travel to your home if necessary to meet with you.

Filed Under: Foreclosure, Foreclosure Defense, Mortgage Lending, Mortgage Modification, Underwater Home Loans Tagged With: , , , , , , , ,

FORECLOSURE ERRORS CONFIRMED

June 16, 2014 By

On Wednesday, April 30, 2014, a Federal regulator confirmed that the biggest banks committed widespread errors when dealing with homeowners who faced foreclosure at the height of the mortgage crisis. The report released by the Office of the Comptroller of the Currency was really a post-mortem of the earlier-released Independent Foreclosure Review, a very expensive review though limited in scope, of how the banks mistreated homeowners in the foreclosure process.

Almost 10% of the errors discovered in the review involve situations when banks improperly denied loan modifications that would have prevented a foreclosure filing in the first place. Many of these errors involved administrative flaws and improper fees being charged to the homeowners during the foreclosure process. In 2013, however, 15 banks settled with banking regulators making payments that totaled $3.9 billion, paid out to more than 4 million homeowners (averaging about $1,100 per household). These settlements ended the Independent Reviews, and the banks agreed to pay homeowners regardless of whether they had been harmed. The banks and regulators agreed to halt the review process because it was so expensive and lengthy, even though only a small fraction of the mortgage files were reviewed.

The report released on April 30 showed that the banks had made even less progress in the reviews than was previously disclosed. For example, Bank of America reviewed only 6% of its files, yet revealed a financial error rate of nearly 9%. Wells Fargo examined less than 10% of its records, and found an error rate of nearly 11.5%. Parties on both sides of the crisis were not pleased, and one reason could be that the decision to cut short the review left regulators with limited information about actual harm to borrowers, even though there was a multi-billion dollar settlement.

Contact Shaffer & Gaier – Protecting Homeowner Rights

The law firm of Shaffer & Gaier protects the rights of those who are facing foreclosure or seeking mortgage modifications in New Jersey and Pennsylvania. To set up a free initial consultation, contact our office online or call our foreclosure hotline at 855-289-1660. Or call our office location in Philadelphia at 215-751-0100, or in New Jersey at 856-429-0970.

Filed Under: Foreclosure, Foreclosure Abuses, Foreclosure Defense, Mortgage Lending, Mortgage Modification Tagged With: , , , , , , ,

New Jersey Resident Wins Damages Against Predatory Lending Practices

May 1, 2014 By

The average homeowner does in fact have recourse against the big banks when it comes to mortgage fraud and foreclosure defense. Goods news comes this past January from a ruling by New Jersey Chancery Judge Peter Doyne that says Wells Fargo committed actionable fraud and predatory lending.

The case involves Oscar Montesdeoca, of New Jersey. Evidently, Montesdeoca was persuaded to borrow $600,000 pus dollars for a three-bedroom home at interest rates that ranged from 7.75 percent to 14.35 percent.

The ruling is considered a significant victory in the battle against predatory lending practices in New Jersey, where another home foreclosure occurs every eight minutes! In the case in question, the mortgage for the home was $4800 a month. However, Montesdeoca earned between $500 and $600 a week, with his wife working for $7.00 per hour. They could not possibly have covered the mortgage, which ended up being $5700 a month, including insurance.

It was determined that the loan officer who worked with Montesdeoca had promised that “if he paid the loan and maintained good credit (for two years) he would receive refinancing” to reduce the high interest rates.

The couple couldn’t read the paperwork, which was in English, and learned only later that the bank listed their income as over $10,000 a month, when it was far from that amount. When the couple’s son requested that the bank refinance the mortgage in order to lower the high interest rate, as the officer had promised, the bank officer never responded.

The good outcome is that the bank was made to refinance the loans, and pay all the couple’s legal fees, as well as three times his damages, as required by New Jersey’s Consumer Fraud Act.

Contact Shaffer & Gaier: Protecting Homeowner Rights

The law firm of Shaffer & Gaier protects the rights of those who are facing foreclosure or seeking mortgage modifications in New Jersey and Pennsylvania. To set up a free initial consultation, contact our office online or call our foreclosure hotline at 855-289-1660. Or call our office location in Philadelphia at 215-751-0100, or in New Jersey at 856-429-0970.

Source: http://www.responsiblelending.org/tools-resources/headlines/opinion-nj-court-resurrects-american-dream-from-foreclosure-nightmare.html

Filed Under: Foreclosure, Foreclosure Defense, Mortgage Fraud, Mortgage Modification Tagged With: , , , , , , , , , ,

Wells Fargo Sued for Mortgage Fraud and Mortgage Discrimination

April 5, 2014 By

It appears that Wells Fargo is being sued on both coasts for mortgage fraud or discrimination.  In the first case, filed in New York, Wells Fargo, the nation’s largest home mortgage lender, is accused of ignoring terms of a multi billion dollar settlement that was meant to resolve foreclosure abuse. This particular case is being heard in the U.S. District Court, Southern District of New York.

The lawsuit claims that Wells Fargo violated the rules of an agreement between Wells Fargo and five other big lenders and 49 state attorneys general. Evidently, the bank is accused of not reporting defective home loans to the government.

