More homes get multiple offers
2009/05/07, 6:25 pm
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More homes for sale are attracting multiple offers as buyers pursue lower-price homes and banks low-ball asking prices to attract competing bids on foreclosures.

Multiple bids have picked up in recent months in California and other states hit hard by foreclosures and steep price drops, real estate executives say.

“If a house is in a good neighborhood, is maintained and is a good value, it’ll get multiple offers,” says Julie Holt, owner of Anclote Title Services in Tarpon Springs, Fla. One in 10 homes now draw multiple offers, up from one in 30 last fall, she says.

Multiple bids usually signify a market in which prices are rising and buyers outnumber sellers. That’s not true now, given rampant foreclosures, still-falling prices in many regions and low demand for higher-price homes. Multiple offers on distressed properties are also not new, but their recent frequency offers hope for the real estate market, says Beth Peerce, treasurer of the California Association of Realtors (CAR).

“When you begin to see people willing to fight for a property, that’s a good sign,” she says. “We are beginning to see the beginning of the end of a disaster time.”

The competition is driven by prices — California’s are down 39% from a year ago, CAR says — low mortgage rates and a new federal tax credit of up to $8,000 for some first-time buyers.

Other hard-hit regions are also seeing more multiple offers, mainly on:

Lower-end homes. In Phoenix, where prices have dropped 50% from their 2006 peak, competition has heated up for homes under $150,000, says Realtor Michael Orr, who publishes the Cromford Report on the Phoenix-area market. He recently considered bidding on one house for $70,000. It had received 14 offers, and Orr was told to bid $110,000 to be considered.

Good values. Holt just handled a closing on a Tarpon Springs home close to schools that was listed at $185,000. It won three bids and sold at $192,000. Three years ago, the home would have sold for $280,000, Holt says. Higher-price homes are also getting more multiple bids. “People who always wanted to live on the water are realizing it is time to buy before prices go up,” Holt says.

Some bidders may think foreclosure bargains are waning, says Mike Lyon, CEO of Lyon Real Estate in Sacramento. That market has 1,600 bank-owned properties for sale, vs. 2,800 a year ago, he says.

He says banks have lured multiple bids by setting below-market prices. Lyon cautions that government steps to curb foreclosures have delayed some.

“People are perceiving that they are running out. But there will be more,” he says.


Fannie Mae seeks foreclosure freeze only in S.C.
2009/05/07, 2:20 pm
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Mortgage-backer Fannie Mae said it singled out South Carolina for an unusual court-ordered freeze on home foreclosure sales because the state gives local judges the authority to dismiss delayed cases, which other states do not.

Fannie Mae isn’t seeking a similar temporary freeze in other states, said Brian Faith, spokesman for the mortgage company.

“In South Carolina, judges have the discretion to cancel an ongoing foreclosure process if there is a significant delay between the foreclosure judgment date and the actual foreclosure sale,” Faith said in a statement.

If masters-in-equity — the special county judges that usually handle foreclosures in South Carolina — were to dismiss delayed cases, “the process begins anew, which leads to higher costs and losses,” Faith said.

“The court ruling effectively addresses this situation,” he said.

Fannie Mae suspended its foreclosure proceedings in late 2008 and during the first of quarter of 2009 while it reviewed cases for potential workout strategies, Faith said. In some cases, that created significant delays.

At Fannie Mae’s request, the S.C. Supreme Court issued a temporary restraining order late Monday afternoon on foreclosure sales for some homes. It targets properties that could be eligible for a mortgage modification program that President Barack Obama’s administration is rolling out. The program offers more affordable mortgage payments to homeowners whose loans are backed by Fannie Mae or Freddie Mac and who meet certain other criteria.

Fannie Mae did not want homeowners potentially eligible for the program to lose their homes in foreclosure before they had a chance to participate. The mortgage company estimates that more than 1,000 homes in South Carolina were headed to foreclosure sales this week. It filed the petition for a temporary restraining order on Friday.

Obama announced the Home Affordable Modification Program in February, but details were not outlined until April 6.

Masters-in-equity say they are still sorting through the implications of the S.C. Supreme Court order, which requires lenders seeking foreclosure to submit affidavits by May 15 stating whether loans in default are eligible for the modification program.

Homes not eligible will continue in the foreclosure process, according to the restraining order.

Published May 7, 2009

Where to get foreclosure help – All the Links you need!
2009/04/22, 5:53 pm
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With all the dubious assistance programs and out-right scams preying on home owners facing foreclosure, it can be difficult to find legitimate help.

