Cities across the country say they are seeing a disturbing new practice when it comes to foreclosures – more and more, banks are opting not to take possession of foreclosed properties because the costs of maintenance, repairs, and legal fees outweigh the still-declining value of the property.
According to a New York Times report published over the weekend, these bank walkaways, as they are being called, are spreading through cities across the nation, from Jacksonville, Florida, to South Bend, Indiana, and Kansas City, Missouri.
In Buffalo, New York, the Times reports that the problem has reached “epidemic” proportions in recent months. In fact, the city of Buffalo has brought a lawsuit against 37 different banks, the newspaper said, claiming they are responsible for the deterioration of more than 57 abandoned homes because they “walked away” from taking ownership of and maintaining the properties following foreclosure proceedings.
Kermit Lind, a clinical professor at the Cleveland-Marshall College of Law and an expert on foreclosure law, told the Times, “It [bank walkaways] is what some of us think is the next wave of the crisis.”
According to the Times, experts suggest the bank walkaways are most visible in states where foreclosures are processed through the courts and therefore tend to be more transparent, but roughly half of the states allow foreclosures to proceed without court intervention, making it difficult to accurately count the number of bank walkaways in recent months.
While a walkaway may be the most cost-effective option for banks in today's market – given the fact that lenders can lose up to 50 percent of their investment in a foreclosure – it offers little assistance to the homeowners, who are still on the title and therefore legally responsible for the property's upkeep under city ordinances. In addition, the homeowner is usually unaware of the bank's decision not to repossess the home until after the home has already been sitting vacant, leaving it vulnerable to vandalism and contributing to neighborhood blight.
Larry Rothenberg, a lawyer for creditors' rights firm Weltman, Weinberg & Reis, explained to the Times, “Oftentimes when the foreclosure starts out, it’s a viable property, but by the time it gets to a sheriff’s sale, it might not have enough value to justify further expense. We’ve always had cases where property was vandalized or lost value, but they were rare compared to these times.”
Rob Alley, Realtor
The Avery Group at Roy Wheeler
540-250-3275
roballey@roywheeler.com
http://www.robsellscharlottesville.com
http://www.forestlakesliving.com
http://www.theaverygroup.com
Tuesday, April 7, 2009
Mortgage Industry Warms to Obama's Foreclosure Relief Plan
Cities across the country say they are seeing a disturbing new practice when it comes to foreclosures – more and more, banks are opting not to take possession of foreclosed properties because the costs of maintenance, repairs, and legal fees outweigh the still-declining value of the property.
According to a New York Times report published over the weekend, these bank walkaways, as they are being called, are spreading through cities across the nation, from Jacksonville, Florida, to South Bend, Indiana, and Kansas City, Missouri.
In Buffalo, New York, the Times reports that the problem has reached “epidemic” proportions in recent months. In fact, the city of Buffalo has brought a lawsuit against 37 different banks, the newspaper said, claiming they are responsible for the deterioration of more than 57 abandoned homes because they “walked away” from taking ownership of and maintaining the properties following foreclosure proceedings.
Kermit Lind, a clinical professor at the Cleveland-Marshall College of Law and an expert on foreclosure law, told the Times, “It [bank walkaways] is what some of us think is the next wave of the crisis.”
According to the Times, experts suggest the bank walkaways are most visible in states where foreclosures are processed through the courts and therefore tend to be more transparent, but roughly half of the states allow foreclosures to proceed without court intervention, making it difficult to accurately count the number of bank walkaways in recent months.
While a walkaway may be the most cost-effective option for banks in today's market – given the fact that lenders can lose up to 50 percent of their investment in a foreclosure – it offers little assistance to the homeowners, who are still on the title and therefore legally responsible for the property's upkeep under city ordinances. In addition, the homeowner is usually unaware of the bank's decision not to repossess the home until after the home has already been sitting vacant, leaving it vulnerable to vandalism and contributing to neighborhood blight.
Larry Rothenberg, a lawyer for creditors' rights firm Weltman, Weinberg & Reis, explained to the Times, “Oftentimes when the foreclosure starts out, it’s a viable property, but by the time it gets to a sheriff’s sale, it might not have enough value to justify further expense. We’ve always had cases where property was vandalized or lost value, but they were rare compared to these times.”
Rob Alley, Realtor
The Avery Group at Roy Wheeler
540-250-3275
roballey@roywheeler.com
http://www.robsellscharlottesville.com
http://www.forestlakesliving.com
http://www.theaverygroup.com
According to a New York Times report published over the weekend, these bank walkaways, as they are being called, are spreading through cities across the nation, from Jacksonville, Florida, to South Bend, Indiana, and Kansas City, Missouri.
In Buffalo, New York, the Times reports that the problem has reached “epidemic” proportions in recent months. In fact, the city of Buffalo has brought a lawsuit against 37 different banks, the newspaper said, claiming they are responsible for the deterioration of more than 57 abandoned homes because they “walked away” from taking ownership of and maintaining the properties following foreclosure proceedings.
Kermit Lind, a clinical professor at the Cleveland-Marshall College of Law and an expert on foreclosure law, told the Times, “It [bank walkaways] is what some of us think is the next wave of the crisis.”
According to the Times, experts suggest the bank walkaways are most visible in states where foreclosures are processed through the courts and therefore tend to be more transparent, but roughly half of the states allow foreclosures to proceed without court intervention, making it difficult to accurately count the number of bank walkaways in recent months.
