Tag Archive: mortgage industry


The Sacramento Bee via Mortgage Daily

Activity climbed on mortgage fraud cases being prosecuted in California, leaving the state with more fraud than any other. New York also saw acceleration, while Florida’s mortgage fraud index topped the list and Minnesota remained prominently perched among the worst locales. But as a whole, the country’s case activity was slower.The Third-Quarter 2011 Mortgage Fraud Index from MortgageDaily.com came in at 1170. The index represents activity on civil and criminal cases. Victim lenders were deceived by fraudulent documentation or inflated appraisals. Cases were tracked from the mortgage fraud blog FraudBlogger.com."The Mortgage Fraud Index reflects current efforts by law enforcement officials to prosecute defendants who typically committed mortgage fraud three to five years ago," said Mortgage Daily founder and Publisher Sam Garcia said. "Many of the recently opened cases were uncovered by mortgage bankers who were forced to repurchase the loans."The index fell 7 percent from the second quarter but climbed 16 percent from a year earlier.On a dollar basis, the aggregate balance of mortgage fraud cases was $1.3 billion — lower than the second quarter and the third-quarter 2010.

The number of cases with activity in Florida climbed, giving it the worst state fraud index. California had the second-highest index, followed by Minnesota.

Based solely on the dollar amount of cases with third-quarter activity, California’s $204 million was highest. New York was a close second, while Minnesota maintained its standing among the five-worst states.

"While mortgage fraud has historically been more prevalent in states hit hard by the housing crisis, Minnesota and New York — two states that have not suffered as badly from foreclosures — have recently emerged as active states for prosecutors," Mr. Garcia added.

 

best appraisal management companies

coester appraisal group

valuation management services

best appraisal management company

appraisal management services

reverse mortgage appraisals

Advertisements

Kenneth R. Harney, Seattle Times

Got a beef with your mortgage lender? Is your bank unresponsive when you complain that your escrow account is fouled up and making your monthly payments needlessly high?

Did your loan officer bait-and-switch you into a more costly home loan than originally promised? Or worse yet: Did your loan servicer ignore you when you told him you’ve had an unexpected drop in income and needed a modification to avoid missing payments?

If any of this sounds familiar, here’s a heads-up about the newest and least-publicized source of federal help: the Consumer Financial Protection Bureau’s home-mortgage complaint and dispute-resolution hotline.

Never heard of it? That’s not surprising since it only went live Dec. 1 and the CFPB hasn’t said much about it, preferring to ease into the potential snake pit of mortgage issues that American consumers have with their lenders rather than get overwhelmed.

The complaint hotline is accessible online at the CFPB’s website (www.consumerfinance.gov), by toll-free phone between 8 a.m. and 8 p.m. Eastern (855-411-CFPB) as well as by regular mail and fax.

The bureau was created by last year’s Dodd-Frank financial-overhaul legislation and is supposed to look out for your interests in banking, financial products, home loans and all other forms of consumer credit. Its mortgage-complaint service is an extension of the agency’s hotline for credit-card-related disputes and inquiries, which began July 21.

Already Busy

So far, according to the bureau, the card hotline has handled 5,074 complaints. Of this total, it referred 84 percent directly to the card issuers — mainly big banks — for resolution.

Some complaints came with incomplete information or were referred to other agencies for action.

Approximately 74 percent of all the complaints were subsequently reported back from banks as resolved, and 71 percent of total resolutions were not disputed by the consumers who lodged the original complaints.

Just under 13 percent of all credit-card complainants reported that they were not satisfied with the card issuer’s actions.

The credit-card complaint service is likely to provide a template for the agency’s approach to mortgage problems, which are expected to be more voluminous.

When a borrower submits a formal complaint to the bureau, the information will be sent to the lender or mortgage servicer named in the complaint via a secure Web portal.

The lender must review the information, contact the customer if needed and determine what action to take to resolve the matter.

Next, the lender is supposed to report its action, if any, to the bureau, which sends it on to the borrower for review.

Throughout the process, according to the CFPB, borrowers "can log onto the (agency’s) secure ‘consumer portal’ or call the toll-free number to receive updates, provide additional information, and review responses" from the lender.

If the dispute focuses on a matter of state regulation or is beyond the CFPB’s scope, the dispute may be referred to other agencies.

Similarly, if the dispute points to fraud or identity theft, the bureau is likely to refer it to either a federal or a state law-enforcement authority.

For the time being, the CFPB is referring all complaints involving small banks or their subsidiaries that have less than $10 billion in assets to other agencies.

In the mortgage field, however, the majority of loan originations and servicing is controlled by the top 10 largest banks or their subsidiaries, which means a high percentage of the complaints will likely be handled by the CFPB.

Groups Optimistic

How is this going to work in practice? Though consumer groups are optimistic, and the CFPB says it’s staffed up and ready to go, some mortgage-industry leaders worry that the agency could be taking on more than it can realistically handle, and raising borrower expectations that can’t be met.

David H. Stevens, president and CEO of the Mortgage Bankers Association, said in an interview that while he has found the CFPB to be "fairly thoughtful" in its approach to date, he is "concerned that they are moving too quickly too soon."

If they are not properly equipped to handle large volumes of emails and calls, the service could be "an investigatory black hole" where complaints are filed but not addressed quickly or adequately, and it could be "a net negative" for borrowers who have genuine problems, Stevens said.

Since the agency is expected to report on the initial months’ results sometime in early 2012, Stevens and consumers should have answers fairly soon. Meanwhile, if you’ve got a legitimate complaint, give the hotline a shot.

 

mortgage appraisals

best appraisal management companies

coester valuation management services

best appraisal management company

reverse mortgage appraisals

dodd-frank

via Washington Post

A government watchdog said Fannie Mae and Freddie Mac improperly foreclosed on homeowners and cost the government billions of dollars by not holding major banks to strict underwriting requirements.

The report released Tuesday also said the Federal Housing Finance Agency gave “undue deference” to Fannie and Freddie officials and didn’t scrutinize more than $35 million in bonuses and compensation to Fannie and Freddie executives.

FHFA’s inspector general had previously released each of the findings on an individual basis. But the semi-annual report to Congress sketched a portrait of abuse at the two mortgage giants that the government failed to stop.

Fannie, Freddie and the FHFA didn’t respond to the report. But they have responded to similar allegations in previous reports.

Fannie and Freddie own or guarantee about half of U.S. mortgages, or nearly 31 million loans. The Bush administration seized control of the mortgage giants in September 2008.

Like banks, the mortgage giants relaxed lending standards during the housing boom and didn’t thoroughly check incomes and assets weren’t properly checked. High-interest loans, some with low “teaser” rates, were doled out to risky borrowers.

The inspector general report found that Fannie and Freddie did not force banks to repurchase mortgages when they failed to meet strict underwriting requirements. That decision cost the government billions of dollars.

When a senior examiner at FHFA raised “serious concerns” about Freddie’ process for reviewing Bank of America’s mortgages, senior Freddie managers disagreed, according to the report. The managers also said they feared losing business from Bank of America if the government became more aggressive in getting money back for bad mortgages, the report said.

The report also found:

— Fannie knew about allegations of improper foreclosure practices by law firms as far back as 2003 but did not act to stop them.

