By Tami Luhby, senior writerJanuary 28, 2010: 2:43 PM ET
NEW YORK (CNNMoney.com) — Under fire for the low number of people receiving long-term mortgage help, the Treasury Department on Thursday announced new guidelines that will require applicants to provide all paperwork before getting a trial modification.
The new policy will make it harder for troubled homeowners to start the process, but it should make it easier for them to qualify for permanent assistance under President’s Obama foreclosure prevention plan.
The administration’s $75 billion housing effort has been plagued by paperwork problems since it launched last April.
Borrowers complain that their loan servicers constantly ask for additional documents and lose their forms. Servicers, meanwhile, say that borrowers are not handing in all that’s needed.
The new rules, which start June 1, will effectively shift the paperwork burden to the start of the process.
“They aim to make it easier and quicker to provide permanent modifications,” said Treasury Assistant Secretary Herb Allison. “These changes also will enable servicers to process more efficiently and handle more volume effectively so we can help more people more rapidly.”
Distressed borrowers will have to fill out a three-page request form that asks them to explain their hardship and list their income and expenses. They will also have to sign an IRS 4506-T form that allows servicers to pull their tax returns. Both forms are available on the Making Home Affordable program’s Web site.
Also, applicants will have to verify their income. For those earning a salary, two recent pay stubs will be sufficient. Other earnings, such as income from self-employment, benefits, or rental properties, must still be documented.
Those who are approved for trial adjustments and make three timely payments will be automatically converted to long-term modifications.
Returning to the original plan
Under the original plan, borrowers were supposed to submit their documents before entering a three-month trial period. The trial was a time that borrowers had to prove their could make the requirement payments.
The program, however, was slow to start as servicers were deluged by applications. In order to get more people into trial modifications, the administration started allowing servicers to approve borrowers’ applications as long as they met the minimum requirements and to track down the necessary documents during the trial period.
The problem then shifted to converting those in the trial modifications to permanent assistance. Servicers attributed the slow pace to the fact that they didn’t have all the needed forms. The Treasury Department responded by lengthening the trial period to five months and lightening the documentation requirements.
Coming under fire once again, the administration in late November ramped up pressure on servicers to convert borrowers to permanent modifications.
As for the end of the year, some 66,500 people have received permanent adjustments, with another 787,200 homeowners in trial modifications.
A Treasury spokesman acknowledged that fewer people will get trial modifications under the new rules, but more of those who make into the program will receive long-term help.
Those already in trial modifications
The administration also reiterated that servicers must review all those currently in trial modifications and determine whether they have been timely with their payments and have handed in their paperwork.
Those who haven’t handed in any documents or have missed payments will be denied permanent modifications, according to the Treasury guidance. These borrowers must be considered for other foreclosure prevention alternatives, such as servicers’ own programs or short sales.
In the case of those who are on time with their payments but have submitted only some documents, servicers must attempt to obtain the required paperwork. If they cannot, then the borrower will be kicked out of the program.
Borrowers have the right to appeal denials.
Some 450,000 people could be at risk of being denied permanent help because of paperwork problems, according to Richard Neiman, the New York banking superintendent who serves on the State Foreclosure Prevention Working Group. He urged Treasury officials last week to reduce the documents requirements and to make it easier for borrowers to submit forms.
From Huffington Post
by Shahien Nasiripour 01-25-10 03:56 PM
As underwater homeowners around the country despair over whether to keep paying their mortgages or just walk away, investors in the largest residential real estate deal in U.S. history have just walked away from 11,232 properties in one fell swoop.
On Monday a group led by Tishman Speyer Properties gave up the 56-building, 11,232-unit Peter Cooper Village and Stuyvesant Town apartment complex in Manhattan, turning the properties over to its creditors after defaulting on some $4.4 billion in debt. The group decided to “transfer control and operation of the property…to the lenders,” it told the Wall Street Journal. The $5.4 billion acquisition in 2006 was the single biggest residential property purchase in U.S. history.
