After ten months of intensive negotiations between the nations five largest banks and a coalition of state attorneys general and federal housing agencies, a settlement resulting in approximately $25 billion dollars in monetary sanctions and relief has been reached.

The settlement hopes to help hundreds of thousands of distressed homeowners remain in their homes through enhanced loan modifications and provide payments to victims of unfair foreclosure practices.

In addition, the settlement mandates mortgage loan servicing reform covering all aspects of mortgage servicing, from consumer response to foreclosure documentation. To ensure that the banks meet the new standards, the settlement will be recorded and enforceable as a court judgment. Compliance will be overseen by an independent monitor who will report to the attorneys general and the court.

IMPLEMENTATION

Timelines for implementation are 30 – 60 days from the settlement agreement. Within 6 to 9 months, qualifying homeowners will be identified and notified by mail. Other resources will also be made available, such as www.nationalmortgagesettlement.com for individuals to see if they qualify. Incentives have been built into the settlement for banks to meet the terms of the settlement within one year.

FORECLOSURE PROCESS TO REV UP AGAIN

Immediate implications to the settlement will be swift. Foreclosures will go on the rise once again. If you, or someone you know, has been living in your property for years without paying, that will soon change. With this settlement, the roadblocks have been removed and lenders, who once had trepidation or hesitancy, will now move forward, full speed ahead to foreclosure.

To prevent this, the settlement gives incentives to the banks to seek other alternatives to foreclosures. But the borrower must connect with the lender sooner rather than later. The lender needs to know that you are interested in a workout program (loan modification, short sale, deed-in-lieu, forbearance, etc). It is when they don’t hear from you that they will now fast track your foreclosure without delay.

PRINCIPLE REDUCTIONS POSSIBLE?

There had previously been some talk about principle reduction. The bottom line to that is that banks aren’t going to do principle reductions when they can only make fifteen cents on the dollar, and they can get more in a short sale or foreclosure.

Nine smaller banks have pending settlements which we will hear from soon, but for now, the settlement only applies to Bank of America, Citigroup, JP Morgan Chase, Wells Fargo, and Ally Financial. Industry insiders are hopeful that terms similar to this settlement may eventually either become legislation and mandated for all banks or will become “best practices” .

BOTTOM LINE

The foreclosure timeline will decrease – gone are the days of living in your defaulted property longer than the state allowed time. Lenders are now prepared to foreclose faster. Due to the terms of the settlement, many problems have now been removed from the system.

If you have been pondering what to do with your home, contact a HUD counselor or qualified short sale specialist to get started on a workout program as soon as possible, don’t delay.

California to Receive $18 Billion in Mortgage Settlement

On February 9, Attorney General Kamala D. Harris announced that California secured up to $18 billion for its distressed homeowners as part of a $25 billion national multistate settlement with the country’s five largest loan servicers. More than $12 billion will be used to offer short sales or write down loans over the next three years for about 250,000 underwater homeowners in California, according to the attorney general. Relief will go to areas hardest hit by the foreclosure crisis within the first year of the settlement.

Although the actual settlement has not yet been released, the attorney general has stated that other financial benefits for California include $849 million for refinancing 28,000 borrowers who are underwater but current on their payments; $279 million restitution for 140,000 homeowners who were foreclosed upon between 2008 and 2011; $1.1 billion for unemployed homeowners, transitional assistance, and repairing blight; $3.5 billion to extinguish unpaid loans that remain after foreclosure for 32,000 homeowners; and $430 million to the state attorney general’s office for costs and fees. As part of a California guarantee, if the lenders fail to reduce principal balances by a minimum of $12 billion, they will be required to pay fines up to $800 million to the state.

The loans involved in this settlement are those owned or serviced by Bank of America, JP Morgan Chase, Wells Fargo, Citigroup, and Ally Financial Inc. The settlement releases the five named lenders from certain federal and state claims pertaining to robo-signing and other foreclosure misconduct by the lenders. It does not affect any individual’s rights to bring legal action against a lender. It also does not apply to the majority of mortgage loans, which are those owned by Fannie Mae or Freddie Mac.

This mortgage settlement does not change any homeowner’s existing financial relationship with a settling lender. It does not relieve homeowners from any obligation. It does not require a settling lender to stop any foreclosure.

Homeowners seeking relief under the settlement agreement should contact their loan servicer or a HUD-approved housing counselor. More information including detailed FAQs is also available from the California Attorney General’s website, or visit the National Mortgage Settlement website.

Stabilizing and restoring the health of the housing market is critical to a broader economic recovery, according to a white paper released yesterday by the Federal Reserve Board. Many of the issues and recommendations outlined in the paper support key principles established by the National Association of Realtors® to help revitalize the housing industry and economy.