— Fannie failed to establish an “acceptable and effective” way to monitor foreclosure proceedings between 2006 and early 2011.

— FHFA failed to oversee the government’s signature foreclosure-prevention program, the Home Affordable Modification Program. As a result, it cost the government extra time and resources to fix it.

Fannie officials said they told a government official about false foreclosure practices in 2006. That unnamed official, who now works for Fannie’s regulator, the Federal Housing Finance Agency, said he couldn’t recall the conversation, the report said.

And both mortgage giants have defended executive bonuses and compensation as necessary to keep talented officials.

coester appraisal group

coester appraisal management company

coester valuation services

dodd-frank

best appraisal management company

best appraisal management companies

reverse mortgage companies

Michael Hudson via iWatchNews

Darcy Parmer ran into trouble soon after she started her job as a fraud analyst at Wells Fargo Bank. Her bosses, she later claimed, were upset that she was, well, finding fraud.

Company officials, she alleged in a lawsuit, berated her for reporting that sales staffers were pushing through mortgage deals based on made-up borrower incomes and other distortions, telling her that she didn’t “see the big picture” and that “it is not your job to fix Wells Fargo.” Management, she claimed, ordered her to stop contacting the company’s ethics hotline.

In the end, she said, Wells Fargo forced her out of her job.

Parmer isn’t alone in claiming she was punished for objecting to fraud in the midst of the nation’s home-loan boom. iWatch News has identified 63 former employees at 20 financial institutions who say they were fired or demoted for reporting fraud or refusing to commit fraud. Their stories were disclosed in whistleblower claims with the U.S. Department of Labor, court documents or interviews with iWatch News.

“We did our jobs. We had integrity,” said Ed Parker, former fraud investigations manager at now-defunct Ameriquest Mortgage Co., a leading subprime lender. “But we were not welcome because we affected the bottom line.”

These ex-employees’ accounts provide evidence that the muzzling of whistleblowers played an important role in allowing corruption to flourish as mortgage lenders and their patrons on Wall Street pumped up loan volume and profits. Codes of silence at many lenders, former employees claim, helped discourage media, regulators and policymakers from taking a hard look at illegal practices that ultimately harmed borrowers, investors and the economy.

Whistleblower advocates say weak federal and state laws also helped prevent finance industry workers from being heard. Congress passed tougher laws in the wake of the financial crisis, but whistleblowers and their advocates say labor-law enforcers, securities-law cops and banking regulators need to do more to ensure that banking workers can safely report fraud and other abuses.

For their part, banking industry representatives reject the idea that employees were punished for reporting problems.

In court documents, Wells Fargo denied Parmer’s charges that management interfered with in-house fraud watchdogs. The bank said Parmer was never prohibited from calling the ethics line and that its internal investigation showed that no one retaliated against her and that “no fraudulent activity occurred.”

A Wells Fargo spokeswoman told iWatch Newsthat the bank has extensive protections for internal whistleblowers and that it is the responsibility of all employees to raise concerns about ethics breaches or law violations.

“We have a strict code of ethics and a no-retaliation policy,” Wells Fargo spokeswoman Vickee Adams said. “We take responsibility for our actions, and when there’s evidence of a mistake and there’s something that’s needs to be corrected, we take action.”

‘Zero tolerance’

iWatch News has reported on former employees of Countrywide Financial Corp. who claimed the company retaliated against them for objecting to falsified mortgage documents and other fraud. In September the Labor Department ruled that Bank of America Corp., which bought Countrywide in 2008, had fired Eileen Foster, the mortgage lender’s fraud investigations chief, as punishment for finding widespread fraud and for trying to protect other whistleblowers within the company.

Further investigation reveals that concerns about the abuse of whistleblowers weren’t limited to Countrywide.­

Most of the workers who claimed they were punished for trying to fight fraud worked at giant firms such as Wells Fargo or Washington Mutual (WaMu). Others worked at smaller lenders that joined the rush to sell home loans during the boom years.

Wherever they worked, their accounts are similar. Many claim that commission-hungry workers falsified loan applicants’ incomes and bank statements, pushed appraisers to exaggerate property values and, in some instances, forged consumers’ signatures on documents.

In many cases, the former employees say, management encouraged the fraud and protected the fraudsters.

Parker, the former Ameriquest fraud investigations chief, claims that he had few problems when he did “ones” and “twos” — investigating cases that involved an employee or two who could cause only limited damage, he said. But things changed, he said, when he tried to fight systemic fraud by focusing on branches or regions where fraud was so prevalent, workers joked that bogus documents were being produced in the “art department.”

Management instructed his unit to limit its investigations by reducing the number of loan files it pulled when it went into a branch, Parker said. He was left out of meetings and key decisions and, eventually, squeezed out of his job, he claimed.

Ameriquest later agreed to pay $325 million to settle loan-fraud allegations by authorities in 49 states and the District of Columbia. It stopped making loans in 2007.

The company said previously in a written statement that Parker was a “disgruntled former employee” who lost his wrongful dismissal claim against the company before an arbitrator. In a 2007 opinion, the arbitrator ruled Parker hadn’t been able to prove that the company’s treatment of him was connected to his reports about fraud, adding that it “stretches the imagination” to think a company would retaliate against a fraud investigator for “doing his job.”

More generally, Ameriquest said it “had a policy of zero tolerance for fraud. When problems were discovered, the company addressed them, including immediately terminating the employee or vendor and pursuing civil and criminal action against them.”

‘Fraud is fraud’

At a White House press conference in October, ABC News correspondent Jake Tapper asked President Obama why his administration hadn’t pursued criminal cases more aggressively in the aftermath of disasters at Lehman Brothers and other banks.

“I don’t think any Wall Street executives have gone to jail, despite the rampant corruption and malfeasance that did take place,” Tapper said.

Obama replied that in many instances the government might have trouble making criminal charges stick, because “a lot of that stuff wasn’t necessarily illegal. It was just immoral or inappropriate or reckless.”

Obama isn’t alone in suggesting that criminal fraud by banks wasn’t the main cause of the nation’s financial disaster. Bankers have cited unpredictable market conditions, the federal government and borrowers as being among the chief culprits.

In congressional testimony, former Washington Mutual chief executive Kerry Killinger blamed borrowers for misleading WaMu about their incomes and other details in their loan applications.

“I’m certainly very disappointed to think about my customers lying to me, because that’s fraud and it shouldn’t happen,” Killinger said. “But I think an objective look at things is that there must have been situations where people did not tell the truth on their applications."

Many whistleblowers who worked inside major banks counter that it was fraud by lenders — not borrowers — that was the driving force in the growth of toxic loans that caused the mortgage meltdown.

“Fraud is fraud,” Parker said. “It’s fraud if someone changes information in a loan file without the borrower’s knowledge or does anything deceptive to get a loan approved and passed through. How can you say those are not criminal acts?”

Parker and other former mortgage workers say some borrowers did take part in the fraud, but they usually did so with coaching from sales representatives who knew how to work the system to get deals done. And in many cases, Parker and others say, borrowers weren’t aware of the deception and were fooled by bait-and-switch salesmanship and other tactics used by the mortgage professionals who controlled the process.