The West Coast case was filed in December of this past year. The Los Angeles city attorney has sued Wells Fargo and Citigroup, claiming that both organizations participated in mortgage discrimination, which led to a rash of home foreclosures in minority areas during the housing bust.

The lawsuits note that “vulnerable, under-served borrowers” who had been denied due to years of unlawful redlining practices leapt at the opportunity to purchase a home when it was possible to obtain a sub-prime home loan, even if they couldn’t afford it.

Contact Shaffer & Gaier: Protecting Homeowner Rights

The law firm of Shaffer & Gaier protects the rights of those who are facing foreclosure or seeking mortgage modifications in New Jersey and Pennsylvania. To set up a free initial consultation, contact our office online or call our foreclosure hotline at 855-289-1660. Or call our office location in Philadelphia at 215-751-0100, or in New Jersey at 856-429-0970.

Filed Under: Mortgage Discrimination, Mortgage Fraud, Mortgage Lending, Mortgage Modification Tagged With: , , , , , , ,

MORGAN STANLEY AGREES TO PAY $1.25 BILLION FOR MORTGAGE SETTLEMENT

February 18, 2014 By

Morgan Stanley has now joined the ranks of JP Morgan Chase, Deutsche Bank, Bank of America and other big banks in agreeing to pay huge sums of money to the Federal Housing Finance Agency to resolve claims that it sold bad mortgage securities to Fannie Mae and Freddie Mac during the run-up to the housing market/mortgage crisis. Morgan Stanley recently agreed to pay $1.25 billion to the FHFA, which is the Federal conservator for Fannie Mae and Freddie Mac. The settlement resolved a lawsuit in which the Agency claimed that Morgan Stanley sold over $10.5 billion in mortgage-backed securities to Fannie and Freddie during the credit boom, while presenting a “false picture” of the riskiness of the loans. This is the same allegation that runs through all of these lawsuits against the big banks, but this lawsuit in particular involved securities issues between September 2005 and September 2007.

Many of the loans were originated by sub-prime lenders, like New Century and Indy Mac, and then bundled into bonds and sold to Fannie and Freddie. The lawsuit said that one group of these loans had default and delinquency rates as high as 70%. As was common in the industry, the big banks turned a blind eye to these default rates while continuing to serve as warehouse lending conduits to keep the train rolling on.

If the Morgan Stanley settlement becomes final, it will be the third-largest monetary payment by a Wall Street firm to settle an FHFA lawsuit. The largest was JP Morgan Chase at $4 billion, followed by Deutsche Bank at $1.2 billion. The FHFA still has some work to do, in that it still has approximately 12 other lawsuits filed against other financial institutions.

Contact Shaffer & Gaier

To set up a free initial consultation, contact our office online or call our foreclosure hotline at 855-289-1660. Or call our office location in Philadelphia at 215-751-0100, or in New Jersey at 856-429-0970.

Filed Under: Foreclosure, Foreclosure Defense, Mortgage Lending, Mortgage Modification, Predatory Mortgage Practices Tagged With: , , , , , , , , ,

RELIEF FOR SOME HOMEOWNERS – BUT THEN A TAX BILL?

February 12, 2014 By

The big banks will be able to write-off the billions of dollars in debt relief they agreed to give to homeowners, but for the homeowners that received that help, the debt relief is treated as taxable income, which can result in large tax bills. There had been a tax exemption for mortgage debt forgiveness, but Congress let this expire on December 31, 2013. While Congress often allows tax breaks to expire, only to reinstate them later, the mortgage debt relief exemption has not yet occurred. This could partly be because there is a movement in Congress to broadly overhaul the entire tax code, and in an election year, this year was considered “small” relative to other tax matters that affect the nation as a whole.

The tax exemption helped homeowners who are underwater in their mortgage – that is, those who owe more on their mortgage than their home is worth (approximately 6.4 million households nationwide). Put in real terms, this means that if you owe $250,000 on your mortgage, and your bank lets you sell it by way of a short sale for $150,000, then the $100,000 difference is treated as taxable income. This would lead to an approximately $28,000 tax bill because of the typical tax laws in which if someone lends you money and then later says you do not have to pay it back, the IRS counts the amount forgiven as income (except in cases of bankruptcy or insolvency). Nationwide, approximately 100,000 people used the mortgage debt relief exemption in 2011. In 2013, however, that number will be much greater, simply because there were approximately 250,000 short sales, yielding an average debt reduction of approximately $37,000. A homeowner in the 25% tax bracket would then face an extra $9,250 tax bill.

What remains to be seen is if Congress recognizes the unfairness of giving the banks a welcome form of tax relief, while piling even more debt upon the innocent homeowner.

Contact Shaffer & Gaier

To set up a free initial consultation, contact our office online or call our foreclosure hotline at 855-289-1660. Or call our office location in Philadelphia at 215-751-0100, or in New Jersey at 856-429-0970.

