Entries in Foreclosure (52)


Rule Would Protect Banks Against Mortgage Borrower Suits

Digital Vision/Thinkstock(NEW YORK) -- A regulatory change under consideration by bureaucrats in Washington would give banks new legal protections against being sued by borrowers.  Mortgage customers, for example -- those deemed most able to repay -- would effectively be prohibited from suing to stop foreclosures.

Kathleen Day, spokesperson for The Center for Responsible Lending, a consumer group, explains that the “legal shield” being contemplated by the Consumer Financial Protection Bureau (CFPB) would serve to implement the overriding purpose of the Dodd-Frank act: to force banks to take into consideration a borrower’s ability to repay when deciding whether to issue them a mortgage.

That assessment would include, for example, a review of a prospective borrower’s employment history and other outstanding credit obligations.

If and when a borrower who had been deemed able to repay were to bring suit to stop a foreclosure of his home, the judge in the case would be compelled to rule against the borrower and in favor of the bank.

It’s easy to see why lenders want such protection.  According to a Wall Street Journal story on the new shield, the seven biggest lenders in the U.S. have had to pay in excess of $76 billion on mortgage-related litigation since the popping of the housing bubble (as estimated by Credit Suisse Group).

Day stresses that the Consumer Financial Protection Bureau has not yet drafted a proposal for the shield.

“It’s just being talked about,” she says.  “It’s something under discussion.”

The CFPB, asked for comment by ABC News, has not responded.

Copyright 2012 ABC News Radio


Georgia Family Tries to Buy Back Foreclosed Home from Bank

The Gearing Family(HELEN, Ga.) -- Of the nearly 1.9 million homes that went into foreclosure last year, few owners had any thoughts about sticking around. They packed up their bags and left.

But not the Gearings of Helen, Ga., a small town about 25 miles from the North Carolina border. They are trying to buy back their foreclosed home from the bank to avoid an eviction on Nov. 5, but nothing about the process has been easy.

Jeannette and Bill Gearing and their seven children, by their own account, were doing "very well" six years ago. In 2006, they built and moved into their five-bedroom dream home. Then the recession hit.

Bill Gearing, 54, a salesman, had invested a large portion of the family's savings in real estate beginning in the late 1990s, including a farm and their home. He also had started a small business in early 2005; it provided farm equipment and had a fully stocked nursery.

The $1.4 million mortgage on their 5,500-square-foot home has monthly payments of nearly $7,000. With a major drought in the area and the economic downturn in full swing by 2009, Bill's customers began to go out of business and so did his company. The mortgage payments were too much for the family.

They filed for Chapter 7 bankruptcy in February 2011. Their home was foreclosed on the following July.

"My husband did very well," said Jeannette Gearing, 42. "We worked very hard, obviously. We're just victims of the economy just like everyone else. It affected everybody on all levels."

Her husband continued to work as a salesman, but he makes about a quarter of what he used to earn. To try to earn more money, Jeannette has cleaned houses and worked as a substitute teacher while taking care of her children, ages seven to 17. An aunt who has Alzheimer's disease also lives with the family.

Jeannette said there didn't seem to be any options to save their home because the mortgage was so high.

"We just didn't know who to call," she said.

A loan modification seemed overwhelming as well.

"My husband started packing when we were notified of the foreclosure," she said. "I didn't give up."

Earlier this year, the Gearings found renewed hope when a family friend contacted them and said he would be willing to purchase the home at its current market value so they could continue to live in it. They would pay the friend, who has so far chosen to remain anonymous, back over time. While the Gearings' financial situation hasn't improved much, they now say they have hope that they can stay in their home.

Meanwhile, the number of foreclosure filings in the country dropped to a five-year low in September, according to the foreclosure listings firm RealtyTrac.

The family friend compared their home to other neighboring homes that have sold for much less than their original worth, and submitted a cash offer of $300,000 to an attorney they thought represented U.S. Bank.

But it was complicated. The Gearings said they had difficulty figuring out who owned their home after the foreclosure. A number of financial firms seemed to have some involvement in the ownership of it.

Initially, they had tried contacting U.S. Bank, which was identified on their foreclosure filings. A friend of the Gearing children started a petition on, initially asking U.S. Bank to allow them to purchase the home. The petition was signed by nearly 200,000 people.

