US REO Properties

Economists Feel That the Foreclosure Crisis has Been Wasted

neha — Tue, 16 Mar 2010 14:23:55 +0000

Economists feel that the foreclosure crisis has been wasted without any lessons learnt from it. It should have been used to show the path towards financial reform.

Two noted economists are concerned that Washington has wasted a chance to chalk out a financial reform plan and this might lead to a repeat of the meltdown Wall Street experienced in 2008. Simon Johnson of MIT and Nobel Laureate Joseph Stiglitz of Columbia University have authored books asking the government to control the power of the mega banks. The economists and policy makers have been chastised for thinking prior to the crisis that the financial markets could rectify automatically and correct the overreaching it had indulged in.

Johnson and James Kwak authored 13 bankers: The Wall Street Takeover and the Next Financial Meltdown. Stiglitz penned Freefall: America, Free Markets, and the Sinking of the World Economy.

Speaking recently at a conference in Roosevelt Institute in New York they elaborated on finding out means to protect the financial system from mega banks – financial entities that become too big to fail. They want the consumers to be protected from financial wrongs and regulation of derivatives that was one of the prime causes for the catastrophe. They also referred to the $180 billion rescue of AIG, the Volcker rule that attempts to limit the volume of financial entities and prohibit banks from dealing in financial markets for their own gains. They do not want that future bailouts would be from the pockets of the taxpayer. Later they spoke to USA Today.

Simon Johnson said that the crisis was an exercise in waste. The cycle by and large is over. Larry Summers had said in 2000 that the moment should be seized. When there is a crisis, when the financial crisis has brought about this crisis then it should be fixed with an eye to the future.

Madeline Albright had wanted the granting of huge unconditional loans to South Korea because of its strategic importance. She did not want the pushing of reforms but the granting of money. That suggestion was derided by the Treasury. Yet this Albright tactic has been put into operation in America’s own system.

But the chances of initiating reforms are not yet over. The financial catastrophe of 1907 led to the Fed after long 6 years. The 1929 collapse led to the legislations of the 35s and 36s. Thus it is not unusual for there to be a time lag between the years of the crisis and the initiation of reforms.

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Economists Feel That the Foreclosure Crisis has Been Wasted is a post from: US REO Properties

Residents of Minnesota Wounded by Foreclosures and the Economy are Poorer but Learning to be Happy

neha — Mon, 15 Mar 2010 13:04:34 +0000

The residents of Minnesota wounded by foreclosures and the accompanying evils in the economy have become poorer but they are learning to be happy with their condition.
Leslie Cotter is one of those who are poorer but happy. She lost her teaching job and is now threatened with bankruptcy. Mentally she has made up her mind to forego her house in St. Paul that had been her home for 17 years. But on top of that the biggest problem for her is a credit card debt amounting to $45,000. In her early fifties Cotter was in tears when she said, “I am a good person. I am hard working, conscientious and reliable person who has hit a hard patch. I just am not the best money manager.”
Cotter is slowly learning from her experience – she is going to many places where individuals go to pick up the art of survival when they become financially poor. Many Minnesotans like Cotter have found themselves landed in this mess because of job losses, foreclosures and ill health. They are turning up in the thousands feeling let down and angry knocking on the doors of financial counselors.

In St. Paul the unemployment rate is as high as 7.3%. There are 1,600 houses in foreclosure. At this juncture activities of financial counselors are thriving. Financial Rehabilitation Center is a non-profit body that has seen the number of its clients double to be 2,500 within two years.
A study of the operations of the centre will show how the house owners belonging to the middle class have to come out in the open with all their embarrassment, errors and depressions. But having paid the price they are now learning to be content with much less; they have become wise enough to be happy.
The experience of Lynne Larkin-Wright can be cited as an instance. The irony of the situation was that she herself was a financial counselor at some point of time. Then her husband endured financial reversals. Having experienced the shame and exposure she understands the plight of her clients. She said, “I know what they are going through.” Last year her husband lost his job that fetched $35,000 annually. Without delaying matters the couple took up action so as to stop foreclosure. But since they had not missed any payment it was difficult for them to qualify for any federal programme. The bank kept assuring but did nothing. The final blow came when her husband was hospitalized. Since then they have accepted the inevitable and facing life anew with a shirt or two less and less pampering for their dog.

