Losing sleep over a short sale

Readers of this blog know about the pitfalls and benefits of short sales where a home is sold for less than the amount of its mortgage.

Since a short sale cannot occur without the consent of the lender, sellers are completely subject to the lender’s whims and ineptness.

The New York Times reports on one New Jersey homeowner who lived the short sale nightmare in “A 30-Month Short-Sale Saga” by Antoinette Martin.

“MELANIE BROWN sits at the breakfast bar of the Teaneck house she will soon surrender to new owners and says the pain of that is piercing, but at least the “mental torture” at the hands of bankers and their computerized bureaucracy is finally done, after two and a half years.

“They would demand information, and then delay any response, demand and delay, over and over,” said Ms. Brown, 42, a school administrator, about her lender, Bank of America, and its Equator software system. “I got to feel like a mouse that a cat just kept smacking around.”

“This was a short sale. It took 30 months. And it might not have happened at all — despite Ms. Brown’s sustained effort to meet every shifting deadline for documents, and her real estate agent’s campaign to get help — except that the agent finally contacted an aide to a ongressman, who contacted an aide to the president of Bank of America.”

What was it like dealing with Bank of America? Ms. Brown says,

“No one ever actually talks to you,” “they just send threatening e-mails, saying things like: ‘If you don’t refile those documents for the third time giving the entire history of your life by the end of the business day, then this process is terminated. You will have to start over at the beginning.’ ”

“Ms. Brown’s original loan was from Countrywide Savings Bank, acquired by Bank of America in 2008. When she began asking Bank of America about loan modification, she said, she was told it was impossible, because she was current with her payments.

“They told me I had to stop paying for three months before they could even consider helping me,” she said. “I was shocked. I thought that was drastic, but they said it was the only way.”

Sound drastic, but a common step.

Do you have a short sale nightmare to share? We’d love to hear from you.

Read the full story here.

For your next title order or

if you have questions about what you see here, contact

Stephen M. Flatow, Esq.

Vested Title Inc.

165 Passaic Avenue, Suite 101

Fairfield, NJ 07004

Tel 973-808-6130 - Fax 201-656-4506

E-mail vti@vested.com - www.vested.com

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The Next Fannie Mae

From the Wall Street Journal:

Much to their dismay, Americans learned last year that they “owned” Fannie Mae and Freddie Mac. Well, meet their cousin, Ginnie Mae or the Government National Mortgage Association, which will soon join them as a trillion-dollar packager of subprime mortgages. Taxpayers own Ginnie too.

Ginnie Mae, has seen this spectacular growth due to the swelling of FHA insured loans. Today, "nearly nine of every 10 new mortgages in America now carry a federal taxpayer guarantee."

Herein lies the problem. The FHA’s standard insurance program today is notoriously lax. It backs low downpayment loans, to buyers who often have below-average to poor credit ratings, and with almost no oversight to protect against fraud. Sound familiar? This is called subprime lending—the same financial roulette that busted Fannie, Freddie and large mortgage houses like Countrywide Financial.

While HUD's Inspector General is sounding alarm bells about new trends in FHA lending that could lead to the need for a Congressional appropriation to cover a short fall in reserves, folks at the top are turning a deaf ear.

Read the full editorial, here.

For your next title order
or if you have questions about what you see here,

contact Stephen M. Flatow
Vested Title Inc.
648 Newark Avenue, P.O. Box 6453, Jersey City, NJ 07306
Tel 201-656-9220 - Fax 201-656-4506
E-mail vti@vested.com - www.vested.com

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Would you buy a used loan from these guys?

Rachel Beck, the national business columnist for The Associated Press, writes about PennyMac, a business previously mentioned on this blog, and its proposed public offering.

"Countrywide Financial placed itself at the epicenter of the housing crisis by making far too many risky loans to homeowners who ultimately couldn't afford them. Those missteps cost CEO Angelo Mozilo his job when the lender was taken over by Bank of America a year ago at a fire sale price."

"Mozilo is now spending most of his time dealing with the dozens of lawsuits naming him as a defendant, but his one-time No. 2 executive and a team of Countrywide alumni are still in the game — shopping around a new business called PennyMac that buys up distressed mortgages and modifies borrowers' loans."

"So, the same people who helped create the housing mess are now trying to make money cleaning it up. As off-putting as that sounds, there's a certain logic to it."

Beck details the history of PennyMac's founder and just how the business is structured to maximize profits. Will investors bite? "PennyMac's leadership could help fix the economy, or stuff they own pockets. Let's hope capitalism doesn't rule."

Of course, the full story is yet to be written. But you can read Rachel Beck's coverage here.

(We are proud to add that Rachel Beck is the daughter of one our firm's clients.)

Vested Title Inc.
648 Newark Avenue, P.O. Box 6453, Jersey City, NJ 07306
Tel 201-656-9220 - Fax 201-656-4506
E-mail vti@vested.com - www.vested.com

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Where There's a Buck to be Made, Someone Will Find the Way to Make It

The New York Times is reporting tonight, March 3, 2009, "Ex-Leaders at Countrywide Start Firm to Buy Bad Loans."

Fairly or not, Countrywide Financial and its top executives would be on most lists of those who share blame for the nation’s economic crisis. After all, the banking behemoth made risky loans to tens of thousands of Americans, helping set off a chain of events that has the economy staggering.

So it may come as a surprise that a dozen former top Countrywide executives now stand to make millions from the home mortgage mess.

Stanford L. Kurland, Countrywide’s former president has formed a company called PennyMac to buy loans, some for pennies on the dollar, from the U.S. government and then proceed to collect on them. Bad idea?

It is quite evident that their efforts are, in fact, helping many distressed homeowners.

“Literally, their assistance saved my family’s home,” said Robert Robinson, of Felton, Pa., whose interest rate was cut by more than half, making his mortgage affordable again.

Others are not so happy.

But to some, it is disturbing to see former Countrywide executives in the industry again. “It is sort of like the arsonist who sets fire to the house and then buys up the charred remains and resells it,” said Margot Saunders, a lawyer with the National Consumer Law Center, which for years has sought to place limits on what it calls abusive lending practices by Countrywide and other companies.

Countrywide is the subject of lawsuits in several jurisdictions and Kurland's role in the busting of the lender is under scrutiny.

It's certainly not a crime to make money off of economic misfortune, but when you've been part of the problem....?

What do you think?

Vested Title Inc.
648 Newark Avenue, P.O. Box 6453, Jersey City, NJ 07306
Tel 201-656-9220 - Fax 201-656-4506
E-mail vti@vested.com - www.vested.com

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