Massachusetts Foreclosed Homes

Lenders Beginning to Favor Short Sales

Apparently banks have finally woken up and smelled the coffee.

Banks are now more willing to agree to a sale at a lower cost than a homeowner’s mortgage balance in order to avoid having to foreclose on a property, a process that can be more costly for a lender.

In the fourth quarter of 2011, there were more than 88,000 short sales in the United States, a rise of 15 percent compared to a year prior, according to data release by Realty Trac, a publisher of foreclosure data. In total, short sales made up 10 percent of all U.S. home sales sold in the fourth quarter.

On the other hand, bank-owned home sales dropped 12 percent year-over-year (to 116,000), making up 13 percent of all home sales during the fourth quarter.

In the U.S., the average short sale in the fourth quarter sold for $184,221. The average foreclosure sold for $149,686; however, at least in Massachusetts, foreclosures tend to need more repairs, in part, because the properties are vacant for so long.

Boston Company Helps Homeowners Facing Foreclosure, Makes Money For Investors

Innovative Boston Community Capital keeps troubled homeowners in their homes while making a profit. The following NECN video (4:23) explains the unique program.

 

Watch this at NECN

Relief for MA Homeowners Facing Foreclosure

The following short video from WHDH Boston outlines help for Massachusetts homeowners facing foreclosure from the Homeowner's Emergency Relief Fund.

 

Sec. of State Galvin Calls for Foreclosure Tribunal

Earlier this month the Massachusetts Supreme Judicial Court made a ruling that puts the ownership of thousands of properties that were repossessed by lenders into question.

The Boston Globe reported January 11, 2011 that Massachusetts Secretary of State William F. Galvin is now calling for the Massachusetts Legislature to create a “special tribunal” to deal with homeowners’ issues that may arise due to the court decision. 

Galvin believes that the state’s Land Court should appoint a judge, or create a tribunal, that could oversee hearings dealing with the validity of property titles and even help homeowners by answering questions about their legal rights and the legal rights of banks that are trying to seize their homes. Galvin also recommended that the legislature should set a time limit for homeowners to make title claims, so that title concerns “do not remain unresolved indefinitely.”

The setting of a time limit for making claims makes a lot sense. A statute of limitations on such claims will avoid having a great number of properties without marketable title indefinitely.

“There is a lot of uncertainly out there,’’ Galvin told the Globe referring to the foreclosure crisis. “We can’t let this sit here for months and fester.’’

Galvin’s proposal follows the SJC decision to uphold a Land Court ruling that invalidated the foreclosure sales conducted by two plaintiff banks, stating that the banks “failed to make the required showing that they were the holders of the mortgages at the time of foreclosure.”

MA Bill to Require Court Approval of Foreclosures

Massachusetts Secretary of State William Galvin said he plans to submit a bill that would require Massachusetts mortgage lenders to receive court approval before foreclosing on a property, the Boston Herald reported December 6, 2010.

Currently, Massachusetts is one of 27 states that do not require a judge to review foreclosures. Galvin believes that introducing this step into the foreclosure process will protect homeowners and thus improve the housing market. After a similar proposal was submitted and rejected two years ago, Galvin believes the current uncertainties in the foreclosure process may provide leverage to pass the bill.

Those opposed to the bill, including lenders and some real estate lawyers, believe adding the process of judicial approval would only slow the process more and add another layer of unneeded bureaucracy.

Consumer Foreclosure Resources

The U.S. Government's official Web site, USA.gov, has a list of foreclosure resources for citizens.

Search USA.gov for foreclosure resources.

More Help For Underwater Homeowners

The following video discusses a relatively new program to help homeowners whose homes are worth less the balance of their mortgage.

Are these programs a good idea? Please give me your comments below.

 

Loan Modification Programs Plagued With Problems

Three New York residents recently filed lawsuits against J.P. Morgan Chase & Co. alleging that the company misled them into false hopes of receiving long-term mortgage modifications under the Obama Administration's Home Affordable Modification Program (HAMP), the Wall Street Journal reported May 4, 2010.

Under HAMP borrowers who make all of their payments under a trial modification period expect to be offered permanent help; however, the federal program has been considered largely a failure by most in the industry.

The three individuals paid their monthly mortgage payments under trial loan modifications with the impression that their mortgage loans would soon be permanently modified to a more affordable cost, but permanent relief never came.
 
It was not until after months of trial payments that J.P. Morgan Chase & Co. notified the individuals that they were not eligible for permanent help due to their incomes being too low. The US Treasury has recently told banks to document incomes before trials are offered.  Instead of having false hopes of permanent modifications the individuals could have gone through with the foreclosure process and possibly set out to find less expensive housing options.
 
