So B of A lied to homeowners and delayed then foreclosed

Well, I guess I should be surprised but like many things in the news these days like the NSA keeping records of everyone’s phone calls, or maybe that Google not only scans your emails but also knows pretty much everything you do online if your using their products (gmail, chrome browser, calendar, Android phone, etc.) this isn’t really any revelation. There have been stories in the news over the past several years of the frustrating runaround homeowners have gotten from their lenders to the point many of them just give up.

This is not particularly good timing for Bank of America. Wether it’s real or artificial housing markets have been heating up meaning home buyers are looking for loans. Also it has been looking like the large national banks have allowed their PR rouse to play out and they were beginning to act more emboldened effectually returning to their old habits of condescension and arrogance. There is still enough consumer anger and frustration with Banks, Wall Street and Politicians that this may bite them where it hurts. We’ll have to see how it plays out.

Former Bank of America workers allege it lied to home owners

(Reuters) – Six former Bank of America Corp employees have alleged that the bank deliberately denied eligible home owners loan modifications and lied to them about the status of their mortgage payments and documents.

The bank allegedly used these tactics to shepherd homeowners into foreclosure, as well as in-house loan modifications. Both yielded the bank more profits than the government-sponsored Home Affordable Modification Program, according to documents recently filed as part of a lawsuit in Massachusetts federal court.

The former employees, who worked at Bank of America centers throughout the United States, said the bank rewarded customer service representatives who foreclosed on homes with cash bonuses and gift cards to retail stores such as Target Corp and Bed Bath & Beyond Inc .

For example, an employee who placed 10 or more accounts into foreclosure a month could get a $500 bonus. At the same time, the bank punished those who did not make the numbers or objected to its tactics with discipline, including firing.

About twice a month, the bank cleaned out its HAMP backlog in an operation called “blitz,” where it declined thousands of loan modification requests just because the documents were more than 60 months old, the court documents say.

The testimony from the former employees also alleges the bank falsified information it gave the government, saying it had given out HAMP loan modifications when it had not.

Rick Simon, a Bank of America Home Loans spokesman, said the bank had successfully completed more modifications than any other servicer under HAMP.

“We continue to demonstrate our commitment to assisting customers who are at risk of foreclosure and, at best, these attorneys are painting a false picture of the bank’s practices and the dedication of our employees,” Simon said in a email, adding the declarations were “rife with factual inaccuracies.”

Borrowers filed the civil case against Bank of America in 2010 and are now seeking class certification. The affidavits, dated June 7, are the latest accusations over the mishandling of mortgage modifications by some top U.S. banks.

Mortgage problems have dogged Bank of America since its disastrous purchase of Countrywide Financial in 2008. The bank paid $42 billion to settle credit crisis and mortgage-related litigation between 2010 and 2012, according to SNL Financial.

Bank of America and four other banks reached a $25 billion landmark settlement with regulators in 2012, following a scandal in late 2010 when it was revealed employees “robo signed” documents without verifying them as is required by law.

But problems have persisted. Since 2012, more than 18,000 homeowners have filed complaints about Bank of America with the Consumer Financial Protection Bureau, a new agency created to help protect consumers. Recently, the attorney generals of New York and Florida accused Bank of America of violating the terms of last year’s settlement.

The government created HAMP in 2009 in response to the foreclosure epidemic and to encourage banks to give homeowners loan modifications, allowing some borrowers to stay in their homes.

THE BLITZ

The court documents paint a picture of customer service operations where managers roamed the floor with headsets, able to listen into any call without warning. Service representatives were told to lie to homeowners, telling them their paperwork and payments had not been received, when in reality they had.

“This is exactly what’s been happening to homeowners for years,” said Danielle Kelley, a foreclosure defense lawyer in Florida. “No matter how many times they send in their paperwork, or how often they make their payments, they simply can’t get loan modifications. They wind up in foreclosure instead.”

The former employees said they were told to falsify electronic records and string homeowners along in foreclosure as long as possible. The problem was exacerbated because the bank did not have enough employees handling modifications, adding to the backlog of cases purged during the “blitz” operations.

Once a HAMP application was delayed or rejected, Bank of America would offer an in-house alternative, charging as high as 5 percent when the loan could have been modified for 2 percent under HAMP, according to an affidavit by William Wilson, who worked at the bank’s Charlotte, North Carolina office.

Wilson, who was a case management team manager, said he told his supervisors the practices were “ridiculous” and “immoral.” He said he was fired in August 2012.

Bank of America said it was not at liberty to discuss personnel matters.

(Reporting By Michelle Conlin and Peter Rudegeair in New York; Editing by Paritosh Bansal)

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Mortgage rates coast as housing market tightens

From Bankrate :

Mortgage rates coast as housing market tightens

Mortgage rates moved up, down and sideways this week as investors pondered both positive and negative economic news reports.

