Archives for October 2013


HARP made a policy change that is to help UNDERWATER loans.

FANNIEMAE is pushing for refinancing of underwater loans.   Perception or reality:  Homeowners believe they need to be delinquent on their loan before their lender will help.  Edward J. DeMarco, acting director of the FHFA (Federal Housing Finance Agency) states this is a misperception.   However, homeowners believe this to be true because Servicers are telling people this exact “misperception.”

The FHFA estimates that 1 to 2 MILLION people may be eligible for HARP (Home Affordable Refinance Program).  These are people who are paying above market interest rates and have little to no equity in their home.  To be eligible to refinance through HARP, borrowers must be current on their payment and the loan must have originated before June 1, 2009.  Borrowers also cannot have more than 20% equity in their homes.  This program ends in December 2015.   Go to the website, for more information.



Zombie homes take on the characteristics of Zombies; If you don’t watch out, they will kill you.  “Night of the Living Dead”, what a great movie.  These vacant houses, just like Zombies, sneak up on you and “Bam”, your dead.  According to RealtyTrac, there are over 302,000 vacant homes in the United States as a result of foreclosures.  Vacant homes kill the neighborhood. They lower the value of other homes.  They have terrible curb appeal.  Vacant homes are vandalized, trashed, and used as crack houses.  20% of all foreclosures nationwide, according to RealtyTrac, were abandoned by homeowners. The top Zombie states are Florida (duh!), Illinois (Obama), Ohio, California and New York.

Lenders cannot foreclose because the World is upside down.  The homeowner must be protected at all costs.  However, foreclosing on these properties as fast as possible is best for everyone; the homeowner so he can get on with his life, the lender so it can recoup the money lent, and the municipality so the home can get back on the tax role.  Homeowners call me very angry that the lender has not foreclosed yet. “Sorry sir, I must protect you from the evil lender”, I respond.

Public perception must change.  All foreclosures are not the same. Vacant property is not the same as occupied property.  It is a mistake to lump these types of properties together.

Foreclosures have always been here.  Foreclosures are not the enemy.  Doing nothing to vacant homes is the enemy.  Allow the foreclosure to proceed.  Get them back on the tax role.

Some states have got the message.  All is not lost as the light bulb has turned on in three states, Florida, Illinois and New Jersey where they have passed laws to speed up the foreclosure process on vacant homes.  In Missouri foreclosures happen so quickly that vacant homes receive the same attention as homes that are occupied.


Six biggest banks, led by JPMorgan Chase and Bank of America make Billions despite paying legal costs of over $100 Billion dollars since the start of the financial crisis in 2008 and with over 40% being paid since 2012.  The money went to attorneys, litigation costs, as well as for settling claims about shoddy mortgages and foreclosures.  There is no end in sight as some estimate the payouts will continue for another 10 years.  JPMorgan Bank has devoted over $21 billion to these expenses and has added over $8 billion to reserves for mortgage buybacks.  Banks are accused of misleading buyers of mortgages, rigging interest rates and manipulating markets.  $8 billion in reserve may not be enough.

Bank of America increased its legal costs by $3.3 billion in the first 6 months of 2013 to total $19.1 billion during this period.  JPMorgan added $1.5 billion and the other four lenders added about $2.4 billion for this time period.

JPMorgan Bank has problems. I previously wrote that an assistant US Attorney is seeking over $6 billion to settle claims where the bank sold bad mortgage bonds to Fannie and Freddie.  You might recall the episode in the U.K. where a trader lost billions from his risky trades.  Penalties to JPMorgan Bank may reach $600 million according to the Wall Street Journal.  Regulators are also preparing enforcement actions against the bank for its treatment of consumers during the recession that could reach $80 million.  These figures do not included European banks.  HSBC, Europe’s largest lender, agreed last year to pay $1.92 billion to settle U.S. money-laundering probes, and UBS, the largest lender in Switzerland, is to pay $885 million to Fannie and Freddie on claims that it improperly sold them mortgages.

The amazing fact is that these banks are still reaping huge profits.  Collectively, the top six banks have earned $59.5 billion in 2012.