Bank of America’s Foreclosure Fight Plan

Wednesday, March 24, 2010

SUSIE GHARIB: Welcome relief today for some people who can’t make their mortgage payments if they’re with Bank of America. Tom, under pressure from state attorneys general, the bank agreed to forgive as much as 30 percent of the loan principal. Today’s announcement comes as part of a settlement with the state of Massachusetts.

TOM HUDSON: And you know Susie, lots of strings are attached though to qualify. In fact for one thing, relief is only for certain types of mortgages. The homeowners also have to be at least 60 days behind on their payments and significantly underwater on those loans. Now just 45,000 people are eligible nationwide.

GHARIB: And those loans could be reduced by a combined total of $3 billion. The plan goes into effect in May. Now leading the negotiations with Bank of America was Massachusetts Attorney General Martha Coakley and she joins us now. Attorney General Coakley, thank so you much for coming on the program.

MARTHA COAKLEY, MASSACHUSETTS ATTORNEY GENERAL: Good evening.

GHARIB: Let me begin by just congratulating you on the deal. Forty five thousand people will be helped by this agreement. But my question is, is that enough? We report on our show all the time that there are millions of people who are under water in that they owe more to banks than the value of their home. Is this enough?

COAKLEY: Well, it is certainly a good start, because we’ve tried with other attorneys general to push this idea that modifying loans, reducing principal so that you get modifications that actually work to keep people in their homes, this is the first time that people have really been willing to do this. And so Countrywide, those who have Countrywide Mortgages will benefit, but our hope is that other servicers, holders of notes will recognize that this is really what has to happen to make sure that we stop the spread of foreclosure and we start to turn this economic crisis around.

GHARIB: Well, that’s a good point. Do you think that your agreement with Bank of America will be a prototype for other lenders and even for the Federal government for the Treasury to do something similar?

COAKLEY: Well, we hope so because for several years now, we’ve worked on foreclosure rescue schemes, on bringing lawsuits. The attorneys general had an agreement with Bank of America, with Countrywide in the past. But even though the servicers have said they’ve been willing to modify loans, we’ve seen somewhat half hearted efforts even from the Federal pressure. This is an agreement that they will do this and we believe it’s commercially reasonable for them to do it, rather than to have homes foreclosed upon. And we hope that it finally is beginning to dawn that this is what should happen to turn this around, keep them in the home, but also stop the greater threat of foreclosures, make sure we don’t have the abandoned property and keep people back, you know, paying a monthly amount so that we really stop the trend that we’ve seen that’s really underlying the root of a lot of this economic crisis.

GHARIB: You mentioned about the half hearted efforts. Even in the case of this deal with Bank of America, what can you do to make sure that they really do modify loans in this way?

COAKLEY: Well, I think it’s clear that as a result of our investigation and in fact that we were looking for this remedy. We were prepared to bring suit if we weren’t able to reach this agreement. And some of the money that comes to the commonwealth are for monitoring and implementation of this agreement. We believe very strongly that this has to happen. It has to happen in a way that actually keeps people in their homes. So we’re committed to it. And the fact that it is going to be national I think will have both other servicers as well as other attorneys (AUDIO GAP) people in their homes not just modifying those foreclosure in another six months or a year.

GHARIB: So what’s next? What’s your next move? What else can you do and other states do to help distressed homeowners who are not part of, who do not have loans with Bank of America, but what more can you do to help distressed homeowners?

COAKLEY: Well, as we have looked at the range of options, as we have in Massachusetts brought a suit against Freemont and a suit pending against Option One, we are continuing to focus on both holding accountable those who made these kinds of loans and I should point out that they’re not just sub-prime loans here. These were loans that were made in a variety of ways to people who might have had more, they were credit worthy borrowers. They might have had less risky financial products and I think we’re going to continue to look at those who have made the loans, those who are servicing the loans, where the sticking point has been. Let’s get the servicers together with the holders of the notes to say this is what really should be happening, to continue this push to really stop the spread of foreclosures. So we’re going to continue to stay active with many of the other attorneys general and I know the Federal government through its program in working in conjunction with attorneys general looking at mortgage fraud, but also looking at ways in which we start making these remedies be real remedies to keep people in their homes.

GHARIB: Certainly a lot more work to be done. We appreciate your coming on the program to tell us about this first phase. Thank you very much.

COAKLEY: Thank you.

