Bank Properties

All around Cleveland, foreclosed properties are being torn down, rebuilt, or used for other purposes.  This is an excellent video to see what Cleveland neighborhoods are doing to fight the aftermath of foreclosure.

Some of the biggest banks in the United States are about to settle state and federal claims over faulty, and fraudulent foreclosures.  The target date for the settlement with Bank of America, JPMorgan Chase, Citigroup, Wells Fargo, and Ally Financial is Wednesday, July 13, 2011.

The settlement is expected to exceed $20 billion, forming state and federal funds to provide relief to mortgage borrowers.  The case has been focused on how banks treated customers during the rise in mortgage defaults.  This case is just one in many cases regarding issues of negligent, faulty, and possibly criminal activity related to mortgage and foreclosures.

Some of the issues that are related include compensating people whose homes were improperly seized.   Other issues include the institution of funds for states including Ohio to resolve civil mortgage complaints as well as a separate federal account that would require them to provide a specific amount of mortgage relief to borrowers.

I will be thrilled when this is settled as it is just one more piece of the puzzle that we need to put the Ohio economy back on track, but I am sure that whether they meet the deadline of Wednesday or not, we will be hearing about this topic for quite some time to come.

Ohio has been caught up in another case involving JPMorgan Chase which affects our economy and the ability for the state and local municipalities to create jobs and income for Ohio residents.   JPMorgan Chase is going to pay out in total $211 million, a number that is so high I can’t even imagine what that amount is, after admitting that one of its divisions rigged dozens of bidding competitions to win business from state and local governments.  Unbelievable!

Bid rigging means that the bidder has a chance to see competitors bids before the final bid is cast, giving the bidder an unfair advantage on the bid.  Why is this bad for states?

Banks help municipalities invest the money they raise from bond offerings to earn interest before they use the money for various projects.  Competition allows the municipality to earn the best yield possible.  By bid rigging, the competition is not real, and it denies the municipality the best yield resulting in less income earned.

Complaints were filed by the SEC, the IRS, bank regulators and state attorneys general.  Part of the money is paying off a civil fraud charges.  From this amount of money, Ohio will receive $1.2 million, and the City of Cleveland, the Columbus Regional Airport Authority, and the Ohio Public Facilities Commission will also receive money.  Just one more case of the big banks taking money out of taxpayers pockets that has contributed to the economic recession.

One of the largest impacts on the economic recovery of states including Ohio are the new stricter rules governing government mortgage agencies like Fannie Mae and Freddie Mac.  Many people who would have fit the borrowing criteria 5 years ago to buy a home in Ohio are no longer considered qualified by the much stricter new rules.

This affects both the buyer and the seller in both ends of a deal in selling homes, whether they are Ohio foreclosure homes, or just regular homes for sale.  Sellers who are selling homes at a fraction of what they paid for them, are not even able to get a buyer approved to pay for that amount.  Buyers who normally would have qualified for a loan through a mortgage lender, are not being approved even if they have good credit.  Their circumstances are just not good enough.

This causes a huge delay in the Ohio economic recovery that we all need to get back to better paying jobs and also to get back on the road to a more prosperous future.  Many of the government policies, meant to help, are just acting in conflict with each other.

Believe it or not, there are a record number of people who want to buy homes in Ohio.  However, more than usual are being turned down for mortgage loans.  This is on top of another delay caused by federal, state, and local investigations into “fraudclosure” or mismanaged or criminal neglect and oversight of foreclosure practices in several banks and banking contractors.  And no matter who is to blame, the Obama sponsored loan modification program has fallen short of goals.

“Giving out unsupportable mortgages was a disaster, and now the danger is overreacting and making the standards excessively high,” according to Joseph Stiglitz, a Nobel prize winninng economist and professor at Columbia University in New York.

Banks usually follow the standards that are set by Fannie Mae and Freddie Mac because these are loans that the agencies will then purchase and package into bonds.  These companies, along with the Federal Housing Authority back about 90% of loan originations.

Government programs like the Home Affordable Modification Program (HAMP) have mostly helped keep existing home owners out of foreclosure, here in Ohio and elsewhere in the U.S., but they have not had the success rate hoped for by the Obama Administration when the program was begun.

Right now the entire fleet of 50 state attorneys are investigating the banking industry foreclosure practices which is holding up the current batch of foreclosures in the works which may work in some homeowners’ favor, allowing them more time to catch up with their bills.

Recently, indictments were brought in Cuyahoga County against 9 employees of Argent Mortgage, Inc.

Due to the large amount of families facing financial crisis due to foreclosure and bankruptcy, Sesame Street has come out with a series of 5 videos to help explain your family’s financial difficulties to your children in a way that won’t frighten them, leading to more issues.  Sesame Street calls the series Families Stand Together: Feeling Secure in Tough Times and they also have a website that has other activities and links for families facing job loss, foreclosure, and bankruptcy, or just having to move because of financial issues.

Children are well aware when parents are not happy, are arguing, or are under stress which losing a job or a home definitely qualifies for.  As usual, Sesame Street does an excellent job of providing help through characters that your children already trust through their television shows, videos, and books.

Sesame Street – Families Stand Together: Tough Times

I have been closely following the news about the Cuyahoga County Grand Jury Indictment of the Argent Mortgage employees, and frankly, as far as I am concerned, they are just a drop in the bucket of all the fraudulent mortgage activity that had been allowed over the last few years.  If this financial crisis had not happened, who knows how much more mortgage fraud would be going on right now.

