Tag Archives: Bank of America

A Big Step Forward for the Housing Market

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For years, the housing market has been locked in a deep freeze, as a combination of underwater mortgages, reluctant lenders, and a lack of political will have kept a huge mass of homes off the market and in limbo. But as banks are finally coming to the conclusion that it makes more sense to accept smaller losses now to move forward, rather than clinging to the fading hope that they’ll somehow recover more in the future, housing could finally get the catalyst it needs to recover.

Banks and short sales
Banks have had problem mortgages on their balance sheets for years. But after stubbornly hanging on to those trouble assets, some banks are coming around and changing their tone when it comes to so-called “short sales.” In fact, not only are they allowing such transactions to happen, they’re also giving homeowners some big incentives to do so.

Short sales occur when a prospective buyer makes an offer on a home that isn’t enough to pay off the seller’s mortgage. Especially in states like California, where the lender often doesn’t have recourse to hold the homeowner liable for any shortfall, lenders have often resisted short sales. For a while, that made sense, as banks figured that short-sale offers were lowballing the true value of the home and that if they foreclosed on the property, they could resell it at its higher market price.

But lately, banks have realized that the foreclosure process is long, costly, and fraught with peril. With regulatory investigations into foreclosure practices adding to the potential problems of years-long delays and an obstacle course of legal requirements, banks are concluding that it’s better to accept the bird in hand of a short sale than to hope for a recovery that may take years to come.

Gimme some money
What’s most surprising about this about-face is the length to which some banks are going to get short sales done. JPMorgan Chase (NYSE: JPM  ) reportedly offered one homeowner $30,000 to accept a short sale on a $600,000 home, despite having a loan for nearly $200,000 more.

Real estate agents that Bloomberg interviewed said that the company offers $10,000 to $35,000 for many (but not all) of the 5,000 short sales it approves in a typical month. Wells Fargo (NYSE: WFC  ) and Bank of America (NYSE: BAC  ) have made similar offers to certain homeowners, especially in states like Florida, where foreclosure is especially onerous.

Is it the end of the bust?
What the housing market has needed all along is a market-clearing event like this. While refinancing and mortgage modifications only kicked the can down the road, allowing actual purchases and sales to occur is a step in the right direction.

A host of companies could benefit. Already, homebuilder stocks have soared as news on the housing front has gotten progressively better, and improving employment reports suggest that consumers may finally be getting back on their feet.

But other possible winners include companies with land development opportunities. For instance, Howard Hughes Corp. (NYSE: HHC  ) owns master planned communities and other real-estate holdings in 18 states, with key properties near Houston, Las Vegas, New York, and Honolulu. Having the housing market flowing again would open the door to further development. Similarly, St. Joe Company (NYSE: JOE  ) could return to profitability if itsextensive Florida land holdings find themselves back in demand, which could happen once the market starts perking up again.

Move forward
It’s always a tough decision to cut your losses and admit that you’ve made a mistake. Although it’s taken too long, it’s good news that banks have finally figured out that throwing good money after bad doesn’t make any sense. With banks finally biting the bullet and letting the housing market breathe again, a recovery should come a lot faster than it otherwise would have.

Housing is a key component of planning for retirement.

 

 

 

Source: By Dan Caplinger

http://www.fool.com/how-to-invest/personal-finance/home/2012/02/09/a-big-step-forward-for-the-housing-market.aspx

California Attorney General Rejects Foreclosure Settlement

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Calling it “inadequate for California,” the state is rejecting the latest settlement proposal between states and major U.S. banks over lending abuses that fueled the foreclosure crisis.

California Attorney General Kamala Harris pulled out of nationwide talks with the banks in October, saying the proposed $25 billion deal gave too much immunity to lenders and didn’t provide enough relief for homeowners in a state hard hit by the mortgage meltdown.

On Wednesday, Harris’ office said a new version of the settlement plan still falls short of those goals.

“At this point, this deal does not suffice for California,” said spokesman Shum Preston.

For more than a year, the nation’s five largest mortgage lenders – Bank of America, Citibank,Wells Fargo, JPMorgan Chase and Ally – have been working on a settlement agreement with a coalition of attorneys general in 50 states.

The latest settlement proposal seeks to help nearly 1 million homeowners, who could see the size of their mortgages lowered by an average of $20,000, according to the Associated Press.

The deal also calls for payment of about $1,800 to homeowners harmed by deceptive lending practices, the AP said.

Some consumer groups said the deal is an imperfect compromise that still provides significant reforms.

The Center for Responsible Lending said the pact could mean sustainable loan modifications for many delinquent homeowners and could end so-called “robo-signing” practices by requiring banks to individually review key foreclosure documents.