GHARIB: My guest tonight, Martha Coakley, Massachusetts attorney general.

The grant will allow the Department of Neighborhood Development to support redevelopment of up to 275 foreclosed homes in Dorchester, East Boston, Roxbury, Hyde Park and Mattapan.

Buyers of foreclosed properties in those neighborhoods may be eligible for low-interest loans or grants of up to $50,000 for purchase and renovation costs.

“This award accelerates our ability to impact the foreclosure challenges that were facing,” said Mayor Thomas M. Menino in a statement. “We’re making important progress, but our neighborhoods are still in danger.”

Boston was one of 482 applicants requesting over $15 billion from the U.S. Department of Housing and Urban Development in foreclosure funding. Since passage of the American Recovery and Reinvestment Act, the city has received nearly $280 million in formula and competitive grants as well as bond allocations.

The NSP initiative was created as part of the Housing and Economic Recovery Act of 2008, designed to boost local economies through the provision of resources to purchase and rehab foreclosed homes. Boston received $4.23 million in 2009 during the first funding round, and later received a matching grant from the state. The latest award brings Boston’s total federal foreclosure funding to more than $21 million.

The campaign seeks to allow Boston’s neighborhoods to recover from the nationwide foreclosure crisis through targeted programs that support existing homeowners while adding new buyers to the market, among other things. Under the umbrella of this initiative, DND has overseen the direct acquisition of 33 units of housing, and is in the process of negotiating the purchase of more than 100 others from banks.

People here say they feel helpless and trapped.

There have been more than 1500 foreclosures here in the past five years – some of it questionable lending practices – and there was anger tonight against banks.

Most people are looking to find a way out.

The bus says “All Occasions” and this one is a tour of the foreclosed homes of Brockton, Massachusetts, a city that’s been hammered by the foreclosure crisis that’s affected much of this country.

The Brockton Interfaith Community coordinated the bus trip so that local leaders could show federal reserve board officials firsthand what the City of Champions is up against.

“(There’s an) abandoned house here, abandoned house here, but you’ve got a homeowner who lives here. A single family up here, a single family over there, people that are taking care of their property (here),” said Robert Jenkins, Director of Housing for the group Building a Better Brockton.

Stop after stop looked like this boarded up home on Highland Street.

Just two doors down, a three family home – and more of the same.

Then to a hotel.

There are currently 91 families in Brockton who had to leave foreclosed homes who are living in hotels.

Laid off teacher Nylton Andrade’s home was on the tour – his mortgage due November 1 as he transitions into foreclosure – his house is in jeopardy and he spoke with federal officials on the bus.

“It’s just awesome, it’s just awesome to actually see them on the bus and connect eye to eye,” Andrade said.

The tour over, Federal Reserve Board officials and others got off the bus.

Their impression?

“I think it was very interesting and very sobering. Obviously there are a lot of foreclosure problems in Brockton. This tracks with conditions we’ve seen in a number of areas around the country,” said Sandra Braunstein Director of the Division of Consumer and Community Affairs for the Board of Governors at the Federal Reserve Board in Washington, D.C.

Then it was time for the people of Brockton to call for change in how the the way foreclosures are handled and several hundred community members did, filling St. Patrick’s Church.

“Will you amend this bill so that it helps the millions facing foreclosure now?” Christine McDonald of Brockton Interfaith Community who asked Massachusetts Congressman Barney Frank, the Chairman of the House Financial Services Committee.

Rep. Frank answered several questions at this, the last of nine federal reserve hearings around the country – and the only one in New England.

“We are trying to free up some more money. I have been pushing the Obama administration to take some of the money that’s being repaid in the TARP program in interest and dividends, we’re making a profit on some of that and make it available to help with these modifications,” he said.

Congressman Frank said he hopes there will soon be a program to bring $2 billion in loans to homeowners who have mortgages but who lost their jobs.

It will extend term of their loan.

Even though Brockton leads the state in foreclosures, it also leads the state in home sales.

But leaders know there’s still a long way to go.

Other cities visited as part of the federal reserve tour include Decatur, Illinois, Cincinnati, Ohio and New York City.

Rising unemployment and more adjustable-rate loans resetting to higher monthly payments are boosting foreclosure filings in the region.

