Bank Faces Lawsuit Over Excessive Fees

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JPMorgan Chase faces a lawsuit that alleges the bank imposed overly high or unnecessary fees on delinquent borrowers. The banking giant tried to get the case dismissed, arguing to the courts that the claims were unjust, but a federal judge ruled the lawsuit should proceed. 

Borrowers are accusing the bank of “imposing excessive or unnecessary fees to inflate profit, including on services performed by third party vendors, cheating thousands of already-strained borrowers out of millions of dollars,” Reuters reports. 

Among the fees in question range from $95 to $125 for “broker’s price opinions.” The plaintiffs, who reside in Tennessee, California, and Oregon, claim that the BPOs cost $30 to produce and that according to Fannie Mae guidelines they should not cost more than $80.  

Similar lawsuits over mortgage fees charged to delinquent borrowers are pending against Wells Fargo and Citigroup. 

Source: “JPMorgan must face lawsuit challenging mortgage fees,” Reuters (June 14, 2013)

Big Predictions for Housing for Next 2 Years

Finally some GOOD news on the Real Estate front! Regardless of what the news says...Real Estate is either UP or DOWN...either way it's a good investment!  Call me to increase your worth! Laura Key 310.866.8422

Home sales are projected to post some big gains in the next two years, according to Fannie Mae’s latest monthly economic outlook. 

Fannie Mae economists predict that existing-home sales will rise by 10.5 percent this year, and by 6.2 percent in 2014. The economists made even bolder projections for new single-family home sales -- growing 15.1 percent this year and 44.1 percent in 2014.

"We expect home prices to firm further amid a durable housing recovery, continuing to boost household net worth, gradually diminishing the population of underwater borrowers, and reducing incentive for strategic defaults," according to Fannie Mae’s report.

Fannie Mae projects that mortgage rates will stay low by historical averages this year, but the 30-year fixed-rate mortgage will rise from an average of 3.5 percent during the first quarter to an average of 4 percent during the final three months of 2013. During the fourth quarter of 2014, mortgage rates are projected to tick up to a 4.5 percent average. 

Mortgage applications for purchases are projected to increase by 16.8 percent this year and by 17.1 percent in 2014. However, a decline in applications for refinancings will likely cause mortgage originations to be down 14.5 percent this year and by 31.4 percent in 2014, Fannie economists predict. 

Source: “Fannie Mae sees housing upturn as 'intact',” Inman News (March 28, 2013)

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‘Boomerang Buyers’ Making a Comeback in California

People who went through foreclosures or short sales during the housing crisis have been gradually returning to the Orange County, Calif., market for at least a year, according to real estate industry observers.

Buyers generally must wait at least three years to qualify for a government-backed Federal Housing Administration mortgage, and it can take seven years to get a conventional loan backed by Fannie Mae or Freddie Mac.

Real estate professional Andreea Stucker, who lost a condo due to a bad loan she could not afford, is among the emerging ranks of “boomerang buyers.” She believes that experience has made her a better practitioner.

More than three-fourths of those who lost their homes will try to become homeowners again, says Paul Scheper, division manager for Greenlight Financial in Irvine, Calif. Nationwide, more than 3.4 million households have completed the minimum waiting period.

Source: "Boomerang Buyers Making a Comeback," Orange County (Calif.) Register (Feb. 15, 2013)

Have you had a foreclosure or a short sale in your past? Has enough time passed so you can own again? Call Laura Key at 310.866.8422 to see if you could be eligible for homeownership again! www.KeyCaliforniaHomes.com

Short Sale Process Cut in Half or More, Freddie Mac Says

Short sales are getting much shorter, Freddie Mac says. The mortgage giant launched a Freddie Mac Standard Short Sale program on Nov. 1 that sought to speed up the short sale process and make it easier and more transparent. "We estimate that the time to complete a short sale will decrease by approximately 50 percent to 75 percent," as a result of the changes, writes Tracy Mooney, Freddie Mac’s EVP in a recent blog post.

Among the changes that took effect Nov. 1, 2012:

• Mortgage servicers have 30 days to make a decision on a short sale once they receive an application. If they need to negotiate with a third party, they have 30 additional days. A final decision on the short sale must be made within 60 days.
• Mortgage servicers are required to acknowledge they received the short sale application within three days of submission. Servicers must provide weekly status updates if they end up needing more time to review the application past the initial 30-day period.
• Mortgage servicers have authority now to approve short sales when qualifying financial hardships for home owners who are past due or current on their mortgage payments.
• Mortgage servicers are also now able to approve short sales without seeking a separate review by the mortgage insurance company.
• Following a short sale, home owners may be able to qualify for up to $3,000 in relocation assistance.

Source: “The Shorter Short Sale: Long on Borrower Benefits,” Freddie Mac Executive Perspectives Blog (Jan. 22, 2013)

California House Dems Call for Recess Appointment at FHFA

Brian Beutler writes that President Obama will likely have to make more recess appointments if he wants to staff key positions, including the newly-created vacancy at the Office of Management and Budget, as Jack Lew has become White House Chief of Staff. The assumption here is that Republicans will react to recess appointments at the CFPB and the NLRB by refusing to confirm any other Presidential appointee, and that’s a reasonable assumption.

But the President won’t get pressure just from Republicans on naming recess appointments. House Democrats in the California delegation, the largest in the Congress, wrote a letter late yesterday to Obama asking him to recess-appoint a new director to the Federal Housing Finance Administration. That institution has been without a confirmed director for over two years, since David Lockhart left.