They eventually learned that U.S. Bank was only the trustee for their foreclosed home, which is owned by a trust. They later were directed to Chase, which they confirmed only earlier this month is the mortgage servicer.

A spokeswoman for Chase said the bank has spoken to the family to try to resolve the issue.

"In servicing a property, we follow the investors' guidelines to avoid foreclosure when possible and to minimize the loss in the case of foreclosure," Chase said in a statement. "After foreclosure, we seek to sell the home for fair market value."

The family said Chase has now said it may be willing to entertain an offer if an independent appraisal is conducted on the home first. On Thursday, Chase sent a real estate agent to assess the home's value. On Tuesday, an appraiser is scheduled to visit.

Jeannette said she has looked at apartments in the area so the children can continue going to school, but she has struggled to find spaces large enough for the family. If they are evicted, she said they would still likely try to buy the home. But moving with seven children and their aunt is something the Gearings would like to avoid.

When asked if the Gearings' family friend would be willing to pay a higher price to meet the appraisal value, Jeannette Gearing said they would be willing to pay a "fair" price for the home.

"I'm glad something is happening," she said. "Hopefully it will be a good thing and we can get something resolved."

Copyright 2012 ABC News Radio


Mortgage Delinquencies Are Falling

iStockPhoto/Thinkstock(NEW YORK) -- According to a new report from the Office of the Comptroller of the Currency, fewer mortgages were delinquent in the first quarter of 2012 than at any time since the first quarter of 2008.

The OCC Mortgage Metrics Report finds the number of newly-initiated foreclosures fell 8 percent compared with a year ago. Some 88.9 percent of first-lien residential mortgages are current and performing.

The percentage of mortgages seriously delinquent (4.5 percent) dropped 10.4 percent from the previous quarter, and 6.2 percent from a year ago.

The findings are based not on a random sample of all mortgages, but on data provided by 9 selected banks that together hold some 60 percent of first-lien mortgages. Their combined portfolio contains 31 million loans totaling $5.3 trillion in principal.

The improvements, says the OCC report, are due partly to the strengthening economy, but also to an increased use of home retention loan modification programs.

During the first quarter of 2012, “Nearly twice as many new home retention actions–loan modifications, trial-period plans, and payment plans” were initiated than were “completed foreclosures, short sales, and deed-in-lieu-of-foreclosure transactions,” according to the report.

Only 10.2 percent of loan modifications involved principal reductions; eight times as many involved interest rate reductions. The average monthly decrease in loan payments (for borrowers who qualified for modification) was $437.

Modifications that reduced monthly payments by 10 percent or more performed better than those that reduced payments by less. The report found, not surprisingly, that the greater the decrease in monthly payments, the better the subsequent performance.

In all, says the report, loan servicers implemented 352,989 new home retention actions during the quarter–a decrease of 23.3 percent from the quarter before and 36.7 percent from a year earlier.

The OCC attributed the drop in newly-initiated foreclosures to “servicers’ ongoing emphasis on modifications and other loss mitigation programs, a declining number of seriously delinquent mortgages, and slower initiation of new foreclosure referrals.”

Copyright 2012 ABC News Radio


Facing Foreclosure, California Man Commits Suicide

Scott Eells/Bloomberg via Getty Images(NEWBURY, Calif.) -- "The engine is smoking like a chimney," Norman Rousseau told his wife after working on an RV that was expected to be home for the couple after they were evicted from their house in Newbury Park, Calif.

Those would be the last words Oriane Rousseau heard from her husband, who shot himself May 15, days before the couple was scheduled to be evicted after a long battle over their mortgage held by Wells Fargo.

In a statement to ABC News, a spokesperson for Wells Fargo, which acquired the Rousseau loan from a lender it bought out, wrote, "Our thoughts are with the friends and family of Mr. Rousseau at this difficult time. The eviction has been postponed and we will continue to work with Mrs. Rousseau. Despite current reports, we tried repeatedly to find affordable options for the family."

The 53-year-old, who battled different ailments, would pick up odd jobs but was struggling financially. His wife, Oriane, was working part-time jobs. The couple's troubles began after they were solicited to refinance their mortgage and became locked into an alleged predatory loan for the home, which they purchased in 2000, according to their attorney Chris Gardas.

