Foreclosure Protection for Military Servicemembers and Dependents

The U.S. Department of Housing and Urban Development today announced a revised Notice of Disclosure form that emphasizes the rights of the active duty military and their dependents who are protected under the Servicemembers Civil Relief Act.

The Act mandates that military personnel on active duty in wartime are entitled to mortgage relief, including a lower interest rate (not more than six percent) on their mortgages and foreclosure protection. It states that a foreclosure proceeding against certain military personnel, who are recalled to active duty, is not valid unless the creditor has obtained a court order approving it and further states that the courts may stop the proceedings for a time or adjust the debt.

“We all stand behind the men and women of our military when they are called upon to serve,” said HUD Secretary Shaun Donovan. “The Servicemembers Civil Relief Act enables our armed forces to focus on their mission abroad, without worrying about their families at home.”

The form explains:

* Who May Be Entitled to Legal Protections Under the SCRA?

* What Legal Protections are Servicemembers Entitled to Under the SCRA?

* How Does a Servicemember or Dependent Request Relief Under the SCRA?

* How Does a Servicemember or Dependent Obtain Information About the SCRA?

A written request and a copy of military orders must be sent to a lender in order for a servicememeber to get interest rate relief and foreclosure protection under the Act. In its revised form, however, the Notice of Disclosure emphasizes that there is no requirement thereafter for servicemembers to alert their lenders of their military status in connection with a foreclosure. It is the lenders responsibility to make that determination and to send a copy of the Notice of Disclosure to homeowners, who are in default on a mortgage.

The Notice advises servicememebers seeking relief to call 1-800-342-9647 or visit for additional information and guidance. It also provides guidance on obtaining military legal assistance.

Bank of America Will Pay $8.5 Billion to Repurchase Mortgage Securities

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.

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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.

Big Banks Leaving Foreclosed Buildings in Ruins

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.

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Voluntary Repossession

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.

Ohio Real Estate Market Down | Columbus Down 25%

Real estate sales in Ohio are still quite low, which is confirmed by the May sales figures from RealtyTrac.  One of the problems is that even when a buyer is interested in buying real estate, banks are reluctant to allow them to borrow, even when their credit scores are good.  May home sales in Columbus were down 25% from May 2010, which is an echo of what is happening all over the state.

There is nowhere in Ohio that has been spared from the foreclosure, short sale and price reductions in homes.  Homes that once demanded a price only affordable to successful professionals are now going to auction for far less than $200,000.

3,405 home owners were were forced to move in Cincinnati after their homes were placed on the auction block this summer. Columbus also faces a large foreclosure problem with 4,099 homes recently listed as foreclosures. Smaller communities face the same issues as metropolitan areas, but do not have as many foreclosures and short sales. The southern Ohio cities of Jackson, Athens and Logan each have less 20 repossessed homes listed for sale.

When a home is in foreclosure, there are often also unpaid real estate taxes attached to the property. Local governments and schools around the state are suffering due to the growing amount of delinquent property taxes.

Homeowners in general are impacted by the growing list of foreclosures. The steeply discounted prices on short sale and foreclosed homes drives down the price of similar homes in the same area. Banks require a real estate appraiser to use comparable homes to determine current market value during the loan process. When your neighbor cannot pay his mortgage and his house is sold at a foreclosure auction, your home is now worth less in the eyes of lenders and appraisers.

There is some hope.  In June 2011, there has been a slowdown in the rate of foreclosure filings and of repossessions.  The courts nationally have also become more aggressive about challenging foreclosures. In January 2011, Massachusetts’s top court voided the seizure of two homes by Wells Fargo & Company and US Bancorp after the banks failed to show that they held the mortgages at the time of the foreclosures, and courts in several states are considering similar cases.

Sometimes the Mortgage Money Goes to the Right People

In an unexpected twist, lawyers from Dworken & Bernstein law firm insisted that any unclaimed funds in a settlement with Wells Fargo and CitiFinancial from a class action case regarding unreleased mortgage liens be turned over to charities instead of being returned to the defendants.

Due to this “cypres” legal doctrine, 20 Ohio charities will be able to continue their work with new funding.  The charities that benefited from this donation included Neighborhood Housing Services of Greater Cleveland, Project Love, The E Prep School, The Arc, Society for Rehabilitation, Malachi House, Trinity Episcopal Cathedral, University Hospitals, The Gathering Place, Cornerstone of Hope, Antioch Community Development, Ohio College of Podiatric Medicine, and Gordon Square Arts District.

Many class action suits end up with unclaimed funds, and this doctrine can be applied to all of them, but often the unclaimed funds just go back to the defendants.  Since they are being asked to give up the funds to rectify a wrong, it makes more sense for the unclaimed funds to go out into the community to help those in need of a hand up.  Class action suits are brought to “fight city hall” so to speak, and it is not often enough that the little guy manages to win against the big corporation.  Certainly we see evidence all of the time of when the big guy wins.

Corruption is rampant when no one is watching, and unfortunately class action suits are the only way to get our own back.  Certainly the people that are affected by the injustice committed by the defendants would prefer that the unclaimed money go to the community instead of back to the defendant.

We can think of it as just a little more justice.

Cuyahoga Country Grand Jury Indicts 9 in Fraudulent Home Loans Case

For the first time in Ohio, and one of the few times across the U.S., a grand jury has indicted 9 employees of a California based loan company, Argent Mortgage Inc., for their suspected roles in approving fraudulent home loans.  So far it has been rare that any home loan companies have actually had criminal charges brought against them, whether they approved subprime home loans or not.

