The following article was released by Crains New York Business.
By Amanda Fung
Published: December 16, 2009 - 2:39 pm
A landmark foreclosure law designed to help thousands of middle class New Yorkers keep their homes was signed into law Tuesday by Gov. David Paterson.
It is designed to protect property values by requiring lending institutions to maintain foreclosed homes and make them safe and habitable for tenants. The law also expands protections to homeowners with all types of loans. Previously, court-based settlement conferences—where homeowners, court officials and banks sit down to discuss foreclosure proceedings—were only offered to homeowners with sub-prime loans.
In addition, under the new law banks are required to notify tenants at least 90 days before foreclosing on properties to give tenants time to find a new home.
“We still need to do a little more, but overall this is going to go a long way in keeping dreams of homeowners alive,” said state Sen. Jeff Klein (D, Bronx-Westchester), who sponsored the legislation and has been working on it for more than two years.
Before this law was passed, local governments and community groups spent money and time to maintain foreclosed properties to prevent these properties from becoming blighted neighborhood eyesores, Mr. Klein said. Now lending institutions are responsible for maintaining these properties.
The law also aims to prevent foreclosure by allowing banks to decrease the principal of a loan for homes where the home's value has fallen below the original loan amount. In return, when the homeowner sells the property, the banks will get a percentage of that sale price.
“The laws we have passed in New York have stood as a national model for foreclosure mitigation,” Mr. Paterson said, in a statement. “This effort is about keeping New Yorkers in their homes and protecting them during this economic crisis.”
“We commend the government for passing this important legislation,” said Michael Minott, program manager of external education at Neighborhood Housing Services of NYC.
For the first 10 months of 2009, New York state reported more than 58,200 foreclosures, according to Realtytrac.com. Among the top foreclosure counties in the state are Queens with 10,521, Bronx with 3,071 and Manhattan with 1,238. Mr. Minott predicts that the problem will continue to increase as adjustable rate mortgage cause homeowners to experience higher payments. “That will trigger a new wave of default,” he said.
The new law is also expected to crack down on foreclosure and loan modification scams that have arisen due to the market conditions. The law bans any firm from collecting upfront fees from homeowners for loan modifications. Many of these independent loan modification companies charge an unnecessary $2,500 upfront fee, Mr. Klein said.
“Homeowners don't need to hire these companies,” he said. “They can get their lending institution or a U.S. Department of Housing and Urban Development-approved counselor to do it for free.
Noting that many of these opportunistic businesses take the fees and just disappear, Mr. Minott said, “It will hopefully put them out of business.
Wednesday, December 16, 2009
Friday, December 11, 2009
Only 5% of loan modifications go through!
As an attorney working to help homeowners, reports of these stats make me scream! I thank the Wall Street Journal for their reporting which appeared in today's paper. I respectfully copy here the story authored by
Ruth Simon (at ruth.simon@wsj.com).
The new numbers were the latest sign of trouble in the $75 billion foreclosure-rescue plan launched in February. The program provides financial incentives for mortgage companies and investors to reduce loan payments to affordable levels for struggling borrowers. But it has proved difficult to move borrowers from a trial phase to permanent mortgage fixes.
"We agree that servicer performance in converting trial modifications to permanent ones has been unsatisfactory," a Treasury Department spokeswoman said. The department last week said it was stepping up pressure on mortgage companies to complete more loan modifications.
Through
November, more than 728,000 borrowers had begun making trial payments
under the plan, up from 651,000 in October, with modifications saving
borrowers an average of more than $550 a month, the Treasury Department
said.
Bank of America Corp. had 156,864 borrowers in the trial program and 98 other borrowers had received permanent fixes. Citigroup Inc. had completed 271 permanent modifications and had 100,124 active trial modifications.
A Bank of America spokesman said the company had "the highest number of...active trial modifications" and expected to gain momentum in converting borrowers to permanent fixes in December.
A spokesman for Citigroup's mortgage unit said the bank was beginning to see "greater success" thanks to "recent improvements in documentation requirements and increased borrower awareness."
The program calls for borrowers to make three trial payments to qualify for a permanent modification. They must also provide a hardship affidavit and other documents.
The administration has been successful in getting borrowers into trial modifications, said Thomas Lawler, an independent housing economist. But its results on permanent modifications has been "discouraging," he said. Officials "clearly didn't think enough about what would happen on the back end," he said.
The administration had set a goal of 500,000 trial modifications by November 1. Many mortgage-servicing companies began the trial process based on verbal information provided by borrowers. But getting borrowers to turn in required documents has been challenging. Many borrowers, meanwhile, complain they are asked repeatedly for forms they have already filed.
Some companies have required borrowers to provide most or all of the needed paperwork before they begin the trial process. Two such firms, Ocwen Financial Corp. and GMAC Mortgage Inc., account for more than 11,000 permanent modifications -- more than 36% of the total.