30 year fixed rate mortgage – 3 month trend

30 year fixed rate mortgage – 3 month trend

Rate movement was so slight it was almost nonexistent. The benchmark 30-year fixed-rate mortgage fell to 3.61 percent from 3.62 percent, according to the Bankrate.com national survey of large lenders. The mortgages in this week’s survey had an average total of 0.44 discount and origination points. One year ago, the mortgage index stood at 4.33 percent; four weeks ago, it was 3.55 percent.

The benchmark 15-year fixed-rate mortgage fell to 2.9 percent from 2.91 percent. The benchmark 5/1 adjustable-rate mortgage rose to 2.73 percent from 2.72 percent.

Here’s the link

homeownership less expensive than renting in all 100 large metros

Buying a Home 44% Cheaper than Renting Despite Rising Home Prices
Low mortgage rates have kept homeownership less expensive than renting in all 100 large metros

Even though asking home prices rose 7.0% in the last year, outpacing rent increases of 3.2%, the gap between buying and renting has narrowed only slightly. One year ago, buying was 46% cheaper than renting. Today’s it’s 44% cheaper to buy versus rent. In fact, homeownership is cheaper than renting in all of America’s 100 largest metros. That’s because falling mortgage rates have kept buying almost as affordable, relative to renting, as it was last year. According to Freddie Mac, between February 2012 and February 2013 the 30-year fixed rate dropped from 3.9% to 3.5%, though rates have been rising in March.

You can read the rest of the article here along with their calculations.

 

Foreclosure outlook for 2013

Mortgage News Daily reports foreclosure activity remains relatively stable but some states may see an uptick this year.  In the past two weeks I’ve noticed a huge uptick in my local market in the number of Foreclosure Sale filings (Notice of Trustee Sales).  It appears the banks are now back from the elections and holidays and back to work… We’ll see how it all pans out with the politics and economy in 2013.  I’m remaining optimistic but nothing the politicians or banks do will probably surprise me.

There were a total of 2,304,941 foreclosure filings in the United States in 2012 affecting 1,836,634 properties or one in every 72 residential units.  This is only a 3 percent decrease from 2011 when 1,887,777 properties received a filing but is down 36 percent from the peak year of 2010 when 2.9 million properties were affected.

The largest inventory was in Florida where 305,766 properties were in some state of foreclosure or bank owned.  That is 20 percent of the national total; another 14 percent or 212,172 properties were in California’s inventory.  The three big government-related housing entities Freddie Mac, Fannie Mae and the Department of Housing and Urban Development owned a combined total of 26 percent of the REO in the country followed by Bank of America and Wells Fargo with 8 percent and 6 percent respectively.

read the full story here.

Note with less inventory prices are rising as demand grows.  I’m not sure but I don’t think the table titled “Underwater Shrinkage” is referring to when I go swimming in cold water but may have more to do with the price to debt ratio (just guessing).

Southland Home Sales Up Again From 2011

From DataQuick:

Southland Home Sales Up Again From 2011; Median Price Nears 4-Yr High

August 14, 2012

La Jolla, CA—Southern California home sales rose above the year-ago level for the seventh consecutive month in July despite continued declines in low-end distress sales. Increased activity in move-up and high-end submarkets also contributed to a significant rise in the region’s median sale price, which neared a four-year high, a real estate information service reported.

The median price paid for a home in the six-county Southland rose to $306,000 last month, up 2.0 percent from $300,000 in June and up 8.1 percent from $283,000 in July 2011, according to San Diego-based DataQuick.

July’s median was the highest since the median was $308,500 in September 2008. The median has risen month-to-month for six consecutive months and has increased year-over-year for the past four. July’s 8.1 percent annual gain was the highest for any month since July 2010, when the median rose 10.1 percent.

Greater demand, partially triggered by historically low mortgage rates, and a thinner inventory of homes for sale help explain recent gains in the median price. But the increases also stem from a sharp drop in foreclosure resales, which often sell at a steep discount and are concentrated in lower-cost areas, as well as a substantial increase in the portion of sales in mid- to high-end neighborhoods.

It appears that about half of the 8.1 percent year-over-year gain in July’s median sale price can be attributed to the shift in market mix. In July, price levels for the lowest-cost third of Southern California’s housing stock rose 4.9 percent year-over-year, while they rose 4.8 percent in the middle and dipped 0.8 percent in the top third.