While a walkaway may be the most cost-effective option for banks in today's market – given the fact that lenders can lose up to 50 percent of their investment in a foreclosure – it offers little assistance to the homeowners, who are still on the title and therefore legally responsible for the property's upkeep under city ordinances. In addition, the homeowner is usually unaware of the bank's decision not to repossess the home until after the home has already been sitting vacant, leaving it vulnerable to vandalism and contributing to neighborhood blight.
Larry Rothenberg, a lawyer for creditors' rights firm Weltman, Weinberg & Reis, explained to the Times, “Oftentimes when the foreclosure starts out, it’s a viable property, but by the time it gets to a sheriff’s sale, it might not have enough value to justify further expense. We’ve always had cases where property was vandalized or lost value, but they were rare compared to these times.”
Rob Alley, Realtor
The Avery Group at Roy Wheeler
540-250-3275
roballey@roywheeler.com
http://www.robsellscharlottesville.com
http://www.forestlakesliving.com
http://www.theaverygroup.com
M&I Extends Foreclosure Moratorium
Milwaukee, Wisconsin-based Marshall & Ilsley Corporation (M&I) announced this week that it is extending its foreclosure moratorium through June 30, 2009. M&I's initial 90-day moratorium was announced on December 18, 2008, as part of the lender's Homeowner Assistance Program.
In addition to the freeze on foreclosure proceedings, M&I's Homeowner Assistance Program features streamlined assistance for potentially distressed homeowners who the bank identifies as being at-risk and initiates contact to offer assistance. The program also offers several refinancing options, including term extensions and reduced rates, that can be used to reduce homeowners' monthly payments.
Mark Furlong, president and CEO of Marshall & Ilsley Corporation, said, "Through our Homeowner Assistance Program, M&I bankers are available to assist homeowners who may be experiencing financial stress, with the ultimate goal of helping them stay in their homes as they recover from their economic challenges. Our objective is to proactively work with our customers, including offering guidance to families before they are faced with the possibility of foreclosure."
Mayor of Milwaukee Tom Barrett commended M&I for its home retention efforts. "M&I, through this important program, is making noteworthy progress in keeping many families in their homes," Barrett said. "We applaud them for extending the moratorium so even more families can benefit during this challenging economic time."
M&I's foreclosure suspension applies to all owner-occupied residential loans for customers who agree to work in “good faith” to reach a successful repayment agreement. The moratorium covers applicable loans in all M&I markets.
Founded in 1847, Marshall & Ilsley Bank is the largest Wisconsin-based bank, with 193 offices across the state. M&I also has locations throughout Arizona, Minnesota, and along Florida's West Coast and Central Florida. The bank also has a presence in Indianapolis, Kansas City, St. Louis, and Las Vegas.
Rob Alley, Realtor
The Avery Group at Roy Wheeler
540-250-3275
roballey@roywheeler.com
http://www.robsellscharlottesville.com
http://www.forestlakesliving.com
http://www.theaverygroup.com
In addition to the freeze on foreclosure proceedings, M&I's Homeowner Assistance Program features streamlined assistance for potentially distressed homeowners who the bank identifies as being at-risk and initiates contact to offer assistance. The program also offers several refinancing options, including term extensions and reduced rates, that can be used to reduce homeowners' monthly payments.
Mark Furlong, president and CEO of Marshall & Ilsley Corporation, said, "Through our Homeowner Assistance Program, M&I bankers are available to assist homeowners who may be experiencing financial stress, with the ultimate goal of helping them stay in their homes as they recover from their economic challenges. Our objective is to proactively work with our customers, including offering guidance to families before they are faced with the possibility of foreclosure."
Mayor of Milwaukee Tom Barrett commended M&I for its home retention efforts. "M&I, through this important program, is making noteworthy progress in keeping many families in their homes," Barrett said. "We applaud them for extending the moratorium so even more families can benefit during this challenging economic time."
M&I's foreclosure suspension applies to all owner-occupied residential loans for customers who agree to work in “good faith” to reach a successful repayment agreement. The moratorium covers applicable loans in all M&I markets.
Founded in 1847, Marshall & Ilsley Bank is the largest Wisconsin-based bank, with 193 offices across the state. M&I also has locations throughout Arizona, Minnesota, and along Florida's West Coast and Central Florida. The bank also has a presence in Indianapolis, Kansas City, St. Louis, and Las Vegas.
Rob Alley, Realtor
The Avery Group at Roy Wheeler
540-250-3275
roballey@roywheeler.com
http://www.robsellscharlottesville.com
http://www.forestlakesliving.com
http://www.theaverygroup.com
M&I Extends Foreclosure Moratorium
Milwaukee, Wisconsin-based Marshall & Ilsley Corporation (M&I) announced this week that it is extending its foreclosure moratorium through June 30, 2009. M&I's initial 90-day moratorium was announced on December 18, 2008, as part of the lender's Homeowner Assistance Program.
In addition to the freeze on foreclosure proceedings, M&I's Homeowner Assistance Program features streamlined assistance for potentially distressed homeowners who the bank identifies as being at-risk and initiates contact to offer assistance. The program also offers several refinancing options, including term extensions and reduced rates, that can be used to reduce homeowners' monthly payments.
