Monthly Archives: March 2011

House votes to kill Obama mortgage plan

By Jennifer Liberto, senior writer
March 29, 2011: 8:21 PM ET

WASHINGTON (CNNMoney) — The House passed a bill Tuesday to kill a signature Obama administration program that helps homeowners stay in their homes but has faced criticism as ineffective.

The House voted 252 to 170 to stop any new funding for the Home Affordable Modification Program (HAMP). Eleven Democrats joined Republicans to defund the program.

The program taps the federal bailout that saved the big banks, providing incentives to mortgage servicers to modify mortgages for borrowers behind on their payments.

“To many struggling Americans seeking permanent mortgage relief, HAMP offered little more than false hope. More homeowners have been kicked out of the program than have received permanent relief,” Rep. Darrell Issa, the California Republican who chairs the House Oversight Committee, said in a statement.

The bill’s path in the Senate is uncertain. President Obama has vowed to veto it.

Already, House Republicans have passed three other smaller programs designed to help families and neighborhoods dealing with foreclosure. What makes the HAMP program different is the widespread criticism it has received, from both Republicans and Democrats, for being ineffective.

“It would put an end to the poster child for failed federal foreclosure programs,” said Rep. Judy Biggert, an Illinois Republican.

On Tuesday, 50 House Democrats wrote Treasury Secretary Tim Geithner a letter, urging him to reform the program, saying “HAMP must change to meet its potential.”

“Yes, the HAMP program has a lot of problems,” said Rep. Barney Frank, a Massachusetts Democrat, on the House floor. “But, the absence of any program leaves homeowners worse off.”

The outgoing special investigator general for the Troubled Asset Relief Program called HAMP a “failure,” in an interview with CNN on Friday. He said it was supposed to help 3 to 4 million underwater homeowners stay in their homes. But so far, it has only managed to help about 500,0000 homeowners.

“It’s really one of the deep failures of TARP,” said Neil Barofsky, the special investigator general. “TARP wasn’t supposed to just help the banks return to profitability, it was supposed to help people stay in their homes.”

Treasury has pointed out, on several occasions, that while the HAMP program could be better, it’s the only federal program spurring mortgage servicers to help homeowners.

“This is a very difficult housing market to fix, and this program, is at least helping fix it,” Timothy Massad, the Treasury acting assistant secretary who is overseeing HAMP, said recently to a Senate Banking panel. “It’s not enough. But it needs to be continued so we can try to ease the pain for millions of American families.”

The GOP proposal would stop Treasury from being able to help 100,0000 new troubled homeowners, according to the Congressional Budget Office. Treasury spends about $13,000 per homeowner on the program, CBO said.

It would also cut federal deficits, saving a minimal amount, $1.3 billion over the next five years.

Massad said in a statement released late Tuesday that the House move will “make it harder to prevent unnecessary foreclosures and for our country to recover from this housing crisis.”

Original article at http://money.cnn.com/2011/03/29/news/economy/republicans_kill_hamp/index.htm

Banks drag feet on short sales, survey finds

Associated Press
March 7, 2011, 10:09 p.m.

Banks are dragging their feet when considering so-called short sales, an increasingly prevalent type of real estate transaction in which lenders allow homes to be sold for less than what is owed on them, according to a survey of California real estate agents.

Nearly two-thirds of the 2,150 respondents to the California Assn. of Realtors’ survey of member agents said banks took longer than 60 days to respond to short sale offers and that fewer than three out of every five offers ultimately resulted in a sale.

The response times are much longer than those specified in government guidelines for banks who agreed to participate in programs that help troubled borrowers when they accepted a share of the $700-billion Wall Street rescue.

“The survey results show that the short sale system is clearly flawed,” CAR president Beth L. Peerce said. “Increasing the number of successful short sale transactions is one important way we can help California families and move our economy closer to recovery.”

Although the survey only covered agents in California, National Assn. of Realtors spokesman Walter Molony said similar complaints had come from across the country, especially from states with hard-hit housing markets such as Nevada, Florida and Arizona.

“Banks just have not been equipped or willing to make quick decisions on this,” Molony said. “It’s unfair to all parties concerned.”

Short sales have played an increasingly large role in California’s real estate market, with declines in property values leaving many borrowers with crushing payments on mortgages that are greater than their homes’ worth.

The transactions allow troubled borrowers to dodge the hit to their credit scores that would come from a foreclosure, while banks are able to keep distressed properties off their books without going through the costly foreclosure process.

The estimated percentage of resales in the state that were short sales went from about 10% in 2008 to 18% in 2010, according to tracking firm DataQuick Information Systems.

But foreclosures are still much more common, accounting for nearly 38% of all resales in 2010, DataQuick said.

Richard Green, who directs the USC Lusk Center for Real Estate, said the market would benefit from avoiding foreclosures, which can lead to homes languishing on the market, by encouraging more short sales.

“Forcing banks to clear the market through short sales would almost certainly get us through this faster than we’re getting through it,” he said.

