My New Blog

 federal judge, Shira Scheindlin, has ruled that Morgan Stanley, Moody’s rating agency, and the S & P rating agency must defend themselves against fraud charges that have been filed against them for their AAA ratings of sub-prime mortgage packages sold during the height of sub-prime mortgage financing for housing.

While some defendants, including Bank of NY Mellon, have been left off the hook, this ruling opens the door to future and already pending suits against hedge funds and other investors, who reportedly “hyped” these investments as high quality investments to collect massive fees, while hiding the risks involved in these investments.

It’s about time that these companies and rating agencies are held accountable for their ratings of questionable investments. Perhaps this will lead to more responsible ratings in the future.

Foreclosures
Here’s an excerpt from an article in the NY Times published August 30, 2009.

A judge in NY is aggressively denying banks their "right" to foreclose on home owners for multiple reasons, but primarily because these banks cannot prove they own the loans, and therefore have the legal right to foreclose on these home owners. “I don’t want to put a family on the street unless it’s legitimate,” Justice Arthur M. Schack said.

“The judge, Arthur M. Schack, 64, fashions himself a judicial Don Quixote, tilting at the phalanxes of bankers, foreclosure facilitators and lawyers who file motions by the bale. While national debate focuses on bank bailouts and federal aid for homeowners that has been slow in coming, the hard reckonings of the foreclosure crisis are being made in courts like his, and Justice Schack’s sympathies are clear. He has tossed out 46 of the 102 foreclosure motions that have come before him in the last two years. And his often scathing decisions, peppered with allusions to the Croesus-like wealth of bank presidents, have attracted the respectful attention of judges and lawyers from Florida to Ohio to California. At recent judicial conferences in Chicago and Arizona, several panelists praised his rulings as a possible national model.”

After reading this article, I immediately called a real estate attorney I have worked with in Oregon. I asked if Oregon judges are helping out homeowners in the same way. He said that sadly, foreclosure laws are very state specific, and homeowners have found little to no relief in Oregon. However, judges in other states, such as Florida, are also taking on some of the biggest banks and ruling against their foreclosure motions for numerous reasons.

As I read this article, I had to think back to Helen, the woman I reported on, who is still in battle with Wells Fargo to get her loan modified. Wells is apparently talking to her now, and she is hopeful, but still cynical, that her loan will be modified. However, at times throughout this process, Wells has told Helen that her loan is owned by an investor which is why they are unable to modify her loan. If her loan is owned by an investor, how did they legally have the right to foreclose on her? Again, according to my attorney contact, servicing contracts between servicers and mortgage loan owners vary considerably. While the contract may provide for foreclosure authorization, it may not provide for modification authorization. Still, his comment about Helen's case is that the excuse about modifications and investors is pure bunk. If the bank wants to modify the loan, they can get it done.

And, so the world turns?

For more information about the law and home owners rights, click here.

To read about Helen and her battle with Wells Fargo, click here.

For more information on how to get a loan modification and tips to avoid foreclosure, click here.

To read more about the HAMP modification program and why it really isn't working, click here.

If you come across any additional news about the law and housing, I would love to hear it. Please feel free to send me an email, so I can follow up.

We have just heard from one lender only, that they are offering a new loan program called MAP. This program is designed to alleviate your fears about losing your job after you buy a house. Here are the details:

This program is for a housing purchase utilizing FHA and USDA rural housing loan programs only.

MAP is a Mortgage Assurance Program that will make up to 6 monthly payments for you, if you lose your job within the first 24 months after your loan closes.

DETAILS
Coverage Period
Twenty Four (24) months from the closing date of the mortgage.
Maximum Benefit
The lesser of the actual mortgage payment (PITI) or $1,800 per month.
Benefit Period
Up to a maximum of six (6) payments during the twenty four (24) month coverage term.
Vesting Period
Sixty (60) days from mortgage closing date (if purchaser becomes unemployed during this Vesting Period, there is no coverage for this occurrence of unemployment).
Waiting Period
Thirty (30) days from commencement of unemployment.
Eligibility
a) 18 to 66 years of age
b) Employed full time (minimum 30 hours/week) at time of mortgage closing
c) Cannot be self-employed
d) Must reside in US
Contribution Clause
When joint mortgagors are involved, benefit amount will be based on the percentage the unemployed person’s income is to total qualifying income at the time of mortgage closing.
Conditions
a) Unemployment must commence during coverage period
b) Coverage is limited to payments due 30 days after unemployment begins
c) Claimant must qualify for state unemployment benefits
d) Claims payments cease immediately upon re-employment
e) In the event of subsequent unemployment, a new 30 day Waiting Period applies
Exclusions
a) Voluntary unemployment
b) Disability or medical (mental or physical)
c) Reasons listed for denial of unemployment benefits
d) Borrowers that are self-employed or are aware of a pending lay-off
e) Strike/Lockout

The program is underwritten by an AM Best Rated Carrier. Seller concessions can be applied towards payment of this program.

Mortgage rates are fantastic today!  We are seeing several lenders with best rates on 30 year fixed rate mortgages at and even below 5%.  There are some lenders offering 5/1 ARM loans under 4% right now, and FHA financing is about as good as we have seen it all year.

The MAP program is being offered by a lender in the Pacific Northwest, but will do loans for other parts of the country on a case by case basis.  Other conditions can apply to acceptance into the program, such as counseling, education, and of course, eligibility.

Please feel free to contact me for more information.

Shelby