Mark Furlong, president and CEO of Marshall & Ilsley Corporation, said, "Through our Homeowner Assistance Program, M&I bankers are available to assist homeowners who may be experiencing financial stress, with the ultimate goal of helping them stay in their homes as they recover from their economic challenges. Our objective is to proactively work with our customers, including offering guidance to families before they are faced with the possibility of foreclosure."
Mayor of Milwaukee Tom Barrett commended M&I for its home retention efforts. "M&I, through this important program, is making noteworthy progress in keeping many families in their homes," Barrett said. "We applaud them for extending the moratorium so even more families can benefit during this challenging economic time."
M&I's foreclosure suspension applies to all owner-occupied residential loans for customers who agree to work in “good faith” to reach a successful repayment agreement. The moratorium covers applicable loans in all M&I markets.
Founded in 1847, Marshall & Ilsley Bank is the largest Wisconsin-based bank, with 193 offices across the state. M&I also has locations throughout Arizona, Minnesota, and along Florida's West Coast and Central Florida. The bank also has a presence in Indianapolis, Kansas City, St. Louis, and Las Vegas.
Rob Alley, Realtor
The Avery Group at Roy Wheeler
540-250-3275
roballey@roywheeler.com
http://www.robsellscharlottesville.com
http://www.forestlakesliving.com
http://www.theaverygroup.com
In addition to the freeze on foreclosure proceedings, M&I's Homeowner Assistance Program features streamlined assistance for potentially distressed homeowners who the bank identifies as being at-risk and initiates contact to offer assistance. The program also offers several refinancing options, including term extensions and reduced rates, that can be used to reduce homeowners' monthly payments.
Mark Furlong, president and CEO of Marshall & Ilsley Corporation, said, "Through our Homeowner Assistance Program, M&I bankers are available to assist homeowners who may be experiencing financial stress, with the ultimate goal of helping them stay in their homes as they recover from their economic challenges. Our objective is to proactively work with our customers, including offering guidance to families before they are faced with the possibility of foreclosure."
Mayor of Milwaukee Tom Barrett commended M&I for its home retention efforts. "M&I, through this important program, is making noteworthy progress in keeping many families in their homes," Barrett said. "We applaud them for extending the moratorium so even more families can benefit during this challenging economic time."
M&I's foreclosure suspension applies to all owner-occupied residential loans for customers who agree to work in “good faith” to reach a successful repayment agreement. The moratorium covers applicable loans in all M&I markets.
Founded in 1847, Marshall & Ilsley Bank is the largest Wisconsin-based bank, with 193 offices across the state. M&I also has locations throughout Arizona, Minnesota, and along Florida's West Coast and Central Florida. The bank also has a presence in Indianapolis, Kansas City, St. Louis, and Las Vegas.
Rob Alley, Realtor
The Avery Group at Roy Wheeler
540-250-3275
roballey@roywheeler.com
http://www.robsellscharlottesville.com
http://www.forestlakesliving.com
http://www.theaverygroup.com
Gov. Agencies Crack Down on Foreclosure Rescue Scams
The U.S. Department of the Treasury, the U.S. Department of Justice, the Department of Housing and Urban Development (HUD), the Federal Trade Commission (FTC), and the Attorney General of Illinois announced the launch of a new initiative on Monday aimed at foreclosure rescue scams and loan modification fraud.
In a press briefing and conference call with the media, government officials had harsh words for those companies they say are preying on vulnerable homeowners, wielding such derogations as “unscrupulous,” “cheating,” and “lying” to describe supposed mortgage modification and foreclosure relief companies out to make a quick buck with their deceptive schemes.
According to Treasury Secretary Timothy Geithner, these marauders “callously rob Americans of their savings and potentially their homes,” and with the announcement of the government's nation-wide homeowner assistance plan, Geithner says they have begun intensifying their tactics.
The multi-agency anti-fraud initiative intends to align responses from federal law enforcement, state investigators and prosecutors, civil enforcement authorities, and the private sector to protect homeowners seeking assistance under the administration’s Making Home Affordable program from criminals and their predatory plots.
Geithner announced two specific actions as part of the crack down on fraud. First, he said, Treasury’s Financial Crimes Enforcement Network, known as FinCEN, is issuing an advisory to help financial institutions spot and report questionable loan modification schemes. The advisory provides “red flags” for financial institutions that may indicate a loan modification or foreclosure rescue scam.
Second, Geithner said, is the launch of a targeted effort - to be coordinated by FinCEN - to deter fraudulent activity and combat fraudulent loan modification schemes. FinCEN, working with partners from the law enforcement and regulatory communities, will utilize information provided by the financial industry, along with other information supplied by participating agencies, to identify possible loan modification fraud suspects for civil and criminal investigations. FinCEN will also help law enforcement agencies streamline and coordinate their efforts so that the resources of multiple investigative and prosecutorial agencies are efficiently utilized and remain focused.
Geithner said, “What today’s announcement means for American homeowners is this: We will shut down fraudulent companies more quickly than before. We will target companies that otherwise would have gone unnoticed under the radar. And we will increase our knowledge of how these companies operate, enhancing our efforts to identify and prosecute every individual involved in a mortgage rescue scam.”
Geithner said he was “especially pleased” that Illinois Attorney General Lisa Madigan had joined the inter-agency team for the announcement, demonstrating the federal-state partnership to target mortgage loan modification and foreclosure relief scams.
