Furiously Fighting Foreclosures

As part of a partnership with the Center for Responsible Lending and NeighborWorks American, the National Association of Realtors introduced the fifth mortgage-related brochure, “Learn How to Avoid Foreclosure and Keep Your Home,” in its borrower education series. The brochure outlines options homeowners facing unaffordable monthly mortgage payments may be eligible for, including forbearance, reinstatement, a repayment plan, and loan modification.

The center estimates that 2.2 million households have lost or will lose their homes when high-risk mortgages reset in the next few years and that as much as $164 billion in home equity will be lost due to foreclosures in the subprime mortgage market.

“Foreclosures threaten the very communities that Realtors work to build,” said NAR President Pat V. Combs in an announcement. The brochure servers as a tool for Realtors to “help clients and customers at risk and educate homeowners about their options if they’re facing foreclosure.”

In an effort to provide updated foreclosure listings in California — where foreclosures are allowed to be postponed for up to one year, foreclosure listings and software company ForeclosureRadar launched what it says is the “first and only service to actively track every foreclosure auction” within the Golden State.

Because of the postponement period, ForeclosureRadar said there was a “significant black hole” in prior foreclosure listing services because it was previously impossible to reliably follow foreclosures beyond the initial auction date. ForeclosureRadar said it tracks and reports auction activity daily and offers data on bank-owned foreclosures weeks ahead of the competition, among other things.

“With $40 [billion] worth of property in some stage of the foreclosure process, and foreclosure auctions now exceeding $2 [billion] a month in sales, this is a market that desperately needs better foreclosure data and services,” said Sean O’Toole, CEO and founder of ForeclosureRadar, in the announcement. “We provide never before available foreclosure data, along with solid foreclosure management tools, to give real estate professionals and investors exactly what they need to thrive in this challenging market.”

The California Reinvestment Coalition led 115 community and consumer organizations in asking six leading mortgage lenders for a six-month moratorium on foreclosures resulting from predatory loans and to direct troubled borrowers to financial solutions, according to a press release. Letters were sent to the CEOs of Bank of America, Citibank, Countrywide Home Loans, Merrill Lynch, Washington Mutual and Wells Fargo.

The coalition noted California is experiencing record-breaking foreclosure numbers, with foreclosures nearly tripling annually to 31,434 in March and contributing to a rate of foreclosures of nearly twice the national average. Additionally, the coalition said that with 21 of 26 metropolitan areas in the state experiencing house price declines last year, many borrowers’ refinancing ability is limited and the “foreclosure crisis will escalate.”

“Many California homeowners are facing foreclosure because they were misled by unscrupulous mortgage brokers and lenders,” said Kevin Stein, associate director of the coalition, in the announcement. “We are asking the largest lenders in the state to take leadership so that families can keep their homes and California’s economy won’t suffer.”

On the other side of the country, members of the Pennsylvania House of Representatives said the state will start two mortgage “rescue funds” and have called on subprime lenders to agree to a voluntary 6-month moratorium on foreclosures to give the state time to create the rescue funds, according to an announcement. The members calling for such action are House Appropriations Chairman, Dwight Evans, D-Philadelphia, House Commerce Chairman, Peter J. Daley, D-Washington/Fayette and banking Subcommittee of Commerce Chairman Mike McGeehan, D-Philadelphia.

While legislature is working on new laws and rules to tighten up oversight of the mortgage industry, the state needs to find a way to extract people already caught in bad mortgages before they move into foreclosure, according to the written statement. This year, it is estimated that foreclosures in Pennsylvania will number about 9,000 to 10,000, with half of those being in Philadelphia.

“We’re not asking the industry to suspend the foreclosure process,” McGeehan said in the statement, “but only to suspend any final actions authorizing a sheriff’s sale.”

A “refinance fund” will use taxable bonds to move people from adjustable-rate mortgages to fixed-rate mortgages with the Pennsylvania Housing Finance Authority. The second fund, or “workout fund,” will move borrowers whose remaining principal is greater than the appraised value of the house into fixed-rate mortgages and will use taxable bonds and a $25 million appropriation from the state’s general fund to cushion against some losses the fund will absorb, the release stated.

“There are literally thousands of Pennsylvania borrowers already locked into ‘subprime’ mortgage contracts that they are struggling to pay, as their adjustable interest rates bump upward,” Daley said in the statement. “Many of these people ended up in those circumstances because of manipulative sales tactics, sometimes outright fraud.”

On Monday, the U.S. Department of Housing and Urban Development announced it hosted a Homeownership Summit with over 150 leading stakeholders in the housing community to discuss the impact of risky, high-priced loans, departmental actions against predatory lending and how modernizing the Federal Housing Administration will provide a safer alternative to exotic mortgages.

Amongst seven areas of agreement for preserving and protecting homeownership that HUD Secretary Alphonso Jackson laid out during the summit was that “a taxpayer-funded bailout will not resolve housing concerns,” according to the announcement.

Jackson advocated for smarter mortgage alternatives, encouraging Congress to pass legislation that modernizes the FHA program.

“Reforms must be made for FHA to adapt to today’s marketplace,” Jackson said in the announcement. “We have internally modernized FHA as much as we can. But the time has come to bring FHA into the 21st Century. A new FHA could be an antidote for predatory lending and for subprime difficulties.”