The couple alleges that there was a dispute with the bank over one payment and that they received harassing calls over the issue. The couple later began a loan modification process, according to Gardas.

"The details of the new loan were misrepresented and the couple became locked into a loan with a higher interest rate and were charged thousands in origination fees," according an amended lawsuit filed by the couple.

Wells Fargo is also one of five big banks that agreed to pay a $25 billion settlement over allegations of mortgage fraud. The bank filed a response to the Rousseau suit, denying the allegations and asking for a dismissal, plus more fees -- this time for the bank's attorneys.

The suit claims the bank told the couple not to make payments during the loan modification process. Then they were denied the modification. And, while facing foreclosure, the couple claims they were not given enough time to make the mortgage current, according to Gardas.

Over the last year, the family has spent thousands on legal fees and consultation, says Gardas.

In the last few months, Rousseau was said to be under incredible stress.

Rousseau, who never took off his wedding band, gave his wife the ring while working on the truck to avoid losing it.

The next day, under a blanket, Rousseau shot himself in the head.

Copyright 2012 ABC News Radio


Multi-Million Dollar Settlement over Foreclosure Abuses Near

iStockPhoto/Thinkstock(NEW YORK) -- Federal and state officials are near a multi-billion dollar settlement with five of the nation's biggest banks over foreclosure abuses that took place during the housing crisis, ABC News has learned.

The Department of Justice will hold a press conference at 10 a.m. Thursday to announce an agreement in principal.

At least 42 states have agreed to sign onto the agreement.  New York and California were among the last holdouts and it wasn't clear whether they will join or sue separately.

The deal is estimated to be $25 billion and would involve Wells Fargo, Bank of America, Citigroup, JPMorgan Chase and Ally Financial.

Some of the money would go towards foreclosure prevention measures, such as lowering the loan balance for homeowners who are underwater, while other provisions could lower interest rates.

Another chunk would be set aside to compensate people who lost their homes.  Those homeowners may may get payouts of up to $2,000.

The settlement comes after banks were found to have taken part in "robo-signing" to speed up foreclosures after the housing bubble burst.  The practice involved the mass signing documents without verifying the accuracy of the paperwork.

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Copyright 2012 ABC News Radio


Bank of America Tower in Atlanta Foreclosed; Sells for Half Price

Chris Rank/Bloomberg via Getty Images(ATLANTA) -- The recent forced public auction of Bank of America’s signature 55-story office tower in Atlanta is yet another example of the U.S. foreclosure crisis.

Experts say Atlanta’s troubles are the result of overbuilding and inflated office building prices due to the issuance of commercial mortgage-backed securities (CMBS). Some $5.8 billion worth of five-year office loans, bundled into CMBS, must now be refinanced nationwide.

With so much debt, experts predict that more distressed properties will come into the market, and the price per square foot of commercial office space will continue to fall.

“It’s a fine building, a beautiful building, and still very much a landmark,” Atlanta real estate expert Kirk Diamond told Bloomberg News. “It just needs to be recapitalized.”

The tallest tower in the state went for $235 million at auction, after owner BentleyForbes missed mortgage payments.

BentleyForbes bought the building from Bank of America Corp. in 2006 for $436 million. Bank of America also sold what had been its namesake office tower in San Francisco, now called 555 California Street, for $1.05 billion in 2005. 

Copyright 2012 ABC News Radio


Florida Man Almost Loses Home over 80 Cents

iStockPhoto/Thinkstock(LARGO, Fla.) -- A Florida man who is trying to get a loan modification from Bank of America is worried he may lose his home over an 80-cent mistake.

Tom Mudie, 56, arranged a three-month trial period that would allow him to obtain a loan modification for his home in Largo, Fla. But with a slip of the finger on a telephone payment system, he accidentally underpaid one of the trial payments by 80 cents, putting his house in jeopardy of being foreclosed.

"It was unbelievable that with a simple mistake of 80 cents you could lose your home," he said. "It kind of ruined my Christmas. It has been stressful that I could come home and find a padlock on my door."

Mudie lost his job as a workforce manager to downsizing in 2010. Unemployed for nine months, he couldn't afford his payments on the home he had owned since 1986 and faced foreclosure.