The white paper, The U.S. Housing Market: Current Conditions and Policy Considerations, calls for increased lending to creditworthy home buyers and more loan modifications, mortgage refinancings, and short sales to reduce the rising inventory of foreclosed homes and help stabilize and revitalize the housing industry; an approach long recommended by NAR to help spur the housing market recovery.

“As the nation’s leading advocate for homeownership and housing issues, NAR knows that a strong housing market recovery is key to the nation’s future economic strength,” said NAR President Moe Veissi, broker-owner of Veissi & Associates Inc., in Miami. “Improving access to affordable mortgage financing for qualified home buyers and investors and aggressively pursuing more loan modifications and short sales is necessary to help reenergize the housing market and spur an economic recovery.”

The pendulum on mortgage credit has swung too far following the housing downturn. According to the 2011 NAR Member Profile, 34 percent of Realtors® reported that the most important factor in limiting their clients’ ability to buy a home was difficulty in obtaining a mortgage. While NAR supports responsible and strong underwriting standards, unnecessarily tight credit restrictions are keeping many qualified home buyers from purchasing homes, which could help absorb excess inventories of homes in foreclosure.

“Creditworthy consumers continue to have difficulties securing affordable financing despite their proven ability to afford the monthly payments,” said Veissi. “Expanding financing opportunities to qualified buyers could help reduce distressed property inventories, minimize the negative impact those homes have on local markets and restore vibrant housing markets and neighborhoods.”

To prevent further foreclosure inventory increases, NAR also urges lenders to take more aggressive steps to modify loans and keep struggling families in their homes. Significantly reducing monthly mortgage payments will help more families remain current on their mortgage and allow them to remain in their home, reducing the impact of foreclosures on local home prices.

For homeowners who are unable to meet their mortgage obligations, NAR has urged lenders and servicers to quickly approve reasonable short sale offers so these people can avoid foreclosure. The short sale process can be time-consuming and inefficient, and many would-be buyers end up walking away from the transaction.

“Loan modifications and short sales help stabilize home values and neighborhoods, and limit the losses incurred by lenders, the federal government and taxpayers, which is good for everyone,” said Veissi.

The Fed paper also addresses converting foreclosed properties into affordable rentals. NAR supports reducing the barriers that prevent owner-occupants and small investors from accessing financing, such as opening the Federal Housing Administration 203(k) program to investors. NAR also believes these efforts are best made by local entities that understand the challenges of the local community and will respond to renters’ needs.

In addition, NAR is concerned about proposed bulk sales of distressed properties and believes that every effort should be made increase liquidity for consumers and small investors since bulk sales will likely result in greater losses for taxpayers and have a more negative impact on housing values.

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.1 million members involved in all aspects of the residential and commercial real estate industries.

###

New year, new credit? Not quite. Many things reset every year on January 1, but your credit score is not one of them. And this year a new credit report will dig much deeper into a consumer’s history than traditional credit reports. CoreLogic is working together with credit score provider FICO to create a new scoring system based on a broader collection of data. The actual score will be ready in March and is being created for mortgage and home equity lenders; major lenders are interested in utilizing the information, which means it could eventually be built for other types of credit. Here are a few things you should know about the new system.

Why are they doing this? According to CoreLogic, the aim is to provide lenders with more details about prospective borrowers, enhancing what they already know from the more traditional credit reports.

What will be revealed? Apply for a payday loan? Have a property tax liens? Miss a rent payment? Fall behind on HOA dues? The new credit file will capture all of this financial activity and more; it maintains a collection of consumer data on almost everything that most of the traditional credit bureaus do not.

What does this mean? As a result of the additional data included, the new report may shed negative light on previously “clean” records. For instance, it may show that you owe more than your house is worth or if you fully own any other real estate properties. It is also supposed to catch smaller lender mortgages that the big credit bureaus may have missed.

Is this good or bad? Although it is scary to think that companies may now have even more of your personal information, the added information could help some consumers with skimpy credit files by highlighting positive behaviors, like making rent payments on time.

Make sure you are aware of your credit score and understand your credit report, both can have a significant impact on your finances and financial future.

Visit www.feedthepig.org for more money-saving tips.

Visit the site at Keep Your Home California here for more program details.

The Local Innovation Fund Program was designed to allow local governments, nonprofits and other entities across California the opportunity to tailor foreclosure prevention solutions to address their particular needs and geographic areas. Through a competitive process, CalHFA MAC selected and will fund several innovative local programs meeting the compliance requirements set forth under Emergency Economic Stabilization Act of 2008 (EESA). Program design, eligibility and benefit assistance vary with each local program.

Read more details here: http://www.keepyourhomecalifornia.org/lifp.htm

Hear their stories.>>> http://championsofhome.com/real-californians/

Why use a REALTOR? >>> http://championsofhome.com/working-with-a-realtor/