FORECLOSURES JUMP, MODIFICATIONS PLUMMET

COMBO Title and Securitization Search, Report, Documents, Analysis & Commentary COMBO Title and Securitization Search, Report, Documents, Analysis & Commentary

NOTABLE QUOTES:

“The rise in repossessions and decline in loan modifications are further signs that problems in the US housing market are persisting, in spite of forecasts by some analysts of a recovery before the year-end.”

The number of homes entering foreclosure rose 31 per cent compared with the second quarter and 3.7 per cent compared with the year-earlier period, according to the Office of the Comptroller of the Currency and the Office of Thrift Supervision.”

“As these properties come on the market, they are expected to depress home prices by between 5 per cent and 10 per cent during the next year.”

“fewer borrowers qualified for loan modifications that would have reduced their monthly payments, bank regulators have said.”

“Even when borrowers receive loan modifications, they are redefaulting at high rates. According to a report by the Congressional Oversight Panel, 40 per cent of borrowers who receive a Hamp modification are expected to redefault over the next five years.”

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EDITOR’S ANALYSIS: The usual number of civil litigation cases that settle is 85%. The usual number of cases sent to mediation that eventually settle is even higher. The number of foreclosure cases that settle is negligible, and even that is falling. To make matters worse at least 40% of the negligible number of mortgage cases settled end up back in foreclosure. What is wrong with this picture? The bottleneck is evident. What is causing it?

Cases that don’t settle are composed of at least one party that has determined they either have an incredibly strong position or that they have nothing to lose by shooting for the moon. In mortgage cases there is an actual disincentive to settle because (1) the lenders are not involved and (2) their “agents” are making money hand over fist by NOT settling. But the main reason is that the wrong parties are at the table. The agents lack both power and any incentive to settle. As a result BOTH the lenders (investors) and the borrowers (also investors under securities laws) are the ones to suffer.

This is not a revelation. Look anywhere on the Internet or mainstream media and you will find analysis that says exactly what I have stated above. So if everyone, and I mean EVERYONE knows what is going on, what is actually driving this train wreck to more and more head-on collisions? I’m afraid the answer is that the investment megabanks have dug in their heels and have decided to ride this out since they are sitting in the drivers seat both in the legislative forums and in the judicial forums, although in the latter, an increasing number of Judges are subtly altering their positions and getting uncomfortable with the presumption that naturally arises when a debtor comes into court and says they are innocent, at least as to the party that is making the claim. “You signed the note, you owe the money, you didn’t make the payments. Everything else is irrelevant.”

Now Judges are starting to get the point that the title system of their state is being corrupted on as grand a scale as the mortgage meltdown itself. Most Judges still have trouble with what seems like a counter-intuitive position proposed by borrowers. But a great many Judges are subtly altering the rules of their court and demanding better explanations for why the payee on the note and the secured party on the mortgage is not in court one way or another. And there is a troubling thought about the whole “free house” PR stunt played by the megabanks. The distraction worked for about three years but is wearing thin because the logic is exploding in their faces. It is apparent under any analysis that SOMEBODY IS GETTING A FREE HOUSE regardless of outcome, if one accepts the arguments of the pretender lenders.

The next step, before ordering the parties into mediation or modification as a stall tactic is to demand that the parties prove their status before going forward. That one step will cause the cases to settle in record numbers. Why? How do I know? Because virtually all cases that settle occur during discovery when the pretender lender gets to the point where they are court-ordered to disclose the identity of the creditor or lender. It is obvious that the investors are not demanding the “confidentiality” claimed by servicers, since they are coming out in the open and suing the servicers, aggregators, and investment banks themselves. It isn’t their privacy they are after, it is their money.

Every case will settle when it becomes clear that the investor and borrower are going to compare notes — i.e., when the intermediary is pulled out of the picture. At that point the deal becomes obvious: there was no agreement between lender and borrower. The whole thing was an illusion created by the intermediaries in a grand illusion called securitization of loans which could have happened but didn’t. The loans stayed where they were without transfer because everyone knew they did NOT contain the terms agreed by Lender and borrower and they were faked as to appraisal, viability and all other indicia.

