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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International super-rich target California real estate

And so they come.  Nothing new we didn’t already know but some interesting analysis by Reuters.

As uncertainty stifles global financial markets, real estate with strong rental prospects in key cities across the United States is again becoming an asset of choice for the yield-hungry international investor.

I do take issue with their unsupported statement

As the U.S. jobs market expands, there are signs that the worst may be over for the property market that spawned the sub-prime mortgage maelstrom and the world’s deepest banking crisis since the Great Depression.

even the mass media has been reporting about all the revisions to the unemployment rate and job creation numbers & how companies large and small are hesitant to add new jobs until they see more positive signs in the economy.  A pretty glib generalization that really doesn’t belong in the story.

You can read the entire story here.

While Chinese investment is no surprise I didn’t realize Canadians had more money flowing into US Real Estate.  Very interesting.  One key to note for Real Estate Investors, namely wholesalers/rehabbers/flippers looking for those bargain REO’s is the statement

 “From an investment standpoint, the view is even more positive: people are searching for returns which aren’t available with other investments, and real estate yields are now looking very attractive, given recent price adjustments.”

They are looking at different criteria when evaluating an investment property so don’t be surprised when all the REO’s are being bid up so high.  It’s a combination of the banks trickling out the inventory or opting for Short Sales to save some of the cost/time of foreclosure and the large investment funds just looking at yields that fit their investment goals.

B of A Demolishes homes

Unbelievable. They foreclose on all these houses, then can’t sell them creating a glut on the market and ruining neighborhoods. Then they donate them and raze them – bulldoze them to the ground.

I hope to God these “donations” are not a tax write off.  This has got to end.  How much are they paying the politicians to just shut up and go along with them?

OK, reality check (pun?) is something really wrong with this or am I missing something?

Could it be no one will buy them because the banks have ruined the neighborhoods? Hmm, foreclosure, vacant houses, vagrants, vandalism, weeds, rats, graffiti, what’s not to like?  Wouldn’t society as a whole be better off if the banks worked with the homeowners to modify the loan to restore it to a performing asset on their books and saving neighborhoods and taxpayer dollars as well?  Or is the government paying too much (of our – taxpayer dollars) thus making foreclosure and collecting insurance and loan guarantees more lucrative than mods?

Here’s the disturbing story via Bloomberg:

BofA Donates Then Demolishes Houses to Cut Glut

Bank of America Corp. (BAC), faced with a glut of foreclosed and abandoned houses it can’t sell, has a new tool to get rid of the most decrepit ones: a bulldozer.

The biggest U.S. mortgage servicer will donate 100 foreclosed houses in the Cleveland area and in some cases contribute to their demolition in partnership with a local agency that manages blighted property. The bank has similar plans in Detroit and Chicago, with more cities to come, and Wells Fargo & Co. (WFC), Citigroup Inc. (C), JPMorgan Chase & Co. (JPM) and Fannie Mae are either conducting or considering their own programs.

Disposing of repossessed homes is one of the biggest headaches for lenders in the U.S., where 1,679,125 houses, or one in every 77, were in some stage of foreclosure as of June, according to research firm RealtyTrac Inc. of Irvine, California. The prospect of those properties flooding the market has depressed prices and driven off buyers concerned that housing values will keep dropping.

“There is way too much supply,” said Gus Frangos, president of the Cleveland-based Cuyahoga County Land Reutilization Corp., which works with lenders, government officials and homeowners to salvage vacant homes. “The best thing we can do to stabilize the market is to get the garbage off.”
BofA’s 40,000

Bank of America had 40,000 foreclosures in the first quarter, saddling the Charlotte, North Carolina-based lender with taxes and maintenance costs. The bank announced the Cleveland program last month, has committed as many as 100 properties in Detroit and 150 in Chicago, and may add 10 cities by the end of the year, said Rick Simon, a company spokesman.

The lender will pay as much as $7,500 for demolition or $3,500 in areas eligible to receive funds through the federal Neighborhood Stabilization Program. Uses for the land include development, open space and urban farming, according to the statement. Simon declined to say how many foreclosed properties Bank of America holds.

