Mortgage Loan Compliance | Morgan Stanley & Co $102MM Settlement

Massachusetts Attorney General Martha Coakley said Morgan Stanley & Co. provided billions of dollars in credit lines to New Century "which used Morgan funds to target lower-income borrowers and lure them into loans that consumers predictably could not afford to repay." She added that some Morgan executives referred to New Century as Morgan's "partner" in subprime lending.

Last Thursday Morgan Stanley & Co. agreed to pay $102 million to Massachusetts homeowners and the state, settling allegations that it aided and abetted subprime lender New Century Financial Corp. in taking advantage of consumers.

As part of the settlement, Morgan agreed to "change its business practices" and to provide the AG's office with "information and materials" as part of its ongoing probe of subprime lenders and the securitization process. In a court filing AG Coakley notes that other Wall Street firms are under investigation regarding their securitization practices. Morgan agreed to the deal without admitting or denying any wrongdoing.

The Irvine, Calif.-based New Century Financial Corporation filed for bankruptcy in early 2008.

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Mortgage Loan Compliance | Fannie and Freddie’s New Tool

Fannie and Freddie (GSE) are expected to implement a new Foreclosure Alternative program by August that places more emphasis on short sales as an alternative to foreclosure. Short sales allow the homeowner to walk away from their house debt free and generally results in a higher sales price and less expenses than a foreclosure or REO.

The two GSE’s have completed 92,760 foreclosure sales in the first quarter, up 27% from the previous quarter. Fannie Mae and Freddie Mac are increasing their use of short sales which is considered a better alternative for lenders and homeowners than a foreclosure sale, according to a report by their regulator.

Analysts note that servicers are becoming more proficient at short sales. However, the loan-to-value ratios on short sales have been increasing relative to REO sales. And the amount of servicer advances has increased more for short sales than for foreclosures.

The Federal Housing Finance Agency says the two GSEs completed 23,400 short sales in the first quarter, compared to just 8,050 a year ago.
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Mortgage Loan Compliance | HAMP Dropouts Go Private

HUD Secretary Shawn Donovan said only 11% of borrowers in the Home Affordable Modification Program payment trials have fallen into foreclosure or lost their homes through a short sale.

"It is a clear indication that the efforts of HAMP, combined with other efforts, are having a substantial effect," the HUD secretary told reporters on Monday. Another 26% of the 277,600 borrowers that dropped out of HAMP trials as of April 30, 2010 are still being evaluated by servicers for a proprietary modification.

The secretary also noted that 2.8 million borrowers have received restructured mortgages through HAMP, Federal Housing Administration and proprietary programs during the 12-month period ending April 30, 2010. "This is nearly three times the number of foreclosures completed during this same period," Secretary Donovan said.

As of May 30, 429,700 borrowers had dropped out of HAMP trials.

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Mortgage Loan Compliance | Homebuyer Tax Credit Extension

Under the current Homebuyer Tax Credit Program terms, buyers had until April 30, 2010 to get a signed sales contract and until June 30, 2010 to complete the sale. The Senate has now approved a plan to give those already in contract to purchase a home an extra three months to be able to use federal homebuyer tax credits.

The extension proposal was approved by a 60-37 vote but only applies to consumers who already have signed contracts to finish at the later date. About 180,000 homebuyers who already signed purchase agreements would otherwise miss the deadline.

The language, pushed through the chamber by Senate Majority Leader Harry Reid (NV) gives homebuyers until September 30, 2010 to complete their purchases and qualify for tax credits of up to $8,000.

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Mortgage Loan Compliance | Foreclosure Defense – Bankruptcy and Lawsuits

As foreclosures continue many homeowners are seeking advice anywhere. Short Sells, Loan Modifications, Walk Away, and self-defense classes. One foreclosure defense move that seems to keep growing in popularity on the “net” is the “produce the note” strategy. While it can be effective in staling foreclosure the “Free and Clear” aspect should be removed from the equation. At best most foreclosure defense strategies only give you more time to pursue other options.

Depending on the state you live in, advisory proceedings, and/or suing your lender may give you the best results - the most time and the possibility of winning your case.

Almost all mortgages from the year 2003 until now were repackaged as mortgage backed securities (MBS’s) and sold to Wall Street investors, where they are traded to other investors. As the loan is broken up and shuffled around, chances are documents, such as the mortgage and promissory note you signed, got lost, misplaced, or warehoused in a location that’s not easily accessible.

With a Forensic Mortgage Audit you can bring your case inside the judicial system by filing your own bankruptcy or a lawsuit against the lender for various violations of Federal and State predatory lending laws. In the course of the legal proceedings, you can absolutely demand that the lender “produce the note.”

Although you can save money and file a Chapter 13 Bankruptcy on your own, suing your lender is a complicated area of law so it is always best to hire an Attorney and have merit to your case.

The strategy you chose will vary depending on whether your home is in foreclosure and if you live in a judicial or non-judicial:

• In Judicial states the lender must file a lawsuit against you to obtain permission to proceed
with the foreclosure sale.

• In Non-Judicial states you receive a notice of default or breach from the lender prior to the foreclosure sale and the process occurs outside of the judicial system.

If you believe you were a victim of predatory lending or mortgage fraud, get a Forensic Mortgage Audit and talk with an Attorney about the possible legal defenses that apply to your case.

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Mortgage Loan Compliance® The Forensic Loan Audit Company

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Mortgage Loan Compliance | Foreclosure Relief For Gulf Residents

Citigroup says it is suspending loan foreclosures in the region through Sept. 17, 2010. Homeowners in areas of the Gulf of Mexico affected by the BP oil spill can get mortgage relief from Citigroup Inc. and government sponsored mortgage purchasers Fannie Mae and Freddie Mac.