"Deciding to get the documentation up front has been key," a GMAC spokeswoman said. Despite financial pressures, GMAC has boosted staffing in loss mitigation by 35%, she said.
J.P. Morgan Chase & Co. has 136,686 active trial modifications and 4,302 permanent modifications. In testimony before Congress this week, Chase said that 29% of borrowers who entered the program between April and September didn't make the required payments; 20% hadn't provided all of the required documents. "Our focus has been on getting the documents we need from customers," a Chase spokesman said.
At Wells Fargo & Co., 96,137 borrowers were in the trial plan and 3,537 had received permanent fixes. About 14,000 additional borrowers had provided all required documents and most should receive permanent modifications in the next month or so, said Cara Heiden, co-president of Wells Fargo Home Mortgage.
More than half of Wells Fargo customers in the program hadn't yet made all their trial payments because they hadn't been participating long enough, she said.
Write to Ruth Simon at ruth.simon@wsj.com
Ruth Simon (at ruth.simon@wsj.com).
Foreclosure Rescue Still Bogged Down
By RUTH SIMON
Fewer than 5% of borrowers participating in the Obama administration's foreclosure-prevention program, about 31,000 in all, have received permanent loan modifications, the Treasury Department said Thursday.The new numbers were the latest sign of trouble in the $75 billion foreclosure-rescue plan launched in February. The program provides financial incentives for mortgage companies and investors to reduce loan payments to affordable levels for struggling borrowers. But it has proved difficult to move borrowers from a trial phase to permanent mortgage fixes.
"We agree that servicer performance in converting trial modifications to permanent ones has been unsatisfactory," a Treasury Department spokeswoman said. The department last week said it was stepping up pressure on mortgage companies to complete more loan modifications.
Waiting for a Permanent Fix
See more data on loan modifications, and sort by servicer, the number of loans eligible and the number modified.More
Bank of America Corp. had 156,864 borrowers in the trial program and 98 other borrowers had received permanent fixes. Citigroup Inc. had completed 271 permanent modifications and had 100,124 active trial modifications.
A Bank of America spokesman said the company had "the highest number of...active trial modifications" and expected to gain momentum in converting borrowers to permanent fixes in December.
A spokesman for Citigroup's mortgage unit said the bank was beginning to see "greater success" thanks to "recent improvements in documentation requirements and increased borrower awareness."
The program calls for borrowers to make three trial payments to qualify for a permanent modification. They must also provide a hardship affidavit and other documents.
The administration has been successful in getting borrowers into trial modifications, said Thomas Lawler, an independent housing economist. But its results on permanent modifications has been "discouraging," he said. Officials "clearly didn't think enough about what would happen on the back end," he said.
The administration had set a goal of 500,000 trial modifications by November 1. Many mortgage-servicing companies began the trial process based on verbal information provided by borrowers. But getting borrowers to turn in required documents has been challenging. Many borrowers, meanwhile, complain they are asked repeatedly for forms they have already filed.
Some companies have required borrowers to provide most or all of the needed paperwork before they begin the trial process. Two such firms, Ocwen Financial Corp. and GMAC Mortgage Inc., account for more than 11,000 permanent modifications -- more than 36% of the total.
"Deciding to get the documentation up front has been key," a GMAC spokeswoman said. Despite financial pressures, GMAC has boosted staffing in loss mitigation by 35%, she said.
J.P. Morgan Chase & Co. has 136,686 active trial modifications and 4,302 permanent modifications. In testimony before Congress this week, Chase said that 29% of borrowers who entered the program between April and September didn't make the required payments; 20% hadn't provided all of the required documents. "Our focus has been on getting the documents we need from customers," a Chase spokesman said.
At Wells Fargo & Co., 96,137 borrowers were in the trial plan and 3,537 had received permanent fixes. About 14,000 additional borrowers had provided all required documents and most should receive permanent modifications in the next month or so, said Cara Heiden, co-president of Wells Fargo Home Mortgage.
More than half of Wells Fargo customers in the program hadn't yet made all their trial payments because they hadn't been participating long enough, she said.
Write to Ruth Simon at ruth.simon@wsj.com
Thursday, December 10, 2009
WE NEED THIS LEGISLATION! Wall Street Reform and Consumer Protection Act H.R. 4173
Once again we have the opportunity to allow our bankruptcy judges to modify home loans. Earlier this year, this very important legislation was defeated in the Senate and rightfully, it is again presented to our House for a vote. HOME LOANS are the only contracts bankruptcy judges can not modify! Please work to have this changed!