A two-year U.S. Senate investigation found that senior management at Washington Mutual ignored clear evidence that bank employees were engaging in fraud.

In a report released in April, Senate investigators noted that an internal WaMu review of a high-volume loan center in Southern California found that as many as 83 percent of the loans it booked contained fraud. Despite in-house gatekeepers’ warnings about fraud at that location and other loan centers, WaMu executives took “no discernable actions” to deal with problem, the Senate report said.

Top sales managers suspected of fraud, the report said, were allowed to continue to produce huge volumes of loans and win trips to Hawaii as members of WaMu’s “President’s Club.”

WaMu collapsed in September 2008, a $300 billion institution buried in bad loans. It was the largest bank failure in American history — and one of the biggest casualties of risky practices and missed warning signs stretching back to the start of the last decade.

Early warnings

In the spring and summer of 2001, Matthew Lee was a busy man.

A fair-lending activist and blogger on innercitypress.org, Lee was fielding a growing number of emails and phone messages from people who worked at Citigroup’s subprime lending unit, CitiFinancial. The lender, they told Lee, was using slippery methods to trap borrowers in cycles of overpriced debt.

The more he reported the whistleblowers’ information on his website, the more whistleblowers contacted him. “I can’t count the number of times people called me and said: ‘It’s actually worse than you described. Let me tell you about it,’” Lee recalled.

In all, Lee estimates, he talked with three dozen current and former CitiFinancial employees.

One continued helping Lee even after he lost his job at Citi, digging through trash bins outside CitiFinancial branches around Tennessee and rescuing internal memos and other documents that, in Lee’s view, provided evidence of the lender’s “pervasive lawlessness.” The documents would arrive via overnight mail, often damp and smelling of used coffee grounds.

One former CitiFinancial employee, Steve Toomey, agreed to go on the record, signing a statement that said managers pushed workers to mislead borrowers about the costs of their loans and to falsify information in borrowers’ files. Lee filed Toomey’s affidavit and other documents with banking regulators at the Federal Reserve.

CitiFinancial immediately denied the allegations against the company, asserting, for example, that Toomey had only raised questions after “he concluded that the company would not pay him monies that he demanded to resolve an employment dispute.”

With the pressure building, Citigroup went out of its way to warn other current and former employees to keep quiet about what went on at CitiFinancial, according to Reuters news service.

Citigroup, Reuters said, hired a famed litigator “to help fight allegations of illegal lending practices and prevent former employees from bad-mouthing the financial services giant.” Mitchell Ettinger, one of Bill Clinton’s lawyers in the Paula Jones case, met with at least 15 current or former employees, reminding the ex-employees that Citigroup would enforce the “non-disparagement clauses” in their severance agreements with the company, Reuters said.

Lee charged that this was an attempt to paper over evidence of misconduct inside CitiFinancial. Why, he argued, would Citigroup dispatch a partner from Skadden Arps, described by Forbes magazine as “Wall Street’s most powerful law firm,” to talk with low-level employees?

Citigroup told Reuters the bank had acted properly. It added that the standard non-disparagement clause in the bank’s severance agreements wouldn’t prevent ex-employees from reporting illegalities.

Ettinger did not respond to requests for comment from iWatch News. A Citigroup spokesman declined to answer specific questions from iWatch News about former employees’ complaints. He said “issues from that time period” were “investigated and responded to appropriately by the company.”

The Federal Reserve eventually fined CitiFinancial $70 million for regulatory violations. Lee said that the Fed focused mainly on technical issues, however, and did nothing to protect whistleblowers from intimidation by the bank.

That, Lee said, made it less likely that more employees would come forward in the future with information about misconduct at Citi — or at other financial institutions that wanted to keep misbehavior secret.

“When people do step forward and put themselves at risk, you need to aggressively say to them, ‘If you’ve received any threats from the company, let us know,’” Lee said.

A spokeswoman said the Federal Reserve couldn’t comment on issues involving individual banks.

‘Their integrity … failed’

As whistleblowers were drawing scrutiny to Citigroup, then the nation’s largest commercial bank, others were raising questions about Washington Mutual, the nation’s largest savings and loan.

One of them was Theresa Hagman, a vice president in WaMu’s custom home-construction lending division. In 2003, Hagman spotted an increase in the number of construction loans going into default. She believed this was happening because loans were being pushed through without proper documentation, in violation of federal lending laws.

But when she pressed the issue with a high-level sales manager, Hagman later testified in a Labor Department hearing, he jumped out of his chair and charged her, screaming at her as his face purpled and veins popped in his neck. (In his testimony, the manager conceded he’d had disagreements with Hagman but denied they’d had heated confrontations.)

As an internal investigation proceeded, a senior vice president wrote: “If this wasn’t a good example of a need for a Fraud team, then I can’t find one. This poor individual is feeling like she is getting no support from her management.”

The senior executive’s concerns weren’t enough to protect her from more retaliation, Hagman said.

“I was being brutalized, and they knew it,” Hagman testified. “I was sharing the emails with everybody, pleading for protection. … We had borrowers that were being damaged and employees that were scared and crying.”

In March 2004, WaMu fired her.

Hagman filed a claim for federal whistleblower protection under the Sarbanes-Oxley Act, the corporate reform law passed in response to accounting frauds at Enron Corp. and other big companies.

Hagman told an administrative law judge that there were “senior-level people in this organization who are still there today who did not tell the truth. Their integrity and their honor … without question failed.”

WaMu maintained that there was no retaliation, only miscommunication between Hagman and her bosses. It said she hadn’t been fired, she’d simply been let go as part of a restructuring.

The judge sided with Hagman. He ordered that WaMu pay her more than $1 million.

‘Silent treatment’

The whistleblower affairs at Citigroup and WaMu came as the mortgage market was beginning to gain steam, recovering from a late 1990s credit crisis that had put dozens of subprime lenders out of business.

By 2004, mortgage industry production and profits were exploding. As the push to book loans grew to a near frenzy, industry insiders recall, the atmosphere at many mortgage-sales operations devolved into a cross between a “boiler room” operation and a frat-house blowout.

At Citizens Financial Mortgage Inc., a small Pennsylvania-headquartered lender, the out-of-control behavior included an ugly mix of sexual harassment and fraud, a lawsuit filed by a former loan processor at the company charged.

Gina La Vitola claimed one manager at her branch in Essex County, N.J., ranted and cursed and gambled on sports during office hours, even getting a visit from a bookie delivering a wad of cash. On several occasions, she said in her lawsuit, the manager picked her up, threw her over his shoulder and then used her “as a weight bar to see how many squats he could do.”

Supervisors’ behavior degenerated from vulgar to threatening, she claimed, when she started complaining about inflated property appraisals and other misconduct. Managers often forged borrowers’ signatures on loan documents and made up fake verification of employment forms, her lawsuit said. One manager, the suit said, had an arrangement with a friendly business owner who was willing to falsely claim that the manager’s loan customers were on his payroll.

After she reported the problems to Citizens’ president, she claimed, she got “the silent treatment” from coworkers and her bosses drastically changed her work hours and duties.

Finally, she said, a manager telephoned her and explained that, since her complaint, the “vibe is not there” in the office. That was a problem, he said, because he was “big about vibe, energy.”

