Posted By Larry Tolchinsky on April 2, 2013

Last Wednesday, the Federal Housing Finance Agency (FHFA) announced big changes for those seeking to modify their home loans: for loan modifications of mortgages connected to Fannie Mae or Freddie Mac, things are going to be much easier in a few months.  Weeks, really.

What is FHFA Doing About Mortgage Loan Modifications?

Both Fannie Mae and Freddie Mac will be offering a new program for home loan modifications beginning in July 2013.  For Fannie Mae and Freddie Mac home loans, mortgage servicers and lenders are going to be forced by the federal government to offer borrowers that are delinquent for 90+ days an easier road to a modified mortgage.

The borrowers have to meet certain criteria.  For one thing, they have to make three trial mortgage payments in a row to prove that they can make that modified mortgage payment.  And they can’t be late on these payments.

However, if they do meet the criteria set by FHFA, then these mortgages will be modified by the lenders without the borrowers having to provide financial or hardship documentation.

That’s right:  in the new “Streamlined Mortgage Initiative” program announced last week, eligible borrowers delinquent 90 days or more on their mortgage can get that home loan modified without all that paperwork — and the bank’s tricky evaluation process.

It’s almost like a magic wand:  poof! no messy gathering of files and folders filled with paperwork, no dealing with bank officials who are supposed to review the documentation and approve the modification applications.  Meet the criteria, apply for the program, get a new monthly mortgage payment amount, pay on time for 3 months, and voila! The mortgage is modified.  Permanently.

Why is FHFA Offering This?

The official word from the agency is that “… Fannie Mae and Freddie Mac will offer a new, simplified loan modification initiative to minimize losses and to help troubled borrowers avoid foreclosure and stay in their homes.” 

“The Streamlined Modification Initiative adds to the suite of home retention tools offered by Fannie Mae and Freddie Mac,” said FHFA Acting Director Edward J. DeMarco. “This new option gives delinquent borrowers another path to avoid foreclosure. We will still encourage such borrowers to provide documentation to support other modification options that would likely result in additional borrower savings.”

The goal here, really?  To cut the mortgage loan losses that are hitting Fannie Mae and Freddie Mac — together, these two government-overseen organizations provide the majority of financing for home loans in the United States.

You don’t recognize their names?  Understandable.  What these two federally-created entities do is buy home loan mortgages from banks after the banks have closed on the mortgage with the home buyer.

You, as the buyer of the home and the borrower on the mortgage, don’t need to approve this deal: your lender can decide all by its ownself to resell the note it made with you to either Fannie Mae or Freddie Mac.

Why do this?  

Fannie Mae and Freddie Mac do this in order to free up the bank to go out there and make more mortgage loans to more people wanting the American Dream of owning their own home.   Afterwards, Fannie Mae and Freddie Mac can stash that mortgage into its own files and keep it as an asset, or alternatively, throw that mortgage into a stash of similar loans, tie them up in a nice bow, and sell them in a bunch as “mortgage-backed securities”.

Larry Tolchinsky’s Tip:

This new program is going to help lots of people, and Florida home owners considering a mortgage modification or dealing with an underwater mortgage or a potential foreclosure will be considering this option.  The new Streamlined Mortgage Initiative is definitely written to help borrowers, not coddle the lenders.

That’s refreshing, isn’t it?

However, this isn’t the only choice for Florida home owners in a mortgage bind and it should be carefully weighed along with other options — like negotiating an individual deal with your banker, one on one.  Why?

These Streamlined mortgage deals aren’t going to be offering the best bang for your buck.  What’s being tossed off the table with all that paperwork is the negotiation to get you the best and LOWEST mortgage payment to meet every month.  As Leslie Peeler, Fannie Mae Senior Vice President, pointed out in a statement released last week (we added the highlighting here):

“Our goal is to give homeowners an efficient way to avoid foreclosure and remain in their home. This streamlined modification initiative will cut through the paperwork and simplify the process of securing a permanent mortgage modification for struggling borrowers.

It is important for homeowners that are current on their mortgage to do everything they can to avoid missing payments. A refinance can provide greater savings than a modification and would avoid the credit impact of a delinquency. In addition, homeowners should continue working with their servicer because the options that are available by documenting a hardship will often create a more affordable monthly payment than a streamlined modification will. Finally, all homeowners must know that we will be using all the tools available to us to screen for potential strategic defaulters.