Ohio ranked among the top 10 states with the most foreclosure filings in June, according to RealtyTrac. The state has 71,617 foreclosed homes, Cuyahoga County 9,797 and Cleveland 6,778, RealtyTrac said.

The tear-downs are in varying states of disrepair, from uninhabitable to badly damaged. Simon said some are worth less than $10,000, and it would cost too much to make them livable.
Unwanted Homes

“No one needs these homes, no one is going to buy them,” said Christopher Thornberg, founding partner at the Los Angeles office of Beacon Economics LLC, a forecasting firm. “Bank of America is not going to be able to cover its losses, so it might as well give them away and get a little write-off and some nice public relations.”

Donating a house may create an income-tax deduction, said Robert Willens, an independent accounting analyst based in New York. A bank might deduct as much as the fair market value if a home wasn’t acquired with the explicit intent of knocking it down, he said.

Wells Fargo and Fannie Mae already started donating houses and demolition funds in Ohio. San Francisco-based Wells Fargo, the biggest U.S. home lender, gave 26 properties and $127,000 to the Cuyahoga land bank, said Russ Cross, Midwest regional servicing director for Wells Fargo Home Mortgage. Since 2009, Wells Fargo made more than 800 donations nationwide, the bank said.
Fannie Mae

Fannie Mae, the mortgage-finance company operating under U.S. conservatorship, made its first deal with the Cuyahoga land bank in 2009, and sells houses to the organization at a “very nominal value,” or about $1 and an additional $200 in closing costs, said P.J. McCarthy, who heads alternative disposition programs.

Fannie Mae sold 200 foreclosures to the Cuyahoga organization in 2010 and has similar programs in Detroit and Chicago. Cleveland is the only city where Washington-based Fannie Mae contributes $3,500 toward demolition, McCarthy said.

“It’s an economically justifiable transaction,” McCarthy said. “Holding on to a property that might sell for $1,000 or $2,000 or $5,000 for several hundred days is not in anybody’s best interest.”

JPMorgan, the second-biggest U.S. bank, has donated or sold at a discount almost 1,900 properties valued at more than $100 million in more than 37 states since late 2008, including 22 in Cleveland, said Jim O’Donnell, manager of community revitalization. The majority aren’t demolished, he said.
Nonprofit Role

Citigroup has been donating foreclosures since 2008 through the National Community Stabilization Trust, according to an e-mailed statement from Natalie Abatemarco, managing director for the bank’s office of homeownership preservation. The New York-based company, ranked third among U.S. lenders, is part of the Washington-based nonprofit trust’s pilot program that starts in late August to provide funds for purchases in distressed neighborhoods, and the money can be used toward demolition, Abatemarco said.

Demolishing all of Cleveland’s foreclosed and abandoned properties might cost $250 million, Frangos said. There are as many as 13,000, according to estimates compiled by Case Western Reserve University in Cleveland and Neighborhood Progress Inc., a nonprofit organization working to counter the effects of foreclosures in six Cleveland areas, according to its website. The Cuyahoga County land bank owns about 899 properties and will demolish about 700 in the next six to seven months, Frangos said.

The oversupply of homes once prompted Warren Buffett, chief executive officer of Berkshire Hathaway Inc., to quip in February 2010 that the solutions was to “blow up a lot of houses — a tactic similar to the destruction of autos that occurred with the ‘cash-for-clunkers’ program.’”

Still, the knockdowns aren’t likely to outpace foreclosures, said Rick Sharga, RealtyTrac’s senior vice president. Foreclosures may accelerate as banks clear a backlog caused by soft real estate markets and legal disputes over tactics used to seize homes.

“These sorts of programs will basically only be nibbling on the edges,” Sharga said.

To contact the reporter on this story: Lindsey Rupp in New York at Lrupp1@bloomberg.net

To contact the editors responsible for this story: David Scheer at dscheer@bloomberg.net; Rick Green in New York at rgreen18@bloomberg.net.

