Sam Pompeo | Ewing & Associates

Year End Stats

By: Sam Pompeo

Bank of America said that it paid nearly $1.3 billion to Freddie Mac and more than $1.3 billion to Fannie Mae on Dec. 31 2010 to resolve a faulty mortgage loan dispute involving Countrywide Financial Corp. The $2.6 billion worth of payments to Freddie and Fannie, combined with potential losses on future repurchases from government-sponsored enterprises adds up to $3 billion in expenses. Bank of America also expects to take an additional $2 billion charge to fourth-quarter results from the decline in the mortgage business, bringing the total impact to the company to $5 billion.

The deals with Freddie Mac and Fannie Mae don’t cover loan servicing obligations, other contractual obligations or loans contained in private label securitizations. But the agreements are a sign that the bank is working quickly to deal with buyback claims. Fannie Mae said in a statement that the Bank of America deal was a “fair and responsible resolution” of the outstanding claims. The company said the agreement accounts for about 44% of the $7.7 billion in repurchase requests outstanding with all of its seller servicers as of Sept. 30, 2010.

The average Florida homeowner who went into foreclosure in November hadn’t paid his mortgage in 10 months. The 307 day delay between the first late payment and a foreclosure referral, reported in a study released this week, was called “flabbergasting” by one financial expert who said mortgages typically go to foreclosure by the third delinquent payment. Jacksonville-based LPS Applied Analytics, which tracks home loans nationwide and issued its November Mortgage Monitor report, ranks Florida among the top states for the average length of time it takes to refer a home to foreclosure. The average Maryland home doesn’t go to foreclosure until 358 days following the first late payment. New York is at 344 days. California tops the list at 367 days.

The data include homes that are in foreclosure for a second time, possibly following a loan modification or short-sale attempt. The report also found that 18% of loans nationwide with 24 or more missed payments are not in foreclosure and about 15% of loans with 18 months of no payments remain out of foreclosure.

“We are looking at a very large pool of very delinquent loans. Many struggling homeowners undoubtedly see delays in the foreclosure process as a benefit. But for homeowner associations trying to collect late fees and neighbors of vacant properties, foreclosure postponements can mean lower home values and a reduction in maintenance.

EwingSIR does not guarantee information contained in this blog, readers are encouraged not to rely solely on this information and to do their own independent research of facts contained herein. Blog information was obtained from independent sources that we do not endorse, and we do not investigate this information for accuracy.

What happened to the $71 billion?

By: Sam Pompeo

The Obama administration’s signature foreclosure prevention program will help only 700,000 Americans save their homes, according to a scathing report released Tuesday by the Congressional Oversight Panel (COP).

The group’s assessment falls far short of the 3 to 4 million homeowners that the president pledged would receive more sustainable mortgage loans when the Home Affordable Modification Program (HAMP) was launched in March of last
year, and is well below the 8 to 13 million foreclosures COP says are expected by 2012.

Treasury initially committed $75 billion of Troubled Asset Relief Program (TARP) funds to the HAMP initiative, which pays incentives to servicers, investors, and homeowners for each loan that is successfully modified. COP, which is charged with overseeing the use of TARP money, says it now appears Treasury will spend only $4 billion on HAMP incentives. The big question is, what happens to the unused $71 Billion?

“Absent a dramatic and unexpected increase in HAMP enrollment, many billions of dollars set aside for foreclosure mitigation may well be left unused. As a result, an untold number of borrowers may go without help,” the report said.

The members of the congress appointed panel went so far as to call the government’s loan modification program “ineffective,” and they said Treasury’s reluctance to acknowledge HAMP’s shortcomings has had “real consequences.”

Since COP’s last report on HAMP eight months ago, the panel noted that Treasury has made “minor tweaks” to the program, but COP says the changes have not resolved its core concerns.

Treasury’s authority to restructure HAMP ended on October 3, when TARP expired, and COP says because the deadline has come and gone for any major overhaul, “the program’s prospects are unlikely to improve substantially in the future.”

“Many of the problems now plaguing HAMP are inherent in its design and cannot be resolved at this late date,” the panel said in its latest report. “Other problems, however, can still be mitigated.”

This has created a huge opportunity to buy luxury home short sales. We have never seen the amount of opportunities in distressed residential and commercial real estate than right now.