NJ Mortgage Network

D-Day vet's tale parallels mortgage meltdown

2009-02-17T14:33:00.000-05:00

MSNBC.com

D-Day vet's tale parallels mortgage meltdown

Ex-corpsman, 84, blames 'greed, greed, greed' as he faces losing his home

By Mike Stuckey

Senior news editor

msnbc.com

updated 6:57 a.m. ET, Tues., Feb. 17, 2009

CERRITOS, Calif. - Questions linger here, as ripe and nagging as the odor that once wafted over this former dairy capital: Who is trying to seize the home of Ray Vargas, child of the Great Depression, D-Day veteran and loving husband who just wanted to do right by his dying wife? And are they entitled to it?

In bankruptcy court documents, the party attempting to foreclose is identified as Mortgage Electronic Registration Systems Inc., or MERS, a small Vienna, Va.-based company employed by lenders to streamline the resale of mortgage loans and servicing rights. In that role, MERS claims an interest in tens of millions of U.S. home loans and the legal right to foreclose on those in default.

But MERS never gave Vargas a loan. It never collected money from him or recorded his payments. It had no ability to modify his loan.

What it did have was a copy of a document that named it a “beneficiary” of the mortgage on his home and a “nominee” for the lender and “lender’s successors and assigns.” But it has never identified the current holder of the loan.

'It makes me sick'
While such documentation has allowed many foreclosures to proceed around the nation, the judge in Vargas’ case threw MERS for a loop, ruling that the company had no right to attempt to seize his home on behalf of unnamed plaintiffs.

“No such unidentified parties are permitted in a motion before the court,” wrote Judge Samuel L. Bufford. Bufford’s October ruling kept the foreclosure on hold and opened the door for Vargas to sue MERS in an action aimed at clearing his home of the $826,549 in debt he says is the result of fraud, forgery and abuse of process.

“It makes me sick,” said Vargas, 84, a deeply religious man who believes God is guiding him in a mission to expose wrongful foreclosure. “Greed has no bounds. That’s what the whole problem is: greed, greed, greed.”

Vargas' case has captured the attention of hundreds of attorneys and others immersed in the nation’s mortgage meltdown, which saw foreclosure filings on U.S. homes hit 3 million last year. In the first six weeks of this year, foreclosure began on another 296,000, according to the Center for Responsible Lending.

Legal icon is a new and somewhat surreal role for Vargas. The Chicago native who got his first job at 8 in the depths of the Great Depression has always been a realist.

From World War II vet to painting contractor
As a Navy corpsman during World War II, he went ashore with the third assault wave at Utah Beach on D-Day to pluck his fallen buddies from the sand and patch them up as best he could. Later, he owned a painting business and took on big jobs, like the restoration of the Queen Mary, the steamship turned hotel, in nearby Long Beach.

But Vargas, hero, citizen and family man, has been sucker-punched along with millions of other American homeowners, taxpayers and the nation’s entire economy by the mortgage-lending debacle.

A series of loans from some of America’s largest mortgage lenders cost him nearly $200,000 in less than two years and destroyed financial security it took a lifetime to build. Documents reviewed by msnbc.com show that loans sold to Vargas by mortgage brokers on behalf of the lenders were loaded with features that federal officials say are the hallmarks of predatory lending.

Lenders passed around the deed to Vargas’ house as if it were a whiskey bottle at a frat party. Ultimately, he wound up in foreclosure proceedings. And, finally, bankruptcy court.

Vargas’ story is the Cliff Notes version of what has happened to the larger American economy. It is a story of greed, lax lending standards, lack of government oversight and the fantasy that real estate prices will always rise.

Now, Vargas’ story, like the larger epic, has become a nightmare. The final chapters in both will be written by judges and lawmakers who, many would argue, should have taken up their pens much sooner.

Vargas’ story is complicated but it begins simply, with love — the love for a woman with whom he shared 57 years of marriage, three sons, three grandchildren and a cozy life in this suburban oasis, about 20 miles southeast of Los Angeles. Raymond Vargas loved Ophelia Martinez and she loved him.

They married and set up house in Southern California in 1948, two years after Ray mustered out of the service, having earned a passel of ribbons and medals for service in the American, European and Pacific theaters.

In 1971, after the family had outgrown its first home, Vargas made a down payment on a sprawling stucco two-story yet to be built in one of the many dairy pastures that gave way to the city of Cerritos, now an upscale enclave of 57,000 with tree-lined streets and posh facilities like a titanium-skinned library.

Vargas’ business flourished and he became a well-known civic leader, serving seven times as commander of the local VFW.

“I got more than I deserved,” he said, his eyes wandering to Ophelia’s paintings of landscapes and floral arrangements that adorn his living room.

Medical needs force new loans
The happiness ended in 2000, when Ophelia was stricken with Parkinson’s, Alzheimer’s, brain tumors and a stroke that left her bedridden, unable to speak. She required expensive around-the-clock care, but Vargas was determined not to put her in a nursing home.

He spent the couple’s cash, closed out their retirement funds and tapped some credit cards. That left only the family home, which had been paid off for a dozen years.

After initially taking out a $50,000 loan with the family’s longtime bank, Vargas turned to a reverse mortgage in late 2003. Such loans, available to older homeowners, are attractive to retired, fixed-income borrowers because they require no monthly payments. Principal and interest are generally not repaid until the sale of the home, often after the borrower has died.

“I needed that money to pay my wife’s medical bills,” Vargas said. “I didn’t have to make any payments until I was deceased and then they would take their money out of my house and my sons would get the rest.”

Reverse mortgage maxed out
By the time Ophelia Vargas died on Jan. 4, 2005, the expenses for her care had maxed out the reverse mortgage. And Ray Vargas had become a target of services that cull through land records to provide sales leads to mortgage brokers. To anyone familiar with property values in Cerritos, the public information on Vargas’ loan might as well have been a banner saying, “Elderly homeowner with lots of equity to cash out.”