U.S. Mortgage Proposal May Result in ‘Rental Entrapment’

Very interesting developments and as always strange bedfellows.  I like the headline of the Bloomberg story but am disappointed in the opening sentence where the writer immediately tries to make it a “race” issue.  It’s a human race and working class issue not a “race” issue.  That aside this could be a real problem.  Requiring home buyers to come up with 20% down will indeed be very challenging in many markets across the U.S.  I always re-read any paragraph that states Banks are aligning with Consumer groups, as should you.

In the shadow of the sub-prime mortgage debacle that had knocked the wind out of the US and many other countries I agree there needs to be a safer more rational approach to mortgage lending.  I think the problem doesn’t lie so much in the underwriting guidelines, at least in rational markets, as it does in the oversight, regulation and control of commercial banks/bankers.  Let’s not treat the cough and sniffles, lets go after the real infection.  Does anyone see the elephant in the room?  Or have too many politicians been paid off already…  This issue needs to be treated holistically.  There needs to be reform and regulations with teeth.  When rating agencies are concerned about getting their next opportunity to rate an investment device from a commercial bank who is paying them for their rating, well, what logic is there in that?  Who is guarding the hen house?  If mortgage loan underwriting guidelines were adhered to there wouldn’t have been such a collapse – call it supply and demand.  I’m not in the mood to rehash the logical details right now, I’m sure I have outlined it in previous posts (or maybe I’ll do it later in a stand alone post).   One of the best elements of the proposed rules is that the banks must maintain at least 5% of the crap they repackage and sell to everyone else.

OK, I caught myself, almost headed down a long negative ranting road.  Let’s be positive, less emotion, more logic.  Bottom line is the economy won’t pick up until people can get jobs and the majority of Americans are not going to start buying homes until banks start lending again.  And guess what, banks aren’t going to lend to people who are under or unemployed.  Not to hard to figure that one out.  It’s a shame that we’ve been brainwashed to think we have to go to the bank and get a loan to buy a house.  Of course the businessman (capitalist?) in me says this has created a lot of jobs and income for lots of people so I shouldn’t be too negative.  I suspect as I slowly get older and possibly wiser I question more and more how we are “trained” to think and how individual critical thinking has pretty much disappeared.  This probably infuriates me even more as I am a product of this mindset and catch myself, too often in hindsight, realizing an opportunity may have been missed as there is often more than one way to solve a problem, meet a need, etc.

Wake up America!  Exercise the good sense the good Lord has given each and every one of us.  Treat others as you would have them treat you, don’t take advantage of people when they are down.  I realize that’s a fine line between a great opportunity and taking advantage but situations and circumstances don’t just happen randomly, even this rant probably has a higher purpose than I meant it for.  I feel the need to go find some good to compliment so it’s off to the real world and actually talking to people.  Here is the link to the full Bloomberg story inspiring this creation:

U.S. Mortgage Proposal May Result in ‘Rental Entrapment’

Have a great day, summer is here!

Larry, InDeed.

America is on sale

Apparently someone forgot to tell these guys the economy is terrible and now is not the right time to be buying real estate.  They also forgot to tell them banks aren’t lending…  Goes to show you there are good deals to be found in any market and that good deals can always find financing.  Who doesn’t want to have a part of a good deal?

Chinese High Rollers Invest in US Real Estate
A small group of wealthy Hong Kong families and businesses, plus one from Singapore, have bought a foreclosed parcel on the corner of Wilshire and Santa Monica in Beverly Hills, 90210. The group, Joint Treasure International, paid $148.3 million, 70 percent less than the previous owners paid.

You have to love (and follow) Mr. Yiu’s investing advice/philosophy – don’t get emotionally attached to real estate.  It’s just a thing, an investment.  To philosophize a bit of my own seems we should use this approach to many of our possessions.  I have a feeling those 33 miners in Chile weren’t worrying about their homes while they were trapped underground for those 10 weeks.  What a healthy dose of reality which hopefully we never have to experience ourselves.  They had some time to evaluate their priorities and think about what’s really important in life.  Whew, I’m starting to feel claustrophobic.  None the less you’ve gotta love stories with happy endings which by the way are also new beginnings!

To your health, happiness and welfare!

Larry

the full story can be read at CNBC  –  http://www.cnbc.com/id/39654990/

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