He told her the company was letting her go, she claimed.          

The company strongly denied her allegations. The case was settled on undisclosed terms. A former company official confirmed to iWatch News that Citizens was no longer in business, but said he couldn’t comment on the lawsuit.

Fraud sleuths

As mortgage salespeople embraced creative methods for pushing mortgages through the system, they were being stalked by a band of internal watchdogs.

Financial institutions keep fraud investigators and other gatekeepers on staff in part because they need to show regulators and investors that they have solid controls in place.

Many of these watchdogs took their jobs seriously.

In the spring of 2005, Darcy Parmer joined a team at Wells Fargo that was working on a plan to create a fraud detection report.

By doing queries within the bank’s computerized mortgage-application system, Parmer said, she and other fraud sleuths found a large number of duplicate credit applications submitted to various branch offices and divisions within Wells Fargo. It appeared to Parmer that loan officers were helping borrowers who’d been turned down for loans resubmit their applications elsewhere within the bank, inflating their incomes from one application to the next by as much as 100 percent.

The report, Parmer believed, was a great tool for sniffing out fraud. In 2006, however, management terminated use of the fraud detection report, Parmer said.Nothing was put in place to replace it, she said.

It wasn’t the only time that higher ups interfered with internal watchdogs’ ability to do their jobs, according to Parmer’s lawsuit in federal court in Colorado. Her court filings described many instances in which she claimed sales people and executives circumvented fraud controls or turned a blind eye to “acts of criminal fraud.”

One case involved a borrower Parmer referred to in court papers as Ms. A. According to Parmer, a loan officer had claimed in the loan-underwriting system that Ms. A earned roughly $140,000 per year, but federal tax records indicated she earned less than half that much — barely $60,000 a year.

When she tried to stop the loan from going through, Parmer said, a manager chastised her: “This is what you do every time.” He ordered her to close her investigation, she said.

After months of harassment, she said in an affidavit, she was “mentally and emotionally unable to continue working” and had to take disability leave to get treatment for distress and depression. After a time, she said, the bank informed her that her job had been filled.

Wells Fargo said in court documents that it had never fired her and that she was simply “on an unapproved leave of absence.”

The bank’s attorneys also said that Wells Fargo had refused to fund “nearly ever loan” that Parmer had complained about, and those that had funded had been handled “consistent with Wells Fargo protocol.”

Parmer and the bank settled the case in 2009. The terms were confidential.

‘In the dark’

When Congress passed Sarbanes-Oxley in 2002, it raised hopes that more workers would be emboldened to come forward with information that would help prevent future corporate scandals. One legal scholar hailed the act — which gave federal labor officials the power to order companies to swiftly reinstate whistleblowers with back pay — as “the most important whistleblower protection law in the world.”

Things haven’t worked out as whistleblower advocates had hoped. Critics claim the Labor Department hasn’t done enough to protect financial whistleblowers.

In roughly the first nine years of the law — from 2002 through May 20 of this year — the agencyissued merit findings in 21 whistleblower complaints and dismissed 1,211 others.

That record is just one example, whistleblower advocates say, of the trials that corporate whistleblowers go through when they try to do the right thing.

When whistleblowers seek help from government agencies or state and federal courts, they often face long delays and find themselves outgunned by their employers’ legal teams.

At the same time, employers are often successful at preventing whistleblowers from getting the word out to the wider world. When companies and employees negotiate severance contracts and legal settlements, confidentiality clauses often permanently silence whistleblowers. Companies also frequently force ex-employees with whistleblower claims into private arbitration, ensuring that many details of their cases will remain secret.

Judges in Los Angeles, for example, have booted three former WaMu employees out of court and ordered them to go before arbitrators to press their claims that the company pushed them out of their jobs in early 2008 because they refused to participate in fraud.

Some former mortgage-industry workers contacted by iWatch News declined to talk in more detail about their legal claims because they’re gagged by secrecy agreements. Others said they couldn’t talk on the record because they still work in banking and don’t want to get in trouble with their current employers, or because they’re looking for jobs and don’t want to be blacklisted.

“Hell, we want to work,” one mortgage fraud investigator said, explaining why he and many of his colleagues haven’t gone public with what they know.

Matthew Lee, the fair lending activist who clashed with Citigroup a decade ago, believes getting whistleblowers to come forward is crucial to preventing the next financial meltdown.

Fraud thrives in secret. If regulators are serious about holding banks accountable, Lee said, they should cultivate and protect whistleblowers and serve as a counterweight to the power of big banks and their armies of lawyers.

“They need to think through how they’re going to protect people in the industry who come forward with information,” Lee said. “If you don’t, you’re going to be in the dark.”

 

 

 

 

 

best appraisal management company

nationwide appraisal management

appraisal management company

coester appraisal group

coester appraisal management

coester valuation management services

reverse mortgage solutions

dodd-frank

American International Group Inc. (AIG) is holding out as rival mortgage insurers accept policy changes that support the U.S. government push to stoke refinancing among borrowers with little or no home equity.

The bailed-out insurer’s United Guaranty unit is telling lenders it’s unwilling to offer the same protections on defective loans that competitors are granting to aid the Home Affordable Refinance Program, said four people with knowledge of the discussions. MGIC Investment Corp. (MTG) and Radian Group Inc. (RDN) have said they will forfeit some rights to revoke coverage under a plan that gets borrowers into less expensive loans.

President Barack Obama has said expanding the HARP program will make cheaper credit available to more homeowners at a time when mortgage rates are near record lows. The planned changes may also limit banks’ losses on loans that Fannie Mae, Freddie Mac or insurers say were poorly underwritten.

“The real issue here is that some of the lenders with fraudulent or poorly documented or undocumented mortgages want to use the HARP program to relieve themselves of the risk tied to their bad lending decisions,” Mark Herr, a spokesman of New York-based AIG, said in an e-mailed statement.

HARP covers loans already guaranteed by government- supported Fannie Mae and Freddie Mac, which may detail adjustments to the program as soon as today. The mortgage finance companies have protection against some losses under insurance sold by firms including United Guaranty.

Obama highlighted an expansion of the program on Oct. 24, saying it can help the economy move past the worst housing slump since the 1930s without relying on an “increasingly dysfunctional Congress.”

‘Surprising’

With the U.S. Treasury Department owning most of AIG, “it’s surprising that they’d be the ones not on board,” said Cliff Rossi, executive-in-residence at the University of Maryland’s Robert H. Smith School of Business. Matt Anderson, a Treasury Department spokesman, declined to comment.

The refinancing program, which began in 2009, has reached less than one quarter of homeowners that Obama initially projected. While United Guaranty has been an “industry leader” on HARP, facilitating $3.4 billion of refinancing, it doesn’t want to be part of “a back-door bailout” of banks, Herr said.

Mortgage insurers cut claims costs by voiding policies for errors including inflated appraisals or borrower incomes. The AIG unit benefited from $584 million of denied claims and rescinded coverage in its first-lien business in the nine months through Sept. 30, according to regulatory filings. Rescissions can hurt lenders rather than Fannie Mae and Freddie Mac because originators must buy back loans when insurance is canceled.

