Mortgage foreclosure settlement – a solution?

Sarah Portlock writing in The Star-Ledger reports on the settlement of the New Jersey Supreme Court’s involvement in the mortgage foreclosure crisis. The settlement “will require six of the country’s biggest mortgage lenders to disclose the specifics of how they foreclose on homeowners has been” court approved.

“Under the agreement, retired Judge Richard Williams will review the lenders’ foreclosure processes to ensure all filed documents are based on personal knowledge and accurate business records. He also has the power to periodically review a sample of future foreclosures.”

Nonsense. Can anyone define “personal knowledge” in the day of e-commerce where everything, absolutely everything is compiled, kept and disseminated electronically? We no longer live in the days of bookkeepers wearing eyeshades sitting hunchbacked over ledger books.

“The settlement was made public two weeks ago, and comes four months after Chief Justice Stuart Rabner issued a three-part initiative to investigate what could be rogue foreclosure filings, noting a staggering increase in caseload and concerns judges had inadvertently "rubber stamped" files that had inadequate or inaccurate paperwork. In response, the banks argued they had already revised their foreclosure procedures.”

Read - Judge approves settlement to review mortgage foreclosure process

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Federal Housing Finance Agency extends the Home Affordable Refinance Program for one year

On March 11, 2011, the Federal Housing Finance Agency (FHFA) announced a one year extension of the Home Affordable Refinance Program (HARP) to June 30, 2012. The program expands access to refinancing for qualified individuals and families who are current on their mortgage payment and who have loans owned or guaranteed by Fannie Mae or Freddie Mac with loan-to-value ratios of between 80 percent and 125 percent. Since the beginning of the program in 2009, Fannie Mae and Freddie Mac have purchased or guaranteed 621,803 loans under HARP (190,180 in 2009 and 431,623 in 2010).

Read FHFA press release.

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Are you tough enough to buy at a foreclosure auction?

Bankrate.com has a wonderful article, “Hassles of buying foreclosures at auction,” written by Clark Palmer.

We get calls from time to time from prospective foreclosure property bidders who just can’t pass up a bargain. The article will set you straight.

Highlights:

• The process has plenty of snags to snare the unwary foreclosure buyer.
• The condition of a foreclosed home is a mystery; it could be plumbing-free.
• Consider the time and expense of repairing a handyman's special.

“An expert's single word of advice for folks who dream of buying a foreclosed house at auction: Don't.”

"’I caution anyone who isn't in the (real estate) business: Buying (at auction) can be one of the worst decisions you'll ever make," says Jim Hamilton, a Realtor in Los Gatos, Calif. Another bit of counsel from Hamilton: If you want to buy foreclosures at auction, plan on making that your full-time job.”

If you consider that “buying a house is like navigating an obstacle course, then buying a foreclosure is like crossing a minefield.”

Traps for the unwary.

First of all, you have to pay cash.

“And you're paying for all of the loans, back interest, taxes and attorney's fees on the property. So if the house is worth $300,000, the opening bid could actually be $400,000. By the time you outbid everyone, you could be paying a lot more than that.”

If the homeowner files bankruptcy on the day of the auction, or, in New Jersey, within 10 days of the sale, you won’t get your deed and will have to wait for return of your deposit.

A perfect house for stargazers.  Even if you work out those issues, you don't know the condition of the property.

People could still be living there. The house could be gutted -- missing copper and plumbing fixtures, or even roofless, Weintraub says.

Finally, “the bank isn't going to tell you all that much about the house.” Inspect on your own if you can.

And, if you find them, who will fix the problems?

Ask yourself if you have the money, time, patience and support from the people around you to repair any problems with the house. "You need to be realistic about those questions. If the answers to any of those questions is 'no,' this probably isn't the house you're looking for," Hamilton says.

Read the full article.

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Stephen M. Flatow, Esq.

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Fairfield, NJ 07004

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

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Adjustable Rate Mortgages becoming popular again?

The New York Times Lynnley Browning reports on the move back to the once despised adjustable rate mortgage.

“IN the years since the financial crisis, adjustable-rate mortgages, or ARMs, with their low initial interest rates that changed over time, have been considered riskier than fixed-rate loans and shunned by most buyers. But these days more people are being persuaded to give the loans a try.”

However, the mortgage seems to have learned one lesson of the mortgage melt down.

“This time around, lenders are rolling out more conservative ARM products — without the gimmicky extra-low “teaser” rates that adjust every six months, or the “pick-a-pay” and “option” features that allow borrowers to pay less than the monthly interest, only to be hit with a huge bill down the road.”

“Those ARMs were hallmarks of the subprime mortgage boom that fueled the soaring rate of mortgage defaults and home foreclosures nationwide.”

Lenders ranging from Equity Now in New York to Bank of America are increasing the number of ARM transactions.

“Mortgage brokers and lenders say the loans most in demand are the “5/1” and “7/1,” in which the initial interest rate is fixed for the first five or seven years — after which many homeowners typically think about selling or refinancing anyway — then adjusted annually at a capped rate toward a maximum level.”

While many have railed against the risk inherent in changes of interest rates over time, I believe history reveals that ARMs were safe due to caps on increase amounts at each step and over the lifetime of the loan. For a homeowner who plans on selling within a few years, the ARM may give her a nice discount in rate.

Starting rates are usually one to one and a half percentage points below those of 30-year fixed-rate loans.

“But one catch is that getting an ARM may now be harder.

“Last summer Fannie Mae, the government buyer of home loans, said lenders must qualify borrowers on either the initial rate plus two percentage points, or on the full index rate to which the initial rate is tied, whichever is greater.”

While ARMs may be attractive to some, it’s doubtful that the number of ARM transactions will approach the 1994 high of about 70 percent of all home purchases.

Read the full report More Borrowers Are Opting for Adjustable-Rate Mortgages

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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Soldiers foreclosed. How could it happen?

The New York Times reports,

“The Justice Department is investigating allegations that a mortgage subsidiary of Morgan Stanley foreclosed on almost two dozen military families from 2006 to 2008 in violation of a longstanding law aimed at preventing such action.”

It seems that

“Saxon Mortgage Services, is one of several mortgage and lending companies being investigated by its civil rights division. The inquiry is focused on possible violations of a federal law that bars lenders from foreclosing on active-duty service members without a court hearing.“

“[A]s many as 23 military foreclosures were under scrutiny in the Justice Department investigation.”

Federal, and many state, laws have what’s called a “civil relief act” designed to protect active duty service men and women from being foreclosed. Federal law requires a judge to

“hold a hearing at which the service member is represented before granting a lender the right to foreclose on the service member’s home, even in states where a court order is not required for civilian foreclosures. As early as 2005, advocates for military families were complaining that banks and other lenders were frequently violating the law.”

Read the full article U.S. Inquiry on Military Family Foreclosures

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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