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Residents of Minnesota Wounded by Foreclosures and the Economy are Poorer but Learning to be Happy is a post from: US REO Properties

Mega Firm Penalized by Court for Playing Foreclosure Games in the West Coast

neha — Fri, 12 Mar 2010 10:02:24 +0000

A judge in King County ordered one of the mega lenders that had prowled around the West Coast playing foreclosure games to pay over $230,000 to a disabled elderly citizen whose house in Whidbey Island had been erroneously sold in a foreclosure auction when she defaulted. Experts are opining that this is the first instance of a foreclosure case to reach verdict of jury in Washington.
On 2008 February 29th Quality Loan Service Corporation of Washington sold off the house of Dorothy Halstien for nearly $83,000. This was done although her guardian appointed by the court had informed the firm 11 days previously of the contract that had been inked for the selling of the house for $235,000 by the middle of March. The auction caused Halstein to lose nearly $150,000 on the equity of her house.

Quality contended in court that it did not have the right to postpone the auction – something only Washington Mutual (the lender) could grant. An investor purchased the house in the auction by offering $1 over the opening bid and then resold the unit six months afterwards for a price of $235,000. The investor got the equity that legitimately belongs to Halstein, a retired factory hand, who had built it up brick by brick during many decades.
The order issued by Judge Barbara Mack of the Superior Court finalized the verdict of a jury in last January that charged Quality and its parent company Quality Loan Services based in San Diego transgressed the Consumer Protection Act of the state by dishonouring the contract made with Halstien. The judge refused a motion to put brakes on Quality operating business in the state until it changed its mode of operations. Mack stated, “The court assumes QLS will follow the law… and that it will in the future fulfill its duty of good faith to borrowers, lest it face endless litigation.”
In January 2007 Puget Sound Guardians had been appointed as guardian of Halstien. It filed the case few weeks after the sale of the unit in a foreclosure auction. In 2008 November Halstien died at 76 years of age. Dianne Klem the executive director of the agency came to be appointed the administrator of her estate. Referring to the verdict Klem said, “We feel like this trustee and any other trustees in the state of Washington will make sure they protect the homeowner, as well as the bank or mortgage company.”

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There are no Bids for the Foreclosed Properties of Wells Fargo

neha — Thu, 11 Mar 2010 09:53:21 +0000

In East Palo Alto, Wells Fargo has become the biggest landlord. There are no bids at the foreclosure auctions. The company took over 1.800 houses in the Woodland Park region of Palo Alto East. It has now officially become the biggest landlord of the city.

Previously the owner of the units was Page Mill Properties based in the city. The bank foreclosed on them. Last Tuesday 2nd March auction was held but no bidders turned up said a spokesperson of Wells Fargo, Elise Wilkinson. It led to Wells Fargo officially taking over ownership of the estates. The worth of the property has been valued by the bank to be $142 million.
The tenants have been very unhappy with Page Mill and it has been the same with the officials of the city. Page Mill had been again and again increasing the rent. Many have charged the company of “predatory equity” and have asked for reductions in rent. Page Mill has said that it had increased because it needed money to upgrade security systems, seismic retrofits and make other improvements on the properties.

Page Mill is also involved in over twelve legal suits with East Palo Alto regarding rent control of these units. The city officials hoped to settle the suits in the forthcoming weeks.

In last fall Page Mill lost its control over the properties after it lagged behind on $50 million ballooning payments to Wells Fargo. Last September the property managers of the firm left the building because the cash flow was not sufficient. A judge of San Mateo County then appointed an overseer to see to the running of the properties.

In a statement Wells Fargo said that it does not think that the results of the auction will have any noticeable impact on the residents of the building. The Investor’s Property Services would continue to manage the estate, said the bank.
Sean Barlas, the managing director of Wells Fargo said, “After speaking with many members of the East Palo Alto community and carefully weighing the options, we believe Wells Fargo’s acquisition of these properties will provide the best possible outcome for the residents and the community. In the short-term, we expect little or no impact to tenants at Woodland Park Apartments or the community.”
Leading the agitation against rent increases is lawyer Chris Lund who is a tenant. He said that then news about change of ownership of the property has come as a “sigh of relief” for all the renters.