Before being accepted into a permanent loan modification program, Mudie was told by Bank of America that he had to make three monthly payments on time during the trial period.

After intentionally overpaying his first payment by $200 in late August, Mudie felt confident when making the second payment for October of $615.82 via telephone. By then he had been working as a supervisor at a call center since March 2011, though he was making less money than before.

But for the second payment, he mistakenly hit the "0" on his telephone keypad instead of "8," causing him to unknowingly underpay by 80 cents, the Tampa Tribune reported.

"I wish the phone system had a prompt that asked, 'Are you sure this is the amount you want to pay?'" Mudie said. "But it didn't."

Mudie said the payment was taken from his checking account but he called a Bank of America representative to make sure the trial period was going smoothly. That's when he learned his second payment was short by 80 cents and he could be ineligible for the modification program.

He said he was advised to send a check for 80 cents to try to resolve the issue, but both that check and his second payment were returned to him in the mail.

A few days before Christmas, he said he received a letter that read: "Your loan is not eligible for the Fannie Mae modification program because you did not make all the required trial period plan payments by the end of the trial period."

Mudie said he was alarmed that the letter said loan modification was not an option anymore and the only option was a short sale.

Bank of America, he said, advised him to continue making his third payment and that the letter was automatically generated after the short payment.

Mudie contacted a local television station who called Bank of America on his behalf. A bank spokeswoman on Monday said Mudie's problem would be cleared up.

Rick Simon, spokesman for Bank of America, told ABC News the company is in the process of converting his trial modification into a permanent one.

"We apologize for this system error and hope that the permanent modification will be completed shortly," he said in a statement.

Mudie was relieved to hear Bank of America was in the process of approving his loan modification but is eager for closure.

"Until I see something in print about a new mortgage payment, I am still not sure if I could lose my home," he said.

Copyright 2012 ABC News Radio


Mass. AG Sues Five Big Banks

iStockPhoto/Thinkstock(WASHINGTON) -- Five of the nation's biggest mortgage lenders are facing a new lawsuit over their foreclosure practices.

From 2008 until now there have been some five million foreclosures.  Massachusetts Attorney General Martha Coakley says some of them resulted from the deceptive and illegal practices of big banks, so she is suing Bank of America, JPMorgan Chase, Citgroup, Wells Fargo and GMAC.

“We believe that the large banks have not even seen the devastation on individual homeowners and communities across this country,” Coakley said.

Those same firms have been trying to settle claims of unlawful foreclosures with all 50 states, but Coakley says she has lost confidence in their ability to bring relief to homeowners.

Copyright 2011 ABC News Radio


Foreclosure Law Firm That Mocked Victims Closing

iStockPhoto/Thinkstock(BUFFALO, N.Y.) -- One of the major law firms handling foreclosures in the U.S. is closing its doors after being banned by Fannie Mae and Freddie Mac from receiving new work from lenders and servicers. It's the same firm that threw a Halloween party last year where its employees dressed up as foreclosure victims, mocking people who had lost their homes.

The photos from the party leaked on the Internet, but law firm Steven J. Baum P.C., one of the largest foreclosure law firms in New York state, was also implicated in the robo-signing scandal where landers seeking to foreclose had filed phony paperwork to speed the process.

The firm announced its closure on Monday. Baum handled 40 percent of all foreclosures statewide, according to the Buffalo News.

The firm had been denounced by consumers and consumer advocates for its work on behalf of lenders even before the "robo-signing" controversy thrust it into the middle of a nationwide crisis over the legitimacy of many foreclosures, according to the Buffalo News. The controversy broke nationwide in October 2010, when bank workers or lenders were accused of indiscriminately signing foreclosure documents.

Steven Baum law firm directed ABC News to its spokesman, Earl Wells, who didn't return a request for comment.

"Disrupting the livelihoods of so many dedicated and hardworking people is extremely painful, but the loss of so much business left us no choice but to file these notices," Steven J. Baum, who owns the firm, said in the statement.

Last month the firm agreed to pay a $2 million fine and change its practices to settle a federal investigation by the U.S. Justice Department that it filed misleading legal papers to expedite foreclosures.