Madigan has fought hard against such schemes targeted at distressed homeowners and has prosecuted 24 different companies for foreclosure relief fraud in her state. According to Madigan, so-called foreclosure rescues and mortgage consultants who demand money before rendering services are “almost always a scam.” Madigan warned that up-front fees, which are strictly illegal in many states, should serve as an immediate warning of a probable scam.
Often these suspect organizations bear official-sounding names that give the impression they are associated with new federal mortgage programs or government-related organizations. At the press briefing announcement on Monday, FTC Chairman Jon Leibowitz specifically called out Northridge, California-based Federal Loan Modification Law Center as one of the companies in his sights for investigation. Leibowitz said the company, which has recently launched a massive national radio ad campaign, has no affiliation with the federal government and is a prime example of the type of fraudulent organization the inter-agency taskforce plans to go after.
The FTC has already issued warning letters to 71 companies it says are running suspicious advertisements and has filed official complaints against Federal Loan Modification Law Center, as well as Newport Beach, California-based Bailout.hud-gov.us and Clearwater, Florida-based Home Assure LLC.
Last month, the FTC filed suits against two other companies – Hope Now Modifications LLC and New Hope Modifications LLC – for falsely representing that they were aligned with the government-sanctioned HOPE NOW Alliance and erroneously claiming they secured loan modifications for all clients.
HUD Secretary Shaun Donovan, stressed that free foreclosure assistance and counseling is available to help homeowners take advantage of the government's mortgage relief program. Donovan said, literature outlining legitimate foreclosure assistance is being distributed, starting Monday, to HUD-related partners, including HUD field offices, state housing agencies, and non-profit HUD-approved counselors, among others.
In addition, NeighborWorks, a nonprofit housing and foreclosure counseling group, has plans to launch a $6 million outreach program to alert homeowners of foreclosure rescue scams. And government officials told reporters that several banks, including Chase and SunTrust, are distributing fraud education flyers through their home retention centers and local branches to raise awareness among homeowners.
According to Attorney General Eric Holder, the FBI currently has about 2,100 mortgage fraud cases under investigation, a 400 percent increase from five years ago.
In the press briefing Monday morning, Geithner acknowledged the efforts of Neil Barofsky, the special inspector general for the Troubled Asset Relief Program (TARP). Geithner said Barofsky has been actively working with the Office of Financial Stability to build fraud protections into the government's relief programs, including the Making Home Affordable program.
Geithner noted that Barofsky has a history of successful mortgage fraud prosecutions, and said the Treasury has already adopted Barofsky's recommendation that every modification package include a cover sheet containing fraud warnings and a reference to the special inspector general’s fraud hotline, through which Barofsky's office stands ready to receive any referrals concerning fraud related to the TARP program.
“American homeowners have been through enough over the past two years,” Geithner concluded. “The last thing they need now is to be taken advantage of as they try to hold on to their homes. Today’s announcement underscores that this administration is doing everything we can to prevent that from happening.”
Rob Alley, Realtor
The Avery Group at Roy Wheeler
540-250-3275
roballey@roywheeler.com
http://www.robsellscharlottesville.com
http://www.forestlakesliving.com
http://www.theaverygroup.com
In a press briefing and conference call with the media, government officials had harsh words for those companies they say are preying on vulnerable homeowners, wielding such derogations as “unscrupulous,” “cheating,” and “lying” to describe supposed mortgage modification and foreclosure relief companies out to make a quick buck with their deceptive schemes.
According to Treasury Secretary Timothy Geithner, these marauders “callously rob Americans of their savings and potentially their homes,” and with the announcement of the government's nation-wide homeowner assistance plan, Geithner says they have begun intensifying their tactics.
The multi-agency anti-fraud initiative intends to align responses from federal law enforcement, state investigators and prosecutors, civil enforcement authorities, and the private sector to protect homeowners seeking assistance under the administration’s Making Home Affordable program from criminals and their predatory plots.
Geithner announced two specific actions as part of the crack down on fraud. First, he said, Treasury’s Financial Crimes Enforcement Network, known as FinCEN, is issuing an advisory to help financial institutions spot and report questionable loan modification schemes. The advisory provides “red flags” for financial institutions that may indicate a loan modification or foreclosure rescue scam.
Second, Geithner said, is the launch of a targeted effort - to be coordinated by FinCEN - to deter fraudulent activity and combat fraudulent loan modification schemes. FinCEN, working with partners from the law enforcement and regulatory communities, will utilize information provided by the financial industry, along with other information supplied by participating agencies, to identify possible loan modification fraud suspects for civil and criminal investigations. FinCEN will also help law enforcement agencies streamline and coordinate their efforts so that the resources of multiple investigative and prosecutorial agencies are efficiently utilized and remain focused.
Geithner said, “What today’s announcement means for American homeowners is this: We will shut down fraudulent companies more quickly than before. We will target companies that otherwise would have gone unnoticed under the radar. And we will increase our knowledge of how these companies operate, enhancing our efforts to identify and prosecute every individual involved in a mortgage rescue scam.”
Geithner said he was “especially pleased” that Illinois Attorney General Lisa Madigan had joined the inter-agency team for the announcement, demonstrating the federal-state partnership to target mortgage loan modification and foreclosure relief scams.
Madigan has fought hard against such schemes targeted at distressed homeowners and has prosecuted 24 different companies for foreclosure relief fraud in her state. According to Madigan, so-called foreclosure rescues and mortgage consultants who demand money before rendering services are “almost always a scam.” Madigan warned that up-front fees, which are strictly illegal in many states, should serve as an immediate warning of a probable scam.