Here’s a list of programs that are either operated by the U.S. government or have its seal of approval:

  • Call (888) 995-HOPE, the Homeowner’s HOPE Hotline to reach a nonprofit, HUD-approved counselor through HOPE NOW, a cooperative effort of mortgage counselors and lenders to assist homeowners.
  • The Controller of the Currency’s consumer information site for banking-related questions is

Source: Controller of the Currency (04/21/2009)

Regulators struggle to contain foreclosure fraud
2009/04/08, 5:56 pm
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Distressed homeowners fall victim to scams promising to save their homes
The government is struggling to hold back a wave of foreclosure “rescue” scams arising from the growing number of homeowners facing the loss of their homes. It may be fighting a losing battle.

On Monday, Treasury Secretary Timothy Geithner declared war on the con artists who prey on borrowers desperate to find a way to keep their homes.

“American homeowners have been through enough in the past few years,” Geithner said, adding that the last thing they need is to get scammed as they struggle to keep their homes.

“These predatory scams callously rob Americans of their savings and potentially their homes,” he said. “We will shut down fraudulent companies more quickly than before. We will target companies that otherwise would have gone unnoticed under the radar.”

But as the problem spreads, regulators and prosecutors seeking to crack down on these scams seem to be fighting a forest fire with a garden hose.

Some 3 million households have already lost their homes to foreclosure. As of Jan. 30, 2.9 million people were 60 days or more past due on their mortgages, one out of 10 were delinquent, according to the government’s Hope Now Alliance. Another 6 million households are expected to face foreclosure in the next several years, according to private estimates.

The Federal Trade Commission has sent warning letters to 71 companies it says were running suspicious advertisements and has filed five new civil cases to halt illegal loan modification scams. Attorney General Eric Holder says the FBI is investigating about 2,100 mortgage fraud cases.

“If you discriminate against borrowers or prey on vulnerable homeowners with fraudulent mortgage schemes, we will find you, and we will punish you,” Holder said.

Over the past year homeowners have been flooding state attorneys general with complaints about for-profit loan modification consultants. While some of these outfits are legitimate, authorities say many are con artists.

Potential victims are easily identified: various filings, including “pre-foreclosure” notices, are public records, providing all the details a would-be scammer needs to target fraud victims. Many snare victims via Web sites promising quick fixes over the phone.

The scams take several forms but usually involves payment of an upfront fee in exchange for a promise to resolve a pending foreclosure. Some of these foreclosure “counselors” simply pocket the fee, usually a month’s mortgage payment, with little or no further contact with the distressed homeowner. Others compound the fraud by convincing the homeowner to sign over the deed or present forged documents purporting to show the foreclosure has been set aside.

Some scammers will file a bankruptcy in the homeowner’s name without consent or knowledge. While bankruptcy usually stops a foreclosure temporarily, this form of the scam adds insult to injury by leaving the homeowner with additional legal costs and the burden of a credit record that will make it difficult to buy or rent a new home for up to 10 years.


Monday’s joint announcement by the Treasury, The Department of Justice, the Department of Housing and Urban Development, the Federal Trade Commission and the Illinois Attorney General provided homeowners with a high-profile warning to avoid foreclosure rescue scams and a pledge to better coordinate government efforts to stop them.

The government’s Financial Crimes Enforcement Network reported in February that banks and other lenders filed some 62,000 so-called Suspicious Activity Reports relating to a wide variety of mortgage frauds during the 12 months ended in July, 2008. That’s a 44 percent increase over the preceding year.

Despite the widespread publicity and broad economic damage inflicted by mortgage fraud over the past several years, efforts to thwart scams have fallen far short. Part of the problem lies in the fractured regulatory structure tasked with combating mortgage fraud. Of those 62,000 reports of possible mortgage fraud, the Office of Thrift Supervision handled 47 percent, The Office of the Comptroller of the Currency handled 36 percent and the rest went to the Federal Reserve, the Federal Deposit Insurance Corp. and the National Credit Union.


The Federal Trade Commission also enforces various consumer protection laws as part of a broad portfolio of regulatory oversight that includes unfair trade practices and antitrust reviews. Over the years, its staffing has not kept up with the overall growth of the economy and population. The agency’s new chairman, Jon Leibowitz, recently testified that the FTC has about 1,100 full time employees, down from about 1,800 in 1980.

While Washington’s attention recently has focused on a broad overhaul of financial regulations, efforts to tighten consumer protection laws against mortgage fraud have moved slowly. Last year, Sen. Herb Kohl, D-Wis., introduced a Senate bill to protect victims of foreclosure rescue scams. The bill died in the Senate Banking Committee.

