Posts Tagged ‘home refinance’
DENVER — Colorado Attorney General John Suthers announced today that Colorado has joined a $25 billion multistate settlement with the five largest national banks, Bank of America, JPMorgan Chase, Wells Fargo, Citi and Ally, who account for 60 percent of the home loan servicing market, to end problematic business practices and to help distressed homeowners. The settlement — the second largest multistate consumer protection settlement — will deliver $204.6 million worth of relief for Colorado homeowners.
Under the terms of the settlement, Colorado, which served on the executive committee that oversaw the settlement negotiations, will receive:
- $73.3 million that will be available to grant principal reductions on loans to make a modification possible. Approximately 40 percent of these funds will also be available to ease the effects of foreclosure, including waiving deficiency balances, enhanced cash-for-keys payments and blight prevention;
- $52.5 million in cash to the state;
- $46.3 million worth of refinancing benefits to underwater borrowers; and,
- $32.49 million in payments to homeowners who lost their homes to foreclosure between January 1, 2008 and December 31, 2011.
Nationally, the banks have agreed to:
- Commit a minimum of $17 billion directly to borrowers through a series of national homeowner relief options, including principal reduction. Given how the settlement is structured, servicers will actually provide up to an estimated $32 billion in direct homeowner relief.
- Commit $3 billion to a mortgage refinancing program for borrowers who are current, but owe more than their home is currently worth.
- Pay $5 billion to the states and federal government ($4.25 billion to the states and $750 million to the federal government).
- Provide homeowners with comprehensive new protections through new mortgage loan servicing and foreclosure standards.
- Be overseen by an independent monitor will ensure mortgage servicer compliance.
“This agreement delivers real help to homeowners affected by the banks’ dual tracking and other improper mortgage- and foreclosure-related processes,” Suthers said. “As a result of this settlement, the banks will end a series of problematic processes that put homeowners at a severe disadvantage during the foreclosure process. This settlement will not solve every problem with the housing market, but it goes a long way to helping homeowners in distress now and leveling the playing field for consumers.”
The settlement is the second largest multistate consumer protection enforcement settlement after the 1998 tobacco litigation settlement. This agreement is the result of a massive civil law enforcement investigation and initiative that includes state attorneys general and state banking regulators across the country and nearly a dozen federal agencies. It holds banks accountable for past mortgage servicing and foreclosure fraud and abuses and provides relief to homeowners. With the backing of a federal court order and the oversight of an independent monitor, the settlement stops future fraud and abuse.
Customers of the five settling banks who lost their homes to foreclosure between January 1, 2008 and December 31, 2011may be eligible for restitution under the settlement. The independent, third-party administrator of the settlement hopes to contact affected victims by the end of the summer. Customers of the five settling banks who are still in their homes but either behind on their payments or underwater should contact the banks directly through dedicated toll-free contact numbers to determine if they are eligible for assistance:
- Bank of America - 1-877-488-7814
- Chase - 1-866-372-6901
- Citi - 1-866-272-4749
- GMAC/Ally - 1-800-766-4622
- Wells Fargo – 1-800-288-3212
The Office of the Attorney General will work with the Governor’s Office and the General Assembly to ensure that the $52.5 million Colorado directly receives under the settlement will be used for purposes including foreclosure prevention, housing-counseling services, additional legal services for distressed homeowners, promotion of loan-modification opportunities and anti-blight efforts.
The settlement changes the way the banks do business. Under the agreement, the banks will be required to stop the use of robo-signing, end the process of dual tracking of loans, provide a single point of contact for consumers as they move through the loan-modification processes, create an online portal for consumers to get information about where they are in the loan-modification process, and abide by a strict set of deadlines for dealing with loan modifications. The settlement also requires that the banks post payments they receive to homeowners’ accounts within two business days of receiving them.
