The St. Ambrose Legal Services department has compiled the following tips for what to do if you’re slipping towards foreclosure:
- Ask for help as soon as you realize you are in financial trouble. The sooner you ask, the more likely you are to get the necessary support to resolve the problem.
- Stay in contact with your bank/lender so that they are aware of your situation. If you are upfront and transparent about your financial situation, your bank will better understand your needs and interests.
- Do not pay fees for services to assist you with your financial situation when the service is available for free. Thoroughly investigate anyone who is charging you for financial services and what they are doing for the fees.
- Take advantage of free services! The state and the banks will inform you of free counseling and legal services that are available to you.
- Do not take advice from friends, neighbors, or family, unless they are trained in financing.
- Open all of your mail, promptly. Don’t assume you already know what’s inside.
- There is no way to get out of the debt obligation. Don’t bother looking for a way out. Instead, determine if a loan modification is a viable option for you.
- Understand your responsibilities under the debt obligation. A deed of trust is the same thing as a mortgage. A deed is the document that transfers ownership of real estate.
- Know your rights and don’t sign any contracts unless you fully understand the document. You may be offered a ‘friendly foreclosure’ at mediation, but thoroughly research the implications of this sort of agreement before signing any contract.
- Do not think the problem will just go away. If you cannot afford your house, start considering what next steps you will take in order to find a new living space.
The threat of foreclosure can be intimidating, but being informed of your rights and responsibilities can make the process easier. Going through a foreclosure doesn’t mean losing everything. If you remain informed and proactive throughout the process you’ll be able to salvage the maximum amount of your investment. Find help, resolve the problem, and look ahead to life after foreclosure. Call St. Ambrose for free legal advice and foreclosure counseling: 410-366-8550
The network apparently asked mayoral candidates to weigh in on the issue. From what we can tell, they received at least one response, from Frank Conaway, Sr., pasted below:
We need to conduct triage on our inventory of vacant and blighted properties. Properties that are in viable locations should be fixed if they are city owned, or acquired through condemnation if they are privately owned and repaired for occupancy. In areas where the neighborhoods are on the borderline between viability and failure, we should have a broader strategy to acquire multiple properties and rehab them in groups. We need to acknowledge that there are some houses that are not suitable for rehab. These properties should be razed. No one in Baltimore has wanted to deal with this reality, but the truth is that some areas are beyond repair and need to be redone from the ground up.
Earlier today, The Huffington Post, one of the nation’s most popular news sites, drew attention to some of the ongoing research of Matthew Kachura and the Baltimore Neighborhood Indicators Alliance–the Post covered BNIA’s study cataloguing the increased presence of rats in Baltimore City since the foreclosure crisis began. From the article:
The rise in rats is an example of the declining quality of life in some sections of the city as foreclosures and vacant properties have begun to take their toll.
Since 2003, rat incidents in his majority-black city of nearly 621,000 are up more than 300 percent, according to the Baltimore Neighborhood Indicators Alliance-Jacob France Institute at the University of Baltimore. There were more than 37,000 reports of rats in 2009, data show.
The rate of dirty streets and alleys is up nearly 250 percent since 2003, according to the research institute.
Like urban centers across the country, Baltimore is fighting foreclosures with fewer resources at a time when home prices are still declining and a rise in home seizures remains a constant threat. While home prices shot up during the bubble, boosting neighborhoods that had been slowly making progress, the precipitous decline has wrecked what were up-and-coming sections of the city.
Baltimore rats have long commanded a storied reputation for their pervasiveness, a notion that has been internalized by residents and non-residents alike. Thoughts and comments on this long present nuisance, as well as perceptions about whether the rat rate is, indeed, increasing, are welcome.
Late last month, Bank of America, one the nation’s largest mortgage servicers, entered into a settlement agreement with multiple investors, in what has been hailed as one of the most significant settlements involving mortgage-backed, toxic assets since the onset of the financial crisis. At $8.5 million, the settlement, at least on its face, seems to present an optimistic message for investors, who can now maintain some measure of hope that legal remedies exists for the opaque, sometimes fraudulent securities on which they spent their money.
But a closer look at the agreement reveals a different picture. While $8.5 million may be a convincing figure to some, the value of the mortgages held by the Bank of America totals at about $172 million, meaning that Bank of America secured a deal in which they were obligated to pay back less than five cents on every dollar. This statistic has prompted many, including New York Attorney General Eric Schneiderman, to demand more information about the settlement. Schneiderman and other critics suspect that the deal was put together hastily and unfairly: the New York Times reports that the investors involved in the settlement hold interest in merely one quarter of the 172 million in assets. Moreover, because of the legal parameters of such a settlement, the deal would have a comprehensive effect, foreclosing claims from investors and individuals that may hold interest in the BoA loans but were not privy to the settlement negotiations.