This is the letter that I sent out today to Congressman Garrett:
Later this week, the House of Representatives will begin debate on H.R. 4173, the "Wall Street Reform and Consumer Protection Act". During debate on the bill, an amendment that will help families avoid foreclosure and stay in their homes ---at no cost to taxpayers - will be offered by Representatives Conyers, Turner, Lofgren and others. Based on key provisions of H.R. 1106, the "Helping Families Save Their Homes Act", which passed the House on a bipartisan basis earlier this year, the amendment would allow bankruptcy judges to modify residential mortgages.
As you probably know, the government's voluntary mortgage modification program has fallen far short of its goals. The amendment being offered would be the inducement needed to step up and make meaningful mortgage modifications for the millions of struggling homeowners who are facing foreclosure.
The ongoing foreclosure crisis is having a negative effect on American families, our communities, and our economy. Experts warn that a rise in foreclosures next year and into 2011 could undermine the chances of a sustained economic recovery.
Residential mortgages are the only contract that bankruptcy judges cannot modify. This restriction--which does not apply to commercial real estate or vacation homes or any other type of loan --is costly to everyone, as property values continue to go down and spillover effects multiply.
If adopted, the mortgage modification amendment to H.R. 4173 would simply give bankruptcy judges the authority to modify unaffordable loans for families who are facing foreclosure and cannot obtain a voluntary modification. Such an approach would require no new tax dollars, and it would not excuse families from paying their mortgage.
I join with other concerned and struggling Americans in asking you to stand up for the families in our state and across the country by using your voice and your vote to give your full support to the amendment being offered by Representatives Conyers, Turner, Lofgren and Marshall. Thank you for your consideration.
Sincerely,
Michele Peters
This is the letter that I sent out today to Congressman Garrett:
Later this week, the House of Representatives will begin debate on H.R. 4173, the "Wall Street Reform and Consumer Protection Act". During debate on the bill, an amendment that will help families avoid foreclosure and stay in their homes ---at no cost to taxpayers - will be offered by Representatives Conyers, Turner, Lofgren and others. Based on key provisions of H.R. 1106, the "Helping Families Save Their Homes Act", which passed the House on a bipartisan basis earlier this year, the amendment would allow bankruptcy judges to modify residential mortgages.
As you probably know, the government's voluntary mortgage modification program has fallen far short of its goals. The amendment being offered would be the inducement needed to step up and make meaningful mortgage modifications for the millions of struggling homeowners who are facing foreclosure.
The ongoing foreclosure crisis is having a negative effect on American families, our communities, and our economy. Experts warn that a rise in foreclosures next year and into 2011 could undermine the chances of a sustained economic recovery.
Residential mortgages are the only contract that bankruptcy judges cannot modify. This restriction--which does not apply to commercial real estate or vacation homes or any other type of loan --is costly to everyone, as property values continue to go down and spillover effects multiply.
If adopted, the mortgage modification amendment to H.R. 4173 would simply give bankruptcy judges the authority to modify unaffordable loans for families who are facing foreclosure and cannot obtain a voluntary modification. Such an approach would require no new tax dollars, and it would not excuse families from paying their mortgage.
I join with other concerned and struggling Americans in asking you to stand up for the families in our state and across the country by using your voice and your vote to give your full support to the amendment being offered by Representatives Conyers, Turner, Lofgren and Marshall. Thank you for your consideration.
Sincerely,
Michele Peters
Tuesday, December 1, 2009
The Scoop on First-Time Homebuyer Credit - Direct from the IRS - 11/24/2009
There has been so much bantering about what is covered and what is not covered, that the IRS has posted on their website what you really need to know for your taxes - good or otherwise. As I always recommend, it's best to go to the source. As a convenience, I'm posting below the information the IRS gives (at the link above you can go directly). And check it out -- they actually have a video on YouTube -- scroll all the way down for that link.
IR-2009-108, Nov. 24, 2009
WASHINGTON — A new law that went into effect Nov. 6 extends the first-time homebuyer credit five months and expands the eligibility requirements for purchasers.
The Worker, Homeownership, and Business Assistance Act of 2009 extends the deadline for qualifying home purchases from Nov. 30, 2009, to April 30, 2010. Additionally, if a buyer enters into a binding contract by April 30, 2010, the buyer has until June 30, 2010, to settle on the purchase.
The maximum credit amount remains at $8,000 for a first-time homebuyer –– that is, a buyer who has not owned a primary residence during the three years up to the date of purchase.
But the new law also provides a “long-time resident” credit of up to $6,500 to others who do not qualify as “first-time homebuyers.” To qualify this way, a buyer must have owned and used the same home as a principal or primary residence for at least five consecutive years of the eight-year period ending on the date of purchase of a new home as a primary residence.
For all qualifying purchases in 2010, taxpayers have the option of claiming the credit on either their 2009 or 2010 tax returns.
A new version of Form 5405, First-Time Homebuyer Credit, will be available in the next few weeks. A taxpayer who purchases a home after Nov. 6 must use this new version of the form to claim the credit. Likewise, taxpayers claiming the credit on their 2009 returns, no matter when the house was purchased, must also use the new version of Form 5405. Taxpayers who claim the credit on their 2009 tax return will not be able to file electronically but instead will need to file a paper return.