Vargas was inundated with offers to refinance, by phone, mail and in person. “There were so many mortgage brokers after me, it wasn’t even funny,” he said.

Vargas’ younger sister, Rebecca Deleon, said she often tried to shoo away loan officers during visits to Vargas’ home. “Every time I went over there, he had a new person that was trying to give him a loan,” Deleon told msnbc.com.

In need of additional funds for his own home care and a pair of car loans, Vargas finally agreed to a loan. He insists the salesman told him the deal would refinance his house with a new reverse mortgage requiring no monthly payments.

“They told me I didn’t have to send any money until I passed,” he says. “Then they started sending me all these bills.”

A refinancing merry-go-round
With that, he was trapped in a rapid cycle of refinancing that saw four lenders hold notes to his house in 2005 alone.

Vargas said he is still as sharp mentally as ever but admitted that he didn't read all the loan documents and was sometimes confused about the terms of the loans, partly because he had medical issues that for a time confined him to a wheelchair.

But he insisted that he never signed up for any loan he did not believe to be a reverse mortgage. And while he acknowledged that his signature appears on many documents, he claimed it was forged in connection with at least three loans. He also said he never went to any office to conduct loan business and never signed any papers before a public notary, although many of the documents bear notary seals.

“I never saw them,” Vargas said. “It was all telephonic. I never signed anything with them. I knew something was wrong.”

Although he made mortgage payments once he realized he owed them, he said he was constantly assured by those who sold him the loans that each new refinancing would eliminate them.

"He’s very straightforward and honest," said Vargas' attorney, Marcus Gomez. "He’s a little old World War II vet. He has no reason to lie. He thought he was getting money through another reverse mortgage and he needed it.”

An examination by msnbc.com of hundreds of pages of bank statements, escrow and loan documents provided by Vargas showed that over 21 months in 2005 and 2006, Vargas’ home was refinanced five times through a total of six loans.

Huge fees, penalties, interest
In that time, his debt grew from $213,555 to $745,000. To tap his $531,445 in equity, Vargas paid at least $123,237 in loan origination fees and prepayment penalties. He paid at least $60,000 in interest as he struggled to make minimum payments on the loans, giving the money right back to the lenders he had borrowed it from. Thousands more in unpaid interest was added to his debt.

Appraisals justified the loans. When they were made, the loans on Vargas’ house likely never totaled more than 90 percent of its value, which peaked close to $850,000 in 2006.

Foreclosure was the lenders' trump card and the equity cushion was their wager that they would not lose any money. Whether Vargas could make the payments was irrelevant.

Given the huge decline in California real estate prices, Vargas' house today is worth hundreds of thousands less than the $702,506 currently claimed in connection with the first loan and the $124,043 claimed on the second.

Signs of predatory lending
After the reverse mortgage, all of the loans to Vargas had one or more signs of predatory lending, practices that are not illegal unless they cross the line into fraud. However, federal officials have long warned of their harmful potential. "Predatory lending threatens to turn the American dream of homeownership into an American nightmare," then-assistant HUD Secretary William Apgar warned in congressional testimony in 2002.

Foremost, all of the loans were made with no regard for Vargas’ ability to pay them back. They were “option ARMS,” which gave him up to four choices each month of how much to pay. But in every case, the lowest option, generally not enough to cover that month’s interest, was more than his $1,600 a month income from Social Security and a union pension.

In other predatory features, at least three of the loans had hefty prepayment penalties. And three earned the agents who sold them a total of $35,475 in “yield spread premiums,” commissions paid by the lender to steer Vargas into loans that would yield more profit.

The first four loans were made by Downey Savings and Loan, World Savings Bank, Washington Mutual and Countrywide Bank, respectively.

Lenders all failed or nearly did
Because they made so many loans like those provided to Vargas — and others that were even more reckless — Downey and Washington Mutual failed and were seized by federal regulators last year. The collapse of WaMu, with $307 billion in assets, was by far the largest bank failure in U.S. history.

The parent company of World was taken over by Wachovia in 2006 in a move that is now widely seen as a big contributor to Wachovia’s failure and seizure last year. Countrywide was bought by Bank of America last year while on the brink of failure. It was subsequently sued by a dozen states over its predatory practices before BofA settled.

Representatives who work for the successor companies of World, Countrywide and WaMu all said they could not comment on specifics of Vargas’ case because of customer privacy concerns. Some of them said it is now widely accepted that mortgage brokers, like those who handled all of Vargas’ loans, often lied about borrowers’ income and other aspects of the deals.

A WaMu spokeswoman said the company, which was taken over by Chase, no longer accepts loans from mortgage brokers. Downey, which did not respond to msnbc.com’s inquiries, last year filed dozens of lawsuits that accuse mortgage brokers, borrowers and appraisers of lying on loan applications.

The high cost of Freedom
The final two loans on Vargas’ house were made by Freedom Home Mortgage Corp. of New Jersey, a first loan of $630,000 and a second of $115,000. They were made Oct. 3, 2006, and obligate him to pay over $3,700 a month — well more than double his income. Within months, he was unable to keep up with the payments. By early last year, foreclosure had begun.

Vargas, who spends a good part of each day watching TV news, said, he only recently came to comprehend that side of the vast financial scheme he was caught up in.

“God opened up my eyes” about what lies beneath the mortgage meltdown, he said. “He showed me what they were doing. They got all these loans and put them in the stock market in bundles. It’s incomprehensible.”

Indeed, Vargas' refinancing nightmare occurred during the peak years of mortgage securitization, the technique Wall Street used to turn home loans into bonds for sale to investors. Securitization in that time frame is now blamed for literally lavishing money on homeowners and buyers, often via predatory and subprime loans, and thus fueling housing inflation across the nation. And while lenders may not have considered Vargas a subprime borrower based on what mortgage brokers told them, his actual finances certainly made him one.

'Securitization meat grinder'
“A lot of the subprime lending, particularly the predatory loans, would not have occurred if the lenders had not been able to dump those loans into the securitization meat grinder,” said Bert Ely, a Cato Institute scholar and an expert on financial regulation.