We believe that this new option will help homeowners avoid foreclosure by creating a sustainable monthly payment in a simple, straightforward process.”

Which means that savvy Florida borrowers are still going to find a Florida foreclosure defense attorney who knows local banking practices and working together, negotiate that loan modification not in a cookie-cutter approach like the new Streamlined program, but instead based upon the unique circumstances facing that home owner.

Do you have questions or comments? Then please feel free to Chat with Larry in the comments below, at info@hallandalelaw.com, or (954) 458-8655. If you have a specific or personal situation, please call or email Larry because he can’t answer specific fact questions in general comments.

“I’m happy to take your call.”

Related:

• Failed Loan Modifications – Sue Your Bank?
• HAMP Lawsuits – Loan Modification Lawsuit: Borrowers Sue Banks for Failing to Do the Right Thing With Trial Period Plan Loan Modifications – Lenders Fail To Follow HAMP Requirements or Honor deals they offer Borrowers
• Florida Mortgage Loan Modifications Denials and Modification Appeals: Submission and Re-Submitting of Loan Documents To Get Your Deal Done
• Florida Bank Reject Your Loan Modification? It Seems to be Happening to Lots of South Florida Homeowners: What’s Up? Home Owners Are Suing Banks for Failed Modifications

1 Comment
Tags: Florida Real Estate Foreclosures, Foreclosure defense attorney, Foreclosure Help, Loan Modification, Mortgage foreclosure, Short Sale Counseling, strategic default, Underwater Mortgage

Posted By Larry Tolchinsky on March 26, 2013

Yesterday, Acting Director of the Federal Housing Finance Agency Edward DeMarco released news from FHFA that is great news for many financially-strapped Florida home owners who are fighting foreclosure:  finally, federal action is doing something about the force-place insurance mess.

FHFA Announces Federal Action to Halt Abuse of Home Owners Through Lender Placed Insurance Coverage on Property

From the FHFA Notice of March 25, 2013:

Protection of property values is important to homeowners, communities, and to the Enterprises. At the same time, provision of such insurance products at an appropriate cost is of concern as well. Reportedly, premiums for lender placed insurance are generally double those for voluntary insurance and, in certain instances, significantly higher.

FHFA recognizes that some greater risks are involved with lender placed insurance and that lender placed insurance carriers do not have the opportunity to underwrite the properties they insure, however, the multiples involved may not reflect claims experience and other measures. Loss ratios for lender placed insurance are significantly below those for voluntary hazard insurance and some states already have required or have considered rate reductions of 30 percent or more.

 What is the federal government going to do about this problem?  

For mortgages connected with Fannie Mae and Freddie Mac, the federal government will work to stop lenders and insurance companies from exorbitant insurance premiums on force place policies by banning the fees and commissions on this kind of insurance.  FHFA also plans to block the practice of insurance companies paying mortgage companies money for insurance business referrals.

This proposed federal regulation still has to go through the usual approval processes, it won’t be effective for over 60 days.  Meanwhile, state governments like New York are doing more.  In a statement released earlier this month, the biggest insurance company in the country, Assurant Inc.,  announced that it would agree to a $14,000,000 penalty and an undisclosed amount of restitution to individual home owners in New York after the state government there pursued claims of unfair practices in lender placed insurance in their jurisdiction.

To get the idea of how bad this problem is, consider that New York officials reported that mortgage lender J.P. Morgan Chase took in over $600 million since 2006 from Assurant in force place insurance deals.  

Larry Tolchinsky’s Tip:

We’ve been monitoring lender placed property insurance coverage abuse for over a year now.  Lender placed insurance is another name for force place insurance, and it’s a big problem in this country.  Too many Florida banks have been pushing high-dollar insurance policies onto home owners that are financially strapped, usually without bothering to discuss policy premiums or policy options with the borrower.  Additionally, investigations have found that there are ties between the banks and the insurance companies, one more instance of “you scratch my back, I’ll scratch yours” in Foreclosure Fraud.