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US mortgage foreclosures rise sharply

By Suzanne Kapner in New York

Published: December 29 2010 20:33 | Last updated: December 29 2010 20:33

US mortgage foreclosures jumped in the third quarter as fewer borrowers qualified for loan modifications that would have reduced their monthly payments, bank regulators have said.

The rise in repossessions and decline in loan modifications are further signs that problems in the US housing market are persisting, in spite of forecasts by some analysts of a recovery before the year-end.

The number of homes entering foreclosure rose 31 per cent compared with the second quarter and 3.7 per cent compared with the year-earlier period, according to the Office of the Comptroller of the Currency and the Office of Thrift Supervision.

These newly foreclosed homes will add to a growing backlog of 1.2m properties in some stage of repossession, a 4.5 per cent increase over the second quarter and 10 per cent more than the previous year.

As of the end of the third quarter, 187,000 homes completed the foreclosure process, a 14.7 per cent increase on the second quarter and a 57.5 per cent jump from the same period a year ago.

As these properties come on the market, they are expected to depress home prices by between 5 per cent and 10 per cent during the next year.

The regulators also found that home retention actions, such as interest and principal reductions, had fallen 17 per cent from the year earlier, mainly because of a sharp drop in modifications run by the government’s home affordable modification programme (Hamp).

Hamp modifications totalled 504,648 as of November, well short of the government’s 3m target.

Even when borrowers receive loan modifications, they are redefaulting at high rates. According to a report by the Congressional Oversight Panel, 40 per cent of borrowers who receive a Hamp modification are expected to redefault over the next five years.

Bruce Krueger, the OCC’s head mortgage expert, said the decline in Hamp modifications was partially caused by the smaller pool of loans eligible for change.

But Mark Zandi, chief economist of Moody’s Analytics, said that explanation told only part of the story. The problem, he said, was the “inadequacy of loan modification programmes”.

Hamp must compete with private modification programmes offered by banks, which tend to provide borrowers with smaller reductions in interest and principal, thus making them more attractive to lenders and less helpful to distressed homeowners.

Another problem, said Mr Zandi, were second-lien holders. Many first mortgage lenders will write down the loan principal only if the balance on the second mortgage is also reduced.

But borrowers continue to make payments on second mortgages, which tend to be smaller and therefore more affordable, even when they fall behind on the first. As a result, second-lien holders had been unwilling to take part in modifications, creating a “big impediment”, Mr Zandi said.

The Treasury Department recently increased cash payments to mortgage servicers and lenders to encourage them to complete more modifications. But analysts said the government had so far done little to address the problems presented by second liens.


12 Responses

  1. naturally like your web-site but you have to check the spelling on several of your posts. Several of them are rife with spelling issues and I find it very troublesome to tell the truth nevertheless I will surely come back again.

  2. THE A MAN,

    Believe the mediation is pushed due to states that are in dire budget situations. Have heard from those in the know — that this is a BIG issue going forward. Believe this is why state courts push foreclosure — they want new owners and TAXES paid. DO NOT care about mortgage title — and do not care about fraud — all is about DOLLARS.

    Article fails to mention that many mediation settlements are “temporary” in nature — and that borrowers will face renegotiation in 5 years or less. And, legal rights are signed away.

    Some states that have mediation — but do not require it — such as as NJ — push it — but, of course, with the wrong creditor (in fact, all states with mediation do this).. How do you have mediation when the actual creditor is not at the table??? or even identified???

    Obama needs to wake-up. He is sleeping. Appointed same officials that covered-up the crisis. Time to start anew. New Year is the great time. How about it Mr. President??? Step up to the plate. For once, would like to hear you discuss foreclosure fraud. NOT ONCE — have you done this. Tired of emails to White House — that are just buried.

    Happy New Year — THE A MAN — always like your posts!!