“Even adjusting for changes in market mix, there’s growing evidence prices have crept up in areas where more demand has met a shrinking number of homes for sale. But we’re approaching the peak of the traditional spring-summer home-buying season. Whether these trends hold into the fall and winter isn’t clear. If they do, then logically the number of homes on the market would eventually rise to meet the demand. More owners will be interested in selling, knowing their homes are likely to fetch a higher price, and more people will shift from a negative to at least a slightly positive equity position, enabling them to sell. Home builders could rev up operations and lenders could push more distressed properties onto the market sooner. It would tame any price appreciation,” said John Walsh, DataQuick president.

In July, a total of 20,588 new and resale houses and condos sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties. That was down 6.7 percent from 22,075 in June, and up 13.8 percent from 18,090 in July 2011.

Last month’s sales were 19.4 percent lower than the average sales tally of 25,545 for all the months of July since 1988, when DataQuick’s statistics begin. The low for July sales was 16,255 in 1995, while the high was 38,996 in July 2003.

The number of Southern California homes sold in July for less than $200,000 fell 5.8 percent from a year earlier, while the number that sold for $200,000 to $400,000 rose 13.4 percent. Sales between $300,000 and $800,000 – a range that would include many move-up buyers – increased 22.0 percent year-over-year. Sales over $800,000 rose 7.2 percent from July 2011.

Last month 22.5 percent of all Southland sales were for $500,000 or more, down from 23.1 percent in June and up from 20.7 percent a year earlier.

Distressed property sales – the combination of foreclosure resales and short sales – made up 39.7 percent of last month’s resale market. That was the lowest level since the figure was 36.0 percent in January 2008.

Foreclosure resales – properties foreclosed on in the prior 12 months – accounted for 21.0 percent of the Southland resale market last month, down from a revised 24.4 percent the month before and 32.6 percent a year earlier. Last month’s figure was the lowest since foreclosure resales were 18.8 percent of the resale market in November 2007. In the current cycle, the figure hit a high of 56.7 percent in February 2009.

Short sales – transactions where the sale price fell short of what was owed on the property – made up an estimated 18.7 percent of Southland resales last month. That was up from an estimated 17.7 percent the month before and 17.4 percent a year earlier.

There were no signs of a major easing of credit conditions last month but the share of purchase loans in the “jumbo” category did inch up again, holding at its highest point since December 2007.

Jumbo loans, mortgages above the old conforming limit of $417,000, accounted for 20.2 percent of last month’s purchase lending, up from 20.0 percent the prior month and 17.8 percent a year ago. In the months leading up to the credit crisis that hit in August 2007, jumbos made up about 40 percent of the market.

The use of adjustable-rate mortgages (ARMs) slipped last month. ARMs made up 6.2 percent of home purchase loans in July, compared with 6.7 percent in June and 8.9 percent a year earlier. Since 2000, a monthly average of about 34 percent of Southland purchase loans were ARMs.

The most active lenders to Southland home buyers last month were Wells Fargo with 10.0 percent of the market, Bank of America with 2.9 percent and Prospect Mortgage with 2.7 percent. Combined market share for the top 10 lenders was 28.1 percent, down from 34.2 percent a year ago. Wells Fargo’s share of the market a year ago was 11.0 percent, Bank of America’s was 8.3 percent and Prospect Mortgage’s market share was 3.0 percent.

Absentee buyers – mostly investors and some second-home purchasers – bought 27.1 percent of the Southland homes sold last month. That was down from 27.3 percent the prior month and up from 23.9 percent a year earlier. The record was 29.9 percent in February this year, while the monthly average since 2000 is 17.3 percent. Last month’s absentee buyers paid a median $230,000, up 7.0 percent from a year earlier.

Buyers paying with cash accounted for 31.0 percent of July home sales, down from 32.3 percent the month before and up from 28.7 percent a year earlier. Cash purchases peaked at 33.7 percent of all sales this February, and since 2000 the monthly average is 14.9 percent. Cash buyers paid a median $235,000 last month, up 9.3 percent from a year ago.

Government-insured FHA loans, a popular low-down-payment choice among first-time buyers, accounted for 27.2 percent of all purchase mortgages last month. July’s FHA level was down from 27.8 percent the month before and 31.4 percent a year earlier. July’s FHA share was the lowest since August 2008, when it was 26.8 percent.

DataQuick monitors real estate activity nationwide and provides information to consumers, educational institutions, public agencies, lending institutions, title companies and industry analysts.

The typical monthly mortgage payment Southland buyers committed themselves to paying last month was $1,106, compared with $1,102 the month before and $1,154 a year earlier. Adjusted for inflation, last month’s typical payment was 52.9 percent below the typical payment in the spring of 1989, the peak of the prior real estate cycle. It was 61.5 percent below the current cycle’s peak in July 2007.