The number of homeowners in the Boston metropolitan area who received default notices – the first step in the foreclosure process – swelled to 7,962 in the third quarter, a 19.4 percent increase over the same period last year, according to RealtyTrac, an online marketplace for foreclosure properties

Despite the grim news, Greater Boston appears to be in better shape than other parts of the country. While between 3 and 5 percent of homes in some parts of Nevada, Florida and California faced foreclosure from July through September, less than one half of one percent of the Boston area’s homeowners received a foreclosure notice during the same period.

Still, the number of default notices increased by 10 percent in Greater Boston over the second quarter. This, despite a law that went into effect last May that requires lenders to delay initial proceedings in an effort to work out a new loan.

In late March of this year in the case of U.S. Bank v. Ibanez, Massachusetts Land Court Judge Keith C. Long issued one of the most controversial rulings in recent years which has called into question hundreds if not thousands of foreclosure titles across Massachusetts.

The Facts

In the Ibanez case, the Land Court invalidated two foreclosure sales because the foreclosing lenders failed to show proof they held ownership of the foreclosed mortgages through valid assignments. In modern securitized mortgage lending practices, the ownership of a mortgage loan may be divided and freely transferred numerous times on the lenders’ books. But the documentation (i.e., the assignments) actually on file at the Registry of Deeds often lags far behind. The Land Court ruled that foreclosures were invalid when the lender failed to bring the ownership documentation (the assignments) up-to-date until after the foreclosure sale had already taken place.

The Ibanez decision has called into serious question the validity of any pending or completed foreclosure where the lender did not physically hold the proper paperwork at the time it conducted its auction. The mortgage industry has criticized the decision as form over substance. The judge is presently reconsidering the ruling, but whatever the outcome, the case will likely end up before the Massachusetts Supreme Judicial Court given its far-ranging impact.

What can you if you are affected by the Ibanez ruling? If you are a homeowner facing foreclosure, you now have a powerful tool to delay or stop the foreclosure sale. Check the Registry of Deeds online to see if your lender has timely recorded the proper assignments, and send a written request for the loan documents. It may be confusing to piece together the chain of custody of your mortgage. If the foreclosure auction has already taken place and you are being evicted, you can request the loan documents in written “discovery requests” filed with the court. You could also file a lawsuit to enjoin the foreclosure.

If you are contemplating purchasing a property out of foreclosure or are selling a previously foreclosed property affected by an “Ibanez” issue, check if there’s an existing title insurance policy on the property, and ask the title company to insure over the issue. Some are willing to do this. Others are not, however. The other option (albeit expensive) is to hire an attorney to file a Land Court “quiet title” action to validate the proper assignment of the mortgage loan, assuming you can track the documents down and they were not backdated. You can also try to track down the foreclosed debtor and obtain a release deed from them, assuming you can track them down and they cooperate.

If you are facing foreclosure and need help getting through the legal paperwork maze, contact City Life/Vida Urbana. They are Boston based. Other efforts are starting up all over eastern Massachusetts, too.

If you are buying foreclosed property, get a lawyer, please! (I know you all hate it when lawyers tell you to get a lawyer, but this is a time when you really need one.)

Ibanez is going to make foreclosure slower and more complicated. But, it may also force lenders into doing things right.

Have you ever read your mortgage documents? If you haven’t, pull them out of that dusty old box and take a look. There is a process; lenders need to follow it. If they don’t, the next person buying the house may not have proper title. Remember that you never buy a house; you buy a title.

Are we headed for a paperwork mess of mammoth proportions? Will Ibanez keep it manageable?

Though he came too late to see any of the speakers’ presentations, much of Monday’s foreclosure prevention seminar at Marshfield Town Hall was familiar to Marshfield resident Jim Nielsen.

And not only because he had been to a similar seminar months earlier. Many of the issues and obstacles discussed by the nights’ presenters were familiar to Nielsen because he has experienced them himself over the past few years.

So, when Joseph Leonard, counsel for the Massachusetts Division of Banks, warned about the complexity of banking infrastructure and the difficulty of trying to maneuver the system without help, Nielsen would have agreed to that. He said he spent at least two years trying to hold off the foreclosure of his own home.

And when Dan Condon, from the attorney general’s office, warned the audience of the scammers and con artists that would try to take advantage of people who are getting foreclosed, Nielsen could have shown the visitors the stack of mail he had received offering him a swift, too-good-to-be-true solution to his problem.