  3. […] FLORIDA MEDIATION PROGRAM FAILING Posted on December 31, 2010 by Neil Garfield COMBO Title and Securitization Search, Report, Documents, Analysis & Commentary EDITOR’S NOTE: The mediation program can’t work. If you have one real person on one side and Donald Duck on the other, nothing but a fictional characterization of mediation is happening. see foreclosures-jump-modifications-plummet […]

  4. Excellent point, neidermeyer. Title fubars happened all over the world and we should learn from them.

    I am convinced that people in many nations eagerly watch this blog to see how credibility will be restored to the judiciary. To make our international point, I have translated the pertinent sentence of my last post into a few languages, with compliments of google 🙂

    “The defendant does not owe anything to the party making the claim, you committed fraud on the court, you deceived everyone, you took down world economies. The case has to be dismissed with prejudice and costs.

    Everything else is TOTALLY irrelevant”.

    Todo lo demás es totalmente irrelevante.
    Tudo o resto é totalmente irrelevante.
    Tout le reste est totalement hors de propos.
    Alles weitere ist völlig irrelevant.
    כל השאר הוא לחלוטין לא רלוונטי.
    Tutto il resto è del tutto irrilevante.
    Alles is anders volstrekt irrelevant.
    Allt annat är helt irrelevant.
    それ以外は完全には無関係です。
    Ang iba pa ay ganap na hindi kaugnay.
    Allt annað er algerlega óviðkomandi.
    Kaikki muu on täysin merkityksetöntä.
    Alt annet er helt irrelevant.

    (I am sure that above might amuse many linguists…)
    .

  5. Quote of the day….from Marc Faber:

    By the end of 2011, people will look at 2012 and think 2012 could be a very bad year because the policies applied are not sustainable and create a lot of instability. Investors may look at 2012 and 2013 with horror. Not Wall Street though. By the end of 2011, bankers will most likely be looking at the second consecutive record bonuses year, and by then will have enough gold safely stashed away in non-extradition countries to where the host organism may finally be allowed to die in peace.

  6. If the title problems aren’t arrested and reversed by denying the banks flips twists and contortions we’ll be hurting for generations … I have relatives whose country was occupied by the Japanese in WW2, all or most land records were lost or destroyed and subsequent “fixes” by the gov’t just confused things more .. to this day you cannot buy property with confidence that there won’t be a claim ,, it has strangled the economy there and it will do the same here.

  7. WHY DOES EVERYONE IGNORE THE OBVIOUS PARALLELS OF GOVERNMENT DEBT AND FORECLOSURES. THIS IS HOW YOU GET AMERICA TO EAT ITSELF ALIVE. A COLOSSAL FINANCIAL/FORECLOSURE INDUSTRY WHICH PRODUCES NOTHING, BUT USUROUSLY LENDS (CREATES OUT OF THIN AIR) MONEY TO MUNICIPAL, STATE AND FEDERAL GOVERNMENTS WHILE AT THE SAME TIME EXTENDS THE SAME TO HOMEOWNERS AND BUNDLES THEM ALL TOGETHER TO SELL TO GOVERNMENT PENSION FUNDS OF PUBLIC EMPLOYEES WHO ONLY CARE ABOUT THEIR “INVESTMENT” NOT THE QUALITY OF THEIR PUBLIC SERVICE. JUDGES ARE OUTRIGHT BREAKING THE LAW AND DENYING ALL FORMS OF DUE PROCESS FOR THE SAKE OF THEIR PENSIONS, NO ONE CAN HONESTLY SAY WITH ANY CERTAINTY THE OUR JUDICIARY IS INDEPENDENT AND IMPARTIAL.