Underwriting Mistakes

AIG’s rivals are generally agreeing, when dealing with HARP loans, to waive rights to void coverage for most types of underwriting mistakes on borrowers’ original loans, said two of the people, who declined to be identified because the talks are private. The companies may also accept limits on the vetting of the new loans, even when homeowners add closing costs to balances, they said.

Fannie Mae and Freddie Mac are willing to have less power to force home-loan repurchases in an effort to aid housing through HARP as lenders also offer concessions, said Joe Pigg, vice president for the American Bankers Association.

“Everybody is being asked to do their part, so it seems to me the mortgage insurance companies need to step up and do their part,” Pigg said in a telephone interview. “If they don’t, that will be an inhibiting factor, hurting borrowers.”

$87.5 Billion

United Guaranty provides insurance on about $88 billion of Fannie Mae and Freddie Mac loans, the fourth-most, according to securities filings. It was the largest mortgage insurer by policy sales last quarter, followed by Radian and MGIC, according to newsletter Inside Mortgage Finance.

Under their government charters, Fannie Mae and Freddie Mac normally must have borrowers buy mortgage insurance if they take out loans exceeding 80 percent of a home’s value. HARP waives the requirement when refinancing loans that didn’t need insurance at origination. The program also can allow existing coverage to roll over at the same cost when borrowers replace their debt and insurers agree.

About 900,000 loans have been refinanced under HARP, according to the Federal Housing Finance Agency, the independent regulator of Fannie Mae and Freddie Mac that says the volume may double by the end of 2013. Obama said the program would aid 4 million to 5 million as the initiative was introduced.

FHFA Acting Director Edward DeMarco told reporters last month that Fannie Mae and Freddie Mac would offer “substantial” relief from buyback demands when HARP is used, without providing “absolute” waivers, citing instances of fraud as an exception. Corinne Russell, an FHFA spokeswoman, declined to comment.

‘Recommitting’

Allowing banks to use HARP to lessen repurchase risk tied to so-called representations and warranties on previously issued mortgages may help fuel refinancing by pushing lenders to prioritize the program, Sandipan Deb, an analyst at Barclays Capital, said in an Oct. 24 interview.

“Typically, such defects show up in the first few years of a mortgage and so the value of the reps and warrants decline over time,” the FHFA said in a document on its website. “By refinancing into a lower interest rate and/or shorter term mortgage, these borrowers are recommitting to their mortgage and strengthening their household balance sheet.”

‘Good for Everybody’

MGIC is ready to accept lessened rights to rescind policies since “it’s good for everybody because it puts the borrower in a better position to service their debt,” said Mike Zimmerman, its investor-relations head. Milwaukee, Wisconsin-based MGIC’s mortgage-insurance unit has the most Fannie Mae and Freddie Mac policies outstanding.

MGIC, which plans to “line up” with the two companies’ repurchase procedures, also will drop a fee of 0.5 percentage point that it has charged to allow a new lender to refinance a homeowner under HARP without taking on rescission risk stemming from the original mortgage, Zimmerman said. One reason that repurchase and rescission rights are being limited is that they have helped to “restrict” borrowers to their current lenders, David Stevens, head of the Mortgage Bankers Association, said.

Radian expects borrowers will be about 50 percent to 70 percent less likely to default after a HARP refinancing lowers their rates, said Teresa Bryce Bazemore, president of the Philadelphia-based firm’s mortgage-insurance unit.

Lessening rescission rights to help achieve that outcome is “in our best interest,” partly because Radian must set aside reserves when loans default, draining capital, even if the insurer expects to reject the claim later, she said in a telephone interview.

Fraud, Negligence

The Washington-based Mortgage Insurance Companies of America said in a statement last month that its four members planned to “relieve lending institutions of representations from the original loan files.” Members are Radian, MGIC and Old Republic International Corp. (ORI) and Genworth Financial Inc. (GNW) units.

“The MI companies waiving their reps and warranties are worried about upsetting their lender relationships,” said Herr, AIG’s spokesman. “We’re worried about assuming someone else’s fraud or negligence.”

United Guaranty’s third-quarter operating loss narrowed to $96 million from $124 million a year earlier. AIG, whose 2008 bailout after bad bets on mortgage securities reached $182.3 billion, is now 77 percent owned by the U.S., down from 92 percent before a May share sale.

Arizona Regulator

The housing crash has pressured all mortgage insurers, with PMI Group Inc., once the third-largest, having its main unit seized by Arizona regulators last month.

The state “has agreed to allow PMI to continue to fully participate in HARP and also to permit PMI to release lenders from representations and warranties on the original loan for eligible HARP refinances,” Erin Klug, a spokeswoman for its insurance department, said in an e-mail.

 

coester appraisal group
best appraisal management companies
fha appraisals
dodd-frank
best appraisal management company
valuation services
reverse mortgage

Approach to spread credit risk is based on Freddie multi-family securitizations

By Ronald D. Orol, MarketWatch

A proposal floated by the Obama administration and Freddie Mac to induce private mortgage investors back into the single-family loan industry likely would need to offer double-digit yields to entice buyers, analysts say.

The approach, which is still in the conceptual study phase, would have Freddie Mac and Fannie Mae, the two government-seized mortgage giants, sell single family mortgage securitizations of which a small slice — 5% or 10% — would be sold without a government guarantee. Investors buying the subordinated security would be the first to take a loss if mortgages in the package default. To attract these investors, Freddie and Fannie would need to offer a higher yield.

“Because there is still a lot of risk aversion in the market and people are still reluctant to put capital to work right now, they would need to be offered 10% or even higher yields to buy unguaranteed securities,” said Chris Flanagan, head of U.S. mortgage and structured finance research at Bank of America Merrill Lynch.

“There are people out there who are willing to do that sort of investing, not as many as those who would buy the guaranteed securities, but there are people who know mortgage credit well and would buy it for a 10% or greater yield,” he added

Regulators are considering the approach because of the success of an existing program that Freddie Mac has employed to sell some multi-family mortgage securities without a government guarantee.

The goal of the new approach would be to begin the process of defrosting the private-label single-family mortgage securities market, which has been all but frozen and unable to function since the financial crisis of 2008.

Outgoing Freddie Mac CEO Charles Haldeman said Oct. 11 at a Mortgage Bankers Association conference in Chicago that he hopes to use the firm’s multi-family mortgage securitizations as a template for attracting private capital to the single-family mortgage securities market.

Freddie Mac has completed 17 of these multi-family securitizations since June 2009 with a value of $18.7 billion, of which $16.4 billion was guaranteed and $2.3 billion carried no government guarantee.

David Brickman, senior vice president for multi-family mortgages at Freddie Mac, said the mortgage giant has had strong demand with multi-family securitizations, in part, because investors have seen extremely low delinquency rates with only 0.3% with the loans defaulting on average.

“We’ve had one of the best portfolios in the industry and the lowest delinquency rates on our multi-family loans,” Brickman said.

He noted that the subordinate slice of the securitization that is not guaranteed by Freddie comes with a much higher yield in the “teens”and that investors in those securities who specialize in these apartment securities really understand the investments. Freddie Mac now has a list of roughly 100 potential buyers for the ‘securitizations’, Brickman said.

