Nationwide Foreclosures Up 6% Over Last Year

The number of U.S. homes lost to foreclosure surged in July, another sign lenders are moving quicker to take back properties from homeowners behind in payments. Lenders repossessed 92,858 properties last month, up 9 percent from June and an increase of 6 percent from July 2009, foreclosure listing firm RealtyTrac Inc. said Thursday. Banks have stepped up repossessions this year to clear out the backlog of bad loans. July makes the eighth month in a row that the pace of homes lost to foreclosure has increased on an annual basis.

Meanwhile, homeowners who are falling behind on their payments are being allowed to stay in their homes longer because lenders are reluctant to add to the glut of foreclosed homes on the market. The number of properties receiving an initial default notice – the first step in the foreclosure process – rose 1 percent last month from June, but tumbled 28 percent versus July last year, RealtyTrac said. Initial defaults have fallen on an annual basis the past six months.

The latest data reflect a foreclosure crisis that continues to drag on as many homeowners struggle to make their monthly payments amid high unemployment, slow job growth and an uneven rebound in home prices.
Economic woes, such as unemployment or reduced income, are now the main catalysts for foreclosures. Initially, lax lending standards were the culprit, but homeowners with good credit who took out conventional, fixed-rate loans are now the fastest growing group of foreclosures. Lenders are offering a variety of programs to help homeowners modify their loans, but their success rates vary. Hundreds of thousands of homeowners can't qualify or fall back into default.

The Obama administration has rolled out numerous attempts to tackle the foreclosure crisis but has made only a small dent in the problem. More than 40 percent, or about 530,000 homeowners, have fallen out of the administration's main effort to assist those facing foreclosure. That program, known as Making Home Affordable, has provided permanent help to about 390,000 homeowners, or 30 percent of the 1.3 million who have enrolled since March 2009. Still, RealtyTrac estimates more than 1 million American households are likely to lose their homes to foreclosure this year.

In all, 325,229 properties received a foreclosure-related warning in July, up 4 percent from June, but down 10 percent from the same month last year, RealtyTrac said. That translates to one in 397 U.S. homes. The firm tracks notices for defaults, scheduled home auctions and home repossessions – warnings that can lead up to a home eventually being lost to foreclosure. Among states, Nevada posted the highest foreclosure rate in July, with one in every 82 households receiving a foreclosure notice. The number of properties in Nevada receiving a foreclosure warning last month rose nearly 7 percent from June, but fell nearly 30 percent from the same month last year. Rounding out the top 10 states with the highest foreclosure rate last month were: Arizona, Florida, California, Idaho, Michigan, Utah, Illinois, Georgia and Maryland. Las Vegas continued to be the city with the highest foreclosure rate in the U.S., with one in every 71 homes receiving a foreclosure notice in July – more than five times the national average.

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Wells Fargo Must Return Overdraft Fees

A federal judge in California ordered Wells Fargo & Co. to change what he called "unfair and deceptive business practices" that led customers into paying multiple overdraft fees, and to pay $203 million back to customers.

In a decision handed down late Tuesday, U.S. District Judge William Alsup accused Wells Fargo of "profiteering" by changing its policies to process checks, debit card transactions and bill payments from the highest dollar amount to the lowest, rather than in the order the transactions took place. That helped drain customer bank accounts faster and drive up overdraft fees, a policy Alsup referred to as "gouging and profiteering."

The ruling detailed the experiences of two Wells Fargo customers who used their debit cards for multiple small purchases, and were then charged hundreds in overdraft fees because the order the purchases were cleared by the bank depended on the amounts. The judge found the customers, who were part of a class action, were not properly informed of the bank's policies on processing payments and were unaware the bank would allow debit purchases to go through when their accounts were overdrawn.

"Internal bank memos and e-mails leave no doubt that, overdraft revenue being a big profit center, the bank's dominant, indeed sole, motive was to maximize the number of overdrafts," Alsup wrote. That policy would "squeeze as much as possible" from customers with overdrafts, in particular from the 4 percent of customers who paid what he called "a whopping 40 percent of its total overdraft and returned-item revenue."