The abuse has been rampant and often devastating for home owners fighting against losing their homes: getting the surprise of a huge jump in insurance premiums on the home that is at risk of foreclosure can be the last straw for an exhausted borrower.   This federal action is a long time in coming, and it may well be closing the barn door after the horse is gone for many Floridians.

Better late than never, though.  Meanwhile, for anyone shell-shocked by a force place policy and lender placed insurance premium, there remains the ever-present judicial course of action.  While legislators debate and legislation is written that may or may not become law, and while agencies work to implement new regulations, the steady course and reliable battleground for borrowers in Florida and across the country has been, and remains, the courtroom.

Do you have questions or comments?  Then please feel free to Chat with Larry in the comments below, at info@hallandalelaw.com, or (954) 458-8655. If you have a specific or personal situation, please call or email Larry because he can’t answer specific fact questions in general comments. 

“I’m happy to take your call.”

2 Comments
Tags: Bank of America Foreclosures, Florida Real Estate Foreclosures, Foreclosure defense attorney, Foreclosure Help, House foreclosure, Mortgage foreclosure, Property foreclosure, Short Sale Counseling, Wrongful Foreclosure

Posted By Larry Tolchinsky on March 19, 2013

Underwater: it’s a scary term for many real estate owners here in South Florida, and it’s a major concern for many who pay their mortgage payment each month, knowing full well that the amount on the home loan is so much greater than the current value of the home itself.

It’s a continuing dilemma:  is it financially wise to keep paying on that mortgage, or is it throwing good money after bad?  What are the ethical and moral considerations in a strategic default?  Is this a short term problem – by hanging in there, will real estate values return in time, making the question moot?

This month, CoreLogic issued a report that addresses some of these concerns:  in its Negative Equity Report for the fourth quarter of 2012, CoreLogic provides detailed analysis on the state of underwater mortgages in this country today.

Read the release concerning the latest CoreLogic Negative Equity Report online here.

From the report:

• while 200,000 mortgage holders saw their homes return to positive equity as home prices are rising, the speed with which this underwater turnaround is happening isn’t getting faster: instead, it appears to be getting slower.
• 38.1 million properties with a mortgage now have positive equity.
• 11.3 million of these positive equity mortgage holders have less than 20% equity.
• 21.5% of residential mortgage properties in this country are still underwater.
• 52.4% of Nevada residential mortgages are underwater, the highest in the country.
• Florida has the second highest number of underwater mortgages in the nation with 40.2% of Florida mortgages in negative equity.
• Five states total for a third of the underwater mortgages in the entire 50 states in this country:  Nevada, Florida, Arizona, Georgia, and Michigan.

 

Underwater mortgages remain a huge problem for property owners in our community.

Larry Tolchinsky’s Tip:

Underwater mortgages are a serious concern here in South Florida, and have been for many years.  Home owners must weigh the pros and cons of their situation, whether or not to face foreclosure or short sale when they have homes that have values so much lower than their mortgage amounts.  It’s a financial consideration, as well as a personal value decision.

What to do about negative equity for you and your family is a real issue for many people living in the Miami-Fort Lauderdale area, and there are many legal and personal issues to resolve for these home owners.  It’s a big problem in our community and it’s not going away anytime soon.

Consider these numbers from Zillow regarding our local area:

Broward County

39% of homes are underwater

23% of underwater homes are delinquent on their mortgages

Palm Beach County

37% of homes are underwater

21% of underwater homes are delinquent on their mortgages

Miami-Dade County

42% of homes are underwater

30% of underwater homes are delinquent on their mortgages

 

Do you have questions or comments?  Then please feel free to Chat with Larry in the comments below, at info@hallandalelaw.com, or (954) 458-8655. If you have a specific or personal situation, please call or email Larry because he can’t answer specific fact questions in general comments. 

“I’m happy to take your call.”

3 Comments
Tags: Broward Real Estate, Florida Law, Florida Real Estate Foreclosures, Short Sale Counseling, Underwater Mortgage

Posted By Larry Tolchinsky on March 12, 2013

Across the country, according to news reports, more and more home owners are opting to try and sell their homes themselves instead of working with a realtor or real estate agent to help them get their home sold.