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There are no Bids for the Foreclosed Properties of Wells Fargo is a post from: US REO Properties

Defaulters Continue to Stay on in Foreclosed Houses as Banks Postpone Evictions

neha — Wed, 10 Mar 2010 10:04:32 +0000

It is a new trend – many defaulters are continuing to stay on in foreclosed houses as banks are postponing evictions. One such couple is Eugene and Patricia Harrison who last paid for their mortgage long 16 months ago. Their house is in Perris, California. Eleven months ago they were served with a foreclosure notice stating that the house would be sold off at an auction. Eight months ago a sharp letter came from an attorney saying that the lender was now the owner of the house. Three months later the bank asked them either to clear dues or clear out.

But they are still where they were in their yellow house that they had purchased seven years previously by paying $128,000. It has a marvelous view of the San Jacinto Mountains. Septuagenarian Eugene Harrison pointing to a mural depicting nature in her bounty they had painted on one of their walls he said, “We’re kind of on pins and needs, but who’d want to leave when you put this kind of energy into a house?”

Right across America householders are defaulting on their home mortgages but lenders are not pursuing the course of eviction and allowing many to continue to remain even without paying rent. Experts opine that the government pressure on the lenders is working and lenders are backing off evictions.
Moreover the inventory pile up in the bank portfolios in places like the Inland Empire of Southern California, Nevada and Arizona is making the banks shy of taking on more foreclosed units. If these enter the market then market prices would tumble further.

Another reason is that borrowers continuing to stay in their homes act as sort of caretakers. The property of the bank automatically gets looked after without the bank incurring extra expenses. The bank retains its public image also. Gary Kirshner of MorganChase said “If the person’s in the property, there’s less chance for vandalism, and they’re probably maintaining the house.”
Economists opine that this situation cannot last for long but this kind of grace period may permit some of the borrowers to regain their financial fortunes and avoid eviction permanently.

In the Inland Empire nearly 100,000 borrowers are living without paying rent as per the findings of John Husing, an economist. He calculated on the gap between delinquencies and foreclosures. Experts are saying that it is difficult to say with certainty how many are in this situation across the country. It is only the lenders and banks who know for sure the number of those who have stopped paying and have not been evicted.

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Foreclosure Evictions Easy in Maricopa County

neha — Tue, 09 Mar 2010 13:29:32 +0000

The new owner of a foreclosed house can make an application in the municipal court of the locality seeking forcible eviction. If the court gives the nod then the Sheriff’s office dispatches a constable to the house in question to make the occupant vacate it. In 2009 there had been 1,416 forced evictions in Maricopa County. In 2007 the number had been 280.

The entire process of foreclosure auctions is complicated. Cancellations and revocations by the lenders have been filed as per the reports of the county office. The figures are record breaking. A lender files a cancellation to stop foreclosure against the previous house owner prior to the house being sold at an auction. A revocation is filed by the lender to repeal or make void an illegal foreclosure sale that is declared invalid.
If the homeowners feel that they are forfeiting their house by illegal means they have the option of engaging attorney and fight the sale as well as the eviction.
Many of the new purchasers, taking over possession of recently bought foreclosed units know they legally cannot evict the previous owners until five days have passed since the time of the auction. But the new purchasers do not want the departing previous owners to damage the house and thus put pressure on their immediate and quick departure.

The previous owner being asked to exit should first ask for proof of the purchase deal. This might provide a temporary and brief respite but beyond that there is not much the previous owner can do once the house has been sold as the auction. The target is to make the whole operation less traumatic.
Diane Drain is a lawyer focusing on real estate. She said, “Homeowners are scared, and they don’t understand the law. They are listening to bullies at their door telling them they have to be out now. But if a homeowner can prepare and leave with some dignity, it will help them recover from a foreclosure faster.”
At the best the previous owners may get another five days grace. Lately lenders have been offering dollars to them to woo their cooperation. The plan that is being encouraged by Washington is termed cash-for-keys. The previous owners are given a minimum of $1,000 if they do not damage the house after surrendering it to foreclosure. New buyers are also offering cash so that the previous occupants exit gracefully. Some new owners are renting out the house to the previous owners.

