David Gorka, head of Black & LoBello’s Submission and Processing department, answers some common questions clients have regarding the document submission process when dealing with a short sale and the lenders involved.
Click here to listen to the Legal Hour on KDWN AM720 from January 4th, 2012 in which Managing Partner, Tisha Black Chernine, Esq., discusses recent case law regarding homeowners’ right to sue lenders under HAMP or HAFA (2:40), how to dispute NODs (4:05), the book Chasing Goldman Sachs by Suzanne McGee and what it says about how Fannie Mae and Freddie Mac operate and other controversies of the current economic crisis (10:16)(23:00)(38:02), how to deal with bank lawsuits (12:50), refinancing an underwater property with Fannie Mae (19:00), how the securitization process avoids taxes (33:55) and how AB 273 can protect homeowners from being pursued by banks (32:56).
Please tune in to AM720 KDWN’s “Legal Hour,” everyday, from 9 AM to 10 AM. Listen live on the radio or online. Feel free to call in with your comments or questions at 702-257-5396.
To listen to past shows, visit our Media page.
The Dodd-Frank financial reform, which passed this summer, requires lenders to retain a five percent stake in loans it packages and sells to investors. The goal of this retention is for lenders to have a stake in the future of these loans, making the lenders accountable for the quality of the loans they packaged and sold. Mortgage Bankers Association (“MBA”) is now asking for an exemption that would cover most home loans. Specifically, the MBA is asking that adjustable rate mortgages that have at least three years of initial period payments should qualify for the exemption. The MBA also argues in its letter to federal regulators that without exempting most home loans, “few loans to ordinary customers are likely to be made.
Federal regulators now must define which loans are safe enough to be exempt from the risk retention rules. The rules are expected no later than April 2011.
Joshua D. Carlson, Esq.
The nation watched and waited as GMAC, JPMorgan Chase, and Bank of America began announcing their plans to stop foreclosures in 23 judicial states. This freeze of the foreclosure industry came about largely as a result of the sworn deposition of a GMAC servicing executive who testified that he was signing off on foreclosures without actually checking the documents or having them signed by a notary, both of which are prerequisites to a proper foreclosure. The other lenders followed suit after realizing that what the media now refer to as “robo-signers” appeared somewhat commonplace. Bank of America even went so far as to announce that they were suspending foreclosures nationwide. Newspapers, internet posts, and the word on the street all voiced the same notion evidencing the overwhelming belief that foreclosures instituted by Bank of America near and far were at least temporarily at a standstill so that Bank of America could “do the right thing” and appropriately check their documents.
It seems rather odd then that Bank of America, less than two weeks later, issued a statement that they would be resuming foreclosures in all of the non-judicial foreclosure states. Did the lender truly review 130,000 foreclosure files in two weeks and fix all the errors? Further, in the absence of any errors and in consideration of a thorough check on the documents, wouldn’t it make sense for Bank of America to resume foreclosures in all states? It could be argued that they aren’t doing so because the foreclosure process in a non-judicial foreclosure state is rather simple and does not require a judge’s approval. In the absence of a ‘trier of fact” the lenders’ documents, correct or not, will never be looked at by a neutral party and over 100,000 homes will be back on the chopping block next week.
It appears that Bank of America started out with the right idea in postponing foreclosures nationwide. Unfortunately, some might argue that their rapid change in course has left the American public looking for answers that the lender still cannot provide. After two weeks of document review can this lender tell you who owns your loan or who has the right to enforce a foreclosure judgment against you? Considering the aforementioned, all signs point to “no.”
Carlos L. McDade, Esq.
Kelle L. Kuebler, Attorney*
*Licensed only in New York and Connecticut
As politicians complain about potentially massive mortgage fraud around the country, a top state official is calling on all residential lenders to halt foreclosures in Nevada. To read the full story in the Las Vegas Review Journal, click here.
Despite the mortgage industry’s recent decline in fraud risk, CoreLogic reports that 1 in 200 home loans still contain misrepresentations that could result in default. Short sales have also become an area of concern due to their growing popularity as a preferred foreclosure alternative. CoreLogic reports that short sale volume from the first quarter of 2008 through the fourth quarter of 2009 increased by more than 300 percent. Nearly 1 in every 200 short sales were deemed “very suspicious” by lenders, meaning there was a new sale transaction less than 60 days after the short sale and the sale price was more than 20 percent higher than the short sale price. Lenders identified income misrepresentation as the most common type of fraud, followed by internal fraud. Also ranking high were falsifications related to borrower identity, occupancy, and the property itself.
Joshua D. Carlson, Esq.
A new program issued by the Federal Housing Administration (FHA) requires lenders to reduce the principal by at least 10% for qualified borrowers. Borrowers can qualify for the FHA principal reduction program if they are current on their payments and their loan was acquired from a failed bank seized by the FDIC. Additionally, the program is open to borrowers whose mortgages are not currently insured by the FHA. The maximum allowed loan to value (LTV) of the combined loans is 115%. Principal reductions must bring the new FHA loan’s LTV to 97.5% and make the new payments account for 31% of the borrower’s gross monthly income including second lien mortgages.
Tisha Black Chernine, Esq.
A Las Vegas Business Press article discusses the growing trend of lenders coming after developers for their personal holdings
A Las Vegas Business Press article discusses how lenders can pursue property owners long after they default on a mortgage.