Why?  One of the biggest reasons is cost: with real estate prices being what they are, many home owners are thinking that they cannot afford to have an agent or broker take a percentage of the sale.  The margin alone is a big incentive for many to try and sell their homes themselves, and like other parts of the country, South Florida may well start seeing more and more “For Sale by Owner” signs.

Tips for Florida Home Owners Wanting to Sell Florida Home by Owner 

 

1.  These Owners Must Know Their Home’s Market – Study the Neighborhood, Avoid Getting Emotional

Real estate agents and real estate brokers know their neighborhoods and communities, and many of them have worked in these locations for years.  By undertaking the sale of the home yourself, you must undertake the work that these professionals would have done for you.  This means that you will need to study the market in your area, learn the pros and cons of your property, and then establish a sales price that is reasonable for the area.  This can be hard to do if you don’t get your emotions out of the way, like being sad that you’re selling the family home and being angry that you’re not going to be able to set a sales price at the same amount that you would have been able to sell it for in years past.

2.  These Owners Must Get Their Home Physically Ready to Sell

Having a formal inspection will be part of any sale (or should be); however, just getting the home ready to sell means more than meeting problems with the property that the inspector points out.  Landscaping the lot for a good first impression is important.  Paint should be touched up, carpets should be cleaned, you get the idea.    The property that you are selling needs to look good to sell to a prospective buyer, and it needs to be in good condition to avoid claims coming back against you for defects in the future.

3.  These Owners Must Do Their Own Marketing

Real estate agents offer lots of established sales techniques on marketing properties to potential buyers; by opting to sell a home without a real estate agent helping here, the owner is going to have to advertise and market the property themselves.   There are some web sites that can help; signs on the street (like the image above) as well as local ads in the community papers, etc. can help.  However, “for sale by owner” may miss out on multi-listing service (MLS) references used by real estate agents representing buyers as well as sellers in the local market.

4.  These Owners Must Meet Legal Requirements of Proper Title, Proper Inspection, and Proper Appraisal

In the sale of real estate, professionals are involved in various industries that dovetail in the sales and closing process:  title companies and title insurance comes into play; licensed inspectors must do their work as required by law and lenders; and appraisers will study comparable properties and work out their opinions on the sale.  Omitting the real estate agent does not omit the need for other professionals to be involved in a Florida home sale.  Cutting out the real estate agent means the owner has to do the work here regarding these dovetailing industries that the agent would have undertaken.

5.  Lawyers and Legal Documents Especially Important in For Sale By Owner

Selling a home means transferring real estate and this requires legal documentation in the real estate records.  Certain laws must be met and they will include specific legal documentation and certain language within that documentation.  When an agent isn’t in the loop, the real estate attorney’s job becomes that much more important in a For Sale by Owner situation.  This means reviewing the contract for sale, as well as closing documents, to make sure that the seller is protected under Florida law.   Sure, there are those document packages sold online and at office supply stores….

Larry Tolchinsky’s Tip:  For Sale by Owner is an enticing alternative to selling a home here in South Florida, particularly by home owners wanting to salvage as much of their bottom line as they can.  Yes, property is sold by owners without the assistance of real estate brokers or real estate attorneys all the time.

However, in today’s real estate market this can be a very, very risky move.  Florida contract law and Florida real estate law has been ignored by many over the past few years, and now we’ve got to fight against all the mud that has been thrown into the legal gearshifts.  Sellers can think they have sold a home and learn months or years later that the buyer has claims against them.  Maybe the home is damaged; maybe the title is flawed. Maybe there are other claims being asserted against the land.

Having professionals involved in the sale of a Florida home may cost more in the short run but it may well turn out to be the cheaper alternative in the long term.  Be careful out there.

Do you have questions or comments?  Then please feel free to Chat with Larry in the comments below, at info@hallandalelaw.com, or (954) 458-8655. If you have a specific or personal situation, please call or email Larry because he can’t answer specific fact questions in general comments. 

“I’m happy to take your call.”