Often these suspect organizations bear official-sounding names that give the impression they are associated with new federal mortgage programs or government-related organizations. At the press briefing announcement on Monday, FTC Chairman Jon Leibowitz specifically called out Northridge, California-based Federal Loan Modification Law Center as one of the companies in his sights for investigation. Leibowitz said the company, which has recently launched a massive national radio ad campaign, has no affiliation with the federal government and is a prime example of the type of fraudulent organization the inter-agency taskforce plans to go after.
The FTC has already issued warning letters to 71 companies it says are running suspicious advertisements and has filed official complaints against Federal Loan Modification Law Center, as well as Newport Beach, California-based Bailout.hud-gov.us and Clearwater, Florida-based Home Assure LLC.
Last month, the FTC filed suits against two other companies – Hope Now Modifications LLC and New Hope Modifications LLC – for falsely representing that they were aligned with the government-sanctioned HOPE NOW Alliance and erroneously claiming they secured loan modifications for all clients.
HUD Secretary Shaun Donovan, stressed that free foreclosure assistance and counseling is available to help homeowners take advantage of the government's mortgage relief program. Donovan said, literature outlining legitimate foreclosure assistance is being distributed, starting Monday, to HUD-related partners, including HUD field offices, state housing agencies, and non-profit HUD-approved counselors, among others.
In addition, NeighborWorks, a nonprofit housing and foreclosure counseling group, has plans to launch a $6 million outreach program to alert homeowners of foreclosure rescue scams. And government officials told reporters that several banks, including Chase and SunTrust, are distributing fraud education flyers through their home retention centers and local branches to raise awareness among homeowners.
According to Attorney General Eric Holder, the FBI currently has about 2,100 mortgage fraud cases under investigation, a 400 percent increase from five years ago.
In the press briefing Monday morning, Geithner acknowledged the efforts of Neil Barofsky, the special inspector general for the Troubled Asset Relief Program (TARP). Geithner said Barofsky has been actively working with the Office of Financial Stability to build fraud protections into the government's relief programs, including the Making Home Affordable program.
Geithner noted that Barofsky has a history of successful mortgage fraud prosecutions, and said the Treasury has already adopted Barofsky's recommendation that every modification package include a cover sheet containing fraud warnings and a reference to the special inspector general’s fraud hotline, through which Barofsky's office stands ready to receive any referrals concerning fraud related to the TARP program.
“American homeowners have been through enough over the past two years,” Geithner concluded. “The last thing they need now is to be taken advantage of as they try to hold on to their homes. Today’s announcement underscores that this administration is doing everything we can to prevent that from happening.”
Rob Alley, Realtor
The Avery Group at Roy Wheeler
540-250-3275
roballey@roywheeler.com
http://www.robsellscharlottesville.com
http://www.forestlakesliving.com
http://www.theaverygroup.com
Gov. Agencies Crack Down on Foreclosure Rescue Scams
The U.S. Department of the Treasury, the U.S. Department of Justice, the Department of Housing and Urban Development (HUD), the Federal Trade Commission (FTC), and the Attorney General of Illinois announced the launch of a new initiative on Monday aimed at foreclosure rescue scams and loan modification fraud.
In a press briefing and conference call with the media, government officials had harsh words for those companies they say are preying on vulnerable homeowners, wielding such derogations as “unscrupulous,” “cheating,” and “lying” to describe supposed mortgage modification and foreclosure relief companies out to make a quick buck with their deceptive schemes.
According to Treasury Secretary Timothy Geithner, these marauders “callously rob Americans of their savings and potentially their homes,” and with the announcement of the government's nation-wide homeowner assistance plan, Geithner says they have begun intensifying their tactics.
The multi-agency anti-fraud initiative intends to align responses from federal law enforcement, state investigators and prosecutors, civil enforcement authorities, and the private sector to protect homeowners seeking assistance under the administration’s Making Home Affordable program from criminals and their predatory plots.
Geithner announced two specific actions as part of the crack down on fraud. First, he said, Treasury’s Financial Crimes Enforcement Network, known as FinCEN, is issuing an advisory to help financial institutions spot and report questionable loan modification schemes. The advisory provides “red flags” for financial institutions that may indicate a loan modification or foreclosure rescue scam.
Second, Geithner said, is the launch of a targeted effort - to be coordinated by FinCEN - to deter fraudulent activity and combat fraudulent loan modification schemes. FinCEN, working with partners from the law enforcement and regulatory communities, will utilize information provided by the financial industry, along with other information supplied by participating agencies, to identify possible loan modification fraud suspects for civil and criminal investigations. FinCEN will also help law enforcement agencies streamline and coordinate their efforts so that the resources of multiple investigative and prosecutorial agencies are efficiently utilized and remain focused.
Geithner said, “What today’s announcement means for American homeowners is this: We will shut down fraudulent companies more quickly than before. We will target companies that otherwise would have gone unnoticed under the radar. And we will increase our knowledge of how these companies operate, enhancing our efforts to identify and prosecute every individual involved in a mortgage rescue scam.”
Geithner said he was “especially pleased” that Illinois Attorney General Lisa Madigan had joined the inter-agency team for the announcement, demonstrating the federal-state partnership to target mortgage loan modification and foreclosure relief scams.
