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Mortgage servicers who have delayed the foreclosure process for delinquent borrowers may now get fined. Fannie Mae announced it will retroactively fine mortgage servicers for failing to process severely aged loans in foreclosure, HousingWire reports.

Fannie Mae would not disclose the amount of the fees, but the fees are to be “based on the outstanding principal balance of the mortgage loan, the applicable pass-through rate, the length of the delay, and any additional costs,” HousingWire reports.

The government-sponsored enterprise updated its time frames for mortgage servicers for navigating the foreclosure process last August.

“A compensatory fee not only compensates Fannie Mae for damages but also emphasizes the importance placed on a particular aspect of the servicer’s performance,” according to guidance for Fannie Mae from its regulator, the Federal Housing Finance Agency. “In some cases, a compensatory fee will relate to the action the servicer took, or failed to take, in handling a specific mortgage loan. At other times, the compensatory fee reflects the impact of the servicer’s performance deficiencies on Fannie Mae’s cash flow.”

Source: “Fannie Mae to Retroactively Charge Mortgage Servicers for Foreclosure Delays,” HousingWire (June 28, 2011) 

Other articles relating to the Sacramento and Placerville, California regions at: www.sierraproperties.com

Foreclosed home owners are contributing to a boom in the rental market. Nearly half of property managers recently surveyed — or 47 percent — say they’re seeing an increase in applicants moving to rental units from foreclosed properties.

But foreclosed home owners may not find big deals in the rental market. As vacancies shrink, many property managers say they have increased prices on their rental units in the last year, according to a new survey of 1,252 property managers across the country by TransUnion, which provides rental screening solutions to both large property management companies and independent landlords.

“The majority of respondents said that they are not having problems finding residents even with the increases,” says Mike Mauseth, vice president in TransUnion’s rental screening business unit.

Rentals are in high demand: Nearly 90 percent of survey respondents report having a 10 percent or less vacancy rate.

Despite the boom in the rental market, property managers say that “finding reliable tenants at an optimal price point is paramount for this industry,” Mauseth says. “A reliable tenant ensures property managers are both solvent and profitable. Conversely, an unreliable tenant can cost property managers thousands of dollars in lost rent and property damages.”

Source: “TransUnion National Rental Survey Finds Large Property Managers Able to Raise Rates and Attract Reliable Tenants,” TransUnion (June 24, 2011) 

Other articles relating to the Sacramento and Placerville, California regions at: www.sierraproperties.com

A sluggish housing market has caused millions of home owners to lose their home to foreclosure, short sale, or deed in lieu of foreclosure. But once these former home owners get a better handle on their credit, how long do they have to sit on the sidelines until they can secure future financing to buy a home again?

Fannie Mae and Freddie Mac have a three-year waiting period following a foreclosure, and a two-year wait following a short sale, deed in lieu, or discharge or dismissal of bankruptcy. However, if borrowers can justify that the circumstance for the foreclosure or bankruptcy occurred because of an illness or job loss — or other “extenuating circumstance” — that may help reduce their wait. But with no such extenuating circumstances, these former home owners may have to wait longer, even up to seven years following a foreclosure or four years after bankruptcy, the article notes.

For loans insured by the Federal Housing Administration, borrowers with perfect credit afterwards also will, in general, have to wait three years after a foreclosure and two years after a bankruptcy is discharged, The New York Times notes.

Following a short sale, borrowers will have to wait three years to secure another FHA loan — however, there are plenty of exceptions. Borrowers will have to wait three years if they were in default at the time of the short sale and had no extenuating circumstances. However, if the borrowers were on time with all their payments a year prior to the short sale, they may have no wait at all and might even qualify for an FHA loan immediately.