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Foreclosures Moving Towards the Commercial Sector

neha — Mon, 08 Mar 2010 14:08:16 +0000

Just at a point of time when experts are arguing about the economy pulling out of the downturn another issue is cropping up – foreclosures moving toward the commercial sector.
According to a recent notification from the Congressional Oversigh Panel that from 2010 till 2014 loans worth $1.4 trillion on commercial properties will mature. Of these about half the loan takers have gone underwater with the value of their collaterals being less than the loan amount.

Attorney Bill Spangler of Riley, Prenn & Ricci of Weld in Eau Claire said the numbers of commercial foreclosures knocking on their doors have increased. He said, “Over the course of the last five years, just the raw number of foreclosures we’ve been dealing with has doubled at least.”
He cited the example of Wissota Green – a development project in Chippewa Falls. It had plans for constructing houses, condos as well as apartments. In 2009 December the property went back to the bank in a sheriff’s auction. Spangler explained, “The problem is those notes are starting to come due and no one out there, none of the banks are willing to refinance those loans, appraisals are coming in at significantly less than the amount of money the developers have into it.”

The oversight panel argues that the banks could endure losses up to $300 billion from the soured commercial property loans during the forthcoming years. Unlike the residential property crisis in this case of commercial loans, the local banks would be the worst sufferers.

Associate professor Bill Kryshak of UW Stout’s Department of Business said, “Most home loans were held by the larger banks, where 40% of these loans are held by what they stated were smaller community banks.” He places the blame on inflation of value of properties and also the weak economy that has led to more vacancies. He argued, “The reality is they believed properties had a higher value than realistically they did and as soon as they get a vacancy or have to lower their rents, they’re not getting enough cash to pay their interest, pay their mortgage.”

With property values having gone down and vacancies increased, new construction has slowed down. The time is not yet ripe to comment on what is happening at Eu Claire. In 2009 the city created a record with its new construction activity worth $200 million. Over half of these came from a single mega project through Luther Midelfort. Kryshak said, “The commercial industry will point out how they provide funding for schools, departments: police departments, fire departments and they do, they do, there’s no question about it.”

The congressional panel urgently suggests that major steps should be taken to avert another outbreak of bank failures. Regulations should be tightened and temporary relief should come from the government.

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The Meritocracy that has Failed to Keep its Promises

neha — Fri, 05 Mar 2010 14:20:39 +0000

Compared to what it was 60 years ago society has become fairer. The upper crust comprised of The Power Elite. If the father came from Harvard the son too had 90% chance of getting in there and the entire climb up the ladder was open for him. But with changing times opportunities have opened up for women, Blacks, Latinos and immigrants from Eastern Europe. The club culture is receding.

But in a meritocratic society the standards have fallen. Diversity has multiplied and there are talented people occupying the top posts but trust in this group has never been so low. This makes one doubt if society is better today than what it was more than half a century ago.

At that time the blue blooded folks with the best of connections walked around in the financial world. They drank during lunch and played golf in afternoons. Today the financial wizards comprise of the cream from Ivy League. In 2007 nearly 47% of the graduates from Harvard opted for financing and consulting. Yet can it be said that the banks are functioning better than what they were performing 50 or 60 years previously? The foreclosure crisis has exposed the myth about the calibre of the financial gods that grace the corridors of power in Wall Street.

In olden days the government comprised of party stalwarts. Today it is staffed by folks coming from public policy centres. But has that led to any improvement in administration?
At one time journalism was preserved for lovers of the working class who filed in stories and went behind bars. Today it is the niche for cultured pundits who publish stuff and hit the jackpot. But has the overall standard of journalism improved or has it gone down?

Meritocracy held out a promise that has not been fulfilled. The level of talent is higher but reputation is going down and down. Why?

Firstly talent definition is very narrow. Those who have amassed technical knowledge have been rewarded by the system. But this talent is not sensitive to the context. It has no link with empathy. This has led to smart folks making mistakes because they did not understand the context in which they were applying their talent. Social gaps have widened in another sense. For instance those with college education have become a class of their own stretched across the country. Previously if one held a top post in a bank in Murfreesboro he probably stayed in Murfreesboro. But today the intimate link is missing and thus bankers are failing to understand their clients. They want something and are being given something else – leading to chaos.

