Foreclosure Issues Result in $10mil HUD Agreement with Bank of America

[keepswimming]

August 16, 2011

The Department of Housing and Urban Development has reached a settlement with Bank of America that releases the business from liability for failing to adequately supply alternatives to foreclosure on 57,000 delinquent government-insured mortgages.

The agreement was previously undisclosed. It has been forged on a separate but parallel track from continuing settlement talks between Bank of America, state attorneys general and other regulators more than alleged mortgage origination and servicing failures.

B of A’s pact with HUD calls for it to waive a minimum of $10 million in unpaid mortgage payments and vet each of the 57,000 delinquent borrowers for a possible loan modification, short sale or other foreclosure alternative.

“Our total fees for the program is going to be multiples of that” $10 million minimum, B of A spokesman Dan Frahm stated. The deal calls for measures to “ensure these consumers have each chance to keep in their homes,” he additional.

The settlement paves the way for B of A to foreclose on properties that borrowers couldn’t afford even following a mortgage modification and these which have been left vacant by owners.

In forging the agreement, HUD made the decision to forgo steep monetary damages or admissions of error from the bank.

As a substitute, it pushed for the lender to implement steps that in most situations it was supposed to have already taken under the terms of its FHA-guaranteed loans, with the apparent aim of minimizing foreclosures and associated insurance coverage claims.

“We took the borrowers into account very first,” mentioned HUD general counsel Helen Kanovsky. “We believe that that’s truly the best thing for the FHA [insurance] fund also.”

The agreement is HUD’s first involving settlement of claims in which a servicer failed to provide loss mitigation to borrowers. It does not, even so, avoid HUD from seeking damages from B of A for unrelated origination and servicing failures.

“We fought for as narrow a [legal] release as you possibly can and as much money as possible” Kanovsky stated.

Under HUD’s regular terms, borrowers must be less than 12 months delinquent to qualify for loan modifications. With all the B of A settlement, the minimum of $10 million the bank agreed to pay will go to covering past-due arrearages and giving borrowers who are more than a year behind the chance of qualifying for foreclosure options.

The agreement was signed July 11 by B of A senior vice president Robert Gaither, who directed queries to a company spokesman.

http://www.realestateinvestingnewsjournal.com/foreclosure-issues-result-in-10mil-hud-agreement-2/

[keepswimming]

Anyone wondering why, after perhaps a year or more of fighting with the bank, that you are now suddenly "ELIGIBLE " for a hamp or hafa deal? Unbelievable.
As if B of A is going to honor a "pact" with ANYONE. And, as if these plans are really going to solve the real problem. Oh, well, sure it might sweep a boatload the fraud and rackeering under the carpet for the homeowners who fall for it.

[mlsj2009]

Bank of America settles with HUD

I just read an interesting article on the same subject that has a twist that makes for most interesting reading. You can't help but wonder what the heck HUD is doing. Maybe this writer has the right idea. Will share after this post as I will have enough to share with you then.

[mlsj2009]

This article provides a different look on same subject. It is entitled, "Government Slaps Bank of America's Wrist"


According to an online news article posted on an internet Real Estate site, “Bank of America (BofA) and the Department of Housing and Urban Development (HUD) have reached an agreement on the 57,000 delinquent, government-issued mortgages serviced by the bank. In exchange for not being held liable for failure to offer foreclosure alternatives in the past, BofA will now work with the borrowers to pursue foreclosure alternatives.”

The solution sounds good on paper, but the only problem with the compromise is that it was no compromise at all. BofA and all the other mortgage companies were already required by HUD and FHA rules to offer foreclosure alternatives before they begin the process. The solution to the problem now becomes nothing less than a slap on the wrist.

There is one little quirk in the solution mix designed to help out Uncle Sam's common enslaved homeowners but most likely will end up helping Uncle Sam instead. BofA has agreed to invest a minimum of $10 million in paying down delinquent HAMP-eligible loans, but if it does not spend at least that much, it will have to pay HUD the difference. Since there is over 2 million homes now facing foreclosure, $10 million may seem like a lot of money, but it is virtually a slap on the wrist compared to the overall scheme of things.

Looking at the overall picture, HUD, the leading government agency that should be protecting the integrity of the government housing programs, has agreed to allow BofA to promise it will do what it should have been doing all along, and if BofA does not do what they say they will, HUD will now insist the money BofA should have already been investing in the HAMP program toward helping homeowners will go directly in the HUD coffers. If that is not a slap on Bank of America's wrist, just what is it? Who, ultimately, does HUD's decision to slap BofA on the wrist really help?

HUD had the option of pursuing damages from BofA for their failure to comply with the various origination and servicing rules they were required by law to do. Maybe with the overall financial environment of the housing market as it has been, HUD thought it was no time to be heavy handed in dealing with the mortgage bank. Bank of America certainly is not innocent by any stretch of the imagination, but they did buy out Countrywide at the beginning of the housing crisis. Countrywide had more financial problems than BofA realized, and Countrywide had a history of origination and servicing failures, or at least, so says many.

By giving BofA the benefit of the doubt, thus, the proverbial slap on the wrist, HUD may be figuring it is best overall for the American public if the housing controversies start coming to an end. The move may not help the homeowners who are already in trouble with foreclosures, but it may go a long way in helping expedite the stalemate caused by the origination and servicing failures. In addition, the move will most likely avoid court appearances and lengthy lawsuits by either side.

It is important to the American public that the housing problems go away as fast as possible, and the housing market stabilizes. It is no time to be fighting in court over solutions to the origination and servicing failures. Once solved, the banks can move on with the foreclosures, and dealing with the foreclosures in a timely manner is very important to a housing recovery.

As for the homeowners left picking up the pieces over being foreclosed on, they have the option of fighting back through the bankruptcy process. Filing for bankruptcy protection is a sure fire way of getting your mortgage company to the bargaining table. The automatic stay of bankruptcy will stop a foreclosure in its tracks.

With the current atmosphere provided by HUD's slap on the wrist, the mortgage banks are currently under the watchful eye of the public. The mortgage banks will more likely be agreeable under those conditions for modification.

http://www.bankruptcyhome.com/bankruptcyblog/2011/08/17/government-slaps-bank-of-americas-wrist/?preview=true&preview_id=4670&preview_nonce=d8bc6e2a1c

[keepswimming]

I just find it interesting that for us, we now have about THREE VERSIONS OF OUR NOTE floating around. Why would I even consider a modification until THEY cough up the original note and admit to fraud?

[MrCredit]

Just imagine...

What if the Federal Government actually came out with an advertisement that explained Chapter 13 Bankruptcy to the Public. The "theme" would be: Keep Your Home and delete Your debts.

These Politicians spend MILLIONS on their campaigns to get elected! Why not let the people of this Country know there is a way out of a bad situation, especially when it's the LAW!

Mr Credit

[treehugger1]

I would guess that many folks who are now bankrupt wish to delete their debt AND not keep their home. If one is going to rework their finances, it might be a good idea to look at everything, not just the debt. An underwater house is not a financial asset. In such a case it seems the decision to keep the house is a personal and lifestyle choice. I doubt that Bank of America or HUD can change the true market (what others are willing to pay) value of a home; housing controversy or not. Any improvement of a housing asset is likely to take a decade or longer to recover.