Source: “The Post-Foreclosure Wait,” The New York Times (June 23, 2011) 

Other articles relating to the Sacramento and Placerville, California regions at:www.sierraproperties.com

Nationwide, new foreclosure cases and repossessions have dropped by a third since last fall as banks, as greater scrutiny over banks’ foreclosure procedures and more home owners fighting back in court has slowed the pace. Banks, already facing huge backlogs of foreclosures they’ve already repossessed, also may be reluctant to add on more to their inventory, experts say.

States where courts must review each foreclosure tend to have the longest delays. But in the 27 states without that requirement, foreclosures are much quicker. For example, as comparison, in California, the foreclosure backlog is three years, and in Nevada and Colorado, it’s two years.

“If you were in foreclosure four years ago, you were biting your nails, asking yourself, ‘When is the sheriff going to show up and put me on the street?’” Herb Blecher, an LPS senior vice president, told The New York Times. “Now you’re probably not losing any sleep.”

Full article at source: “Backlog of Foreclosures Giving Some a Reprieve,” The New York Times (June 19, 2011)

 Other articles relating to the Sacramento and Placerville, California regions at: www.sierraproperties.com

Federal regulators are accusing Bank of America Corp. of being slow to provide documents and other information in an investigation into the banking giant’s foreclosure practices, according to a court filing.

BofA “significantly hindered” the review, said departmental auditor William Nixon in a document that was filed in a lawsuit by the State of Arizona against the bank.

“When interviews were permitted, the presence or involvement of the bank’s attorneys limited the effectiveness of those interviews,” Nixon said in the court filing.

Federal regulators and state attorneys have been investigating banks’ procedures for foreclosures after reports surfaced last year of banks using “robo-signers” to sign hundreds of unread foreclosure documents daily without proper reviews.

Full article at source: “Bank of America Hindered Foreclosure Review-Filing,” Reuters News (June 13, 2011) 

Other articles relating to the Sacramento and Placerville, California regions at: www.sierraproperties.com

Foreclosure can mean more than just a blemish to borrowers’ credit record–it can jeopardize their job too. Federal contractors and employees are finding a foreclosure can cost them their federal security clearance and ultimately their job. It can take years to restore a security clearance so they can work again too.

Many employees who have security clearances are required to report mortgage defaults and other financial issues to their company’s or agency’s security officer.

About 70 security clearance appeals involving foreclosures and other distress sales were reported from January 2006 through January 2010 by the U.S. Defense Department’s Office of Hearings and Appeals. Of those 70 cases, 62 clearances were revoked or denied, according to reports.

“Losing your security clearance is like losing your most marketable aspect for employment,” Travis John, a real estate broker, told the Orlando Sentinel.

David P. Price, a lawyer who specializes in security clearance cases, says he’s seen financial related security clearance problems double in recent years.

For borrowers at risk of foreclosure, they usually have more success at keeping their security clearance if they can prove that their mortgage was a sensible loan that did not overextend them at the time and also show they’ve tried to find a work-out solution, such as a short sale. However, Price says that even a short sale doesn’t put borrowers in the clear since it can take a long time to complete such transactions and increase the chance of a foreclosure.

Source: “Foreclosures Put Workers’ Security Clearances at Risk,” Orlando Sentinel (June 7, 2011)

Other articles relating to the Sacramento and Placerville, California regions at: www.sierraproperties.com

Fannie Mae announced this week new rules that will require mortgage servicers to act more quickly and consistently in helping troubled home owners avoid foreclosure.

Fannie told servicers they must strive to build a “strong customer service relationship,” better understand why the borrower is missing payments, and educate them on ways to prevent foreclosure.

“We want home owners to be able to understand their options when facing foreclosure, and we want servicers to reach home owners early in the process, communicate frequently and clearly, and help home owners avoid foreclosure,” says Jeff Hayward, senior vice president of Fannie Mae’s national servicing organization.

Also among the revamped guidelines, Fannie told servicers they will be required to contact home owners verbally and in writing within 120 days after a loan first becomes delinquent. They will need to try to complete a loan modification or other option that keeps the borrower in their home or helps the borrower avoid the foreclosure process.