The foreclosure practices of the banks will be subject to strict oversight by an independent monitor who will provide regular reports to the participating states. The banks will be subject to stiff fines if they violate the terms of the agreement.
The settlement does not grant any immunity from criminal offenses and will not affect criminal prosecutions. The agreement does not prevent homeowners or investors from pursuing individual, institutional or class action civil cases against the five servicers. The pact also enables state attorneys general and federal agencies to investigate and pursue other aspects of the mortgage crisis, including securities cases.
Consumers interested in learning more about the multistate agreement can visit www.NationalMortgageSettlement.com orwww.coloradoattorneygeneral.gov/mortgagesettlement.
If consumers believe they have been affected by the banks’ problematic processes or have experienced any form of foreclosure fraud, they can file a complaint at www.coloradoattorneygeneral.gov/complaint. To learn more about Colorado’s ongoing fight against mortgage and foreclosure fraud, visit the Office of the Attorney General’s Mortgage Fraud Information Center.
Homeowners facing foreclosure also should contact the Colorado Foreclosure Hotline at 1-877-601-4673 or visitwww.coloradoforeclosurehotline.org. The hotline works with homeowners in or facing foreclosure. Homeowners who call the free hotline can speak with a housing counselor about their options.
Washington, DC – The Federal Housing Finance Agency (FHFA) today announced the first
step of a Real-Estate Owned (REO) Initiative targeted to hardest-hit metropolitan areas
announced in August 2011. Investors interested in participating may “pre-qualify” to establish
eligibility to bid on transactions in the initial pilot phase as well as subsequent phases.
The REO Initiative will allow qualified investors to purchase pools of foreclosed properties with
the requirement to rent the purchased properties for a specified number of years. This rental
period could provide relief for local housing markets that continue to be depressed by the
volume of foreclosed properties, and provide additional rental options to certain markets. Prequalification ensures investors will have the financial capacity and operational expertise to manage properties in a way that is conducive to the stabilization of communities hard hit by the housing downturn.
The REO Initiative was developed in conjunction with the Treasury Department, Department of
Housing and Urban Development, Federal Deposit Insurance Corporation, Federal Reserve,
Fannie Mae and Freddie Mac. The Initiative was informed by meetings with stakeholders and
review of more than 4,000 responses to a Request for Information (RFI) seeking input on
options for selling single-family REO properties held by Fannie Mae, Freddie Mac, and the
Federal Housing Administration.
“This is an important step toward increasing private investment in foreclosed properties to
maximize value and stabilize communities,” said FHFA Acting Director Edward J. DeMarco. “I
am grateful for the collaborative effort by the many stakeholders including investors, nonprofit
organizations, and state and local government officials, who have worked together on this
Initiative.”
During the pilot phase, Fannie Mae will offer for sale pools of various types of assets including
rental properties, vacant properties and non-performing loans with a focus on the hardest-hit
areas. The first transaction will be announced in the near-term.
The pre-qualification will require those interested in receiving information regarding specific
pilot transactions to meet certain minimum criteria including, but not limited to, (a) financial
wherewithal to acquire the assets; (b) sufficient experience and knowledge in financial and
business matters to analyze and bear the risks of the investment opportunity; and (c)
agreement to keep certain information about the REO and related matters confidential.
Interested investors can register at FHFA’s REO Initiative page to pre-qualify.
FHFA is also looking at ways to improve REO sales to homeowners and small investors,
enhancing the existing retail sales strategy at Fannie Mae and Freddie Mac. Both companies
sell the majority of their REO properties to owner-occupants at close to market value. The
purpose of the pilot phase will be to examine investor interest in various types of assets,
including the location, size, and composition of pools of assets; the ways in which investors
maximize the participation of experienced local firms and organizations that can provide the
types of services and support needed to ensure community stabilization; the types of structures
and/or financing that improve returns to the sellers as well as home values in impacted
markets; and the process by which investors are qualified to and ultimately participate in the
sales transactions.