I find it insulting, to say the least to know that American banks are taking advantage of prospective buyers just so that their employees can earn a few extra bucks, when by their actions they can destroy the lives of numerous desperate families that are already on the edge.  Did the banking crisis cause the recession, or did the recession cause the banking crisis?  We will most likely never know, however, it is sure that the banking crisis is a factor, if not the cause of the long continuation of the problems facing the American financial system, and several specific states, Ohio being one of the most affected by the current mortgage, foreclosure, and bankruptcy issues.

So many companies in Ohio have had to close, or consolidate, close some of their operations, let people go, or lay people off.  These people in turn, then cannot pay their mortgage, and go into foreclosure.  It is a never ending cycle, that needs to be fixed for our Ohio economy to get better, and the rest of the country too.

Most families in Ohio are sitting on pins and needles, waiting for the next shoe to drop, hoping and praying that their jobs will stay intact for another few months.  I personally would like to see a lot more indictments to companies like Argent, whose employees thought it would be good fun to torment hardworking American families.

A large fix for the banking industry was settled today.

Bank of America announced today that it will pay $8.5 billion to settle claims related to sales of poor quality mortgage securities through its Countrywide division.  Bank of America CEO Brian Moynihan said that the settlement would minimize “future economic uncertainty” in the banking business and “clean up the mortgage issues largely stemming from our purchase of Countrywide.”

“We have said consistently if people are reasonable and can get to a reasonable assessment of their claims and it’s in the best interest of shareholders, we will settle,” Moynihan told Wall Street analysts in a conference call.

The settlement is subject to court approval and covers 530 trusts with original principal balance of $424 billion.

Citi analyst Keith Horowitz said the settlement, which amounts to only 2 percent of the original principal balance, removes one of the largest investor risks for Bank of America.

Shares of Bank of America Corp. jumped more than 4 percent, or 48 cents to $11.30 before the market opened, with investors happy that the bank can put very big uncertainty behind it.

Investors may now be more confident that they can get similar concessions from other major U.S. banks that created markets for mortgage-backed securities with questionable pedigrees.

While I am glad to see the financial world begin to stabilize itself, the settlement still begs the question about how much the banks are doing to help people during the foreclosure crisis.  While Bank of America is willing to settle with large banking clients, what about all the mortgage customers who have lost their livelihood while the banks were foreclosing on their homes.  Consumer confidence will continue to be shaky until the foreclosure rate goes down, and people start buying new homes, and building new homes.  Until then, Ohio and the rest of the U.S. will be buying and selling foreclosed homes, foreclosed properties, and foreclosed condos.

Until then, you can get a real bargain on a short sale in Ohio, or a foreclosed home or office building.  Hopefully, with the banks improving their financial status, the rest of us can do the same.

Although most of this video takes place in Los Angeles, problems like this are being caused by foreclosures all across the United States, including Ohio.  I have heard many complaints by local realtors that by the time they get a buyer for a house, the house is in such bad condition that it isn’t saleable any more.

The big banks are not set up to be caretakers or landlords of buildings.  And the homes and condos stay vacant so long, that neglect alone is a problem, not even counting the possibility of vandalism.

For many people, voluntary repossession becomes the last (desperate) alternative prior to bankruptcy. Are they one and the same? No, they’re not. When you volunteer repossession to your mortgage lender, you’re still liable for the shortfall between what the property will be sold for and what you owe.

Bankruptcy, a severe option for many, largely wipes out the debtors need to repay debt to creditors. This shouldn’t be viewed as the easy option as going bankrupt does have its negative consequences. However when there’s nothing more to lose (after all … you can’t get lower than ‘nothing’) it can become the more attractive alternative to remaining in debt for years to come.

Voluntary Repossession Of A House

The voluntary repossession of a house involves (pretty much) the handing over of the keys and ownership of your home. However that doesn’t mean that you can then walk away, worry free. You’re still expected to pay the mortgage until it’s sold. Repossessed houses usually find their way onto property auctions, as a means of a rapid turn-around.

This often results in your home being sold for considerably less than its (current) market value. That then leaves you with a larger shortfall to pay out than if you’d successfully sold your home through private means. You will also need to check out your mortgage indemnity guarantee (if you have one) as insurance companies are within their rights to seek redress (i.e. being repaid by you what they cover via the indemnity) once the dust has settled.

The mortgage company can also claim back costs associated with the resale of your home. All auction houses charge a fee, there may have been costs generated from securing or repairing the property, the list goes on. There’s also capital gains tax to consider. Has your home increased in value since you bought it? Do you live in it? Both will need due consideration, otherwise you can just add more money onto the overall debt.

In essence voluntary repossession doesn’t look too good on paper. However, despite the above, it may well be the better alternative than dragging yourself deeper and deeper into debt. For many, volunteering the possession of their home relieves some of the worry associated with defaulting on their mortgage.

Generally, individuals don’t default lightly and it’s largely as a result of a change in financial circumstances. If you’re currently at a crossroads with your home and financial situation, seek help and advice. For general financial aid, contact the CAB. They’re all capable of delivering sound guidance relating to money management and debt related issues.

With regard to the potential house repossession, contact Shelter. Singularly they’re the most robust source of information with regard to housing legislation and problems related to communication between lenders/borrowers. They deliver an effective service to those that need it, and they will do their level best to provide you with the most current, relative advice regarding your needs.