“The folks who invest in that [subordinated un-guaranteed] class are given a substantial amount of property-level information to help them assess the investment and they frequently visit the properties in the pool. The yields on those are typically in the teens,” he said. “They are frequently real estate investors and private equity funds who look for that high yield.”

He noted that some of the slightly less subordinate unsecured, mezzanine, bonds typically come with a 5% to 6% yield and are often purchased by insurance companies, hedge funds and some high-yield funds managed by conventional money managers.

Mike McMahon, managing director at Redwood Trust Inc., a publicly traded real estate investment trust, said buyers would come for the unguaranteed tranches if yields are high enough.

“If mortgage credit investors are persuaded that the collateral is clean and it is well underwritten and provides an equity-like return, then there will be a lot of buyers,” said McMahon.

Since the crisis began Redwood has come to the market with three private-label residential mortgage-backed securities transactions, in sizes of $238 million, $295 million and $375 million, respectively.

Manoj Singh, formerly senior vice president of pricing and securitization at Freddie Mac, says investors are willing to take the credit risk on new single-family mortgage securities for a high yield because these loans are typically made with tight underwriting standards and will have low default rates.

“These securitizations will be made up of new originations from borrowers with pristine credit, high credit scores, and high-yield investors will be willing to take that risk,” said Singh. “The interest rate they receive will be a few percentage points above the securities with a guarantee.”

Flanagan said default rates will not be as low as with the multi-family securities, but they will still be low. He points out that high-yield investors would be interested in buying some of these unguaranteed securities for such a high yield because traditional guaranteed mortgages securities are offering such a low yield.

“In today’s environment, there is no yield left in easy, liquid government securities,” Flanagan said.

Flanagan said that Fannie and Freddie will need to ease into such a new securitization market carefully and probably only issue roughly $10 billion in unguaranteed securities a year at the beginning, a small piece of the total mortgage market. Fannie and Freddie own roughly $1.4 trillion in mortgages and mortgage-backed securities, as of June, according to the agency.

Ajay Rajadhyaksha, chief of U.S. fixed income research at Barclays Capital in New York, in September told senators at a banking committee hearing that such an approach would work. He said the new securitizations would be critical to revive the stagnating private mortgage market because they would create a price for private mortgage securities, driving investment.

“The single most important reason to sell Freddie and Fannie credit risk is to establish a benchmark against which the private sector can price mortgage credit,” Rajadhyaksha said. “At the very least, investors would be able to have a better sense of what they should be paying for new purchases in the private label mortgage markets, encouraging primary issuance.”

Bose George, analyst at Keefe, Bruyette & Woods in New York, said that creating these kinds of securitizations could help revive the private mortgage market in the near term, while other efforts to do so, such as sweeping restructuring of Fannie Mae and Freddie Mac, will take years.

“Even if it is a modest program it will be putting some private capital into the mortgage market rather than waiting for Fannie and Freddie reform which will take much more time,” George said.

 

best appraisal management companies

appraisal management company

fha appraisals

dodd-frank

coester appraisal group

appraisal management

best appraisal management company

reverse mortgage

by Neil Roland via The Street

Mortgage brokers, many of whom originated deceptive loans that helped trigger the 2008 financial crisis, are still supervised by a dysfunctional patchwork of state and federal regulators.

A federal lawsuit against a leading mortgage broker last week exposed a gaping regulatory hole that will persist as long as Senate Republicans block appointment of a chief for the new consumer agency.

The U.S. Consumer Financial Protection Bureau created by the Dodd-Frank legislation can’t examine or supervise mortgage brokers until it gets a director confirmed by the Senate. Former Ohio Attorney General Richard Cordray was nominated in July, but a Senate vote has not yet been scheduled.

Senate Republicans headed by their leader, Mitch McConnell of Kentucky, and Richard Shelby of Alabama are playing Russian roulette with borrowers’ homes and assets by threatening to block Cordray’s nomination. If he were to be confirmed, the consumer agency would likely have the focus and independence to prevent a massive decade-long fraud like that allegedly conducted by Allied Home Mortgage Capital Corp.

"These crises can be averted," said William Black, an economics and law professor at the University of Missouri in Kansas City who was a senior thrift regulator in the 1980s. "But if you create regulatory black holes, mortgage brokers will just move to areas where regulation is weakest."

The hazards of the status quo were highlighted by the federal civil-fraud complaint last week against Allied, which billed itself as the nation’s largest privately held mortgage broker.

The allegations, if true, show how a determined broker can easily sidestep disengaged and unconnected regulators. Since 2003, three federal agencies and more than a dozen states cited or settled with Allied or a related company for misconduct, according to a 2010ProPublica story. Yet Allied chugged along. Thousands of other mortgage brokers committed similar deception about loans they were peddling in the run-up to the financial meltdown.

In 2005, many of the $1 trillion in nonprime loans were handled by mortgage brokers, who were paid by lenders to prepare loan paperwork for borrowers, according to the Financial Crisis Inquiry Commission report.

Many of the 200,000 new brokers who began their jobs during the subprime boom had criminal records, the January report said.

It cited a Miami Herald story that said more than 10,000 brokers with criminal records entered the field in Florida between 2000 and 2007, 40% of whom had been convicted of crimes such as fraud, bank robbery, racketeering or extortion.

"Lack of accountability created a condition in which fraud flourished," Marc Savitt, former National Association of Mortgage Brokers president, told the commission.

The regulatory structure at the time, which remains in place to this day, consists largely of the states and the Federal Trade Commission, whose varied missions include consumer protection. Brokers that originate mortgages backed by the Federal Housing Administration also are monitored by that agency.

The problem with FHA oversight, as the Allied case shows, is that it relies on supervision by federal computers that are easily evaded.

No boots are on the ground in the form of federal examiners, nor is there any umbrella coordination of state efforts. The CFPB, which began operating in July, is the only government agency in the United States with the dedicated mission of protecting consumers in the financial marketplace.

"I believe that a fully functioning CFPB would be more likely to identify and prevent serious violations of law by mortgage brokers and nonbank lenders," George Washington University law professor Arthur Wilmarth said.

Without a director, CFPB can examine the 100 or so banks with assets of more than $10 billion, and has begun doing so. The agency also has asked state regulators to share information about enforcement actions taken to protect consumers against mortgage abuses.

But it can’t oversee nonbank providers such as mortgage brokers and servicers, payday lenders and debt collectors. The federal suit last week alleged Houston-based Allied cost the FHA at least $834 million in insurance claims on defaulted home loans.

The broker engaged in "reckless mortgage lending" in originating 112,324 FHA-backed loans, most to low- and middle-income borrowers, from 2001 to 2010, the complaint contended. About a third of those loans defaulted, leaving thousands of homeowners facing eviction.

Allied, headed by Jim Hodge, who also was sued, did not reply to requests seeking comment. The broker successfully evaded housing regulators through a series of maneuvers, prosecutors alleged.

When an Allied branch office approached unacceptably high default rates, the company made a subtle change to the office address to fool FHA computers and ostensibly create a new branch with a blank default slate.

All the broker had to do to hoodwink the government was change "Street" in the address to "St.," or add a suite number, the suit alleged.

When the FHA upgraded its system to prevent such manipulation, Allied simply switched ownership of its branches to a successor entity with a slightly different name.

