Foreclosure Fight Flourishes

The HOPE NOW alliance reported that almost 503,000 foreclosures were prevented during the first quarter as a result of workouts by its mortgage servicer members. Around 323,000 of the workouts involved repayment plans while another 179,500 were loan modifications. The group claimed to have prevented 1.4 million foreclosures since July 2007.

Sheila Bair, chairman of the Federal Deposit Insurance Corp., has proposed a plan where the Treasury Department would provide up to $50 billion in loans for borrowers who cannot afford mortgage payments, according to published reports. Their primary mortgages would be reduced by up to 20 percent, and the Treasury’s loans would be interest-free for five years.

The National Mortgage Complaint Center is fishing for borrower complaints about the loan servicing practices of Lehman Bros.-subsidiary Aurora Loan Services. The center issued a press release indicating is has initiated an investigation and is soliciting borrowers who have had issues with the servicer.

Freddie Mac announced $10.5 million in grants to housing counseling organizations to use for their outreach, education and foreclosure prevention efforts to help borrowers. The grants will enable the non-profit organizations to add and train staff, pay operational expenses and support outreach campaigns to borrowers having difficulty making their mortgage payments, especially subprime borrowers. HOPE NOW will administer more than $6 million of the funds.

Freddie issued a bulletin indicating that servicers must retain more than one law firm or trustee when making foreclosure referrals in any state where the servicer has 250 or more Freddie foreclosure and bankruptcy referrals in a calendar year. In addition, servicers are required to develop a contingency plan for redirecting foreclosure and bankruptcy referrals in the event a law firm or trustee with whom they currently conduct business is unable to accept new referrals.

Bank of America and Countrywide Financial Corp. detailed plans yesterday on a $35 million foreclosure prevention package. The package includes $10 million in direct grants from the Bank of America Charitable Foundation for nonprofit organizations focused on foreclosure prevention counseling and mitigation; $15 million in long-term, repayable loan/investment offered at below-market interest rates to help nonprofit organizations preserve affordable housing in deeply-impacted cities by acquiring and redeploying foreclosed properties; and $5 million in unallocated grants to address future needs, including counseling and property disposition efforts.

Countrywide announced it is working with New Vista Asset Management to find buyers for its REO properties.

FirstClose said it has formed a strategic alliance with America’s Home Rescue LLC to provide technology services designed to significantly streamline the pre-foreclosure and short-sale process. FirstClose developed proprietary software that automates key components of the short sale document submission process. The software enables real estate agents to create, print, and upload all of the required documents for each lending institution.

Housing and Urban Development Deputy Secretary Roy A. Bernardi this week touted efforts by the Bush administration to prevent foreclosures. Among the accomplishments mentioned were 170,000 refinances through FHASecure; the expansion to subprime borrower for FHASecure; and the temporary increase in FHA loan limits.

RealtyStore reported that 116,644 notices of default were recorded in California during the first quarter, up 38 percent from the fourth quarter.

A bill passed by the California state senate would allow local jurisdictions to impose a $1,000-per-day fine on financial institutions that don’t maintain vacant properties if problems are not fixed within 14 days. Another provision of SB 1137 increases the current notice required to be given to residential tenants of foreclosed properties to 60 days prior to eviction.

The How To Prevent Foreclosure Guide provides guidance for delinquent borrowers to avoid foreclosure, according to a press release. Borrowers should be cautious of unsolicited phone calls, direct mail and strangers knocking at their doors who claim they can help them. They should, however, talk about their financial situation with their servicers.

Florida condominium associations are experiencing a decline in revenues from maintenance fees and other assessments because servicers now holding title to the foreclosed properties aren’t paying them, according to the 2008 Florida Community Association Mortgage Foreclosure Survey released by the Community Association Leadership Lobby. The survey of nearly 500 respondents was conducted online from March 26 to April 8.

“As a result of the mortgage foreclosure crisis, community associations statewide are now seeing the compounding effects of declining revenue collection and will likely have to balance association budgets through increased monthly fees and assessments for members,” an executive for the group stated.

Tucson attorney Stephen M. Weeks claims his newly patented financing method helps prevent foreclosures.

“When refinancing, the Owner pays 30 percent of the $200,000 fair market value — $60,000 — fully amortized over 5 years, with an investor/financial institution paying 70 percent plus closing costs,” Weeks explained in an announcement. “Subtracting out the existing equity in the property — $6,170.00, provides the amount this owner would finance for 5 years. Here, the amount financed is $53,830.00. At 7.25%, the new P&I payment is $1,072.26 — a $630.89 monthly savings over their ARM’s new payment.”

The California Reinvestment Coalition announced grant awards to 39 mortgage counseling agencies through the California Home Ownership Preservation Initiative. Initiative funds will be used to hire 58 mortgage counselors statewide, who are expected to serve 40,000 troubled home loan borrowers.