The surge in foreclosure rescue fraud mirrors the ongoing rise in foreclosures, a trend that has proved stubbornly resistant to public and private efforts. Over a year ago, the Bush administration established the Hope Now Alliance to prod lenders to negotiate voluntary loan modifications with troubled homeowners. Though the group says it has helped several million homeowners work out new terms and payment plans, the results have been disappointing. In some cases, monthly payments increased under these new payment plans. In December, the Office of the Comptroller of the Currency issued a report noting that more than half of those modifications left homeowners facing foreclosure again within six months.

But the national attention provided a boon to foreclosure rescue scammers. Last month, the FTC shut down a New Jersey-based company called Hope Now Modifications that claimed affiliation with the widely publicized Hope Now Alliance. According to the complaint, callers to the company’s telemarketers were promised loan modifications and told they could avoid foreclosure in return for a “mitigation escrow fee.” After paying the fees, consumers either didn’t hear back or were told negotiations with lenders were proceeding smoothly. Some homeowners later found out their lender hadn’t been contacted. Those who complained to the company and asked for a refund didn’t get their money back, the FTC said.

But the case demonstrates the difficulty regulators and prosecutors have shutting down these operations. A New Jersey judge issued a restraining order against Hope Now Modifications and the site was shut down. But later that day, Leibowitz told a congressional hearing last month, the site “popped up again under a Web site registered in Germany” and was shut down again.

“So we have a little long-arm problem in terms of asserting our jurisdiction,” Leibowitz said.

Some of those offering to help distressed homeowners are former brokers, agents and appraisers who’ve seen their previous business evaporate after the housing market collapsed under an avalanche of rogue lending many of them participated in. Some foreclosure consultants offer legitimate services. But it’s not clear whether paid advice is more effective than the help available to homeowners from nonprofit credit counselors who also work with lenders at no charge.

Some scammers have successfully tricked victims by mimicking those non-profit counseling organizations. Others have become adept at Web search marketing, buying keywords representing legitimate counseling organizations.


Neighborworks America, a national housing advocacy group, filed two trademark complaints last month with online search engines to prevent companies from using the group’s name and logo to promote foreclosure rescue schemes.

One company offering referrals for a variety of financial services is riding the coattails of the  Treasury’s Web site, , which Treasury Secretary Geithner touted in Monday’s announcement. The official site is devoted to the government’s various efforts to bail out the financial system and help homeowners avoid foreclosure. Web surfers who navigate to the unrelated are referred to dozens of links purporting to help consumers “Get out of Debt,” “Stop Foreclosure Now” and get “Payday Loans in 1 hour.”

According to, is registered to Admin Search Marketing, Ltd, based in Tortola in the British Virgin Islands. A company representative was not immediately available for comment.

In most cases, prosecutors who catch foreclosures rescue scammers opt for civil actions aimed at recovering money for bilked consumers. Few cases result in criminal penalties.

That may be changing as state attorneys general begin gearing up to go after the latest wave of mortgage fraud. This year, Arizona Attorney General Terry Goddard brought three cases charging felony theft, fraud and money laundering. Two defendants pleaded guilty; a third case is pending. California’s attorney general won convictions last year against three people who stole more than $700,000 in upfront fees of $1,500 to $5,000; those sentences ranged from probation to six years in prison.


How will foreclosure affect credit scores?
2009/03/16, 6:28 pm
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The amount of damage to a credit score caused by foreclosure, deed in lieu or a short sale during 2008 and 2009 may be mitigated by the slower economic times, say some credit and legal experts.

FICO may have to adjust its credit scores to lessen the impact of a foreclosure in the last two years, says Todd J. Zywicki, a professor of law at George Mason University.

”It just seems obvious that a foreclosure in 2008 or 2009 doesn’t have as much information value as a foreclosure five years ago,” he says. ”To the extent that foreclosure doesn’t predict future behavior as much as it did in the past, you’d expect that the FICO algorithm would change to adjust for that.”

One of the country’s largest credit unions Golden 1 has already figured out a way to lend to people with a foreclosure on their record by offering a mortgage repair loan specifically for those who have lost a home to foreclosure and who want to buy a new one.

BECU, another large credit union based in Washington State, is about to present a program to fellow lenders, ”How to Lend to the Newly Credit Impaired.”

Source: The New York Times, Ron Lieber (03/14/2009)

Trump avoids foreclosure
2009/03/04, 8:16 pm
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Developer Donald Trump and Deutsche Bank AG, which lent the money for the troubled Trump International Hotel & Tower project in Chicago, have called a 90-day truce.

Deutsche Bank has agreed to be patient even though sales are far short of what it would take to pay back the $640 million first mortgage. That gives Trump time to finish construction without fear of foreclosure.

Trump is also using the time to push for closings with buyers who signed contracts several years ago.

“I see this as very positive development,” Trump said in a statement.

Source: The Wall Street Journal, Alex Frangos (03/04/2009)