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Flipping is no Longer an Ugly Word in the Foreclosure World

neha — Thu, 04 Mar 2010 16:13:38 +0000

Once in real estate flipping was taken to be an ugly word but it is not so today thanks to a change of policy by HUD – Housing and Urban Development. It is cheering flipping so that sales pick up of foreclosed units – especially those that are in a bad derelict condition. The realtors are happy about this move and thinks that this will help to stabilize the struggling housing section.

At the time of the housing boom the flippers used to escalate the value of the houses and make staggering profits. But in reality nothing was done to enhance the value of the units. To contain this practice the department altered its rules so that flipping could not be indulged in with properties that were bought with FHA insurance coverage.

As per the previous policy a mortgage would not qualify for FHA coverage if the purchase was made within 90 days of the previous deal. This 90 day ban has been done away with from 1st February.

Brian Sullivan speaking on behalf of HUD said, “Since a large part of the mortgage activity taking place today is FHA, there were concerns that efforts to stabilize neighborhoods hard hit by foreclosure and abandonment were further challenged by this prohibition. This is about people coming in trying to stabilize neighborhoods by purchasing homes and actually rehabilitating them and then selling them to families that are low, moderate and middle income.”

Last January, foreclosures increased by about 4% in comparison to December 2009 with a rate of 1:102 in the Valley. It is the second highest rate among the metro regions with residents counting to a minimum of 200,000 according to the findings of RealtyTrac. The valley posted a month-over-month spike in foreclosures – being the only one in metro areas.

Jay Thompson a realtor from East Valley said, “There’s a lot of foreclosure homes out there that are in really bad shape. Allowing an investor to come in, buy the property, fix it up and then turn right around and sell it is a good thing because there’s a lot of people who want to buy a house, but they don’t have the knowledge or the money to fix it up.”

The foreclosure problem will not go away with removal of anti-flipping rules. But at least it is one step forward in the proper direction said Jay Butler of W.P Carey School of Business (Arizona State University) where he holds the post of an associate professor.

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Stimulus is not Helping in Slowing Down Foreclosures Among the Blacks

neha — Wed, 03 Mar 2010 14:24:26 +0000

Those Blacks who have equity but are poor in cash have been the worst hit by the housing crisis. The stimulus is not helping in slowing down foreclosures for them. Loan analysts studying modifications say that the stimulus money has not helped them – rather it is the predatory lending entities that have pocketed the lion’s share.

Obama initiated the Making Home Affordable Program – it being inclusive of his stimulus package of $787 billion package. The target was to help nearly seven or nine million borrowers struggling to keep their homes from the jaws of foreclosures by either refinancing or modifying to lower rates.
Greg Akili of National Association for the Advancement of Coloured People or NAACP, based in Los Angeles said words were easier than action because the banks are continuing to keep the people enslaved. Akili said, “The money should have gone to direct payment to homeowners, just like they did with the banks. They should have subsidized people who were close to foreclosure or in foreclosure so they could keep their homes right away.”
According to the findings of RealtyTrac in January there were more than 315,000 foreclosures – the term including all the stages of the process. Very few borrowers have been able to avail of assistance. Aili added, “Supposedly the help is there but the problem is it’s in the pipeline, and the pipeline is a funnel, so the closer it gets to the bottom, the more it gets slower and slower.”

As per the findings of ProPublica (non-profit) news agency, Bank of America, JPMorgan Chase, CitiMortgage and Weels Fargo together hold over 60%of 3.4 million mortgages that are qualified for HAMP plan. But they have given the permanent status to a miniscule number since the trial period began couple of months previously.

Jeffrey May of International Development and Planning said, “It’s not like … these organizations are being forced to undo these bad loans, reduce interest rates, or lower loan amounts. The participation by the banks is voluntary.” The entity is based in New Orleans, is minority owned and is dealing with planning and consultancy.

Many are of the opinion that although like other measures, HAMP may have been the brain child of Obama but like the others it has gone awry due to faulty implementation. Apart from the comprises made in the Congress the agencies supervising the running of the programmes have also set up issues. The prediction is that soon there will be mass evictions prior to massive

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