The judge dismissed Wells Fargo's arguments that customers wanted and benefited from the policies, and detailed evidence he said showed efforts to obscure the practices in statements and other materials. Wells Fargo's online banking system, for example, would display pending purchases in chronological order, "leading customers to believe that the processing would take place in that order."

"The supposed net benefit of high-to-low resequencing is utterly speculative," he wrote. "Its bone-crushing multiplication of additional overdraft penalties, however, is categorically assured."

Alsup also criticized the bank for allowing overdraft purchases after accounts had been drained by offering a "shadow line of credit" that customers were unaware existed.
The decision noted that the Federal Reserve has outlawed some of the practices detailed in the case, most notably debit card overdrafts permitted without customers agreeing to accept overdraft protection.


Judge Alsup ordered Wells Fargo to stop posting transactions in high-to-low order by Nov. 30 and to reverse overdraft fees charged to customers from Nov. 15, 2004, to June 30, 2008, as a result of the policy. A study cited in the decision by a Wells Fargo witness put the restitution at "close to $203 million."

Wells Fargo spokeswoman Rochele Messick said the bank is "disappointed" with the ruling. "We don't believe the ruling is in line with the facts of this case and we plan to appeal," she said.

Messick noted that Wells Fargo changed its policies earlier this year, and customers can no longer incur more than four overdraft charges in one day.

Wells Fargo shares closed Wednesday trading down $1.47, or 5.3 percent, at $26.30, as the broader markets dropped sharply on economic concerns, with banks being particularly hard hit.

The case, heard in the U.S. District Court for Northern California, is Gutierrez vs. Wells Fargo.

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WHY CAN'T I GET FINANCED TO BUY A HOME?

Do you want to buy a home however you are having problems getting financed?  Well, here are the top reasons you may not be able to be approved for home financing:


Poor Credit: Even if you have a large down payment and great income, if your credit is not up to par with the banks current lending standards  you will have a problem getting financed.  Even FHA loans, which cater to borrowers with a lower credit score, has increased its FICO score standards bringing the average credit score of todays home buyer to 693


Insufficient Liquidity: If you don't have a heavy down payment (20% to 30%) and a strong excess in liquidity the banks don't want to take the risk of funding your loan.  Even minimum down payments of 3.5% (FHA) loans still require you to have six months of reserves in liquid assets to offset the risk.


Lack of Inome: If you can't afford it with room for all of your other bills then you can't buy it.  In todays market, you will need consistent income for the past two years. 


Debt: If you have too much debt then you cannot qualify for more debt from the banks to finance your home purchase.  Your debt to credit ratios have to pass the banks qualifying guidelines


Self Employment: Thse of you who are self employed, pay attention because your gross adjusted income will determine what you can afford and can't afford.  This means that the more deductions you take the less money you show that you net, the less you have to spend on your home.

With the strict current lending guidelines  these days private lending seems to be the future for securing real estate funding. 

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Ben Bernanke Says Current Lending Guidelines Too Strict!

Finally, it's about time that someone with authority admits that it is becoming very hard for individuals to get home financing, causing more home owners to go into foreclosure.   Fed chairman Ben Bernanke announced that lending guidelines are too strict!  Well, we all new that right?  You did if you could not get financed to purchase a home in the last two years for reasons that you could not believe.  An example, an individual looking searching for homes finally finds a great home in which the home owner is in trouble and needs to sell.  The individual puts in an offer and the home owner agrees, both are very happy.  The buyer goes to get home financing and everything looks good, 780 credit score, good income, etc.  Now, during the process he goes and purchases a few small pieces of furniture with his credit card for the new home.... you know, planning.  Now the bank puts a big stop on everything!!  The buyers borrowed credit/debt has increased and they don't like it.  The deal is killed and the process has to start all over again, however this is too late for the seller.  His bank hears the news and moves forward with the foreclosure.  Another property foreclosed on and another buyer who can't believe the bank did that.  This is just one example and it happens everyday, the lending guidelines are so strict that they start to not make any logic sense at all.  Not to mention, the guidelines are becoming stricter every month.  The more foreclosures, the tighter the guidelines become.  The tighter the guidelines become, the more foreclosures.  Aren't we working backwords?  Hopefully we will see some new and positive light shined on our current real estate industry in the next few months so more people can get loand and buy homes, which means more sellers can actually sell their homes to buyers needing financing.