More specifically, the settlement involves loans held by a BoA subsidiary, Countrywide Financial, which BoA purchased in late 2008 under what was apparently a disaster mitigation circumstance. While BoA has every incentive to get rid of the Countrywide loans, given their toxicity and total lack of profitability, they neglect to consider the far-reaching policy effects that the deal will have. Most conspicuously, the settlement will almost certainly accelerate foreclosure processes, which will impose devastating consequences on families. These foreclosures will have broader economic ramifications. According to Times columnist Paul Krugman, the settlement:
“would just accelerate foreclosures, and if more families were evicted from their homes, that would mean more homes offered for sale — an increase in supply. An increase in the supply of a good usually pushes that good’s price down, not up. Why should the effect on housing go the opposite way?”
Indeed, as Krugman writes, this settlement presents yet another example of letting bankers of the hook. Furthermore, the Countrywide mess and the subsequent short sale of the firm to BoA indicates the crucial need for greater regulation of asset-backed securities, the danger of which is now well documented. The deal will certainly affect our job at here at St. Ambrose, where our foreclosure prevention team negotiates with banks everyday in an effort to stymie foreclosures. Settlements like this one set a precedent of “going easy on the banks,” as Krugman writes, enabling them to feel that they are beyond legal remedies for honest negotiation. Such settlement will, in other
By Anne B. Norton and Harsha Sekar
A few days ago, the New York Times presented yet another angle of the chaotic and disorganized foreclosure crisis, a maelstrom that has revealed, among other things, poor ethical practices and other bizarre behaviors on the part of both homeowners and lenders. Apparently, the backlog of foreclosures is now so extensive that mortgage servicers may be delaying the process altogether. In some cases, this practice (or lack thereof) has conferred legitimate relief upon buyers, who are able to continue living in their homes. In others, buyers have taken advantage of stalled foreclosure processes, strategically defaulting on their loans. The Times reports that some homeowners have even discovered creative (yet unscrupulous) was to earn a profit off of their foreclosure, one of the more shocking news items we’ve come across.
The Times explains the magnitude of the crisis straightforwardly:
In New York State, it would take lenders 62 years at their current pace, the longest time frame in the nation, to repossess the 213,000 houses now in severe default or foreclosure, according to calculations by LPS Applied Analytics, a prominent real estate data firm.
Clearing the pipeline in New Jersey, which like New York handles foreclosures through the courts, would take 49 years. In Florida, Massachusetts and Illinois, it would take a decade.
The Times goes onto distinguish states which mandate that foreclosures be filed in court versus those that do not (and states are more or less evenly divided throughout the country). “The pace is much more brisk,” in states that bypass the court process, declares the paper, “three years in California, two years in Colorado and Nevada.” According to a foreclosure lawyer to whom the Times was able to speak, “banks aren’t trying to win.” While the banks, in a strong effort to mitigate the understandable concerns of investors that may purchased their assets, have categorically denied allegations that they have made any attempts to intentionally prolong foreclosures.
Perhaps not surprisingly, while the new phenomenon is a relief for those less fortunate, certain people have chosen to take advantage of the situation:
Mr. Stopa, the Florida lawyer, said he divided his clients into three groups. Some are unemployed or disabled and just getting by. Others are able to save money and improve their financial situation as their case drags on. The third group are those who have strategically defaulted. They can afford to pay but are taking advantage of the banks’ plodding pace. Often the members of this group rent out the foreclosed home and keep the proceeds.
While so much of the coverage of the foreclosure crisis has emphasized ordinary American families that have fallen on hard times, here, we get a rather appalling glimpse of another, new side of the equation.
Is the backlog for real, and what does this all mean in the grander scheme, one might ask? In total, the Times definitely delivers a few valid points in terms of delay. The process in NY will be substantially longer due to the judicial process that can take more than 500 days to complete if there was no backlog and no objections to the foreclosure sale filed. As for locally, there is no question that there is backlog of foreclosures in Maryland thanks to the July 1, 2010 mediation law followed by robo-signing followed by new changes to the mediation law coming soon as well as a looming settlement with the OCC, DOJ/AG group and state bank regulators. The state’s Foreclosure Bar has said that there largest national bank clients have 10’s of 1,000’s of loans in the pipeline that are waiting for some of the uncertainty to resolve.
Everyone’s hope is that the economy will start to pick up a little as the filings start to move through the system and that certain changes in servicing make it more likely that the homeowners in line for foreclosure will find relief. But, without clearing the market of the foreclosure inventory, can there be a true economic recovery? We’re not certain.
