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Nonprofits Urge Federal Officials To Investigate Suspected ‘Pro-Foreclosure Campaigns’

A group of nonprofits that promote affordable housing and community development has sent a letter to top federal officials calling for an investigation into suspected pro-foreclosure campaigns run by hedge funds, mortgage bond traders and insurance companies.

In their letter addressed to Mel Watt, director of the Federal Housing Finance Agency; Jack Lew, secretary of the U.S. Department of the Treasury; and Richard Cordray, director of the Consumer Financial Protection Bureau, the nonprofits say they are “concerned by recent media reports” that investors are “pushing servicers to foreclose on borrowers rather than offering them loan modifications and principal reductions.”

“These are many of the same Wall Street investors that contributed to the mortgage crisis and have continued their unscrupulous practices,” the letter from HomeFree USA, the National Community Reinvestment Coalition and the National Community Stabilization Trust, among others, states. “Once again, they are putting their own economic self-interests above our communities and the sustainable growth of our nation’s economy.”

The letter specifically mentions national servicer Ocwen Financial Corp., which has seen a spate of regulatory enforcement actions during the past two years that have crippled its operations and decimated its stock. In light of those recent enforcement actions, as well as concerns over the company’s performance, a group of investors - including BlackRock Financial Management Inc., Pacific Investment Management Co., Kore Advisors LP, Metropolitan Life Insurance Co. and Neuberger Berman Europe Ltd., represented collectively by law firm Gibbs & Bruns - in January issued a “notice of alleged nonperformance” accusing Ocwen of “material failures … as servicer and/or master servicer to comply with its covenants and agreements under governing pooling and servicing agreements.”

Ocwen then fired back with a letter of rebuttal, alleging that the investor groups were trying to “impose changes to standard servicing practices, with the goal of forcing more home foreclosures and fewer loan modifications.”

The investors’ “pro-foreclosure, anti-modification agenda is driven by their desire to increase their own financial returns on their specific tranche-level holdings in RMBS trusts, at the expense of long-term gains to the trusts as a whole, through sustainable modifications,” Ocwen wrote in its rebuttal.

The housing nonprofits argue that Ocwen, in fact, has had a better success rate than other mortgage servicers in keeping borrowers in their homes because of its strong commitment to offering foreclosure alternatives.

The letter cites recent research by Morgan Stanley that found that Ocwen’s approach to modifications “is more effective in keeping borrowers in their homes.” The Morgan Stanley report found that “not only does Ocwen have a higher success rate on mortgages that went delinquent when it held the servicing rights, but it also seems to succeed at keeping borrowers in their homes when it takes on a delinquent or modified mortgage from another servicer.”

The letter points out that if there is, in fact, a pro-foreclosure campaign by certain investors, it “contradicts the foundation of the 2012 National Mortgage Settlement negotiated by the U.S. Justice Department and Attorneys General in 49 states,” which “specifically requires banks and other mortgage market participants to participate in meaningful engagement with community organizations and to develop foreclosure prevention programs, including principal reduction modifications.”

“We urge you to seriously investigate and prevent these private interests from promoting policies that lead to unnecessary foreclosures,” the letter states. “Access to principal reduction programs, like Ocwen’s Shared Appreciation Modification Program, should be applauded; our communities need it. We ask you to encourage mortgage transfers to servicers that offer principal reduction as a solution to help struggling homeowners instead of other servicers, who are more likely to pursue foreclosures.”

Other nonprofits that signed the letter include the National Housing Resource Center; Neighborhood Housing Services of Chicago; Neighborhood Housing Services of Greater Cleveland; Neighborhood Housing Services of New York City; Neighborhood Housing Services of South Florida; New Jersey Citizen Action; and Northwest Side Housing Center Chicago.

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CoreLogic: Completed Foreclosures Fell 15.5%

There were about 41,000 completed foreclosures nationwide in March 2015 - a decrease of 15.5% from 48,000 in March 2014, according to CoreLogic’s March 2015 National Foreclosure Report.

Further, completed foreclosures were down 65.2% from the peak of completed foreclosures, which was in September 2010.

The number of mortgages in serious delinquency declined by 19.1% from March 2014 to March 2015 - with 1.5 million mortgages, or 3.9%, in serious delinquency (defined as 90 days or more past due, including real estate owned loans or those in foreclosure). CoreLogic says this is the lowest delinquency rate since May 2008. On a month-over-month basis, the number of seriously delinquent mortgages declined by 1.9%.

The national foreclosure inventory saw a year-over-year decline of 25.7%. As of March 2015, the foreclosure inventory included approximately 542,000 homes, or 1.4%, compared with 729,000 homes, or 1.9%, in March 2014.