Filed Under: Foreclosure, Foreclosure Abuses, Foreclosure Defense, Mortgage Debt Forgiveness, Mortgage Lending, Mortgage Modification Tagged With: , , , , , , , , ,

Mortgage Modification Push Helps New Jersey Homeowners

December 18, 2013 By

Mortgage delinquencies are falling as home prices rise and the foreclosure pipeline is clearing. Many speculate that this is the result of the mortgage modification push by the Obama Administration.  The Obama Administration has used various programs like HARP, the Home Affordable Refinance Program, and HAMP, the Home Affordable Modification Program, to allow distressed borrowers to refinance or modify their mortgages into something more affordable.  These programs have been particularly effective in New Jersey, as under New Jersey law, a judge must approve foreclosures, and they often press the borrower and lender to find a way to keep the borrower in their home.  Full article.

Mortgage modification is a process where the terms of a mortgage are modified outside the original terms of the contract agreed to by the lender and borrower.  At Shaffer & Gaier, we aggressively protect the rights of property owners in Pennsylvania, New Jersey and Florida. Our lawyers bring more than 45 years of combined legal experience to every case we handle. While we recognize that your case is unique, our commitment remains the same — to use our skill, knowledge, experience and resources to help you get the best outcome possible in a timely and cost-effective manner.

Contact Shaffer & Gaier

To set up a free initial consultation, contact our office online or call our foreclosure hotline at 855-289-1660. Or call our office location in Philadelphia at 215-751-0100, or in New Jersey at 856-429-0970.

Filed Under: Foreclosure, Foreclosure Defense, Mortgage Lending, Mortgage Modification Tagged With: , , , , , , , ,

CHESTER COUNTY TRIAL RESULTS IN SETTLEMENT

December 11, 2013 By

I was on trial today in Chester County, PA, for our client who was a custodian employed by West Chester University. She was a victim of a high interest rate mortgage refinance, and was placed into a loan that required a monthly payment of almost 2/3rds of her monthly income. Since her income was not nearly enough to support the mortgage, she became delinquent and eventually defaulted in 2009.

After being sued in 2011 for foreclosure by Bayview Loan Servicing in the Chester County Court of Common Pleas, I filed an answer and undertook discovery. During the discovery process, I received documents from the lender which, in my view, raised grounds for a counterclaim (a lawsuit back against the Lender for wrongful conduct). The banks will not agree to let me add a counterclaim, so I had to file a motion to add the counterclaim; it was granted by the court in 2012.

The case was called to trial, and on December 9, 2013, the lender presented its witness on the stand for testimony. After direct and cross examination of the bank’s witness, the lender and I negotiated a settlement agreement, which enables our client to reside in the property for at least 7 more months, obtained a confidential cash payment and eliminated all past and future payments to the lender (an amount in excess of $110,000) – which I call “waiver of deficiency”.

Contact Shaffer & Gaier

To set up a free initial consultation, contact our office online or call our foreclosure hotline at 855-289-1660. Or call our office location in Philadelphia at 215-751-0100, or in New Jersey at 856-429-0970.

Filed Under: Foreclosure, Foreclosure Defense, Mortgage Lending, Mortgage Modification Tagged With: , , , , , , , , ,

Favorable Settlement During Trial in Philadelphia

November 28, 2013 By

Our client had been sued by HSBC, one of the world’s largest banks (its initials stand for Hong Kong Shanghai Banking Corporation). In 2010, my client’s employer cut back on his overtime hours, and this caused a decrease in take-home pay. During the build-up to the housing bubble, HSBC acquired hundreds of thousands of U.S. mortgages from smaller lenders. Many banks got bailed out, but HSBC did not, and now claims that since it did not take any federal bailout money, it does not have to adhere to federal guidelines to modify mortgage loans, or engage in what I call reasonable settlement/resolution practices.

HSBC, therefore, demanded that the only way to reinstate my client’s delinquent loan was for the him to come up with 40% of the arrears. For homeowners that have been in foreclosure for a year or more, this often means that HSBC will not modify the mortgage unless the homeowners has tens of thousands of dollars to put down towards the new loan. In my client’s case, as in the case of most homeowners, this was not possible.

This scenario causes, in my view, more trials than are necessary since it is so difficult to settle by a loan modification. In this trial which started on November 27, 2013, the results ended favorably for my client. In this Philadelphia County case, HSBC was demanding that my client come up with over $60,000 in order to reinstate his mortgage loan (which already contained a 10.9% interest rate). My client rejected the offer, and the case proceeded to trial. Midway through the trial, HSBC made an offer to let our client remain in the home for almost another 12 months, and to waive the entire unpaid loan amount of $177,000. The case has been in litigation for nearly 3 years so this was a fantastic result for my client. The terms of the settlement were put on the record in front of the judge.

Contact Shaffer & Gaier

To set up a free initial consultation, contact our office online or call our foreclosure hotline at 855-289-1660. Or call our office location in Philadelphia at 215-751-0100, or in New Jersey at 856-429-0970.

Filed Under: Foreclosure, Foreclosure Abuses, Foreclosure Defense, Mortgage Lending, Mortgage Modification Tagged With: , , , , , , , , , ,
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