Madigan has fought hard against such schemes targeted at distressed homeowners and has prosecuted 24 different companies for foreclosure relief fraud in her state. According to Madigan, so-called foreclosure rescues and mortgage consultants who demand money before rendering services are “almost always a scam.” Madigan warned that up-front fees, which are strictly illegal in many states, should serve as an immediate warning of a probable scam.
Often these suspect organizations bear official-sounding names that give the impression they are associated with new federal mortgage programs or government-related organizations. At the press briefing announcement on Monday, FTC Chairman Jon Leibowitz specifically called out Northridge, California-based Federal Loan Modification Law Center as one of the companies in his sights for investigation. Leibowitz said the company, which has recently launched a massive national radio ad campaign, has no affiliation with the federal government and is a prime example of the type of fraudulent organization the inter-agency taskforce plans to go after.
The FTC has already issued warning letters to 71 companies it says are running suspicious advertisements and has filed official complaints against Federal Loan Modification Law Center, as well as Newport Beach, California-based Bailout.hud-gov.us and Clearwater, Florida-based Home Assure LLC.
Last month, the FTC filed suits against two other companies – Hope Now Modifications LLC and New Hope Modifications LLC – for falsely representing that they were aligned with the government-sanctioned HOPE NOW Alliance and erroneously claiming they secured loan modifications for all clients.
HUD Secretary Shaun Donovan, stressed that free foreclosure assistance and counseling is available to help homeowners take advantage of the government's mortgage relief program. Donovan said, literature outlining legitimate foreclosure assistance is being distributed, starting Monday, to HUD-related partners, including HUD field offices, state housing agencies, and non-profit HUD-approved counselors, among others.
In addition, NeighborWorks, a nonprofit housing and foreclosure counseling group, has plans to launch a $6 million outreach program to alert homeowners of foreclosure rescue scams. And government officials told reporters that several banks, including Chase and SunTrust, are distributing fraud education flyers through their home retention centers and local branches to raise awareness among homeowners.
According to Attorney General Eric Holder, the FBI currently has about 2,100 mortgage fraud cases under investigation, a 400 percent increase from five years ago.
In the press briefing Monday morning, Geithner acknowledged the efforts of Neil Barofsky, the special inspector general for the Troubled Asset Relief Program (TARP). Geithner said Barofsky has been actively working with the Office of Financial Stability to build fraud protections into the government's relief programs, including the Making Home Affordable program.
Geithner noted that Barofsky has a history of successful mortgage fraud prosecutions, and said the Treasury has already adopted Barofsky's recommendation that every modification package include a cover sheet containing fraud warnings and a reference to the special inspector general’s fraud hotline, through which Barofsky's office stands ready to receive any referrals concerning fraud related to the TARP program.
“American homeowners have been through enough over the past two years,” Geithner concluded. “The last thing they need now is to be taken advantage of as they try to hold on to their homes. Today’s announcement underscores that this administration is doing everything we can to prevent that from happening.”
Rob Alley, Realtor
The Avery Group at Roy Wheeler
540-250-3275
roballey@roywheeler.com
http://www.robsellscharlottesville.com
http://www.forestlakesliving.com
http://www.theaverygroup.com
In a press briefing and conference call with the media, government officials had harsh words for those companies they say are preying on vulnerable homeowners, wielding such derogations as “unscrupulous,” “cheating,” and “lying” to describe supposed mortgage modification and foreclosure relief companies out to make a quick buck with their deceptive schemes.
According to Treasury Secretary Timothy Geithner, these marauders “callously rob Americans of their savings and potentially their homes,” and with the announcement of the government's nation-wide homeowner assistance plan, Geithner says they have begun intensifying their tactics.
The multi-agency anti-fraud initiative intends to align responses from federal law enforcement, state investigators and prosecutors, civil enforcement authorities, and the private sector to protect homeowners seeking assistance under the administration’s Making Home Affordable program from criminals and their predatory plots.
Geithner announced two specific actions as part of the crack down on fraud. First, he said, Treasury’s Financial Crimes Enforcement Network, known as FinCEN, is issuing an advisory to help financial institutions spot and report questionable loan modification schemes. The advisory provides “red flags” for financial institutions that may indicate a loan modification or foreclosure rescue scam.
Second, Geithner said, is the launch of a targeted effort - to be coordinated by FinCEN - to deter fraudulent activity and combat fraudulent loan modification schemes. FinCEN, working with partners from the law enforcement and regulatory communities, will utilize information provided by the financial industry, along with other information supplied by participating agencies, to identify possible loan modification fraud suspects for civil and criminal investigations. FinCEN will also help law enforcement agencies streamline and coordinate their efforts so that the resources of multiple investigative and prosecutorial agencies are efficiently utilized and remain focused.
Geithner said, “What today’s announcement means for American homeowners is this: We will shut down fraudulent companies more quickly than before. We will target companies that otherwise would have gone unnoticed under the radar. And we will increase our knowledge of how these companies operate, enhancing our efforts to identify and prosecute every individual involved in a mortgage rescue scam.”
Geithner said he was “especially pleased” that Illinois Attorney General Lisa Madigan had joined the inter-agency team for the announcement, demonstrating the federal-state partnership to target mortgage loan modification and foreclosure relief scams.