This was not the first time a lawsuit has been filed against a bank that failed to comply with the HAMP regulations. A non-profit group in Boston, The National Consumer Law Center, recently filed suits for four Massachusetts residents who claimed similar issues of trial HAMP modifications not converting to permanent modifications.
 

"J.P. Morgan and other big banks regularly say they are making extraordinary efforts to help borrowers. But Treasury Secretary Timothy Geithner told a Senate subcommittee last week that banks aren't 'doing enough to help homeowners—not doing enough to help them navigate the difficult and often frightening process of avoiding foreclosure.' He threatened to crack down on banks that don't 'hold up their end of the bargain' in providing HAMP modifications to those who are eligible."

U.S. Regulators Fight Mortgage Scams

Federal regulators, looking to take away a common tool used in mortgage frauds, are considering a nationwide ban on companies' charging upfront fees for helping homeowners modify loans to avoid foreclosures, the Los Angeles Times reported September 18, 2009.

The move comes as federal and state officials plan to expand a crackdown on mortgage-related scams and other schemes that prey on debt-ridden consumers trying to stay financially afloat due to a poor economy, unemployment, falling home prices and exotic mortgages.

While foreclosures remain near record levels, the only way many consumers can stay in their homes is by reducing their mortgage payments. As often happens during economic downturns, scam artists have tried to cash in on other people's misfortune, this time by asking for large upfront payments for help seeking mortgage modifications.

I heard a radio ad just a few days ago by a "loan modification company" that suggested homeowners didn't need help from the government or lawyers, but should contact them directly to get help with a loan modification.

Lenders Fail To Modify, So Foreclosures Continue

President Obama's $75 billion plan to reduce the number of foreclosures sweeping the nation has been plagued with backlogs and delays, USA Today Reported June 19, 2009.

Many struggling homeowners have complained about phone calls not returned and inaccurate information from lenders, and others have said they were denied help for reasons that weren't clear.

The Obama plan's goal was to prevent up to 4 million foreclosures by having banks modify loans into more affordable monthly payments; however, since its debut, the plan has led to offers of more than 190,000 mortgage modifications with lower monthly payments, according to Treasury Department numbers. During that same period, lenders either have started or advanced foreclosure proceedings against more than 1 million homes.

"Homeowners who apply for mortgage modifications are finding that banks typically are taking 45 to 60 days to respond to inquiries, according to a report this month by NeighborWorks America, a provider of foreclosure-prevention counseling.

"Some homeowners who applied for mortgage modifications five months ago still have no answer on whether they will be able to arrange smaller monthly payments, leaving them uncertain whether they'll keep their homes or lose them shortly."

Some lenders blame the Obama administration for not outlining the details of the plan until March. These lenders now claim they are beefing up staffing to process modification requests.

"Bank of America reports that it modified about 232,000 mortgages last year. During the first four months of this year, it has completed about 157,000 modifications — all before the Obama housing rescue plan went into effect."

Read The USA Today Article

Find Foreclosed Property In Massachusetts

Loan Modification Program Starts Slow, Helps Few

The Obama administration's plan to help millions of homeowners avoid foreclosure by reducing the size of their mortgage payments has had little impact so far.

"So far, two months after the program went into effect, about 55,000 homeowners have been extended loan modification offers, according to a senior administration official," The New York Times reported May 13, 2009.

The administration apparently is just now putting together the details of the plan; hence, banks have been slow to move forward on modifications.

The plan intends to lower monthly mortgage payments to 31 percent of the borrower’s gross income.  This would be done by either extending the loan term, reducing interest rates to as low as 2 percent or deferring principal; however, at this point not all loan modifications are reducing monthly mortgage payments.

Mortgage servicers can reduce principal, but are not required to, and most have not lowered the balance owed.  In April, 29 percent of mortgage modifications actually increased monthly payments and 12 percent did not alter payments.  Loan modifications reduced monthly payments only 59 percent of the time.

That mortgage modifications lower monthly payments is crucial for the plan’s success, as borrowers whose payments are not cut tend to default again within 6 months to a year.   

The Times reported that experts believe that reducing the principal amount would significantly help homeowners who are “underwater,” which those who owe more than their home is worth.  Being underwater is one of the most telling indicators of loan default experts believe. 

RealtyTrac, a publisher of foreclosure data, reported last week that there were 342,000 foreclosure filings in April, which represents a 32 percent increase from April 2008.  An estimated 2.1 million homeowners will lose their homes this year, Moody’s reported.

Read The New York Times Article