    GOLDMAN SACHS UNDERWROTE (BROKERED) CALIFORNIA’S STATE AND MUNICIPAL BONDS (DEBT OWED), WHICH IS HOW THE LOCAL AND STATE GOVERNMENTS ARE FUNDED. GOLDMAN SACHS ALSO STRUCTURED (SECURITIZED) MOST OF THE SO-CALLED MBS TRUSTS (EMPTY MORTGAGE SECURITIES’ POOLS) AND ALSO OWNS CALIFORNIA’S LARGEST AND USA’s MOST PREDATORY LOAN SERVICER, LITTON LOAN SERVICING THAT UNLAWFULLY SEIZES HOMES IN ORDER TO FUND THE LOFTY RETURNS EXPECTED BY OVERGROWN PUBLIC PENSION FUNDS WHICH, GUESS WHAT? ALL ORIGINATED FROM AN EMPIRICAL MONOPOLY OF INVESTMENT IN RESIDENTIAL REAL ESTATE THAT CUT OUT DUE PROCESS RIGHTS, PAVING THE WAY FOR NON-JUDICIAL FORECLOSURES IN AN ATTEMPT TO MINIMIZE THE APPEARENCE OF CONFLICTING INTERESTS.

    JUST LOOK AROUND, IT ISN’T HARD TO FIND. OUR NEW (OLD) GOVERNOR’S SISTER WORKS FOR GOLDMAN SACH. GUESS WHICH JOB SHE HAS?

    “Kathleen Brown , who runs the [California] municipal finance team at Goldman Sachs Group Inc.” “The former California state treasurer joined Goldman Sachs as a managing director in 2001.”

    OUR GOVERNMENT IS A CARNIVOROUS CREATURE THAT FEEDS ITSELF AND PAYS FOR ITS OBLIGATIONS BY EATING OUR HOMES THROUGH UNLAWFUL FORECLOSURES AND EVICTIONS THEN $HIT$ THEM OUT AND STILL EXPECTS TO MAKE MORE MONEY OFF OF THEM BY MAKING EVERYONE PAY RENT AND NOT ALLOWING ANYONE TO OWN ANY HOME.

    GOVERNMENT IS THE PROBLEM, BANKSTERS ARE JUST A SYMPTOM.

  8. Goal for 2011?

    The one and only “modification” program for 2011 is to appropriately MODIFY the sentence:

    “You signed the note, you owe the money, you didn’t make the payments. Everything else is irrelevant.”

    To:

    “The defendant does not owe anything to the party making the claim, you committed fraud on the court, you deceived everyone, you took down world economies. The case has to be dismissed with prejudice and costs.
    Everything else is TOTALLY irrelevant”.

    Period –> .

  9. Loan Reinstatement not Loan Modification.

    Instead of loan modification it should be called loan reinstatement. If they were really doing loan modifications then we would have principle reduction below market rate and waive most of the fees by the servicers and low interest rate.

    THE ABOVE IS A REALISTIC APPRAISAL OF CURRENT CONDITIONS WITH OUT BLAMING ANYBODY. REALITY.

    Below market rate because the market is in a downward spiral. Because of unemployment and over building.

    NEVER AGAIN

  10. The mega banks are going to keep on going and ruining Americans as long as they can get away with it. Obama had better get his S%&t together and declare a moratorium on foreclosures. That will stop the free fall on the value of houses.

    The economy will not recover until the foreclosure issue is out of the way. Even if they let all the houses go to foreclosure, people will not trust the banks again. Investors do not want houses with a clouded title. There will also be a tsunami of lawsuits about illegal foreclosure and fraud by people who want their homes back. It is not going to go away for the banks–Allstate v. Countrywide. That lawsuit is the beginning of the end for BofA with Wikileaks waiting in the wings as well. http://www.challengingforeclosure.com Sirak@challengingforeclosure.com

  11. US mortgage foreclosures jumped in the third quarter as fewer borrowers qualified for loan modifications that would have reduced their monthly payments, bank regulators have said.

    It’s painfully obvious by now that the term “bank regulators” is an oxymoron.

    This one article mentions quotes about how the problem is growing, these quotes coming from the Congressional Oversight panel, which is overseeing the annhilation of their constentuency by the mega banks.

    It also quotes both the Office of the Comptroller of the Currency and the Office of Thrift Supervision, who are also watching from the sidelines, counting the corpses due to the carnage being perped on the American people.

    And the article ends with yet more of our money being paid out as graft by banker boy Tim to the TBTF banksters.

    We’ve been sold down the river folks, and handed a ball and chain to help us on our journey.

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