Indicators of market distress continue to move in different directions. Foreclosure activity, while above long-term averages, has been trending downward this year and is far below peak levels. Financing with multiple mortgages is very low, and down payment sizes are stable, DataQuick reported.

Here’s an interesting perspective on where to best invest your money right now – your home

He makes an interesting point which has some merit however I’m not on board with his assumption/foregone conclusion that central banks meddling in their economies will jolt them into growth.  Sure hasn’t worked for Japan for the last 20 years…

Invest in Your Home, NotStocks: Chris Martenson

Don’t look to the major market indices to get a sense of the global economy. The Dow Jones Industrial Average (DJI) and the S&P 500 Index (GSPC) are headed toward multi-year highs and both have posted gains of 8 percent or more since January. This discord between investor sentiment and the current macro outlook has strategists like Chris Martenson confounded.

“It’s almost inconceivable at this point that we’re not seeing some money off the table,” Martenson says in an interview with The Daily Ticker. “Markets don’t always move in sync with the economy [but] we have a global slowdown right now…and there seems to be a lot of risk out there.”

Martenson, the CEO and co-founder of the website PeakProsperity.com and the author of “The Crash Course,” says he expects coordinated global intervention by central banks to jolt the depressed economies of the U.S., China, Japan and Europe, going so far to say “we need something larger than we’ve seen before.”

Eurostat, the European Union’s statistics agency, reported Tuesday that the euro zone economy contracted in the second quarter, falling 0.2 percent from the previous three months. Most economists believe that the 17-member region has already entered a recession.

Meanwhile, economic growth in Japan slowed to an annual rate of 1.4 percent in the second quarter compared to 5.5 percent growth in the first quarter of the year. U.S. gross domestic product grew a modest 1.5 percent in the April to June quarter. And China — the world’s second and fastest growing economy — has experienced six consecutive quarters of slower growth prompting concerns that the country is headed for a hard landing.

The rise in global markets has partly been a response to expectations that the Federal Reserve and European Central Bank will take more aggressive action — i.e. quantitative easing — this fall to prevent further economic deterioration. The Federal Reserve did not take new steps to boost the U.S. economy at its August policy meeting but said it “will closely monitor incoming information on economic and financial developments and will provide additional accommodation as needed to promote a stronger economic recovery and sustained improvement in labor market conditions in a context of price stability.” ECB Chief Mario Draghi excited markets in late July when he vowed to do “whatever it takes” to save the euro but a week later softened his tone, proclaiming his bond buying comment was merely “guidance.” Investors around the globe later dumped stocks.

The interminable guessing and conjecture about central bank action has caused hedge funds, institutional and retail investors to become speculators, Martenson says. Professional money managers have publicly acknowledged their own difficulty picking stocks. Hedge Fund titan Louis M. Bacon has decided to return $2 billion to investors after his Louis M. Bacon Moore Capital Fund was down 2 percent in 2011 and flat for the year.

Martenson’s investment recommendations range from the conventional (he’s a buyer of gold) to the unorthodox.

“One of the things we counsel people to do is consider investing in your own homestead,” he says. “Plugging all the leaks” in your house yields a 10, 12 or even 18 percent return on investment by cutting the homeowner’s heating and energy bills, he notes. “This is a time you have to consider other places for investments,” he adds.

As if you didn’t need another reason to not trust Wall Street investments

I’ve spoken on this topic before.  Yes, some form of rules and regulations with teeth in them are needed.  Wall Street, when left alone, will continue to prove there are no adults in the house and when the regulators are not watching or can not inflict any serious and painful consequences then well, we all know what happens.  Spare the rod and spoil the child…

From the NY Times

Wall Street’s Race to the 48-Millisecond Trade

It took just 45 minutes this month for one of Wall Street’s top trading firms to lose $440 million, a loss that has focused attention on the potential problems associated with high-speed trading. Today’s technological challenges are not unlike those faced by traders in the 19th century, whose jobs were revolutionized by the advent of ticker machines.

– – – (follow the title link for full story)

Computerized trading of stocks, which took off exponentially in the 1980s, is often blamed for accelerating the Black Monday market crash of Oct. 19, 1987. Regulators responded the next year by introducing new competition from more computerized trading and electronic exchanges.

But desktop day traders armed with real-time market quotes and business cable channels have been unable to compete with new powerful algorithms run on giant computers. Stock transactions are measured in microseconds, and they can be ordered and canceled faster than the “American Deer” could blink an eye.

After a spate of flash crashes, including the one in which Knight Capital recently lost $440 million, regulators are discussing steps that would reduce trading volume, including a transaction tax. Although not even the strongest critics of high-speed trading are calling for rules to turn back the clock to 900 characters a minute, there is a growing consensus that the potential negative consequences of raw speed need to be addressed for the good of the financial markets.

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