Citigroup's home mortgage division said Wednesday it is suspending loan foreclosures in the region and that borrowers with first mortgage loans owned by CitiMortgage who meet certain criteria will not be subject to foreclosure sales or foreclosure notifications.

"In the midst of this crisis, we will continue to explore ways to help people avoid foreclosure so they and their families can remain in their homes and have one less thing to worry about," Citigroup CEO Vikram Pandit said in a statement.

CitiMortgage borrowers occupying homes in zip codes within 25 miles of affected coastal areas will be eligible.

Fannie Mae says companies servicing its home loans may suspend or reduce borrower payments for up to 90 days. Additional time may be granted after a review of individual circumstances. Fannie Mae said companies servicing its home loans may immediately suspend or reduce payments for borrowers whose property or income are negatively affected for up to 90 days. Additional time may be granted after a review of individual circumstances.

"We want to give homeowners every opportunity to weather this unprecedented disaster, including relief from their mortgage payment if that will help them get back on their feet and stay in their homes," CEO Michael J. Williams said in a statement.

Borrowers seeking relief under Fannie Mae's or Freddie Mac's special relief measures should contact their mortgage servicer.

The eight-week-old oil disaster is affecting the coasts of Alabama, Florida, Louisiana, and Mississippi.
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Mortgage Loan Compliance | Reform Bill Says Sue Your Lender

According to an analysis of the regulatory reform bill “base text” conducted by the law firm K&L Gates LLP, "in the case of judicial or non-judicial foreclosure or any other action to collect on a loan, it appears that a consumer has a perpetual federal right to assert such a violation by a creditor as a matter of defense by recoupment or set off in an amount equal to the monetary damages that could be asserted against the original creditor."

Language in the "base text" document of the reform bill could allow residential borrowers to sue their lender, without a statute of limitations, if the mortgage banker violates the anti-steering provisions of the law.

The anti-steering language is designed to prevent lenders from pushing borrowers into certain loans such as predatory loans, without regard of the borrower’s ability to repay, because the loan officer might receive higher compensation for delivering such a loan. The law firm is telling clients, "There is a lot to be digested in the base document, but it is important to stress that it is the starting point for negotiations among the conferees."

The "base text" is an amalgamation of the House and Senate versions of the bill. K&L Gates LLP notes that several provisions from the House bill pertaining to residential mortgage lending that were not in the Senate Bill are included in the initial base document.

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Mortgage Loan Compliance | Excessive Fees, Illegal Practices Only $108 Million

Countrywide Home Loans profited from failed loans and "illegally extracted the last dollar out the pockets of the most desperate consumers," Federal Trade Commission Chairman Jon Leibowitz said in announcing one of the largest settlements in FTC history. "To have a major servicer like Countrywide piling on illegal and excessive fees is indefensible," he added.

Bank of America (BAC) has agreed to pay the Federal Trade Commission $108 million to cover foreclosure-related servicing abuses by Countrywide Home Loans, the mega lender/servicer that it purchased almost two years ago.

Overall, the settlement will benefit more than 200,000 consumers who were charged excessive fees while facing foreclosure or trying to save their homes from bankruptcy.

Bank of America bought Countrywide Financial Corp., the parent of Countrywide Home Loans, in August 2008 and "took responsibility for fixing the problems," Leibowitz said. "Bank of America did step up to the plate."

"Countrywide's outdated computer systems made the records incredibly difficult to sort out. But we believe thousands of borrowers in bankruptcy ended up overpaying," the FTC chairman said. He also noted that Countrywide used affiliates to provide default services such as property inspections and lawn mowing, charging excessive fees in the process.

"Countrywide's mortgage contracts prohibited these inflated charges but that didn't stop Countrywide from passing on those markups in violation of the FTC Act," Leibowitz said.

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Mortgage Loan Compliance | FHA Grant News

For the first time in its history, the U.S. Department of Housing and Urban Development (HUD) will require grant applicants seeking HUD funding to comply with state and local anti-discrimination laws that protect lesbian, gay, bi-sexual, and transgender (LGBT) individuals.

Today, HUD published a notice detailing the general requirements that will apply to all of the Department’s competitively awarded grant programs for Fiscal Year 2010.

“We‘re using every avenue to shut the door against discrimination,” said HUD Secretary Shaun Donovan. “Today, we take an important step to insist that those who seek federal funding must demonstrate that they are meeting local and state civil rights laws that prohibit discrimination based on sexual orientation or gender identity.”

To read the entire article, please visit : http://portal.hud.gov/portal/page/portal/HUD/press/press_releases_media_...

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Mortgage Loan Compliance | The Rise of Multifamily Late Payments

Serious payment delinquencies of 60-plus days, a category that also includes loans in foreclosure, real estate owned, and nonperforming balloons — increased 41 bps to 7.55% in the past month.

The 30-day or more past due rate on securitized multifamily mortgages rose 28 basis points in May to 13.34%-dashing hopes that delinquencies in the commercial real estate sector had stabilized.

Last month, Analyst reported the multifamily 30-day plus delinquency rate fell 13 bps to 13.06%—the first decline since May 2009. However, one month does not make a trend. Commercial mortgage-backed securities delinquencies overall set yet another new record high as they jumped 40 basis points to 8.42% in May.

Analyst also said the monthly increase in delinquencies has been between 37 and 49 basis points for seven out of the past eight months when the anomaly associated with New York's Stuyvesant Town in March is removed.

The one exception outside of this was February, when delinquencies jumped just 22 bps.

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