Millions of those borrowers, like Vargas, are in the thick of foreclosure proceedings. Millions more have lost their homes.

Vargas got word in a letter last April 4 that MERS planned to auction the house three weeks later in a bid to regain what it said was owed in connection with the first mortgage. He retained attorney Gomez of nearby Norwalk, who rushed Vargas into bankruptcy court, a move that automatically stops, or stays, attempts to collect debts, including foreclosure.

Creditors in bankruptcy cases are allowed to seek removal of such stays, and that’s what MERS did, retaining attorney Mark T. Domeyer.

However, Gomez and Judge Bufford of the U.S. Bankruptcy Court for the Central District of California wanted to know what right MERS had to demand the keys to Vargas’ house. After all, the loan in question had been made by Freedom, the New Jersey lender.

Domeyer’s court filings included copies of Freedom’s mortgage documents naming MERS as “beneficiary” of the deed of trust, or mortgage, on Ray’s house.

The use of MERS as a “nominee” of the lender and “beneficiary” of mortgages is key to the company’s business model, described on its Web site as “an innovative process that simplifies the way mortgage ownership and servicing rights are originated, sold and tracked. … MERS eliminates the need to prepare and record assignments when trading residential and commercial mortgage loans.”

In other words, when a loan in the MERS registry is sold by one party to another, instead of filing paper “assignments” at the local government office where the mortgage is recorded, the transaction is simply noted by MERS. Similarly, foreclosures and other events are supposed to be noted in MERS’ records on each loan.

57 million mortgages
With more than 3,000 member companies and 57 million registered mortgages covering about 50 percent of all new loans, the 45-employee MERS controls and disseminates information on loans made to a majority of American homeowners. MERS would not disclose how many foreclosure cases it is currently bringing.

In a press release in May 2007 when it announced the registration of its 50 millionth mortgage, MERS said it had saved the mortgage industry $1 billion since it was founded in 1996.

But consumer advocates see the company in a darker light, arguing that another purpose of MERS is to obscure ownership of loans, allowing investors to buy, sell and foreclose on them in unethical and illegal ways. Also unhappy are local government officials who miss out on assignments and recording fees.

Attorneys who defend homeowners in foreclosure say the procedure is reserved for the actual owner of the loan, also called a note. “The party who can bring a foreclosure proceeding has got to be the party that proves it actually owns the note and that note has been properly negotiated all the way up the line,” said O. Max Gardner III, a bankruptcy attorney from North Carolina and a dean of the U.S. debtor bar.

Mixed results in court
MERS officials and their attorney, Domeyer, declined requests from msnbc.com for interviews. MERS also declined to answer numerous questions submitted via e-mail, including who is actually the current owner of the loan, although it did provide a prepared statement that said in part, “Numerous state and federal courts have affirmed the right of MERS to be the mortgagee in the public land records and its ability to move for relief from stay and foreclose.” But Arnold’s statement also acknowledged that MERS’ guidelines for foreclosure appeared not to have been followed in Vargas’ case.

The argument that MERS lacks legal standing to foreclose has met with mixed results in court. MERS has won several such cases in Florida; debtors have won in Ohio, Connecticut and elsewhere.

Gardner said a nationwide ruling that MERS had no standing to foreclose would raise thorny issues. “What if a court really ruled that all these foreclosures that MERS has done are invalid?” he asked. “Can you imagine what would happen to the real estate and title business?”

Bankruptcy court rulings on MERS are being keenly watched because that is where many foreclosure cases are playing out and where many more could wind up.

So Judge Bufford’s ruling in Vargas’ case was greeted with enthusiasm by Gardner and his allies. In a withering opinion, the judge said MERS “presented no admissible evidence” in its case. And he found that sanctions should be imposed against Domeyer, the attorney representing MERS, for bringing such a sloppy motion to court.

The bottom line, Bufford said, was that the true owners of the loan — “highly unlikely” to be original lender Freedom — did not come forward in court and MERS failed to prove any right to act on their behalf. He would not comment to msnbc.com beyond his published ruling.

Bufford’s ruling opened the door for Gomez, Vargas' lawyer, to file a new claim. This complaint airs Vargas’ allegations of fraud and forgery surrounding the origination of the loan. In it, he seeks $1.75 million in damages as well as to remove lenders’ liens and his obligation to repay them via “quiet title.”

Freedom, the New Jersey company that originated the loans now in foreclosure, did not respond to interview requests.

The loans appear to have been sold to Vargas on behalf of Freedom by Monta Vista Mortgage, a now-defunct Santa Ana, Calif., firm that has disconnected its phones and moved out of its offices.

Signatures disputed
Vargas said the signatures on the loans are not his and that he never met with anyone from Monta Vista nor received settlement statements explaining the transactions.

Among the few papers Vargas has from Monta Vista are a letter and two check stubs showing he received about $48,000 for cashing out $95,000 in equity. It is unclear where the rest of the funds went.

Msnbc.com located the owner of Monta Vista, Martha Lozano, in nearby Tustin. She said she was running a new company, Debt Solutions, which helps trouble borrowers seek loan modifications from lenders. She said she could find no records in her computer system indicating that her old firm, which employed 50 to 60 people, had done business with Vargas. She said any paperwork on Vargas’ transactions had likely been stolen during a burglary at a storage unit.

Lozano said many homeowners in foreclosure “now want to blame us for everything that is happening to them.” But she defended the option ARMs sold to Vargas and others, saying, “You sell what the lender is advertising.”

Asked if she would have sold such a loan to her father, Lozano quickly replied, “No way!”

As to the claim of forgery, when msnbc.com tracked down the public notary who swore that Vargas had signed the documents, he said he had no recollection of the transaction. Thomas Montaghami of Anaheim, Calif., said he is no longer a notary. He said he had lost records that notaries are supposed to keep to explain how they verified the identities of people whose signatures they notarized.

Montaghami said he had informed authorities of the loss of his records as required, but officials at the Secretary of State’s Office in Sacramento said they had no record of that.