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Fannie Mae Releases New Website To Help Troubled Home Owners

Fannie Mae has just launched a great new website to assist home owners who have financial difficulty with their homes.  The new website, http://www.knowyouroptions.com/ is an easy to use site that provides individuals with options regarding their home and a decision they will have to make if they are in financial difficutly.  The site is a great source especially when there are tons of loan modification companies trying to provide you with advise which may be incorrect for your situation.  The site is interactive and very easy to use.  There is also a resoures page, advise from other homeowners and more. 

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Well known for sale by owner firm files for liquidation

Florida-based company that helped for-sale-by-owners market their properties around the country has reportedly filed for liquidation.
Buy Owner of South Florida Inc., which does business as Buy Owner, has turned over its assets to Michael Moecker & Associates, an auction firm that liquidates insolvent companies, DailyBusinessReview.com reported.

The auction firm says that it will continue operating the BuyOwner.com website and provide services to consume in order to pay off creditors.

The Deerfield Beach-based company does business in 10 markets, including Miami, Chicago, Dallas and Atlanta, Daily Business Review reported.

By Owner was established in 1984 and claims to be the first "by owner" company to provide nationwide radio, television, and magazine publications.
Buy Owner promises to provide exposure for clients' properties through an "ultra-aggressive advertising campaign" that includes highway billboards, television commercials and Internet advertising.  The majority of the home sellers who use Buyowner end up using a Realtor to sell their home and end up wasting time and money.

Buy Owner operates corporate offices and authorizes franchises, which it says distinguish the company from networks of "real estate agents just trying to make some extra money by associating themselves with a 'by owner' name."

Buy Owner and 18 affiliates filed an assignment for the benefit of creditors, or ABC filing, on July 26 in the Broward County 17th Judicial Circuit of Florida, DailyBusinessReview.com reported. An ABC liquidation is an alternative to filing for bankruptcy in federal court.



Buy Owner reportedly settled a class-action lawsuit last year that required it to pay refunds to many clients who were clients between 2002-08. The lawsuit alleged that Buy Owner hadn't allowed clients to cancel contracts, the story said.

Buy Owner reportedly owes more than $3.9 million to its only secured creditor, and $1.2 million in back wages to executives.



CEO Scott A. Eckert and other members of the Eckert family involved in running the company resigned on July 23, the publication reported.

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The Wall May be Cracking - Bank America to Reduce Mortgage Principal

Bank of America under pressure to keep distressed borrowers from losing their homes, said Wednesday that it would begin forgiving some of their mortgage debt. While limited in scope and by invitation-only, the program is a significant shift in efforts to assist the four million homeowners who are facing foreclosure.

 It comes as banks and the Treasury Department are under growing pressure from the Obama administration, lawmakers and community groups to stem the foreclosure tide.

With the housing market entering another period of stress, worries about foreclosure are compounded. As the volume of sales drops, prices start to slide as well. When the gap keeps increasing between the size of a mortgage and the value that the home could fetch from a buyer, owners tend to give up.

“Banks are willing to take some losses now to avoid much greater losses later if the housing market continues to spiral, and that’s a sea change from where they were a year ago,” said Howard Glaser, a housing consultant in Washington and a former H.U.D. official.

The Bank of America program is intended for owners who received loans from Countrywide, the biggest and one of the most aggressive lenders during the housing boom. Bank of America bought Countrywide in 2008.

Bank of America executives said the program would work this way: A borrower owes $250,000 on a house now worth $200,000. Fifty thousand dollars of that balance would be moved into a special interest-free account.