California and other states began their investigations after lenders and mortgage servicers were accused of rubber-stamping foreclosures without actually reviewing homeowners’ loan documents.

California is the nation’s No. 1 state when it comes to the number of foreclosures.

According to Irvine-based RealtyTrac, more than 420,000 homes had a foreclosure filing last year, which is more than double the filings in Florida, which had the next most filings.

Lawyers in the AG’s office have reviewed the settlement offer during the past several days and found that the proposal prevents the state from pursuing substantial legal actions against lenders.

“Our state has been clear about what any multistate settlement must contain: transparency, relief going to the most distressed homeowners, and meaningful enforcement that ensures accountability,” said Preston.

The state’s rejection came a day after President Barack Obama in his State of the Union speech called for the creation of a special investigative unit to delve into abusive lending practices that helped trigger the foreclosure crisis.

In many ways, the goals of federal unit, made up of federal prosecutors and state attorneys general, are similar to those of the 40-member Mortgage Fraud Strike Force set up by Harris in May.

That unit recently joined forces with Nevada Attorney General Catherine Cortez Masto’s mortgage fraud strike force to investigate lending abuses.

Source: By Rick Daysog
Read more here: http://www.sacbee.com/2012/01/26/4216052/california-attorney-general-rejects.html#storylink=cpy

 

Top Real Estate Market News of 2011

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(MoneyWatch)  COMMENTARY The holidays are over, the decorations have been taken down and New Year’s Eve has come and gone. We’re onto a new chapter of the real estate story, and everyone is hoping it’s better than the last one. There were some positive signs last year, but overall the market remained oversaturated and underperforming.

Before we get too far into 2012, let’s take a look back at some of the top real estate market news of 2011:

January 2011. The biggest news at the beginning of 2011 was what happened in 2010: It was a record year for foreclosures. RealtyTrac’s 2010 Year-End U.S. Foreclosure Report showed roughly 1 million homes – that’s one in every 45 – were foreclosed on in 2010.

March 2011. CoreLogic released data indicating U.S. homeowners had a massive $750 billion in negative equity. The top five states for underwater mortgages included Nevada, Arizona, Michigan, California and Florida. These states still continue to struggle, with high foreclosure rates resulting in lower home sale prices across the board.

April 2011. The Office of the Comptroller of the Currency (OCC) announced it would proceed with mandatory enforcement actions against eight mortgage servicers including Citibank, HSBC, JP Morgan Chase, MetLife Bank, PNC, U.S. Bank, Wells Fargo and Bank of America.

The measures required banks to engage an independent auditing firm to review foreclosure actions, and to prove to these auditors they complied with federal and state laws during proceedings. Some of these banks – such as Bank of America – are still fighting legal battles in court over foreclosure proceedings.

June 2011. Bank of America’s mortgage legal issues intensified when New York Attorney General Eric Schneiderman launched a formal probe into the bank’s mortgage securitization practices. The probe was part of a larger investigation to determine whether mortgage companies followed New York state law when creating and selling mortgage backed securities, but it had major fallout for Bank of America in particular.

July 2011. The fun continued for Bank of America when the Federal Trade Commission (FTC) announced it would return nearly $108 million to more than 450,000 homeowners who were overcharged by Countrywide Financial, a unit of Bank of America. Though the settlement was part of an investigation that began before Bank of America acquired Countrywide, it raised more red flags for consumers.

October 2011. Mortgage interest rates fell to new lows through the fall of 2011, but reached a record low in October with rates under 4 percent for the first time in history. Even with those rates, would-be homebuyers found it difficult to jump into the mortgage market due to the tight credit market. Federal Reserve Chairman Ben Bernanke was less than enthused about the low rates, saying the recovery was close to “faltering.”

November 2011. Remember those enforcement actions the OCC called for back in April, which included foreclosure reviews? The Independent Foreclosure Review finally started in November, giving homeowners the opportunity to request a review of how the lender conducted the foreclosure of their primary residence. Homeowners interested in a review can still apply until April 2012, but be prepared to wait a few months for the results of the review.

December 2011. Bank of America came under more fire towards the close of 2011, once again due to problems with Countrywide Financial.

In late December, federal officials announced a $335 million settlement stemming from an investigation into Countrywide’s lending procedures. The lawsuit alleged Countrywide discriminated against African American and Hispanic borrowers, charging them more than similarly qualified white buyers and steering them towards subprime loans based solely on their race or national origin.

With the low housing prices, long market times and legal issues which plagued the housing market last year, it’s probably a good thing we can put the 2011 real estate market behind us. Here’s hoping 2012 brings a robust housing market and new opportunities for economic growth.

 

 

 

By Ilyce Glink