Green said he suspected banks were slow to approve short sales because the transactions force them to immediately report the difference between the sale price and what they’re owed as a loss, rather than carrying the loan balance as a purported asset. He said some banks may also fear inadvertently letting property go for less than it’s worth.

Mortgage Bankers Assn. spokesman John T. Mechem did not return a phone message.

CAR had previously written to federal government agencies that oversee short sales to ask them to mandate faster responses by banks and to take other steps to foster more of the transactions.

The association said in the December letter to the Treasury and the Federal Housing Finance Agency, which oversees government-supported lenders Fannie Mae and Freddie Mac, that banks were not living up to the terms of the Home Affordable Foreclosure Alternatives’ short sale program.

Since most lenders have repaid their bailout funds to the government, participation in HAFA is now primarily voluntary, but CAR said the banks should still be bound by the agreement.

The association noted that banks were taking much longer to approve short sales than the time allotted by HAFA: Ten days in cases where the lender has already decided on a selling price; 30 days if the selling price is being proposed by a listing agent.

CAR asked for the government agencies to force banks to complete all short sales following HAFA guidelines and to comply with the program’s time frames. It also recommended increasing monetary incentives to banks for completing short sales.

Treasury spokeswoman Andrea Risotto said that her agency was still working on its response to CAR’s letter, but that some of the requests — such as punishing banks for not meeting HAFA’s time frames — would require legislative action.

A message left with the Federal Housing Finance Agency was not returned.

Original article at http://www.latimes.com/business/la-fi-short-sales-20110307,0,6800709.story

C.A.R. Short Sale Lender Satisfaction Survey

LOS ANGELES – Fewer than three of five short sales close in California, illustrating the complexity and difficulty of navigating lenders’ and servicers’ short sale procedures, according to a Short Sale Lender Satisfaction Survey conducted by the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.). The survey gauges REALTORS®’ experience in working with short sale transactions – transactions in which the lender or lenders agree to accept less than the mortgage amount owed by the current homeowner.

“It’s disappointing that less than three in five short sales close, despite every effort by the REALTOR®, home seller and potential home buyer,” said C.A.R. President Beth L. Peerce. “Many underwater homeowners who have been hit by the recent economic crisis can no longer afford to stay in their home and just need to sell their home as expeditiously as possible are unable to largely because of the complex and cumbersome short sale process,” she said.

Of the REALTORS® surveyed, 94 percent participated in a short sale transaction during 2010, demonstrating the surplus of short sale listings in today’s real estate environment.

The most frequent problems REALTORS® cited in working with lenders and servicers during the short sale process include unresponsiveness, onerous procedures, and long processing delays.

Nearly three-fourths (70 percent) of REALTORS® said that closing their most recent short sale transaction with a lender or servicer was “difficult” or “extremely difficult,” while only 10 percent said it was “easy” or “extremely easy.”

“The lack of standardization, long approval process, and lack of lender approvals are hampering what should be a 45-day short sale process,” said Peerce. “Instead we’re hearing the typical response time for lenders is at least 60 days, and in many instances, their response time exceeds 6 months.”

More than half (63 percent) of REALTORS® said that lenders took more than 60 days to return a written response of the approval or disapproval of the short sale agreement submitted. Only 4 percent said they received a written response in less than 14 days.

Additionally, 44 percent of REALTORS® said that lenders took more than five business days to return any form of communication to REALTORS®. Only 14 percent said lenders responded “within one business day.”

“The survey results show that the short sale system is clearly flawed and must be standardized and streamlined to reduce the inventory of foreclosures,” said Peerce. “Increasing the number of successful short sale transactions is one important way we can help California families avoid foreclosure and move our economy closer to recovery,” she added.

Further illustrating faulty communication problems, 64 percent of REALTORS® were “not satisfied” or “not at all satisfied” with the timeliness of lenders’ response to their inquiries, while only 22 percent said they were “satisfied” or “extremely satisfied.”

Moreover, nearly three-fourths (74 percent) of REALTORS® were “not satisfied” or “not at all satisfied” with the amount of time it took to hear whether a transaction was approved or disapproved, while 16 percent said they were “satisfied” or “extremely satisfied.”

In overall satisfaction with the lender they worked with, 67 percent of REALTORS® were “not satisfied” or “not at all satisfied,” while 19 percent were “satisfied” or “extremely satisfied.”

C.A.R.’s Short Sale Lender Satisfaction Survey was conducted during the last two weeks of December 2010 to gauge REALTORS®’ experience in working with lenders or servicers of short sales, bank-owned properties (REOs), and foreclosures. The survey was delivered to 20,000 REALTORS®, with 2,150 responding to the survey.

Leading the way…® in California real estate for more than 100 years, the CALIFORNIA ASSOCIATION OF REALTORS® (www.car.org) is one of the largest state trade organizations in the United States, with more than 160,000 members dedicated to the advancement of professionalism in real estate. C.A.R. is headquartered in Los Angeles.

Original article at http://www.car.org/newsstand/newsreleases/sslendersurvey/