Archive for April 11th, 2013

Rhode Island Judge Dismisses Complaint Against MERS

Rhode Island Judge Dismisses Complaint Against MERS

04/10/2013 BY: ESTHER CHO

A judge in Rhode Island ruled in favor of  Mortgage Electronic Registration Systems, Inc. (MERS) and co-defendants and dismissed arguments of wrongful foreclosure from the plaintiff.

In Van Hoecke v. First Franklin Financial Corporation, the court determined that since the material facts were similiar to the facts underlying a previous decision inPayette v. Mortg. Elec. Registration Sys., Inc., the court used the same reasoning established in Payette.

In the case, First Franklin Financial Corporation, the lender, assigned the mortgage to MERS, who as mortgagee and as nominee for First Franklin, then assigned the mortgage to LaSalle Bank.

LaSalle, as mortgagee, began the foreclosure proceedings against the homeowner and was the successful bidder when the property went to sale.

The plaintiff then attempted to argue the defendants were actually not authorized to foreclose on the property. In response to the argument, Superior Court Justice Allen P. Rubine wrote, “It is well-established that MERS and an assignee of MERS, such as LaSalle, may properly invoke the statutory power of sale as granted to the mortgagee by the plain, unambiguous language of the Mortgage. Plaintiff, through her acknowledgement and execution of the Mortgage, explicitly granted to MERS, and to the successors and assigns of MERS, the right to exercise the statutory power of sale and to foreclose on the Property.”

The plaintiff also argued the mortgage servicers may not conduct a non-judicial foreclosure sale and are limited in functions they can perform on behalf of the mortgagee.

Home Loan Services was the servicer in the case and executed the foreclosure deed on behalf of LaSalle.

However, the court pointed out that, “Rhode Island law clearly establishes a role for mortgage servicers in the mortgage industry as mortgage servicers are included within the definition of ‘mortgagee’….Thus, Home Loan, as servicer of LaSalle, the mortgagee and note holder, was properly authorized to execute the foreclosure deed on behalf of LaSalle.”

 

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HOPE NOW: Loan Mods, Foreclosure Starts Rise in February

HOPE NOW: Loan Mods, Foreclosure Starts Rise in February

04/10/2013 BY: KRISTA FRANKS BROCK

The number of permanent mortgage modifications completed during the month of February rose 6 percent from January, according to the latest report from HOPENOW. At the same time, foreclosure sales decreased and foreclosure starts increased, according to the industry group.

More than 81,300 homeowners received permanent loan modifications in February, according to HOPE NOW, a private-sector mortgage industry alliance. HOPE NOWcalculates both proprietary and government modifications.

“More than 158,000 loan modifications have been completed in the first two months of 2013 and outreach to at-risk homeowners by the industry, non-profits, government agencies and others remains proactive,” said Eric Selk, executive director of HOPE NOW.

Since the group began reporting loan modification data in 2007, the industry has completed about 6.23 million modifications—more than 5 million through the private sector

and more than 1 million through the government’s Home Affordable Modification Program (HAMP).

Another foreclosure alternative—short sales—have been declining over the past few months. In February, 26,388 short sales were completed, down from 29,648 in January.

HOPE NOW also observed a 21 percent decrease in foreclosure sales in February. The group calculated 49,135 foreclosure sales in February, the lowest number on record since December 2007 when HOPE NOW reported 47,378 foreclosure sales for the month.

Foreclosure starts, on the other hand, increased 16 percent in February, rising to 193,860 for the month.

Serious delinquencies—loans 60 or more days delinquent—improved about 2 percent in February. About 2.48 million homeowners are 60 or more days delinquent on their mortgages.

Serious delinquencies have been hovering around 2.5 million for the past several months.

Of the more than 81,000 loan modifications completed in February, almost 66,000 were offered by the private sector.

HOPE NOW also tracks proprietary modifications for specific characteristics such as fixed interest rates and principal reductions.

Ninety-two percent of proprietary modifications completed in February included fixed interest rates for at least five years.

Eighty-six percent offered principal and interest rate reductions, and 79 percent offered principal and interest rate reductions of more than 10 percent.

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Rhode Island Judge Dismisses Complaint Against MERS

Rhode Island Judge Dismisses Complaint Against MERS

04/10/2013 BY: ESTHER CHO

A judge in Rhode Island ruled in favor of Mortgage Electronic Registration Systems, Inc. (MERS) and co-defendants and dismissed arguments of wrongful foreclosure from the plaintiff.

In Van Hoecke v. First Franklin Financial Corporation, the court determined that since the material facts were similar to the facts underlying a previous decision in Payette v. Mortg. Elec. Registration Sys., Inc., the court used the same reasoning established in Payette.

In the case, First Franklin Financial Corporation, the lender, assigned the mortgage to MERS, who as mortgagee and as nominee for First Franklin, then assigned the mortgage to LaSalle Bank.

LaSalle, as mortgagee, began the foreclosure proceedings against the homeowner and was the successful bidder when the property went to sale.