Shown a signature that MERS claimed was his on the loan it tried to foreclose, Vargas laughed. “That’s not mine.”

His attention was diverted by the ringing phone, a telemarketer trying to sell Vargas on refinancing his home. “It’s an everyday thing,” he said. “They’re the vultures coming to pick over the bones.”

The gallows humor fits Vargas’ lack of bitterness at his plight. A guy who began adulthood carting the dead and wounded away from Normandy may have a greater capacity for forgiveness than most.

Even if he loses the house, he reckons, it was out of love for his dear Ophelia. “We were married 57 years,” he said, softly, his eyes lighting upon an urn on his mantle. “Her ashes are right there. She will be buried with me when God calls me.”

URL: http://www.msnbc.msn.com/id/29198366/page/4/

MSN Privacy . Legal

Mortgage Bailout Plan Gains Traction

2008-03-13T21:25:00.001-04:00

MoneyNews
Friday, March 14, 2008 WASHINGTON -- A mortgage bailout plan hatched between Wall Street and Congress is gaining political traction even though it could be on a crash-course with the Bush administration.

The plan would amount to a steroid boost for the Federal Housing Administration, a program conceived to help poor people buy homes that is now being used as a subprime mortgage lifeline.

Both Credit Suisse and Bank of America have mapped out how the FHA could gather up more shaky home loans and Rep. Barney Frank, chairman of the House of Representatives' Financial Services Committee, on Thursday offered legislation to do just that.

Under those plans, the government would take failing mortgages off the hands of investors and write new terms that would prevent foreclosure.

The Frank bill is specifically aimed at borrowers who are distressed because the value of their home has dropped.

Story Continues Below

http://moneynews.newsmax.com/money/archives/articles/2008/3/13/162839.cfm?s=mnh

S&P: Mortgage Writedowns Could Hit $285B

2008-03-13T21:20:00.000-04:00

MoneyNews
Thursday, March 13, 2008 NEW YORK -- Standard & Poor's on Thursday said subprime write-downs for large financial institutions are likely past the halfway mark, but they could still hit $285 billion.

S&P's estimate of subprime write-downs was up from a $265 billion figure it published in January, but the credit ratings agency said the end to write-downs was in sight.

"The positive news is that, in our opinion, the global financial sector appears to have already disclosed the majority of valuation write-downs of subprime asset-backed securities," S&P credit analyst Scott Bugie said in a report.

S&P's statement gave a boost to financial stocks and helped Wall Street indexes pare losses.

The Dow Jones industrial average was last down 0.45 percent after earlier falling about 2 percent. The S&P 500 Index was down 0.32 percent, also paring earlier losses of over 2 percent.

Story Continues Below

http://moneynews.newsmax.com/money/archives/articles/2008/3/13/140754.cfm

One in Three Foreclosures in Florida, California

2008-03-07T17:51:00.000-05:00

Florida, California push foreclosure starts

South Florida Business Journal

Related News

Colorado 40th in Q4 mortgage delinquencies [Denver]
U.S. home foreclosures at record high [Honolulu]
MBA: U.S. foreclosures at record high [East Bay]

Florida and California make up a disproportionate part of foreclosure starts in the U.S. and helped push the national number to new highs, the Mortgage Bankers Association said.

California and Florida together represent 21 percent of all loans outstanding, but accounted for 30 percent of foreclosure starts in the country, the report said. They also accounted for 39 percent of all prime adjustable-rate mortgages outstanding and 47 percent of prime ARM foreclosure starts.

Together, the make up 29 percent of all subprime ARMs and 36 percent of subprime ARM foreclosure starts.

In Florida, the percentage of loans on which a foreclosure was started during the quarter rose to 1.46 percent from 1.09 percent in the third quarter. The percentage of loans in the foreclosure process at the end of the quarter climbed to 3.22 percent from 2.19 percent.

The delinquency rate for mortgage loans on one- to four-unit residential properties, which does not include loans in the process of foreclosures, for the state was up to 7.47 percent, up from 6.47 percent in the third quarter.

The delinquency rate for prime loans increased to 4.57 percent from 3.9 percent. Subprime loans had a much higher delinquency rate, up to 19.76 percent from 17.2 percent.

Nationally, the delinquency rate was 5.82 percent, up from 5.79 percent in the third quarter.

The percentage of loans on which a foreclosure was started increased to .83 of a percent from .78 of a percent, and the percentage of loans in the foreclosure process at the end of the quarter was 2.04 percent, up from 1.69 percent.

Home Foreclosures Hit Record High

2008-03-06T13:56:00.000-05:00

Home Foreclosures Hit Record High

Thursday, March 6, 2008 11:16 AM

Article Font Size

WASHINGTON -- Home foreclosures soared to an all-time high in the final quarter of last year, underscoring the suffering of distressed homeowners and the growing danger the housing meltdown poses for the economy.

The Mortgage Bankers Association, in a quarterly snapshot of the mortgage market released Thursday, said the proportion of all mortgages nationwide that fell into foreclosure shot up to a record high of 0.83 percent in the October-to-December quarter. That surpassed the previous high of 0.78 percent set in the prior quarter.

"Clearly it's the worst it's been," chief association economist Doug Duncan said in an interview with The Associated Press.

More homeowners - at the same time - fell behind on their monthly payments.

The delinquency rate for all mortgages climbed to 5.82 percent in the fourth quarter. That was up from the 5.59 percent in the third quarter and was the highest since 1985. Payments are considered delinquent if they are 30 or more days past due. more.....

http://www.newsmax.com/newsfront/Home_Foreclosures_Hit_Rec/2008/03/06/78353.html

Feds Announce Plan to Delay Foreclosures

2008-02-12T14:04:00.000-05:00

Tuesday, February 12, 2008 1:40 PM

Article Font Size

WASHINGTON -- Homeowners threatened with foreclosure would in some instances get a 30-day reprieve under an initiative the Bush administration announced Tuesday.