Argent Mortgage, Inc. was one of the biggest originators of home loans in Cuyahoga County from 2003 to 2005, and was sold to Citibank in 2008.  This particular case has been investigated by the Cuyahoga County Mortgage Fraud Task Force, and shows how the lending practices of Argent and other subprime lending companies were responsible for the foreclosure crisis that has decimated Cleveland, Ohio and many of its area suburbs.

The indictment of the Argent employees alleges that they helped coach mortgage brokers about how to falsify loan documents so that they misstated the source or existence of down payments and also borrowers’ income and/or assets.

According to the case, employees at an Argent loan processing center in Illinois approved the loans even though they KNEW that their own company’s lending rules had not been satisfied.  Argent employees bent the rules in order to get the loans approved so that they would get higher wages and bonuses.

Subprime loans have been viewed as a major cause of the downfall of the banking industry, as these popular loans during the housing boom between 2000 and 2007 were given with little or no proper documentation in order to get approved.  Because of these loose lending practices, many speculative property purchases were made, and fraudulent practices abundant.

The indicted included 3 Argent account executives assigned to work with mortgage brokers in Northeast Ohio, and two supervisors and four underwriters who were responsible for ensuring that the company’s lending standards were being met.  This investigation into Argent employees grew out of a Cuyahoga County case being prosecuted against Ur Gofman, owner of Cleveland based REal Asset Fund.  Gofman was indicted in August 2008 in Cuyahoga County Common Pleas Court for his role in what prosecutors are calling one of the biggest mortgage fraud schemes in U.S. history.  Gofman was convicted this year in U.S. District Court of mortgage fraud related charges.  Sentencing in this case is scheduled for this week.

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Cleveland is Adding Jobs, But They Don't Pay as Much

Greater Cleveland, Ohio (which includes Cleveland and the outlying suburbs) has actually been doing an admirable job of adding employment opportunities for people out of work, even in a weak economic recovery.  Unfortunately, the jobs that people are getting pay less than they did before the economic downfall.

According to the Brookings Institution’s MetroMonitor, which is a project measuring economic performance in the 100 largest metro areas of the United States, while the Cleveland-Elyra-Mentor area gained jobs in the first quarter of 2011, economic output in the area fell.  This a common trend in the economic recovery patterns over and over again, in many areas.

The report showed that Cleveland ranked second in terms of places that have brought down their unemployment rate, but is still struggling in economic output (the value of goods and serviced produced in the region).  Part of the problem is how productivity is measured.  Manufacturing jobs get higher points on the productivity scale because they pay more than lower paying service jobs.  Manufacturing is a key post-recession job growth factor in Ohio and neighboring states.

Local experts say that there is still reason for hope.  Early figures show that the Cleveland area continued to add obs during the second quarter of 2011, including jobs in the business and professional sector, which are also higher paying jobs.  Cleveland has a very large medical professional community due to the many high level hospitals like the Cleveland Clinic and University Hospitals systems.  In many ways, the medical industry is what is driving much of Cleveland’s economic growth and stability, and creating jobs for people that will eventually turn into home buyers as they settle in the Cleveland area.

Ohio Home Sales Slipping Even Including the Short Sale of Foreclosed Homes

The Ohio housing market is still quite sluggish, even during the time of year when housing sales usually go up due to better weather and ease of moving.  This trend is quite disappointing for real estate sellers, who are blaming part of the home sales slump on bad weather, high gas prices, and the difficulty in getting mortgage loans these days.

Last spring, home sales were up due to a very popular home buyer tax credit, but that is not available for home buyers now, so there is less incentive to take a risk this year.

Sales of homes in Northeast Ohio rose in May, however they were still behind May of 2010.  This pattern was followed across the state of Ohio.  Home sales were 20.8% lower than last year at this time (Ohio Association of Realtors).  In Northeast Ohio, sales of new and existing homes rose 6.8% last month, but were down 17.3% from May 2010.  Condo sales, however, jumped 35.7%, but were 4.6% lower than May 2010. Data is provided form the Northeast Ohio Real Estate Exchange.

Most analysts say that buyer demand is just sluggish, and buyers are sitting on the sidelines waiting to see what is happening.  The average price for a house in Northeast Ohio in May was $121,447, while the average price for a condo was $117,742.

RealtyTrac Report Shows Ohio is the 13th Highest Foreclosure State

Yippee!  Ohio is in the running to be the highest home foreclosure state in the U.S.  Out of 50 states in the union, we are the 13th highest.  This is not a race that we want to win, folks.  We want to lose this race.

RealtyTrac is a company that tracks statistics related to real estate issues, and in the last few years foreclosure stats have been highly tracked.  Ohio’s statistics for May show that one out of every 608 households in the state received a foreclosure notice.  RealtyTrac’s report went on to say that Ohio saw nearly 8,400 foreclosure filings last month. Filings include default notices, auction-sale notices and bank repossessions.

So is there anything we can do to get our real estate crisis back on track, building instead of foreclosing?  It all comes back to jobs.  We need more good jobs in Ohio to help people get back to paying their bills on time.  This will kick start the economy in all directions as people with jobs spend more money in stores which in turn infuses the state with more corporate buying.

RealtyTrac says the number of homeowners nationwide who were put on notice for being behind on their mortgage payments fell in May to the lowest level since 2006. The decline was the result of a slowing housing market and lingering delays in banks’ foreclosure process not really any new construction or an upswing in home buying.

Mortgage lenders also took back fewer properties in May, the second down month in a row. Repossessions have been held up as many lenders continue to work through foreclosure documentation problems that surfaced last fall in compliance with federal regulators’ demands.