1 Comment
Tags: Broward Real Estate, Florida Condominium, Florida Law, Florida Real Estate, Florida Real Estate Foreclosures, Foreclosure defense attorney, House foreclosure, Short Sales, strategic default

Posted By Larry Tolchinsky on March 7, 2013

Florida home owners with underwater mortgages as well as Florida borrowers and Florida home buyers interested in short sales are all watching the Florida real estate housing market carefully.  When something like the latest Fiserv Case-Shiller Index on national home trends is released, many people here in South Florida take note.

Today, Fiserv Case-Shiller released a study that predicts home prices to rise in 2013.  That’s right:  according to Case-Shiller, we are in the midst of a housing recovery.  Their numbers show, looking at the nation as a whole, that home prices should rise around 3.3% each year, starting in the 3rd quarter of 2012 and continuing through to the same time four years from now, in 2017.

According to Case-Shiller research, in 2012 the nation saw home prices and home sales rise — and this is based upon their analysis of over 380 housing markets around the country using numbers from FHFA (Federal Housing Finance Agency) and Fiserv.  

To read the Case-Shiller study in detail, go here.  From the study:

“2012 was the first year since 1997 that the housing market has resembled something recognizable as normal. For the past 15 years, home price changes and sales volumes have either been boosted by a bubble mentality or crushed by crash psychology,” said David Stiff, chief economist, Fiserv. “Back in 1997, housing prices grew 3 percent, just below the 5 percent long-term average rate of appreciation. From 1998 to 2006, prices appreciated at levels above 5 percent, with double-digit price increases in many of those years. Then, after 2006, the market collapsed as euphoria turned to panic. It took until the end of 2011 before housing markets finally started to stabilize. The latest Case-Shiller results show a return to a historically normal pace of price appreciation in the last year.”

Larry Tolchinsky’s Tip:

This news is good for the country, and many people will find encouragement in this new study.  However, as the Business Insider at AOL.com points out, these numbers do not give all the story for all the nation.  Taking the Case-Shiller study apart, the Business Insider released its own list of the “ Fourteen Worst Housing Markets in the Next Five Years” and both the Fort Lauderdale area and the Miami area made the top ten.

According to their analysis, in the Miami area home prices are 48.4% of what they were in 2007, for example.  That makes for a whole lot of underwater homes in South Florida.

Looking Into the Crystal Ball to Predict the Future of Florida Real Estate….

Meanwhile, there are experts out there who do not share this optimistic view of the future housing market.  Consider economist Peter Schiff who warns in Forbes magazine that more homes are being built than the country can afford (investors are buying lots of them from builders now) and that banks are still sitting on lots of homes in inventory particularly in judicial foreclosure states (like Florida).  In the Orange County Register, Reason Foundation’s director of economic research Anthony Randazzo said that all of this optimistic hoopla could be a sandcastle waiting to crumble, since no one can point to where the things that caused the housing bubble and resulting market crash have been fixed.

For the individual in Florida looking to buy a home, sell a home, or stay in their home despite threats of foreclosure, the desire to find a strong rock to stand upon and ride out these troubling times is intense.  It would be wonderful to be able to point to one expert or one study and state that the truth can be found there. However, life isn’t that easy in Florida today.

The reality is that Florida laws have been disrespected for many years and Florida land titles are in shambles.  Buy a Florida home today, be careful you have bought more than a piece of paper and a lawsuit.  Florida courts remain bottlenecked with foreclosure actions filed years ago by banks, and now courts are moving to rocket dockets that risk huge due process violations just to get that clog lifted from court dockets.

Banks are still bringing robots to work: now we have robo-witnesses in Florida courtrooms testifying on documentation filed by robo-signers in old foreclosure fraud cases.  Sub-prime mortgages are out there (does anyone watch Sister Wives?).

Optimism is important to keep us moving forward.  In Florida real estate, however, moving forward in this legal muck definitely needs to be done very carefully, and one step at a time.

Do you have questions or comments?  Then please feel free to Cht with Larry in the comments below, at info@hallandalelaw.com, or (954) 458-8655. If you have a specific or personal situation, please call or email Larry because he can’t answer specific fact questions in generala comments. 

“I’m happy to take your call.”

1 Comment
Tags: Bank of America Foreclosures, Broward Real Estate, Florida Condominium, Florida Real Estate, Florida Real Estate Foreclosures, Foreclosure Help, Property foreclosure, Short Sale Counseling, Underwater Mortgage