The President has never had his own nominee at FHFA. And Democrats believe that FHFA, which currently oversees Fannie Mae and Freddie Mac, is uniquely positioned to help the country out of the housing mess. They accuse acting director Ed DeMarco of obstructing efforts to aid the housing market and keep borrowers in their homes. Here’s an excerpt from the California Dems’ letter, which I’ll put in its entirety on the flip:

As part of the FHFA’s ability to promote policies that will prevent foreclosures, they have the authority to establish rules over residential mortgages that Fannie Mae, Freddie Mac and other government enterprises are able to underwrite. FHFA has consistently and erroneously interpreted its mandate far too narrowly and as such has failed to take adequate action to help homeowners and has brought an end to successful, local initiatives—such as the PACE (Property Assessed Clean Energy) program [...]

As the fiduciary of government-backed entities, there are steps that the FHFA can take to help prevent future foreclosures while also protecting taxpayers. Installing a permanent Director of the FHFA will allow the FHFA to move forward to make key decisions that will help keep families in their homes and improve our economy. We appreciate your recent appointment of Richard Cordray as the new Director of the United States Consumer Financial Protection Bureau over similar Republican opposition and we urge that you take the same action to put in place a permanent Director to the FHFA.

I’m of two minds on DeMarco. He has interpreted his mandate very narrowly. It’s a bad thing when he refuses to engage in principal reductions for troubled borrowers, even though that would make more money for Fannie and Freddie in the long run, because he doesn’t want to take the short-term financing hit. But it’s a good thing when he sues 17 banks over misrepresentations of the mortgages in the securities they sold to Fannie and Freddie, with the hope of forcing repurchases of those mortgage pools.

There have been signs that DeMarco is warming to a more activist stance. He agreed to the changes to HARP, which is more of a stimulus program than a program that will save homes, but which will allow expanded refinancing come March of this year on GSE-owned properties. Freddie Mac just initiated a program for a 12-month forbearance (where the borrower can skip payments) for unemployed borrowers, although Democrats maintain that not everyone eligible will receive that forbearance.

Most promisingly, DeMarco is considering a principal pay-down program put forward by a California Democrat, Zoe Lofgren, that would allow underwater homeowners with GSE loans to have their mortgage payments go entirely to equity for five years, waiving the interest payments. DeMarco said he would look into the idea back in October, and there have been leaks since then suggesting that principal pay-down would happen. However, there has been no final word, and officially FHFA “continues to evaluate” the Lofgren proposal, even though in a meeting with House Dems they promised an assessment within two weeks.

I don’t think some in the Administration would have any problem getting rid of DeMarco – they don’t particularly like his aggressive stance on bank repurchases. But that would not necessarily be the best news for the housing market or the rule of law. If anything, the California Dems’ action shows that the previous recess appointments have opened a Pandora’s box for the Administration, and now everyone wants a recess appointment tailored to their concerns.

The entire letter from the Congressional Dems in California is below the fold.

The President The White House Washington, DC 20500

Dear President Obama:

We urge you to act on behalf of the American people and immediately make an appointment for the Director of the Federal Housing Financial Agency (FHFA). For two and a half years, Senate Republicans have been blocking the appointment of this position, causing there to be no permanent Director. The FHFA regulates and oversees Fannie Mae and Freddie Mac, which together hold 70% of mortgages in the US. The current economic crisis began in the housing market and our economic recovery is dependent on the important work pending before the FHFA. It is time to move forward and put in place a permanent FHFA Director.

According to RealtyTrac, 224,394 U.S. properties had foreclosure filings in November, 2011. This means that 1 in every 579 housing units received a foreclosure filing nationwide. In California, 1 in every 211 housing units received a foreclosure filing. And there are fears that a new set of foreclosure waves may come in the next few months. According to RealtyTrac cofounder, James Saccacio, “November’s numbers suggest a new set of incoming foreclosure waves, many of which may roll into the market as REOs or short sales sometime early next year…some bellwether states such as California, Arizona and Massachusetts actually posted year-over-year increases in foreclosure activity in November.”

It is clear that we must take immediate steps to prevent more foreclosures. As part of the FHFA’s ability to promote policies that will prevent foreclosures, they have the authority to establish rules over residential mortgages that Fannie Mae, Freddie Mac and other government enterprises are able to underwrite. FHFA has consistently and erroneously interpreted its mandate far too narrowly and as such has failed to take adequate action to help homeowners and has brought an end to successful, local initiatives—such as the PACE (Property Assessed Clean Energy) program. The PACE program allows property owners to finance energy efficiency measures and renewable energy projects for their homes and commercial buildings, thereby reducing their energy costs and making them better able to make mortgage payments. It has been successful in many of our districts, however, in July of 2009 FHFA issued a decision that essentially put an end to PACE programs across this country.

As the fiduciary of government-backed entities, there are steps that the FHFA can take to help prevent future foreclosures while also protecting taxpayers. Installing a permanent Director of the FHFA will allow the FHFA to move forward to make key decisions that will help keep families in their homes and improve our economy. We appreciate your recent appointment of Richard Cordray as the new Director of the United States Consumer Financial Protection Bureau over similar Republican opposition and we urge that you take the same action to put in place a permanent Director to the FHFA.

By: David Dayen Wednesday January 11, 2012 7:00 am