Dubbed "Project Lifeline," the program will be available to people who have taken out all types of mortgages, not just the high-cost subprime loans that have been the focus of previous relief efforts.

The program was put together by six of the nation's largest financial institutions, which service almost 50 percent of the nation's mortgages.

These lenders say they will contact homeowners who are 90 or more days overdue on their monthly mortgage payments. The homeowners will be given the opportunity to put the foreclosure process on pause for 30 days while the lenders try to work out a way to make the mortgage more affordable to homeowners.

"Project Lifeline is a valuable response, literally a lifeline, for people on the brink of the final steps in foreclosure," Housing and Urban Development Secretary Alphonso Jackson said at a joint news conference with Treasury Secretary Henry Paulson.

He said the goal was to provide a temporary pause in the foreclosure process "long enough to find a way out" by letting homeowners and lenders negotiate a more affordable mortgage.

Paulson said the new effort was just one of a number of approaches the administration was pursuing with the mortgage industry to deal with the country's worst housing slump in more than two decades.

http://www.newsmax.com/money/Feds_Announce_Plan_to_Del/2008/02/12/72086.html

Fed Cuts Fed Funds Rate by Half Point

2008-01-30T15:22:00.000-05:00

The Federal Reserve announced today that it had cut the
Fed funds rate 50 basis points to 3 percent.

http://www.moneynews.com/money/archives/articles/2008/1/30/141841.cfm

Why a Chapter13-Buyout can lower your monthly payments!

2008-01-29T14:14:00.000-05:00

Why a Chapter13-Buyout can lower your monthly payments!

When you filed Chapter 13 Bankruptcy, you agreed to pay your past due mortgage payments and other debts usually over 60 months or 5 years. You also agreed to make your regularly scheduled mortgage payments in a timely fashion to your lender. If you have made these payments on time (never 30 days late) for at least twelve months, you have demonstrated to some lenders that you are a good risk, since you have handled the higher monthly payments.

A new 30, 40 or 50 year first mortgage refinancing your existing mortgage and paying off the Chapter 13 Bankruptcy allows you to stretch your debt payments over 30 to 50 years, and this should lower your monthly payments.

more information visit: http://www.chapter13-buyout.com

Why Do a Chapter 13 Bankruptcy Buyout Now?

2008-01-29T14:12:00.000-05:00

Why Do a Chapter 13 Bankruptcy Buyout Now?

Lower monthly debt payments!

Ends stigma of bankruptcy and puts you on the road to better credit! Better credit means lower interest rates on future big ticket purchases such as a new car, furniture or home!

Could put a lump sum of Cash in your bank account!

Opportunity to use monthly savings and lump sum cash to create an emergency reserve fund that grows tax free!
more information visit http://www.chapter13-buyout.com

Homes in Foreclosure Up 79 Percent in 2007

2008-01-29T13:02:00.000-05:00

Breaking News from MoneyNews.com

Homes in Foreclosure Soar 79 Percent From 2007

The number of U.S. homes that slipped into some stage of foreclosure in 2007 was 79 percent higher than in the previous year, a real estate tracking company said Tuesday. Many homeowners started to fall behind on mortgage payments in the last three months, setting the stage for more foreclosures this year.

About 1.3 million homes received foreclosure-related warnings last year, up from 717,522 in 2006, Irvine-based RealtyTrac Inc. said. Foreclosure filings rose 75 percent from the previous year to 2.2 million.

More than 1 percent of all U.S. households were in some phase of the foreclosure process last year, up from about half a percent in 2006, RealtyTrac said.

Nevada, Florida, Michigan and California posted the highest foreclosure rates, the company said.

The filings included notices warning owners that they were in default, or that their home was slated for auction or for repossession by a bank. Some properties may have received more than one notice if the owners had multiple mortgages.

Store continues below . . .

http://moneynews.newsmax.com/money/archives/articles/2008/1/29/081735.cfm

Home Prices Fell in ’07 for First Time in Decades

2008-01-25T15:48:00.001-05:00

January 24, 2008

Home Prices Fell in ’07 for First Time in Decades

By MICHAEL M. GRYNBAUM

It was a notable year for the housing industry, and not in a good way.

In 2007, the median price of an American single-family home fell for the first time in at least four decades, according to the National Association of Realtors, a trade group.

The median price declined 1.8 percent to $217,800, the first annual decline since reliable records began in 1968. “It’s the first price decline in many, many years and possibly going back to the Great Depression,” said the group’s chief economist, Lawrence Yun.

Over all, sales of previously owned single-family homes fell 13 percent in 2007, the biggest drop in a quarter-century. Last month alone, home sales dipped 2.2 percent from November, to a 4.89 million annual rate. (The group’s survey excludes newly constructed homes.)

Inventories of single-family homes and condominiums remain elevated, as the housing industry struggles to climb out of its worst downturn since the early 1990s. Though the backlog of unsold homes ticked down slightly in December, at least one economist attributed the drop to discouraged homeowners “pulling their homes off the market in the face of continued weak demand and falling prices.”

“We still have a long way to go before prices sink to levels necessary to balance supply and demand in the housing market,” the economist, Joshua Shapiro of MFR, a research firm, wrote.

Potential home buyers have stayed on the sidelines as they expect prices to drop further in 2008. Economists predict the housing market will not bottom out until the summer, and even then will remain sluggish.

The median price of a previously owned home was off 6 percent last month from December 2006, and sales of condominiums fell 25 percent.

The steepest decline in sales last month came in the Northeast, where sales fell 4.6 percent from November. Prices in the region were down 8.9 percent from December 2006.

Taxpayers Could Lose $500,000,000 on Countrywide Deal

2008-01-24T14:33:00.000-05:00

Taxpayers Could Lose $500,000,000 on Countrywide Deal

As the deal stands, Bank of America may be able to avoid up to $500 million in federal taxes if its acquisition of Countrywide Financial Corp. proceeds according to plan, according to tax experts.