The housing sector will likely take incremental steps forward in 2012, though total originations will fall on fewer refinances, according to economists at Fannie Mae.
The second half of the year should outpace the first six months in terms of growth, though fiscal policy and political uncertainty in Washington will likely drive consumer and business activity, the mortgage giant said.
Chief Economist Doug Duncan said positive consumer activity and challenges in housing and the global economy will equate to moderate growth for the year.
“We’re entering 2012 with decent momentum, especially on the employment side, which is fostering positive household and consumer behavior,” Duncan said in a release. “Unfortunately, we expect this momentum to slow as we move through the first half of the year.”
The report released Friday forecast total home sales to increase 3.5% to about 4.74 million in 2012 from 2011 with another 5% gain in 2013 to nearly 5 million. New home sales could jump 10.4% for 2012.
The Federal Housing Finance Agency home sales price index, excluding refinances, could dip 1.1% for 2012 from a year before, according to the forecast. Economists predicted the 2011 index would finish 4.6% lower than 2010.
Mortgage originations as dollar volume could see a decline as well in 2012, largely on a steep drop in refinances. The Fannie report said total originations will fall to $1.01 trillion in 2012 from a predicted final 2011 tally of $1.36 trillion. Economists expected refinancing to plummet to $540 billion from $894 billion.
Purchase mortgages, however, will rise to $471 billion in 2012 from a estimated 2011 total of $464, according to the report.
Total single-family outstanding mortgage debt will likely drop 1.3% to $10.14 trillion in 2012.
For the U.S. economy as a whole, Fannie researchers predicted real GDP would increase 3.3% in the fourth quarter to finish the year at 1.7% growth. Economists forecast 2.3% GDP growth for 2012 and 2013.
Write to Andrew Scoggin.
Follow him on Twitter @ascoggin.
As an owner of a mortgaged rental property, how do you know when it might be a financially beneficial time to refinance?
Know your goals
Before you set out to get refinancing information, decide what it is you’re looking to accomplish. Do you want have more cash available by making a lower monthly payment? Would you like to pay off your property faster? Do you want to use the equity in your property to make improvements (and raise rents) or earmark money for the purchase of another property?
Also, consider how long you plan to keep the property. If you’re planning to sell in three years, for instance, investing in a refinance effort — with its associated closing costs — might not be the most profitable move.
Questions to ask
You can make a better decision between many loan options once you’ve determined the most important aspects of refinancing for you.
As you make specific inquiries about loans, compare the details carefully. Determine the details of the rate and the term of the loan you’re interested in. The most important question is whether the interest rate, the length of the loan, or the combination of the two will lower your monthly payment or your pay-off amount, thanks to less accrued interest.
Be sure to assess whether the rate is fixed or variable. With a variable rate, what is the ceiling on the rate, if any? Read the terms and conditions of the loan carefully before you sign. A borrower can find himself in a bad situation with a low introductory rate that turns into a rate far beyond what was originally budgeted for.
You’ll also want to find out about closing costs. If there are some (and there usually are), can they be rolled into the refinance? And, if so, is your new monthly payment still low enough to make the deal worthwhile?
Consider the economy
Though there is no crystal ball to predict economic ups and downs, there are indicators that can help you make informed decisions. In a downturn, mortgage loans can be harder to get approved, potentially creating a higher demand for rental properties. If a refinance of an existing property would make it possible for you to make improvements to that property or buy additional rental properties to fill new demand, it might be the right choice for you.
Shop around
Though you can compare rates online through a variety of sites, consider having a professional do the footwork for you to offer advice on the many different kinds of loans available. It helps to have someone point out the pros and cons of individual loans and give insight on what might be the best match for your investment goals.
Refinancing can help make a rental property you’ve been considering selling viable again or give you the equity to buy an additional one. Shop carefully, read the fine print and you may soon have more money in your pocket even after paying the mortgage payment on your rental property.
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