It’s now worth an estimated $1.8 billion, putting the properties’ owners “underwater.”
Four years later, the joint venture by Tishman and BlackRock Inc. is part of what is undoubtedly the biggest walk-away in mortgage history.
On Wall Street, it’s okay to walk away from your mortgage.
“We basically walked away from it,” said Clark McKinley, a spokesman for the California Public Employees’ Retirement System [CalPERS], the nation’s biggest municipal pension fund. CalPERS, one of several investors in the venture, wrote off its $500 million investment, McKinley said.
“It’s underwater, anyway, so we’ve lost it,” he added. “We took our medicine, and we’re learning from it.”
The Tishman-led venture is just the latest Wall Street walk-away.
Last month, Morgan Stanley, the country’s sixth-biggest bank by assets, walked away from five San Francisco office buildings it purchased as part of a landmark $2.43 billion deal near the height of the real estate boom. The $770 billion firm called it a “a negotiated transfer to our lenders.”
So if Wall Street can do it, why can’t homeowners?
About a quarter of homeowners with a mortgage — estimates range from 11-15 million — are currently underwater on their mortgages, meaning they owe more than the property is worth. All of the mortgages in the state of Nevada are worth more than the underlying properties, according to real estate research firm First American CoreLogic, making the whole state virtually underwater.
But struggling homeowners aren’t getting the kind of mortgage relief they need, experts say. Principal cuts are rare. In fact, more than 70 percent of mortgage modifications involve an increase in the principal owed, according to a recent report by state regulators.
Meanwhile, about half of mortgages that are modified eventually re-default anyway. The kind of mortgage modifications most prevalent are simply delaying the inevitable, according to a review of mortgage modification data.
With homeowners at the mercy of their lenders, unable to get relief on their home mortgages in bankruptcy court, and unlikely to see a return in their homes’ values to their boomtime highs, they don’t have too many options.
Enter “strategic defaults” — a fancy way of saying “walking away.”
More than one million homeowners went that route last year, nearly double the amount in 2008 and more than four times the level in 2007, according to a recent analysis by the credit reporting company Experian and Oliver Wyman, a management consulting firm. A study by a team of university academics found that a quarter of defaults are strategic.
The trigger, researchers say, is negative equity. When the value of a house is less than what the bank is owed, borrowers have good reason to break their contracts and walk away.
As Brent T. White, a law professor at the University of Arizona, notes, “there is in fact a huge financial upside to strategic default for seriously underwater homeowners — an upside that is routinely ignored by the media, credit counseling agencies, and other political and economic institutions in ‘informing’ homeowners about the consequences of default.”
White argues that homeowners should act like corporations, or like Morgan Stanley and Tishman Speyer — maximize profits and minimize losses. Walking away from an underwater mortgage makes sense, White says.
But distressed homeowners are often guilted into paying their mortgages, White argues.
Former Treasury Secretary Hank Paulson once said: “And let me emphasize, any homeowner who can afford his mortgage payment but chooses to walk away from an underwater property is simply a speculator – and one who is not honoring his obligations.”
The head of the Mortgage Bankers Association, John Courson, played up the moral argument against walking away, telling the Wall Street Journal last month: “What about the message they will send to their family and their kids and their friends?
But corporations and businesses don’t play by those rules. Like CalPERS’s McKinley said, “You come to a point where you write it off or stay in the game. If you want to stay in you got to put in more capital. We reached our limit on that. It was not a prudent thing to put more money into it.
“You get to a point where you can’t keep throwing good money after bad,” he said. “These are illiquid investments. You gotta fish or cut bait.”
As for homeowners walking away en masse — perhaps lenders’ biggest housing-related fear — McKinley added: “We’re hopeful that won’t happen.”