According to analysis by a long-time tax expert at Lehman Brothers, Robert Willens, the Charlotte-based bank will be able to offset a portion of its own taxable income with losses that Countrywide sustained prior to the acquisition.

Willens estimates that the tax break could total roughly half a billion dollars in just the first five years after the takeover.

Losses to federal revenues could take off even further after that, suggests Willens.

He estimates that Bank of America would be able to deduct $270 million of pre-acquisition losses at Countrywide's every year for the first five years based on the projected $6 billion cost of buying Countrywide.

The projected cost includes $4 billion of stock the bank plans to give Countrywide's common stockholders, in addition to $2 billion of preferred stock it bought from Countrywide last August.

With the long-term tax-exempt rate of 4.49%, Willens says that Bank of America would multiply the $6 billion that figure to determine how much of lender's losses it can deduct annually for five years after the purchase.

With a $270 million annual deduction, Bank of America would save over $100 million a year in federal and state income taxes.

If that figure is multiplied over five years, BoA could save about $500 million of taxes using a total of $1.35 billion of Countrywide's losses to shelter its own income.

Although not even Countrywide knows the extent of its losses from rising defaults and lower demand, the lender would tally both its realized and unrealized losses just before the deal closes.

If the losses exceed $1.35 billion, the bank would be free to deduct the rest of the losses without any limits starting in the sixth year, says Willens.

However, any losses incurred following the closing of the deal would be fully deductible by the bank.

When Bank of America purchase of the collapsed FirstRepublic Bank of Dallas in 1988, the company manipulated the tax codes to save $1 billion in taxes in a manner that shocked both regulators and rival bidders.

Bank of America ultimately lost money with its purchase of $2 million shares of Countrywide in August by underestimating the extent of the problems with the lender’s portfolio.

It remains to be seen whether the massive tax breaks the bank stands to get will be enough to cover the future losses that Countrywide may bring.

Posted on Tuesday, January 22, 2008

http://www.mortgageledger.com/modules.php?name=News&file=article&sid=2780&mode=&order=0&thold=0

Fed Cuts Interest Rate 3/4 of a Point

2008-01-22T12:09:00.000-05:00

Tuesday, January 22, 2008 8:47 AM

Article Font Size

WASHINGTON -- The Federal Reserve, confronted with a global stock sell-off fanned by increased fears of a recession, cut a key interest rate by three-quarters of a percentage point on Tuesday, the biggest one-day move by the central bank in recent memory.

The Fed said it was cutting the federal funds rate, the interest that banks charge each other on overnight loans, to 3.5 percent, down by three-fourths of a percentage point from 4.25 percent.

The Fed action was the most dramatic signal it can send that it is concerned about a potential recession in the United States. It marked the biggest one-day move by the central bank in recent memory.

The Fed decision was taken during an emergency telephone conference with Fed officials on Monday night. Those discussions occurred after global financial markets had plunged Monday as investors grew more concerned about the possibility that the United States, the world's largest economy, could be headed into a recession.

In a brief statement, the Fed said it had decided to cut the federal funds rate "in view of a weakening of the economic outlook and increasing downside risks to growth."

The central bank said that the strains in short-term funding markets have eased a bit, but "broader financial market conditions have continued to deteriorate and credit has tightened further for some businesses and households. Moreover, incoming information indicates a deepening of the housing contraction as well as some softening in labor markets."

The move caught financial markets by surprise. Many had expected the central bank would wait until its meeting next week to make any move in interest rates. The Fed made the move before markets had opened in the United States, hoping that the bold move would limit the decline in U.S. stocks.

Before Tuesday's move, the Fed had cut interest rates three times, beginning in September, the month after a severe credit crunch had roiled Wall Street and global financial markets. The Fed cut the funds rate by a half-point in September and then by smaller quarter-point moves in October and December.

In its statement, the Fed said, that "appreciable downside risks to growth remain" and held out the prospect of further rate cuts.

"The committee will continue to assess the effects of financial and other developments on economic prospects and will act in a timely manner as needed to address those risk," the Fed statement said.

The Fed's action was approved on an 8-1 vote with William Poole, president the Fed's regional bank, dissenting. The statement said that Poole objected because he did not believe current conditions justified a rate move before the Fed's meeting next week.

http://www.newsmax.com/headlines/Fed_Cuts_Interest_Rate_3//2008/01/22/66325.html

Home Construction Slows to 27-Year Low

2008-01-19T14:52:00.001-05:00

MoneyNews
Thursday, Jan. 17, 2008 WASHINGTON -- The prolonged slump in housing pushed construction of new homes in 2007 down by the largest amount in 27 years with the expectation that the downturn has further to go.

The Commerce Department reported Thursday that construction was started on 1.353 million new homes and apartments last year, down 24.8 percent from 2006. It was the second biggest annual decline on record, exceeded only by a 26 percent plunge in 1980, a period when the Federal Reserve was pushing interest rates to post-World War II records in an effort to combat an entrenched inflation problem.

Many economists believe that the current slump in housing will rival the dive in the late 1970s and early 1980s when housing construction fell for four straight years before beginning to recover after the severe 1981-82 recession. For December, construction fell by a bigger-than-expected 14.2 percent.

In other economic news, the Labor Department said the number of newly laid off workers filing applications for unemployment benefits dropped by 21,000 last week to 301,000. That marked the third consecutive weekly decline and occurred even though the government reported that the unemployment rate increased sharply in December.

Some economists believe the current housing troubles will push the country into another recession as consumers are staggered by the steep drop in housing — which has pushed home values down in many parts of the country. Consumers also have been faced with rising mortgage defaults and a severe credit crunch which has made loans harder to obtain.

Story Continues Below

http://moneynews.newsmax.com/money/archives/articles/2008/1/17/095331.cfm?s=al&promo_code=434C-1

Bernanke Backs Quick Fiscal Stimulus

2008-01-17T18:21:00.000-05:00

MoneyNews
Friday, Jan. 18, 2008 WASHINGTON -- The chairman of the Federal Reserve on Thursday threw his weight behind proposals for near-term actions to stimulate economic growth to ward off an election-year recession, but warned such a plan could do more harm than good unless put together quickly.