“We are seeing additional improvement in housing market conditions due to a decline in the serious delinquency rate to 3.9 percent, far below the peak of 8.6 percent in early 2010,” says Frank Nothaft, chief economist for CoreLogic. “Despite the decline in the number of loans that are 90 days or more delinquent or in foreclosure, the percent of homeowners struggling to keep up is still well above the pre-recession average of 1.5 percent.”

“Based on the current trends in completed foreclosure rates, we expect the foreclosure inventory to drop below 1.3 percent by midyear - a level not seen since the end of 2007. Many states in the Northeast and Midwest, as well as Florida, still have elevated levels of distressed housing, but they are making more rapid progress as of late. In March, foreclosures in these areas accounted for a large proportion of completed foreclosures,” says Anand Nallathambi, president and CEO of CoreLogic.

States with the highest number of completed foreclosures, year over year, ended in March 2015 were Florida (110,000), Michigan (50,000), Texas (34,000), Georgia (28,000) and Ohio (28,000). These five states accounted for almost half of all completed foreclosures nationally.

States with the lowest number of completed foreclosures were South Dakota (16), the District of Columbia (87), North Dakota (326), West Virginia (462) and Wyoming (517).

States with the highest foreclosure inventory as a percentage of all mortgaged homes included New Jersey (5.3%), New York (3.9%), Florida (3.3%), Hawaii (2.7%) and the District of Columbia (2.5%).

States with the lowest foreclosure inventory were Alaska (0.3%), Nebraska (0.4%), North Dakota (0.5%), Montana (0.5%) and Colorado (0.5%).

 

Repossessions Jumped 49% In March As Foreclosure Pipeline ‘Flushes Out’

A total of 122,060 foreclosure filings - including default notices, scheduled auctions and bank repossessions - were processed in March, an increase of 4% compared to February, according to RealtyTrac.

The increase was driven primarily by a jump in bank repossessions (REOs), the firm reports. There were 36,152 bank repossessions in March - an increase of 49% from the previous month and an increase of 25% from a year ago to reach a 17-month high.

Still, that’s only about one-third of the 102,134 bank repossessions seen in September 2010, the peak month, the firm reports.

“The 17-month high in bank repossessions in March corresponds to a 17-month high in scheduled foreclosures auctions in October,” says Daren Blomquist, vice president of RealtyTrac, in a release. “The March increase is continued cleanup of distress still lingering from the previous housing crisis - not the beginning of a new crisis by any means. Some of the most stubborn foreclosure cases are finally being flushed out of the foreclosure pipeline, and we would expect to see more noise in the numbers over the next few months as national foreclosure activity makes its way back to more stable patterns by the end of this year.”

Looking at the first quarter, there were about 313,487 foreclosure filings - down 7% from the fourth quarter of 2014 and down 8% from the first quarter of 2014 to reach the lowest level since the first quarter of 2007, RealtyTrac reports.

Despite the spike in March, bank repossessions in the first quarter were still down from a year ago. Lenders repossessed 82,081 properties during the quarter - up 7% from the previous quarter but still down 14% from a year ago.

There were about 152,147 foreclosure starts in the first quarter - down 11% from the previous quarter and down 8% from a year ago.

States that saw the highest number of foreclosures in the first quarter, compared to the first quarter of 2014, included Massachusetts (up 58%), Virginia (up 11%), Michigan (up 11%) and Illinois (up 8%).

States that saw the highest number of bank repossessions in the first quarter, compared to the first quarter of 2014, included Ohio (up 54%), Maryland (up 39%), Missouri (up 34%), New Jersey (up 18%) and Illinois (up 16%).

 

New Solution For Determining HOA Super-Lien Status

CoreLogic has introduced HOA Super Lien Check, a solution that helps investors and servicers monitor at-risk properties in the 22 states that give homeowners associations (HOAs) super-lien status.

Using this solution, servicers can quickly and easily identify loans in their portfolios that are within the 22 super-lien states. Further, they can match those loans to specific HOAs and validate HOA contact information, including whether there is a master association, sub-association or property management company.

The solution also allows servicers to gather the required loan and property information needed to complete a request for notice (RFN). The system determines filing requirements, produces the RFN and sends it to the county for recording.

“Investors and lenders are asking their servicers what steps they’re taking to protect their properties and are looking for alternatives to overcome the information and logistical challenges involved in filing RFNs and monitoring lien activity,” explains Arlene Hyde, senior vice president of compliance and management solutions at CoreLogic. “Our approach draws upon CoreLogic property and mortgage data and also leverages the company’s new CondoSafe national condo-owner association database, as well as our document retrieval and recording capabilities.”

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Nonprofits Urge Federal Officials To Investigate Suspected ‘Pro-Foreclosure Campaigns’

 

 

 

 

 

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