If foreclosure is unavoidable, servicers will need to follow a clear timeline and must begin the foreclosure process once a loan has been delinquent for more than 120 days. Servicers also must make it clear when a property in the foreclosure process will be sold.

Source: “Fannie Mae Updates Rules on Delinquent Loans,” Associated Press (6/0 6/11) 

“Little customer service relationships” with the banks problem loans in the Placerville, California regions, continue to slow economic recovery. Let’s hope this really represents a change for the better!  Other related articles at: www.sierraproperties.com

In negotiation talks with state and federal officials, the nation’s largest banks said they are willing to pay $5 billion to settle an ongoing probe into claims of faulty foreclosure practices.

Bank of America Corp., JPMorgan Chase & Co., CitiGroup Inc., Wells Fargo & Co., and Ally Financial Inc. made the offer during negotiation talks this week with state attorneys general and federal officials. The five bank giants service more than half of mortgages in the country.

The ongoing settlement talks stem from an investigation into banks’ foreclosure practices, which revealed last fall a “robo-signing” scandal in which thousands of foreclosures were approved without proper reviews.

Since then, state attorneys general, along with other government agencies, have worked to change banks’ foreclosure procedures and penalize banks for shoddy practices.

The $5 billion offer from banks comes at time when state attorneys general are pressing banks to agree to a special fund that would cover principal write-downs for struggling home owners, a proposal that banks have strongly opposed. The banks argue that any plan that would reduce borrowers’ loan balances would just encourage more home owners to default.

Source: “Banks Said to Offer $5 Billion to Resolve Probe of Foreclosures,” Bloomberg (May 11, 2011) 

Other articles relating to the Sacramento and Placerville, California regions at: www.sierraproperties.com

Eighty-two percent of independent landlords say they would rent to someone who had lost a home in foreclosure, if the applicant had otherwise good credit, according to a new survey by The National Association of Independent Landlords.

“Landlords typically won’t rent to applicants with poor credit–and a foreclosure will absolutely slam someone’s scores,” says Tracey Benson, president of The National Association of Independent Landlords. “The exception is when they see people who have paid their bills their whole life, but lost their job, can’t meet their mortgage and must hand their keys back to the bank.”

Benson says that applicants with a foreclosure aren’t necessarily bad credit risks. “Often, they lost their jobs and homes through no fault of their own,” she says.

As such, “because of this abundance of defaults, there is a greater need for rental property, so landlords should carefully vet applicants,” Benson says, adding that landlords should do a thorough background check to determine whether defaulting applicants were a victim to financial woes or following a lifelong trend of not paying bills.

Source: “Most Landlords Say They Would Rent to People Who Lost Homes to Foreclosure, The National Association of Independent Landlords Finds,” PRNewswire (April 20, 2011) 

Other articles relating to the Sacramento and Placerville, California regions at: www.sierraproperties.com

Mortgage delinquencies on single-family homes continued to inch down in March, as did first-quarter home-owner vacancies, two government agencies report this week.

For the fourth straight month, mortgage delinquencies dropped in March as delinquencies on single-family homes fell to 3.63 percent last month compared to 3.78 percent in February, Freddie Mac reports.

Meanwhile, the percentage of empty homes dropped in the first three months of the year, although overall vacancies remain high.

The first-quarter home-owner vacancy rate fell to 2.6 percent from 2.7 percent in the fourth quarter of 2010, according to the Commerce Department.

The residential rental vacancy rate increased to 9.7 percent in the first quarter, compared to 9.4 percent in the prior quarter.

Details at:  “Freddie Mac: Mortgage Delinquencies Decline Again in March,” Dow Jones Business News (April 26, 2011) and “First Quarter Home Owner Vacancy Rate Falls to 2.6 pct,” Reuters News (April 27, 2011) 

Other articles relating to the Sacramento and Placerville, California regions at: www.sierraproperties.com