Fed chief Ben Bernanke told the House Budget Committee that the U.S. central bank was not forecasting recession, but he repeated it was ready to act aggressively to prop up growth. He said a fiscal package could be effective if used in concert with interest-rate cuts.

Bernanke's comments, which lent impetus to efforts on Capitol Hill to assemble a package of stimulus steps, also reinforced a view in financial markets that a half-percentage point rate reduction will come at the end of the month.

"Fiscal action could be helpful in principle, as fiscal and monetary stimulus together may provide broader support for the economy than monetary actions alone," Bernanke said.

Other Fed officials, speaking at other locations, said they were worried enough about the economy to back further cuts in interest rates. The central bank has already lowered benchmark rates by 1 percentage point to 4.25 percent since mid-September.

Story Continues Below

http://moneynews.newsmax.com/money/archives/articles/2008/1/17/152833.cfm

Roach: ‘U.S. Homes Should Fall 30 Percent’

2008-01-13T19:12:00.000-05:00

Friday, Jan. 11, 2008 11:19 a.m. EST Voracious, spendthrift consumers in the United States have driven the global economy out of balance, and only a massive repricing of U.S assets – including up to a 30 percent decline in home values – can fix it.

That’s the view of Stephen Roach, chairman of Morgan Stanley Asia, writing in the Financial Times this week.

"America’s current account deficit is due more to bubbles in asset prices than to a misaligned dollar,” Roach wrote in an editorial. "A resolution will require more of a correction in asset prices than a further depreciation of the dollar.”

A weakening U.S. dollar might help, but it won’t solve the real problem – a huge trade imbalance financed by a huge spending binge by American consumers.

Story Continues Below

http://moneynews.newsmax.com/money/archives/st/2008/1/11/111956.cfm?s=st

Gross: $250 Billion in Credit Losses Will Slam Economy

2008-01-13T19:06:00.000-05:00

Wednesday, Jan. 9, 2008 8:51 a.m. EST Bond guru Bill Gross says credit-default swaps, a derivative used to insure against the risk companies won't pay debts, could cause losses of $250 billion this year, helping send the U.S. economy into a recession.

The Pimco chairman also sees economic growth as low as 0.75% for 2008 and a housing price slide of up to another 10%.

Assuming default rates on corporate bonds reach historical averages of about 1.25 percent, $500 billion of credit-default swap contracts will be triggered, causing losses of $250 billion to sellers of the derivatives after accounting for the recovery value of the securities, Gross told investors in his monthly note. Goldman Sachs estimates that mortgage related losses of $200-$400 billion alone might lead to a pullback of $2 trillion of aggregate lending, Gross wrote.

"Add to that my $250 billion loss estimate from CDS, as well as prospective losses in commercial real estate and credit cards in 2008 and you have a recipe for a contraction in credit leading to a recession,” he wrote.

Story Continues Below

http://moneynews.newsmax.com/money/archives/st/2008/1/9/85219.cfm

A Glimmer of Light for Subprime Loans

2008-01-11T14:54:00.000-05:00

John Browne
Wednesday, Jan. 9, 2008 To most institutions and individuals, the outlook for subprime mortgages could not look more bleak.

Indeed, with today's news of record default rates, many observers see subprime as an all consuming black hole!

And yet, some people are said to be buying collateralized debt obligations (CDOs) containing subprime mortgages, at very deep discounts, usually undisclosed.

So what glimmer of future profit do they see? Let me offer some thoughts.

I see three dim rays of light that could one day allow some profit to be squeezed from CDOs.

They are: CDO re-packaging, substantially lower interest rates, and government aid. Let's examine each in turn. more....

http://moneynews.newsmax.com/money/archives/articles/2008/1/8/173217.cfm

Bernanke's Bluntness Assures a Big Cut

2008-01-10T17:01:00.000-05:00

Thursday, Jan. 10, 2008 3:50 p.m. EST CHICAGO -- Weeks ahead of a key policy-setting meeting, Federal Reserve Chairman Ben Bernanke Thursday left little doubt the central bank will slash interest rates to bolster the sagging economy.

Speaking in Washington, Bernanke was unexpectedly blunt about the U.S. economy's worsening outlook, while adding that the Fed is "not currently" forecasting a recession.

He assured markets that the Fed stands ready to take "substantive additional action as needed" to support growth and would "act in a decisive and timely manner."

"Bernanke's comments will be regarded as unequivocally dovish," said Marc Chandler, senior currency strategist at Brown Brothers Harriman in New York.

Story Continues Below

http://moneynews.newsmax.com/money/archives/st/2008/1/10/155209.cfm?s=st

Shiller Sends Shivers into Real Estate

2008-01-04T16:58:00.000-05:00

John Browne
Thursday, Jan. 3, 2008 Last week I was interviewed, together with the housing expert Robert Shiller, a Yale professor, on CNBC's Larry Kudlow show.

Shiller showed how home prices in 10 major metropolitan areas were down by 6.7 percent, year-on-year, in October (more than experts' estimates and down by 1.4 percent compared to September).

The shrill cries of Wall Street "cheerleaders" floundered to a whimper as they tried vainly to degrade Shiller's findings and show evidence against a real estate collapse that is becoming increasingly obvious.

Contrary to the claims of the "cheerleaders," the broader index of 20 metropolitan areas was just as bad, with a fall of 6.1 percent.

Professor Shiller also commented ominously that, "to see as bad a fall as this, you would have to go back to 1940!" more....

http://moneynews.newsmax.com/money/archives/articles/2008/1/3/142344.cfm?s=al&promo_code=424E-1

Delinquencies on Consumer Loans at 7-Yr. High

2008-01-03T18:15:00.000-05:00

MoneyNews
Thursday, Jan. 3, 2008 WASHINGTON -- Late payments on a cluster of consumer loans, including those for autos, home improvement and certain home equity loans, climbed in the summer to their highest point since the country's last recession in 2001.