The Washington Post’s new expose that purports to reveal to the public the widespread incompetence affecting the Department of Housing and Urban Development has engendered much controversy. The series ostensibly addresses only a single program within HUD, the HOME Investment Partnership Program, which administers funding to local government and private entities to develop affordable housing projects. In stentorian fashion, the opening sentence of an article titled, “A trail of stalled or abandoned HUD projects,” (part of the multi-article investigative series titled, “Million Dollar Wasteland”), declares, “ the federal government’s largest housing construction program for the poor has squandered hundreds of millions of dollars…and routinely failed to crack down on derelict property developers or the local housing agencies that funded them.” The Post goes onto report that some 700 projects, totaling “nearly $400 million” have been stalled for years, some even for decades, causing widespread blight. The article then lists widespread deficiencies in oversight and accountability within HUD, contending that the agency doles out cash without properly vetting recipients, that money was delivered when projects were only in an inchoate phase, and that HUD should have imposed more regulations on funding recipients, whether they be housing agencies, non-profit organizations, or the partnered developers. Needless to say, we were surprised.
Perhaps the main reason the article surprised us, however, was what appeared to be the intentional misrepresentations of the available housing statistics, most of which were pointed out lucidly by Secretary Donovan. In a response published on June 10, Donovan rebutted the Post by indicating out that HUD has received numerous acclaim in recent years as well introducing his own stats:
Although HUD provided data and information to The Post for more than a year, the paper has not shared with us the list of projects it generated. So after the articles ran, we conducted our own project-by-project review using The Post’s parameters. We determined that more than half of 797 projects that could have been flagged as “stalled” based on The Post’s criteria are finished.
Of the remaining projects, 97 have been canceled and their funding moved to viable projects, while 154 are progressing toward completion. The final 85 properties are experiencing delays, but in the vast majority of cases there is a simple reason for this: the recession.
Donovan goes on to state the conclusions of HUD’s internal study: only four percent of the more that 5,000 Home projects are “delayed” or “cancelled” (employing the metrics used by the Post). Moreover, the Post misleadingly gives the impression that funds were squandered, when in fact HUD policy stipulates that “[if] there are delays, money can be moved to other viable projects or must be returned if it is not used within five years.” Donovan then goes on to defend the decentralized nature of the HUD grants, which give large discretion to local communities and their governments, by suggesting that this framework is a preferable to a “one-size-fits-all” federal mandate.
In addition to what could be blatant misrepresentations or mistakes, the article is unfair in a number of other respects. For starters, it assumes more regulations and requirements are a solution, while ignoring the fact that these could quite possibly further stifle such developments. Moreover, it completely neglects to contrast the HUD programs with the ways in which the private sector has aimed to deliver affordable housing in recent years. While this phenomenon also resulted from public-private partnerships, namely government policies encouraging homeownership and many private entities vying to advantage from government guarantees by engaging in the lucrative process of securitizing credit, the private sector likewise failed, resulting in the financial crisis. The HUD developments, which involve the government to a greater extent than most other housing developments, are one of the few bright spots of economic creation in the housing industry, which many commentators have pointed out is crucial to broader economic recovery. Let’s keep this in mind, and give the developments a chance.
We at St. Ambrose were also particularly chagrined about the fact that the article seemingly attempts to paint the entire Department of Housing and Urban Development in a negative light. The Post does this in part by implying that HUD is a single-faceted organization aimed at the development of new properties for low-income citizens. While it is true that this area comprises a major part of HUD’s activity, the organization also provides other, far different services, many of which remain crucial to mitigating the widespread financial pain incurred by the current financial crisis. These services include both mortgage and foreclosure prevention counseling—we believe that the former type of assistance needs to be implemented on a large scale, as mortgage counseling is often key to ensuring that families understand their commitments, the terms of their mortgages, and what it will take to keep above water over the long term. As for the latter, we know that foreclosure prevention assistance is paramount in enabling families to stay in their homes longer. Take for example our unique study on foreclosure prevention conducted earlier this month, which among other things found that 70% of homeowners that underwent counseling in 2007 reported positive outcomes, and that homeowners who utilized counseling services were 79% more likely to experience a positive outcome. (More insight on the study will appear here next week).
More than anything, in light of Donovan’s straightforward statistics, which serve to debunk much of the Post’s shocking data, we wonder how the Post could have come up with numbers that contrast so sharply with HUD’s. As far as we know, the Post is yet to respond to Donovan, and on this point we think it may be fair to take a hint from one of Baltimore’s great social critics, David Simon. In Season 5 of The Wire, the city’s local paper runs into some problems with balancing sensationalism with thorough, honest journalism. And while we certainly don’t equate the Post series with Scott Templeton, it’s reasonable to suspect that the Post may be guilty of a similar, all too common imbalance.