As long as the owner continued to make payments on the $200,000, every year $10,000 in the special account would be forgiven until either the balance was zero or the housing market recovered and the borrower once again had positive equity.

“The time has come to test this sort of program,” Jack W. Schakett, who heads credit loss mitigation strategies at Bank of America, said in a briefing. “Modifications are better than foreclosure.”

That was the original notion behind the government’s modification program, which was originally touted as helping millions of borrowers but has resulted in permanently improved loans for less than 200,000. The program, which stresses reductions in interest rates, was criticized Wednesday by the special inspector general for the Troubled Asset Relief Program for over-promising and under-delivering.

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Mortgage Fraud Continues - Know Who You Are Working With!

CHICAGO –Officials from the Illinois Department of Financial and Professional Regulation’s (IDFPR) Mortgage Fraud Task Force (MFTF) today announced a series of disciplinary actions, including $769,000 in fines, against 16 licensees—including a title company, 7 mortgage companies, 6 loan originators, and 2 appraisers—plus three unlicensed companies and a number of straw buyers, all of which were involved in an alleged $7.7 million scheme to defraud lenders in a rehabbed 27-unit condominium building located at 4725 S. Michigan Avenue and other properties on Chicago’s South Side. All 27 apartments at 4725 S. Michigan are in foreclosure. “This is the first time that we have seen a case in which all of the building’s units are in foreclosure,” said Brent E. Adams, IDFPR Secretary. “We believe this case will serve as a dramatic example of the damaging ripple effect that mortgage fraud has on communities by lowering the property values of neighboring homeowners.” The type of fraud scheme alleged by IDFPR, which puts entire neighborhoods at risk and can net millions of dollars for the perpetrators, involves complicated financial transactions that can be successfully unraveled partially as a result of the 2004 consolidation of all three state agencies with responsibility for overseeing portions of real estate transactions: from listing a property to transferring the property to a new owner. Illinois is one of the few states in the nation that has the capability to conduct investigations into alleged mortgage fraud within one state agency. Tipped off by a confidential informant, MFTF investigators late last year began to unravel the alleged fraud that resulted in every unit owner in the building being unable or unwilling to keep up their mortgage payments.  The alleged scheme involved title agents, mortgage brokers, loan originators, appraisers, unlicensed real estate brokers and straw-buyers who were induced or compensated to participate in the origination of loans using knowingly false information on loan applications.  According to IDFPR’s investigation, most if not all of the units were alleged to have been sold to straw buyers, beginning in late 2006 and continuing through October 2007, at artificially inflated prices based on fraudulent appraisals. The buyers would allegedly sign loan documents stating that the address was going to be their primary residence when, in fact, they had no intention of ever living there. At least one of the alleged straw buyers purchased five units claiming that each unit was her primary residence. Often times, the sellers would allegedly ask the buyers to risk their good credit for generous cash kickbacks or on the promise that a bevy of renters will cover the cost of the mortgage. In the end, the buyers failed to make payments, defaulted on their loans and the lenders began the foreclosure process. According to the informant, Schaumburg-based Traditional Title Company LLC was the alleged ring leader in the fraud and, two of its principals, Ira Kaufman and Elbert Reniva, both of Chicago, were “outwardly committing fraud” by recruiting investors, mortgage brokers, appraisers and straw buyers. Traditional Title’s title insurance license was revoked by IDFPR’s Division of Financial Institutions and the company was fined $24,000.  Traditional Title is contesting IDFPR’s revocation. In its revocation order, IDFPR said that Traditional Title demonstrated “untrustworthiness” in transacting the business of guaranteeing titles.  It alleged that the condo development’s seller hired Kaufman as the attorney of record for 19 transactions in which alleged straw buyers signed purchase agreements for properties they could not reasonably afford.  Many of the alleged straw buyers reported inflated incomes from working as employees of E&H Distributors, Inc.  IDFPR could not confirm employment and found no evidence that the company was doing business. Some of the alleged straw buyers purchased multiple properties as their primary residence. In addition to Tradition Title, the MFTF’s investigation also cited and fined several other licensed companies and individuals. IDFPR’s Division of Banking revoked, fined and/or disciplined the licenses of: Mortgage Companies AM Mortgage Corp., Lincolnwood (Revoked license; $100,000 fine) Atlas Preferred LLC, Chicago (Revoked license; $100,000 fine) Exclusive Bancorp, Inc, Lincolnwood (Revoked license; hiring unlicensed loan    originator Arfeen S. Ahmed; $100,000 fine) KRK Financial Services, Inc. (dba KRK Mortgage Bancorp, Inc.), Chicago (Revoked license; $100,000 fine) Elite Financial Investments, Inc., Oak Brook (90-day suspended license; $25,000 fine) Two other mortgage companies: C.D.K. USA Mortgage in Chicago and Country Mortgage Services, Inc. in Arlington Heights; each were operating on previously revoked licenses. They also were fined $100,000 each. Loan Originators Theodore Cardenas of Schaumburg (Revoked license; $20,000 fine) John Karapournos of Skokie (Revoked license; $20,000 fine) Razzak Khader  of Morton Grove (Revoked license; $20,000 fine) Zarak Khan of Chicago (Revoked license; $20,000 fine) Sara Mian of Niles (Revoked license; $20,000 fine) Jeff Townsend of Glendale Heights (Revoked license; $20,000 fine) Arfeen S. Ahmed (Cease and desist unlicensed loan origination) IDFPR’s Division of Professional Regulation also filed formal complaints against the following licensed professionals: Real Estate Appraisers (complaints seeking revocation, suspension or other disciplinary action) Choudhry Z. Muzaffar of Chicago Jason M. Powell of Chicago According to investigators, Muzaffar and Powell allegedly inflated the value of the properties by $50,000-$75,000, failed to select appropriate comparable sales, and failed to accurately reflect certain information necessary for a valid appraisal. In addition, ENH Services LLC, Zeal Management LLC, and Eliot Higueros were all charged with unlicensed practice as real estate brokers for accepting commissions on the sale of condos at 4725 South Michigan. In multiple instances, ENH and Zeal are alleged to have received commissions of more than $20,000 on the sale of single units. Due to the nature of the investigation—including possible evidence of criminal fraud—IDFPR has referred this case to the Federal Bureau of Investigation for further review. The Mortgage Fraud Task Force (MFTF)—which consists of representatives from the Illinois Divisions of Financial Institutions, Banking, and Professional Regulation—was formed four years ago to ensure that businesses and individuals involved in real estate transactions comply with the strict standards of conduct established by state laws. Since its inception, the MFTF has taken disciplinary action against more than 100 persons and entities and assessed fines of almost $2 million and conducted a regulatory sweep of more than 150 mortgage companies.