A taxpayer who purchased a home on or before Nov. 6 and chooses to claim the credit on an original or amended 2008 return may continue to use the current version of Form 5405.
Income Limits Rise
The new law raises the income limits for people who purchase homes after Nov. 6. The full credit will be available to taxpayers with modified adjusted gross incomes (MAGI) up to $125,000, or $225,000 for joint filers. Those with MAGI between $125,000 and $145,000, or $225,000 and $245,000 for joint filers, are eligible for a reduced credit. Those with higher incomes do not qualify.
For homes purchased prior to Nov. 7, 2009, existing MAGI limits remain in place. The full credit is available to taxpayers with MAGI up to $75,000, or $150,000 for joint filers. Those with MAGI between $75,000 and $95,000, or $150,000 and $170,000 for joint filers, are eligible for a reduced credit. Those with higher incomes do not qualify.
New Requirements
Several new restrictions on purchases that occur after Nov. 6 go into effect with the new law:
Members of the Armed Forces and certain federal employees serving outside the U.S. have an extra year to buy a principal residence in the U.S. and still qualify for the credit. An eligible taxpayer must buy or enter into a binding contract to buy a home by April 30, 2011, and settle on the purchase by June 30, 2011.
For more details on the credit, visit the First-Time Homebuyer Credit page on IRS.gov. http://www.irs.gov/newsroom/article/0,,id=204671,00.html
Related Items:
IRS YouTube Videos
New Homebuyer Credit, November 2009
http://www.youtube.com/watch?v=GkzB03uuGlg
IR-2009-108, Nov. 24, 2009
WASHINGTON — A new law that went into effect Nov. 6 extends the first-time homebuyer credit five months and expands the eligibility requirements for purchasers.
The Worker, Homeownership, and Business Assistance Act of 2009 extends the deadline for qualifying home purchases from Nov. 30, 2009, to April 30, 2010. Additionally, if a buyer enters into a binding contract by April 30, 2010, the buyer has until June 30, 2010, to settle on the purchase.
The maximum credit amount remains at $8,000 for a first-time homebuyer –– that is, a buyer who has not owned a primary residence during the three years up to the date of purchase.
But the new law also provides a “long-time resident” credit of up to $6,500 to others who do not qualify as “first-time homebuyers.” To qualify this way, a buyer must have owned and used the same home as a principal or primary residence for at least five consecutive years of the eight-year period ending on the date of purchase of a new home as a primary residence.
For all qualifying purchases in 2010, taxpayers have the option of claiming the credit on either their 2009 or 2010 tax returns.
A new version of Form 5405, First-Time Homebuyer Credit, will be available in the next few weeks. A taxpayer who purchases a home after Nov. 6 must use this new version of the form to claim the credit. Likewise, taxpayers claiming the credit on their 2009 returns, no matter when the house was purchased, must also use the new version of Form 5405. Taxpayers who claim the credit on their 2009 tax return will not be able to file electronically but instead will need to file a paper return.
A taxpayer who purchased a home on or before Nov. 6 and chooses to claim the credit on an original or amended 2008 return may continue to use the current version of Form 5405.
Income Limits Rise
The new law raises the income limits for people who purchase homes after Nov. 6. The full credit will be available to taxpayers with modified adjusted gross incomes (MAGI) up to $125,000, or $225,000 for joint filers. Those with MAGI between $125,000 and $145,000, or $225,000 and $245,000 for joint filers, are eligible for a reduced credit. Those with higher incomes do not qualify.
For homes purchased prior to Nov. 7, 2009, existing MAGI limits remain in place. The full credit is available to taxpayers with MAGI up to $75,000, or $150,000 for joint filers. Those with MAGI between $75,000 and $95,000, or $150,000 and $170,000 for joint filers, are eligible for a reduced credit. Those with higher incomes do not qualify.
New Requirements
Several new restrictions on purchases that occur after Nov. 6 go into effect with the new law:
- Dependents are not eligible to claim the credit.
- No credit is available if the purchase price of a home is more than $800,000.
- Purchaser must be at least 18 years of age on the date of purchase.
Members of the Armed Forces and certain federal employees serving outside the U.S. have an extra year to buy a principal residence in the U.S. and still qualify for the credit. An eligible taxpayer must buy or enter into a binding contract to buy a home by April 30, 2011, and settle on the purchase by June 30, 2011.
For more details on the credit, visit the First-Time Homebuyer Credit page on IRS.gov. http://www.irs.gov/newsroom/article/0,,id=204671,00.html
Related Items:
IRS YouTube Videos
New Homebuyer Credit, November 2009
http://www.youtube.com/watch?v=GkzB03uuGlg
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