And in 2006, when the FHA barred a North Carolina branch of Allied from originating loans, the broker said the mortgages were from a different branch with a cleaner slate, according to the suit.

In Congress, the Republican charge is being led in part by Shelby, by far the leading 2010 recipient of campaign contributions from finance and credit companies, according to the non-partisan Center for Responsive Politics. Shelby, the top Republican on the banking committee, and 43 other Senate Republicans sent a May letter to President Obama calling for revisions in the Dodd-Frank law.

Their letter called for "accountability" for the consumer agency — oddly, the same concept said to be lacking for mortgage brokers during the subprime boom.

The Republicans threatened to block the appointment of any agency director unless CFPB was headed by a bipartisan board rather than a single director. The agency also should be funded by Congress rather than through the self-supported Federal Reserve, they said.

Under Senate rules, it would take 60 votes to halt the filibuster threatened by the 44 Republicans. The White House has not disclosed its plans nor whether it is holding any back-room talks with Senate Republicans.

But this is a clear-cut issue — the protection of consumers against the potential greed of mortgage brokers — on which the president should stand tall.

 

 

best appraisal management companies

appraisal management company

fha appraisals

dodd-frank

coester appraisal group

appraisal management

best appraisal management company

reverse mortgage

Mary Ellen Podmolik via Los Angeles Times

Many consumers applying for a mortgage are going to start sharing more personal information with lenders next year, like it or not.

FICO scores, the industry standard for determining credit risk in mortgages backed by Fannie Mae, Freddie Mac and the Federal Housing Administration, largely have been based on a person’s credit history. But in an attempt to develop a more well-rounded picture of a person’s finances beyond credit, tools are being developed to help the lending industry dig deeper.

Fair Isaac Corp., or FICO, the company behind the widely used scoring formula, and data provider CoreLogic recently announced a collaboration that will result in a separate score that will be available to mortgage lenders and incorporates information that will include payday loans, evictions and child support payments. In the future, information on the status of utility, rent and cellphone payments may also be included.

Separately, the big three credit reporting companies — Experian, Equifax and TransUnion — recently began providing estimates of consumer income as a credit report option. And Experian this year began including data on on-time rental payments in its reports.

The new information could prove to be a double-edged sword for consumers: It may open the door to homeownership to some consumers who have, according to industry speak, a "thin file" or worse, a "no file," meaning that they lack sufficient credit histories.

On the other hand, the extra information may make a borderline borrower look even worse on paper. Also, it’s unlikely to quiet critics who complain that too much emphasis is put on a single number.

Still, there is thought among researchers that consumer transparency, if it demonstrates both good and bad behavior, has its place.

"You’re trying to convince someone to loan you an awful lot of money at a low interest rate," said Michael Turner, president of the Policy and Economic Research Council. "Only you know whether you’re going to pay it back. There is a harmony in this data exchange."

The FICO-CoreLogic partnership won’t result in a credit score that will rule out a borrower for a mortgage backed by Fannie Mae, Freddie Mac or the FHA, which together own or guarantee at least 90% of the mortgages being written. That’s because the report required for such a loan does not rely on CoreLogic data. However, it could affect mortgage fees or interest rates charged by lenders that in today’s lending environment have heartily adopted risk-based pricing.

"We’re fascinated to see, as we get into the data, whether that may expand the universe of people who can get a mortgage," said Joanne Gaskin, director of product management global scoring for FICO. "Banks are saying, ‘How do I find ways to safely increase loan volume, to find the gems out there?’"

As a result, there’s a rush by credit reporting firms to provide financial companies, including mortgage banks and credit card providers, with a wealth of information on individual customers.

"Before the [housing] bubble burst, there was a huge amount of interest in targeting the unbanked," said Brannan Johnston, an Experian vice president. "It was a desperate dash to try and grow and go after more and more consumers. When the bubble burst, that certainly dialed back some. They want to grow their business responsibly by taking good credit risks."

FICO scores have been around since the 1950s, but they didn’t become a major factor in mortgage lending until 1995, when Fannie Mae and Freddie Mac began recommending their use to help determine a mortgage borrower’s creditworthiness. The score, which ranges from 300 to 850, factors in how long borrowers have had credit, how they’re using it and repaying it, and whether they have any judgments or delinquencies logged against them.

The change comes as mortgage lenders reward the most creditworthy borrowers with low rates and tack extra fees onto loans for those with lower credit scores.

There are concerns about whether inquiries and charge-offs from payday and online lenders should be included in determining credit scores.

"Payday loans are extremely onerous," said Chi Chi Wu, a staff attorney at the National Consumer Law Center. "They trap people in a cycle of debt. To report on them is to cite that person as financially distressed. We certainly don’t think that’s going to help people with a credit score."

The extra information may also help more affluent homeowners who aren’t on the credit grid.

Two years ago, David Pendley, president of Avenue Mortgage Corp., worked with a college professor who didn’t believe in using credit. "He was putting down 40% and he had the hardest time getting a loan, even though he had $120,000 in the bank and he was 22 years on the job."

Eventually, Pendley secured a loan for the customer through a private bank, but he paid for it. "He didn’t get the lowest rate possible," Pendley recalled.

 

 

best appraisal management companies

appraisal management company

fha appraisals

dodd-frank

coester appraisal group

appraisal management

best appraisal management company

reverse mortgage

Kenneth Harney via Washington Post

When you apply for a mortgage to buy a house, how often does the lender ask detailed questions about monthly energy costs or tell the appraiser to factor in the energy-efficiency features of the house when coming up with a value?

Hardly ever. That’s because the big three mortgage players — Fannie Mae, Freddie Mac and the Federal Housing Administration, who together account for more than 90 percent of all loan volume — typically don’t consider energy costs in underwriting. Yet utility bills can be larger annual cash drains than property taxes or insurance — key items in standard underwriting — and can seriously affect a family’s ability to afford a house.

A new, bipartisan effort on Capitol Hill could change all this dramatically and for the first time put energy costs and savings squarely into standard mortgage underwriting equations. A bill introduced Oct. 20 would force the big three mortgage agencies to take account of energy costs in every loan they insure, guarantee or buy. It would also require them to instruct appraisers to adjust their property valuations upward when accurate data on energy efficiency savings are available.

Titled the SAVE Act (Sensible Accounting to Value Energy), the bill is jointly sponsored by Sens. Michael Bennet (D-Colo.) and Johnny Isakson (R-Ga.). Here’s how it would work: Along with the traditional principal, interest, taxes and insurance (PITI) calculations, estimated energy-consumption expenses for the house would be included as a mandatory underwriting factor.

For most houses that have not undergone independent energy audits, loan officers would be required to pull data from either previous utility bills — in the case of refinancings — or from an Energy Department survey database to arrive at an estimated cost. This would then be factored into the debt-to-income ratios that lenders already use to determine whether a borrower can afford the monthly costs of the mortgage. Allowable ratios probably would be adjusted to account for the new energy/utilities component.

For houses with significant energy-efficiency improvements built in and documented with a professional audit, such as a home energy rating system study, lenders would instruct appraisers to calculate the net present value of monthly energy savings — i.e., what that stream of future savings is worth today in terms of market price — and adjust the final appraised value accordingly. This higher valuation, in turn, could be used to justify a higher mortgage amount.