The American Bankers Association reported Thursday that the delinquency rate on a composite of consumer loans increased to 2.44 percent in the July-to-September quarter. That was up sharply from 2.27 percent in the previous quarter and was the highest late-payment rate since the second quarter of 2001, when the economy was suffering through a recession.

Payments are considered delinquent if they are 30 or more days past due. The survey is based on information supplied by more than 300 banks nationwide.

Late payments on credit cards, meanwhile, dipped during summer.

The delinquency rate on credit cards dropped to 4.18 percent in the third quarter, down from 4.39 percent in the second quarter.

http://moneynews.newsmax.com/money/archives/articles/2008/1/3/090611.cfm?s=al&promo_code=423A-1

Home Prices Still Falling

2007-12-26T15:08:00.000-05:00

Home Prices Still Falling

MoneyNews
Wednesday, Dec. 26, 2007

NEW YORK -- U.S. home prices fell in October for the 10th consecutive month, declining a record 6.7 percent compared with a year ago, according to the Standard & Poor's/Case-Shiller home price index.

"No matter how you look at these data, it is obvious that the current state of the single-family housing market remains grim," said Robert Shiller, who helped create the index, in a statement Wednesday.

The previous record decline was a drop of 6.3 percent, recorded in April 1991.

Home prices fell 1.4 percent in October compared with the previous month. more,,,,

http://moneynews.newsmax.com/money/archives/articles/2007/12/26/094407.cfm

Analyst: Mortgage Industry Must Slash Jobs By 1/3

2007-12-18T13:46:00.000-05:00

Analyst: Mortgage Industry Must Slash Jobs By 1/3

Although the mortgage industry has shed 103,200 jobs since employment peaked at 504,700 in October 2006, the deteriorating housing market will need to purge another third of the roughly 400,000 remaining jobs in 2008, says a research analyst at Friedman, Billings, Ramsey & Co. (FBR).

Research analyst Paul J. Miller has some unwelcome news for more than a hundred thousand mortgage professionals: your services are no longer needed.

In lowering his initial forecast of residential originations for 2008, Miller dropped his prediction from $2.2 trillion to about $1.8 trillion.

"Bottom line, too many loan brokers are chasing too few loans!" wrote Miller in a research note.

"Until the mortgage industry eliminates back-office personnel and loan officers, which could take several quarters, we believe the mortgage industry will not generate an economic profit."

The FBR analyst suggested that the mortgage industry has entered a historically unprecedented period where older criteria for predictions no longer apply.

In the past, Miller wrote, the level of annual originations was more or less tied to the fluctuations of interest rates during the year, making it difficult to present yearly forecasts.

However, two factors have arisen in the largest housing slowdown in U.S. history to make predictions more simple this time around: diminished liquidity and tightened lending standards.

Miller wrote that "lower interest this time around is having only a marginal impact on origination volume as reduced liquidity coupled with stricter underwriting standards are driving origination volumes lower."

The analyst suggested that employment serves as a decent barometer of how the mortgage industry is faring.

Although mortgage jobs continued to climb well after originations began to fall last year, the number of industry professionals has declined by roughly 20% since peaking in October 2006.

Miller says that the mortgage industry probably will not reach a balance between loan fundings and employment before major lenders will generate a profit once more.

Posted on Tuesday, December 18, 2007

http://www.mortgageledger.com/modules.php?name=News&file=article&sid=2707

Fannie Mae CEO: Housing Woes Until 2009

2007-12-16T19:25:00.000-05:00

MoneyNews
Friday, Dec. 14, 2007 WASHINGTON -- Fannie Mae's CEO told shareholders Friday he does not expect a housing market recovery until late 2009, "at the earliest," and that the mortgage-finance company is strong enough to ride out the downturn.

Fannie Mae "will weather the turbulence of today's mortgage market and prosper when better conditions return," the president and CEO, Daniel Mudd, said as he and other top executives faced shareholders for the first time in three-and-a-half years at an annual meeting. More...

http://moneynews.newsmax.com/money/archives/articles/2007/12/14/142536.cfm?s=mne

NJ Mortgage Network

D-Day vet's tale parallels mortgage meltdown

Mortgage Bailout Plan Gains Traction

S&P: Mortgage Writedowns Could Hit $285B

One in Three Foreclosures in Florida, California

Florida, California push foreclosure starts

South Florida Business Journal

Related News

Home Foreclosures Hit Record High

Home Foreclosures Hit Record High

Feds Announce Plan to Delay Foreclosures

Fed Cuts Fed Funds Rate by Half Point

Why a Chapter13-Buyout can lower your monthly payments!

Why a Chapter13-Buyout can lower your monthly payments!

Why Do a Chapter 13 Bankruptcy Buyout Now?

Why Do a Chapter 13 Bankruptcy Buyout Now?

Lower monthly debt payments!

Ends stigma of bankruptcy and puts you on the road to better credit! Better credit means lower interest rates on future big ticket purchases such as a new car, furniture or home!

Could put a lump sum of Cash in your bank account!

Opportunity to use monthly savings and lump sum cash to create an emergency reserve fund that grows tax free!

Homes in Foreclosure Up 79 Percent in 2007

Home Prices Fell in ’07 for First Time in Decades

Home Prices Fell in ’07 for First Time in Decades

Taxpayers Could Lose $500,000,000 on Countrywide Deal

Fed Cuts Interest Rate 3/4 of a Point

Home Construction Slows to 27-Year Low

Bernanke Backs Quick Fiscal Stimulus

Roach: ‘U.S. Homes Should Fall 30 Percent’

Gross: $250 Billion in Credit Losses Will Slam Economy

A Glimmer of Light for Subprime Loans

Bernanke's Bluntness Assures a Big Cut

Shiller Sends Shivers into Real Estate

Delinquencies on Consumer Loans at 7-Yr. High

Home Prices Still Falling

Analyst: Mortgage Industry Must Slash Jobs By 1/3

Fannie Mae CEO: Housing Woes Until 2009