Foreclosure Crisis Compels Increased HUD Funding

Foreclosure Crisis Compels Increased HUD Funding

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WASHINGTON, D.C. – President Obama did not mention America’s foreclosure crisis during his year-end press conference. But the next day, Dec. 23, U.S. Housing and Urban Development Secretary Shaun Donovan held his own teleconference to announce the award of close to $73 million in counseling grants.

The grants are supposed to fund counseling services to assist first-time homebuyers. But Donovan stressed they are also to help homeowners facing foreclosure. He said that homeowners who receive counseling are “twice as likely to receive [loan] modification and stay out of default” than those who do not.

The numbers are grim. RealtyTrac, which tabulates foreclosures, reported that banks have taken possession of 980,000 properties thus far in 2010. Nevada is still the country’s state leader in foreclosures, followed by Utah, California, Arizona and Florida, according to RealtyTrac data. Vacant and foreclosed homes mean a decline in real estate tax revenues which is often accompanied by a decline in a jurisdiction’s capacity to offer services, thus prompting other owners to leave as well.

The crisis has led to calls for a moratorium on foreclosures, a plea that the Obama administration has thus far ignored. But the foreclosure rate has gone down in recent months, partly due to self-imposed temporary freezes because some lenders have launched their own internal investigations into allegations of “robo-signing” of loan documents. “Robo-signing” refers to the practice of an institution’s officers merely affixing their signatures to loan documents as opposed to the legal requirement to familiarize themselves with their contents, a near statistical impossibility given the volume of foreclosure paperwork that has flooded mortgage loan offices.

While moratoriums may provide a temporary reprieve for some homeowners, too many may yet fall victim to fraud by people or organizations representing themselves as mortgage counselors or foreclosure experts. The HUD grants enable legitimate counseling services to offer free expertise as contrasted, for example, with so-called “experts” who often charge an upfront fee and then disappear, or who convince distraught homeowners to sign documents that may result in the legal loss of their homes.

“HUD-certified counseling is one angle, one way, one method of providing some assistance to the public,” said Maeve Elise Brown, executive director of Oakland, Calif.-based Housing and Economic Rights Advocates (HERA) which offers legal and technical assistance services, including counseling, to individuals and organizations throughout California. “The public has been treated so badly by mortgage servicers, homeowners are like prey by the watering hole for rescue foreclosure scammers who have promised them the moon,” Brown said.

The elderly are particularly vulnerable. The $73 million package carves out $9.5 million targeted for use by counselors to educate seniors about whether they can qualify for Home Equity Conversion Mortgages, more commonly known as reverse mortgages. HECMs enable the elderly to draw an income from equity in their homes.

“In addition,” Sec. Donovan’s release stated, “HUD is awarding more than $5 million to three national organizations to train approximately 4,500 counselors who will receive the instruction and certification necessary to effectively assist families with their housing needs.” Grant winners were selected on a competitive basis and the funds are to be funneled to HUD-certified agencies and non-profit organizations in all 50 states. Donovan explained that President Obama had fought for and obtained a 22 percent increase, or an additional $13 million, over the previous funding level in the annually awarded funds as part of the fiscal year 2010’s budget package. Fiscal year 2010 began in October 2009 and concluded in September 2010.

But some worry it’s too little, too late. An officer with one of HUD’s new grant recipients, who personally has more than two decades of mortgage counseling experience, was cautious. Preferring to speak anonymously, she said the need for foreclosure counseling is and has been pandemic for years. “HUD has never embraced counseling” as a primary tool to deter foreclosures, she said, and given the scale of the current crisis, the funds amount to no more than a “drop in the bucket.”

One challenge in meeting the counseling need, she explained, is that a large grant recipient, after deducting its administrative costs, may be disbursing funds to as many as 50 smaller entities that in turn have to stretch those smaller sums over a typically small annual budget. Donovan acknowledged the dispersal process in his statement.

But another important component, she said, is evaluating how counseling assistance is rendered. “Some agencies simply focus on the submission of documents, helping an applicant with filling out paperwork. Others will actually play an advocacy role as well, which is more time consuming and therefore more expensive.”

“One of the ways to strengthen the counseling process is for the major lenders to become more involved with the non-profits, including supporting some of those costs,” she said. “Wells Fargo and Chase are doing that,” she said, but to her knowledge, she said Bank of America and Citibank, two leading mortgage lenders, are not.

"We're not in a normal [housing market] environment," said HERA’s Brown, but "if the [U.S.] Treasury [Department] would actually enforce the existing Home Affordable Modification Program (HAMP), many homeowners would benefit.” HAMP provides eligible homeowners the opportunity to modify their mortgages. She said an impediment to solving the foreclosure crisis is that "some of the biggest companies in the United States, if not the world, appear to be resistant to implementing the HAMP."

But even if HUD’s training initiative successfully yields a 4,500-member cadre of new counselors, they will be thrown into the breach of daunting foreclosure rates. The pace of foreclosures will likely accelerate in 2011 should the robo-signing crisis be resolved in a way that allows lenders to expedite the foreclosure process.

Nevertheless, “You can’t measure success of counseling just by the number of loan modifications. If the only thing counseling can provide is a reality check to homeowners who may have unrealistic expectations about their options, that’s useful,” said Brown.



 

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Anonymous

Posted Dec 30 2010

Scores of homeowners do not contest foreclosures because of not having legal knowledge to recognize illegal foreclosures and fraud; they lack funds to pay for attorneys to represent them; and they are told to come to foreclosure auctions with money that they do not have, so they stay away from foreclosure auctions. It is extremely troubling that there are families living outdoors whose homes have been confiscated via real estate racketeering.

Intentional foreclosure fraud entails foreclosures naming defunct mortgage companies, or having no ownership of notes; unfair fees beyond “Acceleration Clauses" that impairs borrowers’ ability to repay arrears; falsified Bankruptcy Court motions to “Lift Stay" for accomplishing"simulated" foreclosure auctions via “straw buyers."

Whether or not property owners should have mortgage loans –and whether or not people realize basis for opposing home repossessions, very serious foreclosure fraud acts are deliberately being done by certain foreclosure lawyers! Even if it became remotely valid to label all defaulted homeowners as deadbeats, NOTHING IS VALID ABOUT real estate racketeering. http://chn.ge/eU2zAm

Also, some PREDATORY mortgage loans appear to be issued for the very purpose of people defaulting so that properties can become flipped, repeatedly (hence blight); and lenders gain tax credits, mortgage-default insurance, and more! Too often, not only is it true that the lender DID NOT file foreclosure, certain homes wound up becoming flipped by the foreclosure lawyers who carry out simulated auctions with “straw buyers” who illegally “credit bid”!

Foreclosure lawyers are officers of the court; knowledge of applicable laws and civil procedure is not required from mortgage lenders, nor loan servicers. In states that require judicial foreclosures, FORECLOSURE LAWYERS are the ones who file lawsuits to seize and sell property; and lawyers are responsible for filing and recording foreclosure property deeds. *Request for Congressional Foreclosure Panel to Examine Foreclosure Lawyers @ http://www.change.org/petitions/view/request_for_congressional_foreclosure_panel_to_examine_foreclosure_lawyers#

Anonymous

Posted Dec 30 2010

Was a victim of a fraudulant mortgage, was able to keep up with the payments until I lost my job (twice), but in the end the bank won, took my home, gave me a mere pittance to move out. I don't know what the future will hold for me. I have a job and a roof over my head. I thought being an American was about building a dream not living a nightmare. All I want to do is be of service to people with my skills and experience and to be treated fairly. Isn't that the American way? Where have we gone astray?

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