For example, Kateri Callahan, president of the Alliance to Save Energy, a nonprofit advocacy group and a major supporter of the new legislation, estimates that a typical new home that is 30 percent more energy efficient than a similar-sized, average house will save about $20,000 in utility expenses over the life of a mortgage. Under the Bennet-Isakson bill, appraisers would be required to add those savings to the current market valuation of the house. In this instance, Callahan says, the increase in value would be about $10,000.

Dozens of housing, energy and environmental groups have endorsed the new legislation including appraisers, large home builders, the U.S. Chamber of Commerce, the U.S. Green Building Council, the Natural Resources Defense Council, green-designated real estate brokers, the Institute for Market Transformation and the National Association of State Energy Officials, among others.

Business groups such as the U.S. Chamber are backing the legislation because they see it as an employment generator that requires no federal budget outlays, no new taxes or programs. A joint study by the American Council for an Energy-Efficient Economy and the Institute for Market Transformation estimated that 83,000 new jobs in the construction, renovation and manufacturing industries could be stimulated by the legislation if the new underwriting rules were phased in over a period of years.

But not all interest groups are lining up behind the bill. The National Association of Realtors expressed concern that it might hamper a real estate recovery by complicating the mortgage process. “NAR supports efforts to promote energy-efficiency in housing and believes it’s something that all consumers should strive toward,” the group said. “However, we believe that homeowners should move toward energy efficiency at their own pace, without a mandate that impedes their ability to qualify for a mortgage or causes them to incur substantial additional costs to purchase a home, especially while the housing market continues to recover.”

Another group whose members and clients could be affected by the bill, the Mortgage Bankers Association, declined to comment for the record, saying it is still evaluating the bill’s provisions.

But one might ask: In a fractious, polarized Congress, could this bill actually make it through this session? The co-sponsors are optimistic and supporting groups say there is substantial bipartisan support — a rarity — for the idea in both the House and Senate.

In the meantime, for homeowners who think their energy-efficiency and cost-saving improvements should be worth something, there is no rule barring you from asking a qualified appraiser or a lender to assess the added market value of those features. You can get your house rated and documented and insist they do precisely that.

Or you can invest in documented improvements that save on utility expenses — a worthy goal in its own right — and hope that the federal agencies see the light and change their underwriting and valuation procedures before you go to sell. Sooner or later, this is going to happen.

appraisal management

fha appraisals

appraisal management companies

fha appraisal compliance

reverse mortgage appraisals

appraisal services

appraisal management company

coester appraisal

fha minimum property standards

best appraisal management company

By Elyse Cherry via Los Angeles Times

President Obama recently announced that the federal government will take steps to reduce interest rates on mortgages for some existing homeowners. Unfortunately, that won’t help millions of U.S. homeowners already in foreclosure and millions more about to join them.

The current foreclosure crisis is not due to poor choices by individual homeowners. Most people caught up in it fell prey to a national bubble and bad lending practices. These taxpayers – schoolteachers and medical technicians, salesclerks and mechanics, veterans and parents of soldiers in Iraq and Afghanistan – are often simply people who got in over their heads. They deserve a second chance.

One reason the mortgage industry hasn’t done more, its leaders say, is that it fears creating a "moral hazard" – the concept being that if homeowners in default are given too much help, other homeowners might be tempted to deliberately default in order get the same help. That hasn’t been the experience of Boston Community Capital, a 27-year-old nonprofit, community development finance institution I’ve led for 14 years.

As part of its Stabilizing Urban Neighborhoods initiative, Boston Community Capital has renegotiated many mortgages on foreclosed homes, and we’ve seen no evidence that doing so sets off a flood of voluntary defaults. We believe our model could be applied much more widely in this national crisis.

Foreclosure isn’t something a homeowner chooses if it can be avoided. Today, a good credit score is required for countless transactions, and foreclosure destroys a person’s credit score. In many states foreclosed homeowners can’t qualify for another mortgage for many years, nor can they easily rent houses, qualify for college and car loans, or even get some jobs.

Since 2009, Stabilizing Urban Neighborhoods has prevented the eviction of almost 150 Massachusetts households by securing reduced mortgage payments that line up with homeowners’ real incomes – rather than with the value set by a real estate bubble that burst long ago.

Our formula is straightforward. We negotiate with the lender’s representative to buy foreclosed homes at current, distressed market values – often 50 percent less than the amount paid by the homeowner. We then resell the homes to their current occupants with a new 30-year mortgage at a fixed interest rate of 6.375 percent (a rate that, although higher than the best loans available to people with excellent credit, is far lower than the rate that the high-risk clients we assist could get elsewhere – if they could get other loans at all).

We qualify our clients by closely analyzing their finances and employment situations. We work with local nonprofits to understand client histories. Even after accounting for reserves, emergency repairs and closing expenses, we are able to lower monthly housing expenses and the overall cost of a home loan to affordable levels. On average, homeowners pay about 40 percent less per month.

We require homeowners to share any future potential appreciation with our neighborhood nonprofit if the market rebounds, discouraging speculators and people who aren’t serious about keeping their homes from coming to us.

Our initiative cannot solve every foreclosure problem. Some would-be participants don’t have enough income to sustain even a sharply reduced mortgage payment. Some in the mortgage industry, citing moral hazard, refuse to sell us homes at their current values because we plan to keep foreclosed homeowners in the homes. At times, we have been outbid for a home we were trying to save, but we won’t spend more on a home if that would mean we would have to offer our borrowers new mortgages that were still too high for them to manage.

Our Stabilizing Urban Neighborhoods initiative is not a bailout or a charity. It is a sustainable model that can offer relief to a substantial percentage of homeowners in foreclosure and relieve mortgage industry gridlock. The Open Society Foundations and others have provided us planning funds to explore other locations across the country where our model might work. The approach is best suited to areas that have suffered substantial depreciation in housing prices, that have high levels of foreclosures, and that have trusted, long-standing community organizations interested in entering partnerships to administer the program. We estimate that our approach could help 1 in 5 homeowners whose homes have significantly dropped in market price, and who are either late in paying their mortgages or in foreclosure.

Renegotiating realistic mortgages that keep people in their homes helps homeowners and neighborhoods. It also helps the mortgage industry, which must come to grips with the fact that many of its borrowers can’t afford to continue to make payments on mortgages that were entered into during the bubble. Our strategy could work on a far grander scale – the kind of scale that, say, Bank of America, Citigroup, HSBC or Wells Fargo or others could adopt.

Foreclosure and eviction are lengthy and expensive. As more homes become owned by lenders, those institutions will bear increasing responsibility for paying local property taxes, insurance and maintenance costs, as well as steep fines if they fail to comply with local building codes and city ordinances.

The groundless fear that helping some borrowers will lead to an avalanche of new foreclosures has discouraged sensible and systemic solutions to the foreclosure crisis. Allowing the mortgage industry to hide behind this fiction has created a genuine hazard – to neighborhoods, to communities and to the nation’s economic health.

appraisal management

fha appraisals

appraisal management companies

fha appraisal compliance

reverse mortgage appraisals

appraisal services

appraisal management company

coester appraisal

fha minimum property standards

best appraisal management company