The plaintiff then attempted to argue the defendants were actually not authorized to foreclose on the property. In response to the argument, Superior Court Justice Allen P. Rubine wrote, “It is well-established that MERS and an assignee of MERS, such as LaSalle, may properly invoke the statutory power of sale as granted to the mortgagee by the plain, unambiguous language of the Mortgage. Plaintiff, through her acknowledgement and execution of the Mortgage, explicitly granted to MERS, and to the successors and assigns of MERS, the right to exercise the statutory power of sale and to foreclose on the Property.”

The plaintiff also argued the mortgage servicers may not conduct a non-judicial foreclosure sale and are limited in functions they can perform on behalf of the mortgagee.

Home Loan Services was the servicer in the case and executed the foreclosure deed on behalf of LaSalle.

However, the court pointed out that, “Rhode Island law clearly establishes a role for mortgage servicers in the mortgage industry as mortgage servicers are included within the definition of ‘mortgagee’….Thus, Home Loan, as servicer of LaSalle, the mortgagee and note holder, was properly authorized to execute the foreclosure deed on behalf of LaSalle.”

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HUD Secretary Speaks on Possibility of FHA Bailout

HUD Secretary Speaks on Possibility of FHA Bailout

04/10/2013 BY: TORY BARRINGER

The Obama administration released Wednesday its budget proposal for fiscal year (FY) 2014, revealing that the Federal Housing Administration (FHA) may require a bailout of up to $943 million to reinforce its capital reserves.

The agency has drawn fire in recent months over the losses it took from insuring risky loans before the crisis. According to a third-party actuarial review released last year, FHA’s Mutual Mortgage Insurance (MMI) Fund had ended FY 2012 with a negative value of $16.3 billion.

Since then, FHA and HUD have taken a number of steps to reinforce the fund and prevent a Treasury draw, including raising FHA insurance premiums and putting a moratorium on

its full-draw reverse mortgage program, which HUD Secretary Shaun Donovan says has been a drag on the agency’s budget.

In a conference call with reporters, Donovan explained the ground gained from the estimated $16.3 billion shortfall to today’s estimated $943 million deficit is the result of newer, safer business expected this year.

“How we get to the negative $943 million is a combination of things. First, it looks at what revenue do we expect to come to the fund from new loans that we’re making this year. And given that new loans that FHA’s making are ‘profitable,’ if I can use that term … that’s why we have over $14 billion in receipts this year for FHA and Ginnie Mae,” Donovan commented.

He also added that HUD has taken steps to increase recoveries on older loans, including proposing legislation to increase the agency’s enforcement powers over the risky loans that caused damage to the MMI Fund during and after the crisis.

In a separate conference call, FHA Commissioner Carol Galante acknowledged that the agency’s potential draw “could be a little higher [or] could be a little lower” than the administration’s projected number. However, the amount required—or the necessity of a bailout altogether—won’t be determined until the end of this fiscal year, October 1.

Should FHA need a draw, it would be a first on the agency’s 79-year history.

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LPS Reports a Spike in Loan Cures in February

LPS Reports a Spike in Loan Cures in February

04/10/2013 BY: ESTHER CHO

Lender Processing Services (LPS) reported a spike in cure rates in February.

About 500,000 loans were cured, or went from being delinquent to current, in February, with most of the cures reported on loans that were just one or two months past due, according to LPS’ February Mortgage Monitor report.

The increase in cures, however, is typical in February and March, LPS noted.

“What stood out in this month’s data was where that increase was centered,” explained Herb Blecher, SVP of applied analytics at LPS. “February’s rise in cures was driven almost entirely by FHA loans, representing a 29 percent increase from January, and likely driven by revived modification activity related to the revisions to the FHA’s Loss Mitigation Home Retention options released late last year.”

LPS also found an increase in modifications over the last two quarters after two years of decline.

“The majority of the increases in both Q3 and Q4 occurred in proprietary modifications as opposed to through the Home Affordable Modification Program. Given the current FHA activity, along with the FHFA’s recent announcement of its Streamlined Modification Initiative, we could see continued strength in modification volumes in the future,” Blecher added.

Overall, LPS reported delinquency data shows the rate of non-current loans, which include delinquencies and in foreclosures, trended downward in February, but the rate still remains nearly two times higher than pre-crisis levels.

For example, in February, the rate of non-current loans stood at 10.18 percent, down from the January 2010 peak of 14.82 percent, but well above 5.15 percent-the rate seen in December 2005.

Serious delinquencies, or loans that are 90 days past due, are still experiencing improvements, but at a slower pace, while inventory continues to age, according to LPS. In January 2010, when 90-plus delinquencies peaked, there were 2.9 million loans that were seriously delinquent. On average, the loans were 252 days past due. As of February, about 1.5 million loans were seriously delinquent, but were past due by 474 days on average.

Compared to January 2010, delinquencies declined across all products types, but for FHA/VA loans, foreclosures actually increased since that time by 16 percent. While recent vintages are performing better due to stricter underwriting guidelines, LPS explained FHA is supporting lower quality borrowers with higher default rates.

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