Rep. Elijah Cummings, D-Md., and ranking member of the House Oversight and Government Reform Committee, launched an investigation into the Baum firm, and wrote to the firm to request documents, according to the Buffalo News.

Daren Blomquist, spokesman for RealtyTrac, said the closing of the firm and others has put the spotlight on shoddy practices and a lack of transparency in the foreclosure industry.

"It's good that these questionable practices are coming to light," Blomquist said. "The problem is the foreclosure industry brought this on itself in a way."

One large problem is that it is slowing down the path to a housing recovery, he said.

"It's delaying foreclosure activity that needs to take place for market to reset itself," he said. "It's a good thing that these practices are coming to light, but it's going to mean the markets are going to be bogged down before we can truly recover."

Brad German, Freddie Mac spokesman, said he could not divulge the reasons why the agency told services on Nov. 10 to stop referring new business on its new files to the firm.

A spokesman for Fannie Mae, the Federal National Mortgage Association, confirmed that the federal agency suspended new referrals to the Baum firm on Nov. 15 but said he could not share why. On Monday, the agency distributed broader authorization to transfer existing foreclosure filings to other counsel.

Fannie Mae has processed 960,000 loan workouts, such as modifications and other foreclosure prevention solutions, since 2009. The agency has also opened 12 mortgage help centers across the country, most recently in Washington, D.C. to assist homeowners in trouble.

The average time to close a foreclosure is 336 days, according to RealtyTrac. New York state already has the longest process of any state, with an average of 986 days, which Blomquist says "almost unbelievable."

As a comparison, nationwide in 2007 when the country had a "normal market" the average time to foreclose was 140 days.

Copyright 2011 ABC News Radio


Facing Foreclosure on Nonexistent Home, Homeowner Sues Bank of America

iStockPhoto/Thinkstock(SEABROOK, Texas) -- A Texas man has learned a home does not have to exist to face foreclosure.

Three years after Brad Gana's home in Seabrook, near Galveston, was destroyed by Hurricane Ike in 2008, he still is waiting for a resolution after his bank tried to foreclose on his house.

At the time his house was destroyed, Gana was working in Saudi Arabia, tracking the storm online. Fast forward to today, and Gana has sued Bank of America, which held his mortgage, for allegedly reporting "to the credit reporting agencies that the home has been foreclosed," making it impossible for him to "refinance the property and get out from under the thumb of the churlish acts of BAC."

The suit also alleges that BAC "authorized a third party to clean up the lot where [Gana] had stored within containers his personal effects. This personal property was stolen."

The trouble began in 2009 when Gana declined to renew his homeowner's policy with his insurance agency. He says the insurance company agreed and told him it would not renew the policy. But three months later, Bank of America's loan servicing department applied a forced homeowner's insurance policy.

Bank of America issued a statement apologizing for their “error in adding homeowners insurance to his mortgage payment” and said that they refunded his account for the insurance premiums.

Gana's house had an outstanding mortgage of approximately $170,000 before the storm. Despite being left with just a slab of concrete, Gana says he continued to pay the mortgage, hoping to rebuild at the same address.

But, despite the alleged timely payments, the bank scheduled an auction for November 2010, which Gana says he learned about two days before it was to take place. He says that's when he learned the house was headed for foreclosure.

Gana says he was unaware of the hike in the mortgage because his mailbox also washed away. Despite efforts to change his address, the bank refused to send his mail to his location abroad.

After retaining a lawyer, Gana was able to avoid foreclosure, but the bank still confiscated what remained of his belonging on the property, Gana alleges.

In documents obtained by, a letter dated on May 20 says an agreement between the two parties would leave Gana with an unpaid balance of $41,792. But a June account statement shared with ABC News by Gana placed the balance at more than $93,000 -- far greater than the what the alleged May agreement stipulated.

In September, Gana received a letter from Fannie Mae, which he supplied to ABC News, stating, "Your mortgage loan that is serviced by Bank of America/Fannie Mae is currently delinquent and you may soon be facing foreclosure."

Now he's back to where he started.

"All of this confusion has occurred because Bank of America put a forced Homeowners Insurance policy on a home that no longer exists," Gana wrote to ABC News.

Copyright 2011 ABC News Radio

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