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Foreclosure News | Foreclosure Resources

Foreclosure Strategies Widely Varied

Recent foreclosure prevention activity

November 12, 2008

By MortgageDaily.com staff

California is looking at establishing a three-month foreclosure moratorium, Massachusetts is suing servicers and Maryland is working directly with servicers to improve the mitigation process. One firm is scouring loan documents to find compliance errors for delinquent borrowers.

But first, Visionet recently announced the revival of a refinance service in response to HUD's Hope for Homeowners bailout plan for the mortgage industry. VisiRetention, which can be up-and-running within four to six weeks, proactively targets troubled borrowers who qualify for the H4H program.

Residential Capital LLC -- which is on the verge of collapse -- issued a statement yesterday endorsing the streamlined modification plan announced by the Federal Housing Finance Agency, which regulates Fannie Mae and Freddie Mac. ResCap said its own loss mitigation efforts have helped prevent 251,000 foreclosures so far this year.

Treasury Secretary Henry M. Paulson Jr. today commended the chairman of the Federal Deposit Insurance Corporation for her streamlined modification strategy at failed IndyMac Federal Bank FSB.

"FDIC Chairman Bair has given us a model, in the mortgage modification protocol she developed with IndyMac Bank," Paulson said in a statement today. "Through the end of October, the FDIC has completed loan modifications for 3,500 borrowers, with several thousand more modifications currently being processed. These modifications have reduced payments for participating homeowners by an average of $380 month, or about 23 percent."

California Governor Arnold Schwarzenegger has proposed a 90-day hiatus on some foreclosure proceedings, a notice from the state said.

Ocwen Financial Corp. announced last week that it prevented 22,257 foreclosures during the third quarter as a result of its track record on loan workouts. From January through September, 54,868 foreclosures were prevented.

Ocwen said Monday that it has agreed with Maryland's Governor Martin O'Malley to establish a streamlined, timely and meaningful loss mitigation process for Maryland borrowers. The effort includes the designation of a Maryland team inside Ocwen, quicker communication with delinquent borrowers and a promise to accept initial modification payments from a state program.

In a separate announcement, Maryland's governor said similar agreements had been reach with AmeriNational Community Services, GMAC ResCap, HSBC, Litton Loan Servicing and Citi. Together with Ocwen, the six servicers handle 23 percent of mortgages in the state.

A preliminary injunction against Option One Mortgage Corp. and H&R Block Mortgage Corp. was granted to Massachusetts Attorney General Martha Coakley by the Suffolk Superior Court, a press release today said. Option One, now operated as part of American Home Mortgage Servicing Inc., is prohibited from initiating or advancing foreclosures on any of the 9,700 loans in the state that are considered presumptively unfair.

The state originally filed its lawsuit against Option One in June because it allegedly placed borrowers in risky loans that it should have known would wind up in foreclosure. The company was also accused of charging several hundred dollars more in fees and points to black and Latino borrowers than similarly situated white borrowers.

Option One must notify the attorney general at least 30 days before foreclosing on an adjustable-rate mortgage with a teaser rate that is more than 2 percent below the fully indexed rate and a loan-to-value that exceeds 96 percent. The attorney general has 45 days to object while it determines if the loans were unfair, in which case the parties have 15 days to resolve differences.

National Loan Audits announced last week that it will help delinquent borrowers find compliance mistakes by their lender in order to threaten servicers with lawsuits and extract a loan modification. The firm performs forensic loan audits for $495 each. Customers receive a 40-page report detailing compliance violations.

The auditing firm claims that it finds mistakes on more than 80 percent of files it audits.

"The most common violation is the understatement of prepaid finance charges and in many instances a mere $35 error within the Truth in Lending disclosure statement could entitle the borrower to a refund of all finance charges, closing costs and interest payments made since the inception of the loan," National Loan said.

Commonwealth of Massachusetts v. H&R Block Inc.
No. 1:08-cv-11225 (D. Mass.)

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