Madigan has fought hard against such schemes targeted at distressed homeowners and has prosecuted 24 different companies for foreclosure relief fraud in her state. According to Madigan, so-called foreclosure rescues and mortgage consultants who demand money before rendering services are “almost always a scam.” Madigan warned that up-front fees, which are strictly illegal in many states, should serve as an immediate warning of a probable scam.
Often these suspect organizations bear official-sounding names that give the impression they are associated with new federal mortgage programs or government-related organizations. At the press briefing announcement on Monday, FTC Chairman Jon Leibowitz specifically called out Northridge, California-based Federal Loan Modification Law Center as one of the companies in his sights for investigation. Leibowitz said the company, which has recently launched a massive national radio ad campaign, has no affiliation with the federal government and is a prime example of the type of fraudulent organization the inter-agency taskforce plans to go after.
The FTC has already issued warning letters to 71 companies it says are running suspicious advertisements and has filed official complaints against Federal Loan Modification Law Center, as well as Newport Beach, California-based Bailout.hud-gov.us and Clearwater, Florida-based Home Assure LLC.
Last month, the FTC filed suits against two other companies – Hope Now Modifications LLC and New Hope Modifications LLC – for falsely representing that they were aligned with the government-sanctioned HOPE NOW Alliance and erroneously claiming they secured loan modifications for all clients.
HUD Secretary Shaun Donovan, stressed that free foreclosure assistance and counseling is available to help homeowners take advantage of the government's mortgage relief program. Donovan said, literature outlining legitimate foreclosure assistance is being distributed, starting Monday, to HUD-related partners, including HUD field offices, state housing agencies, and non-profit HUD-approved counselors, among others.
In addition, NeighborWorks, a nonprofit housing and foreclosure counseling group, has plans to launch a $6 million outreach program to alert homeowners of foreclosure rescue scams. And government officials told reporters that several banks, including Chase and SunTrust, are distributing fraud education flyers through their home retention centers and local branches to raise awareness among homeowners.
According to Attorney General Eric Holder, the FBI currently has about 2,100 mortgage fraud cases under investigation, a 400 percent increase from five years ago.
In the press briefing Monday morning, Geithner acknowledged the efforts of Neil Barofsky, the special inspector general for the Troubled Asset Relief Program (TARP). Geithner said Barofsky has been actively working with the Office of Financial Stability to build fraud protections into the government's relief programs, including the Making Home Affordable program.
Geithner noted that Barofsky has a history of successful mortgage fraud prosecutions, and said the Treasury has already adopted Barofsky's recommendation that every modification package include a cover sheet containing fraud warnings and a reference to the special inspector general’s fraud hotline, through which Barofsky's office stands ready to receive any referrals concerning fraud related to the TARP program.
“American homeowners have been through enough over the past two years,” Geithner concluded. “The last thing they need now is to be taken advantage of as they try to hold on to their homes. Today’s announcement underscores that this administration is doing everything we can to prevent that from happening.”
Rob Alley, Realtor
The Avery Group at Roy Wheeler
540-250-3275
roballey@roywheeler.com
http://www.robsellscharlottesville.com
http://www.forestlakesliving.com
http://www.theaverygroup.com
Tuesday, March 31, 2009
Foreclosure "Rescues" May Be Illegal
Here’s the situation: A beleaguered home owner is in bankruptcy, overwhelmed by debt. The mortgage lender had begun foreclosure proceedings, but they were stayed by the bankruptcy court. That stay, however, is about to end, and the lender may be allowed to proceed. The owner owes the mortgage lender about $170,000. Another $50,000 (representing 13 cents on the dollar) is owed to unsecured creditors under the approved bankruptcy plan.
Along comes a potential purchaser of the property – a person who just happens to be a real estate broker and owner of both a finance company and a company by the name of Innovative Real Estate Strategies, LLC – who offers her this deal: “I’ll pay you $220,000 for your property – enough to pay off the mortgage and to satisfy the creditors according to the bankruptcy plan. You and I acknowledge that the property may be worth more, but, given the exigencies of the situation, that is a satisfactory amount. It is deemed to be fair and equitable, and in the interest of the seller. [Note: This is not the exact language of the agreement, but it represents the substance.] Furthermore, I, the buyer, will let you remain in the property under a one-year leaseback agreement. Not only that, I will also grant you an option for the next twelve months that allows you to repurchase the property for the amount of $260,000.”
So how does that sound? Does it look like a win-win? The owner is given a way out of her debt, is allowed to stay in the property, and even has an opportunity to purchase it back. Meanwhile, the buyer has positive cash flow for at least a year (the lease amount more than covered expenses) and, if the option isn’t exercised, may be able to turn the property for a good profit.
Well, it sounded good to the bankruptcy trustee who approved the deal, paid off all the creditors, and ultimately discharged the homeowner from her bankruptcy debts.
Unfortunately, things did not turn out so well. Within nine months the former home owner had fallen behind in her rent. She tried to exercise the option, but couldn’t qualify for a loan. When the option expired, the broker/rescuer offered her the property for $315,000. Of course, she was unable to do that. He then listed the property for $369,950; and gave her a sixty-day notice to quit.
The above provides a summary description of the facts underlying the case of Spencer v. Marshall, recently decided by the California First Appellate District Court of Appeal. The home owner was Alanna Spencer and the purchaser was Ryan Marshall.