I’m no food critic ~ but I do enjoy a tasty meal! Price is the biggest factor when I judge a restaurant. Food quality, ambiance and authenticity matter, too. Below, you can find a list of local restaurants in Roseville. Click on them to get a quick review. Some of these hot-spots are well-known. Others are hidden jewels. Check-em out!
Companies that American taxpayers had to bail out with billions of dollars use that money to reward their employees with bonuses.From John Amato’s virtual online magazine Crooks and Liars By Heather Thursday Jan 14, 2010 6:00am
|The Daily Show With Jon Stewart||Mon – Thurs 11p / 10c|
|Clusterf#@k to the Poor House – Wall Street Bonuses|
Posted: 01-04-10 08:25 AM
Remember the Public-Private Investment Program (PPIP)? The Treasury Department unveiled the program in March and intended it as a way to help banks unload hard-to-sell (read: often toxic) mortgage securities. In short, private investors partnered with the government to get bad loans off the banks’ books — and everyone, including taxpayers, was supposed to come out ahead on the proceeds of the asset sales.
But, as Bloomberg reports this morning, some of the nation’s largest banks have actually bought more risky home loans instead of getting them off their balance sheets.
In other words, the program that was supposed to help banks dispose of these toxic assets instead made those assets so marketable that banks bought more — which has pushed Wall Street’s titans to even greater exposure to the stalled housing market. The banks apparently decided that the government’s entry into the mortgage security market was simply a guaranteed money-making opportunity.
Per Bloomberg’s figures, Bank of America, Citigroup, Morgan Stanley and Goldman Sachs added $2.74 billion of this kind of mortgage debt since March. The value of the debt was up 13 percent from the second quarter. Here’s more:The Public-Private Investment Program was introduced in March by Geithner as a means of helping struggling banks by reviving the market for unpackaged loans and mortgage securities that aren’t backed by government-supported institutions, such as Fannie Mae or Freddie Mac. Under the program, asset managers were supposed to raise money from investors and, with additional capital and loans from taxpayers, buy as much as $1 trillion in toxic assets from U.S. banks, freeing up money for lending. It’s “absolutely ridiculous” that banks, which were expected to reduce their holding of such volatile mortgage securities, bought them before the government program was running and may now profit, said Michael Schlachter, managing director of Wilshire Associates, the Santa Monica, California- based investment-consulting firm. “Some of them created this mess, and they are making a killing undoing it.”
Eric Petroff, director of research at Wurts & Associates, a Seattle-based investment advisory firm, told Bloomberg: “Any time the government says, ‘We’re going to buy something in the securities market,’ they’re putting out a sign that says, ‘Free money, come and get it’.”
The PPIP initiative has been widely criticized since it was unveiled last year. In December, TCW Group, was removed as one of the government’s program managers after a management shake-up at the firm.
Read Bloomberg’s entire piece here
Not too long ago I joined other local Roseville business people for a special VIP tour of the Sacramento art district during the 2nd Saturday Art Walk event. The privately organized (informational) bus tour was RELAXED and FUN! We enjoyed snacks and beverages as we toured the Franklin Boulevard Urban Plein Air Art Project. We also walked the streets of mid-town Sacramento, the heart of the Sacramento art district. We saw some amazing art, met some really neat people, and enjoyed a tasty serving of gumbo and calamari at one of my favorite restaurants, Celestin’s.
Downtown Roseville could easily produce an equally intriguing art exhibit and experience for people to enjoy, similar to the Sacramento project. Imagine plein air art displayed on the side of downtown Roseville’s buildings, like the Tower theater, First Bank, Crystal Creamery, Blue Line Gallery, Roseville Telephone, Roseville Library, etc. With downtown Roseville’s heavy need for a destination anchor and growing interest in the arts, the marriage of the two seem to be a perfect fit. I’m hopeful that the coming years will produce just such an event.
A special thanks to the Roseville Library Foundation for hosting a great evening!
Pictures of Plein Air Artwork and various Artists
More Pictures of the Day