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TAX CREDIT DEADLINE JUST AROUND THE CORNER

The tax credit deadline is just around the corner, what are you waiting for?

First time home buyers have just over a month to find their first home purchase and receive a $8000.00 tax credit.  To qualify as a first time home buyer you must have not owned a home 3 years prior to the purchase.  Repeat buyers can still take advantage and receive $6500 tax credit, but they must purchase before April 30, 2010.  The credit can be applied to primary residences  only, sorry but no investments.

There are limitations, the new law raises the income limits so the full tax credit will only be available to taxpayers with modified adjusted gross incomes up to $125,000 for individual or $225,000 for joint filers.  Sorry again, but those with higher incomes will not qualify. 

Do you qualify?  Contact one of our sales associates to find out how you can take advantage of the tax credit, current low interest rates and discounted home prices.  Right now may be the a golden opportunity to buy.

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YELP Loses All Credibility - Class Action Lawsuit Filed

Finally, Yelps extortion tactics are coming back to haunt the company.  A national class action lawsuit has been filed against YELP alleging that the company engages in extortion of business by manipulating its viewers' reviews in exchange for advertising dollars from the company's reviewed.  Refuse to play the YELP game and bad reviews suddenly appear and good reviews curiously disappear.  YELP has lost all credibility and will likely not survive. Read the suit here.

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