And when Deirdra Hall, from Quincy Community Action Programs, gave a speech about the various ways she could help homeowners try to get their loans restructured, Nielson had been through that, as well. In fact, it was Hall who helped put him on the right track, he said.

According to the Plymouth County Registry of Deeds, in the first six months of 2009, 28 properties in Marshfield received foreclosure notices. In Scituate, where, according to Hall, property values have not dropped as far, the number was 13. Countywide, the number of foreclosure notices was 1,106, up 37 percent from 701 in the same period last year.

Nielsen is a self-employed construction worker – he owns Seacoast Construction. He said he received his foreclosure notice after the interest rate on his adjustable rate mortgage increased at the same time the construction business slowed down.

It got so bad that the bank actually named a foreclosure date. Nielsen’s home was scheduled to go up for auction this July. Notices ran in the newspaper.

At a loss for what to do, Nielsen attended a seminar foreclosure prevention seminar hosted by State Rep. Jim Cantwell, who represents Marshfield and five of Scituate’s six precincts. That meeting was one in a series of similar meetings hosted by Cantwell.

“It wasn’t pretty, people were upset,” Nielsen said.

Nielsen attended the tail end of the July 27 meeting to offer his support to the program that he said had helped put his situation back on track. Because Hall knew the system, he said, she was able to get Nielsen’s foreclosure held off.

“What little (work) it was, it was a lot of help,” Nielsen said. “She knows what to do.”

Nielsen said he was glad to see that the most recent meeting was well attended, meaning that people were getting help. He estimated that the meeting months ago had only been attended by six other people. The July 27 meeting had at least 21.

“If two of us get help because of this, it was well worth it,” Nielsen said, looking around at the group of visitors who were asking advice from the night’s speakers.

There was Joan Dowd of the Marshfield charity, Sowing Seeds, getting information to use when helping residents with housing troubles.

There was the Bridgewater woman, who was in the process of reorganizing her mortgage after her husband had lost his job.

“I wanted to know what my options were,” she said. “This was very helpful, at least we have a contact person we know is on our side.”

There was a Brockton couple that had signed up for a loan they never could have afforded. The loan, they said, was based on an inaccurate valuation of the property.

Both the Bridgewater woman and the Brockton couple asked not to be identified.

Cantwell said the goal of the night was to provide people with information and contacts to avoid trouble. He had invited Nielsen to show his story of relative success to others.

“I’m pleased to learn that we’re helping to keep people in their homes, here in Marshfield and Scituate,” Cantwell said.

Source: WickedLocal

If you’re selling or buying a home, chances are you’ve noticed a change. In Massachusetts, that change is big.

Esmerelda Thornton is a homeowner counselor at the Neighborworks center of Worcester. Her job is to help people facing foreclosure and first-time homeowners perhaps looking to buy those foreclosed homes.

According to the Warren Group in a report-released Wednesday, Massachusetts single-family home sale prices have fallen nearly 16 percent from this time last year. It’s no surprise for realtor George Russell.

He’s says the foreclosure crisis not only in Worcester – but across the country – has changed the market completely. Essentially foreclosure sales with low-ticket prices have set the standard for any home sales in region.

Governor Deval Patrick announced a state clearinghouse that will link bank-owned properties with organizations like non-profits.  The non-profits are expected to renovate and sell the Massachusetts foreclosures to families that meet certain income requirements.  

According to the announcement, after completing eight hours of homebuyer counselling, up to $75,000 per home will be awarded; $25,000 towards a downpayment, and $50,000 for renovations and improvements to the property.  The money can also be used to demolish blighted properties.  “The federal money is designed to flood our cities with new resources to combat foreclosures,” said Lucy Warsh, a spokeswoman for the Boston Department of Neighborhood Development.

Buyers interested in purchasing in a number of areas such as Dorchester, East Boston, Mattapan, Hyde Park and Roxbury will be eligible for the financing.  For more information, check out the Massachusetts Executive Office of Housing and Economic Development (EOHED) website.

As part of their coverage of foreclosures in Boston, they’ve highlighted three Boston foreclosures that piqued their interest:

$289,000 | MLS # 70874972
4 Story Street
Boston, MA 02127

$325,000 | MLS # 70817977
367-369 MARKET
Boston, MA 02135

$393,000 | MLS # 70847521
15 Gardenside St
Boston, MA 02131

For more information, you can check out their website.