When Marshall began an unlawful detainer action against Spencer she filed a notice of recession of the sale. Subsequently, she filed a case asking for both compensatory and punitive damages. Spencer alleged that both the form and content of the purchase agreement drawn by Marshall had failed to meet the requirements of the Home Equity Sales Contract Act (HESCA), found at California Civil Code 1695 and following.
The California Legislature enacted HESCA upon a finding that “homeowners whose residences are in foreclosure have been subjected to fraud, deception, and unfair dealing by home equity purchasers.” (An equity purchaser is an investor buyer of an owner-occupied home for which a Notice of Default has been filed.) The purpose of the act is to enable defaulting homeowners “to make an informed and intelligent decision regarding the sale of his or her home…” and “to safeguard the public against deceit and financial hardship; to insure, foster, and encourage fair dealing in the sale and purchase of homes in foreclosure;” and to “prohibit representations that tend to mislead.”
The court determined that Marshall’s purchase agreement did not conform to HESCA requirements. Indeed, the lower court opined that, insofar as their dealings (Marshall had an associate) with Spencer, “defendants were in every respect the ‘archetypal predators’ that HESCA seeks to regulate.”
Marshall’s defense, in part, was that the bankruptcy court had approved the purchase. But the bankruptcy trustee testified that her sole concern was that the payment plan would be satisfied. It was not her concern whether Spencer would be receiving a fair price or a fair deal.
The appellate court upheld the decision against Marshall and the award of $70,000 actual damages and $210,000 exemplary damages.
There is a lesson here for California investors and real estate agents. Homeowners in default are protected by laws that very specifically detail what any contract offered to them must look like. It’s a good idea to pay attention to those laws.
Rob Alley, Realtor
The Avery Group at Roy Wheeler
540-250-3275
roballey@roywheeler.com
http://www.robsellscharlottesville.com
http://www.forestlakesliving.com
http://www.theaverygroup.com
Along comes a potential purchaser of the property – a person who just happens to be a real estate broker and owner of both a finance company and a company by the name of Innovative Real Estate Strategies, LLC – who offers her this deal: “I’ll pay you $220,000 for your property – enough to pay off the mortgage and to satisfy the creditors according to the bankruptcy plan. You and I acknowledge that the property may be worth more, but, given the exigencies of the situation, that is a satisfactory amount. It is deemed to be fair and equitable, and in the interest of the seller. [Note: This is not the exact language of the agreement, but it represents the substance.] Furthermore, I, the buyer, will let you remain in the property under a one-year leaseback agreement. Not only that, I will also grant you an option for the next twelve months that allows you to repurchase the property for the amount of $260,000.”
So how does that sound? Does it look like a win-win? The owner is given a way out of her debt, is allowed to stay in the property, and even has an opportunity to purchase it back. Meanwhile, the buyer has positive cash flow for at least a year (the lease amount more than covered expenses) and, if the option isn’t exercised, may be able to turn the property for a good profit.
Well, it sounded good to the bankruptcy trustee who approved the deal, paid off all the creditors, and ultimately discharged the homeowner from her bankruptcy debts.
Unfortunately, things did not turn out so well. Within nine months the former home owner had fallen behind in her rent. She tried to exercise the option, but couldn’t qualify for a loan. When the option expired, the broker/rescuer offered her the property for $315,000. Of course, she was unable to do that. He then listed the property for $369,950; and gave her a sixty-day notice to quit.
The above provides a summary description of the facts underlying the case of Spencer v. Marshall, recently decided by the California First Appellate District Court of Appeal. The home owner was Alanna Spencer and the purchaser was Ryan Marshall.
When Marshall began an unlawful detainer action against Spencer she filed a notice of recession of the sale. Subsequently, she filed a case asking for both compensatory and punitive damages. Spencer alleged that both the form and content of the purchase agreement drawn by Marshall had failed to meet the requirements of the Home Equity Sales Contract Act (HESCA), found at California Civil Code 1695 and following.
The California Legislature enacted HESCA upon a finding that “homeowners whose residences are in foreclosure have been subjected to fraud, deception, and unfair dealing by home equity purchasers.” (An equity purchaser is an investor buyer of an owner-occupied home for which a Notice of Default has been filed.) The purpose of the act is to enable defaulting homeowners “to make an informed and intelligent decision regarding the sale of his or her home…” and “to safeguard the public against deceit and financial hardship; to insure, foster, and encourage fair dealing in the sale and purchase of homes in foreclosure;” and to “prohibit representations that tend to mislead.”
The court determined that Marshall’s purchase agreement did not conform to HESCA requirements. Indeed, the lower court opined that, insofar as their dealings (Marshall had an associate) with Spencer, “defendants were in every respect the ‘archetypal predators’ that HESCA seeks to regulate.”
Marshall’s defense, in part, was that the bankruptcy court had approved the purchase. But the bankruptcy trustee testified that her sole concern was that the payment plan would be satisfied. It was not her concern whether Spencer would be receiving a fair price or a fair deal.
The appellate court upheld the decision against Marshall and the award of $70,000 actual damages and $210,000 exemplary damages.
There is a lesson here for California investors and real estate agents. Homeowners in default are protected by laws that very specifically detail what any contract offered to them must look like. It’s a good idea to pay attention to those laws.
Rob Alley, Realtor
The Avery Group at Roy Wheeler
540-250-3275
roballey@roywheeler.com
http://www.robsellscharlottesville.com
http://www.forestlakesliving.com
http://www.theaverygroup.com
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