New Mortgage Rules’ Negative Impact on the Housing Industry

foreclosure defense attorneyThere are new rules which affect financial institutions involved in the mortgage business in the United States. Lenders have to be able to verify the individuals they loan money to can repay their home mortgages. This is pursuant to the new rules designed by the Consumer Financial Protection Bureau under the Dodd- Frank Law that regulates Wall Street.

New Consumer Protection Laws

Under the new consumer protection laws, banks have to take into consideration a variety of factors when making mortgage loans. Included in these factors are the income of the borrower, the financial health of the borrower, the borrower’s credit history, and his or her other debts. The purpose of the reform law is to prevent the meltdown in the home mortgage industry that took place between 2000 and 2009 which caused millions of Americans to have their homes sold in foreclosure sales. The new statutes seek to prevent lenders from engaging in loaning funds for home mortgages to individuals who simply cannot afford to pay back the loans.

Other Aspects of The New Consumer Protection Laws

The law deals with a homeowner’s ability to pay their mortgage has created a lot of concern for financial institutions. Mortgage lenders are concerned if the homeowners fail to make their mortgage payments and their homes are foreclosed on by banks they will claim in the foreclosure actions the financial institutions had known or should have known that they couldn’t afford to make the mortgage payments under these loans.

New Regulations Affect Low Income Prospective Homeowners

Experts in the mortgage industry are claiming the new regulations will make it very difficult for low income prospective homeowners to qualify for mortgage loans. They claim the new regulations will give the banks less flexibility in working with low income mortgagors. The regulations also regulate mortgage servicing companies.

helping homeowners stay in their homesElliot S. Schlissel is a foreclosure lawyer representing homeowners facing foreclosure lawsuits throughout the Metropolitan New York area.

Beware of Mortgage/Foreclosure Fraud – Part I

foreclosure defense attorneysThe number of homes going into foreclosure on a national basis has been decreasing. However, the number of homes in the Metropolitan New York area that have been placed into foreclosure by financial institutions has not been going down during the past few months.

Homeowners who find themselves with financial difficulties can be vulnerable to fraudulent mortgage and foreclosure schemes. In California, a woman by the name of Jewel Hinkles swindled approximately 1300 homeowners out of $5,000,000 through a group of companies which she claimed were in the business of buying distressed properties from the homeowners. This is one of many examples of fraudulent foreclosure/mortgage schemes that have been perpetrated on individuals finding themselves in financial difficulty and unable to make mortgage payments on their home.

Avoiding Foreclosure Scams

The most important thing to take into consideration in avoiding being defrauded is if a deal sounds too good to be true, it probably is fraudulent! Foreclosure proceedings are subject to public disclosure in the courts. It is therefore easy for criminals who seek to scam homeowners by obtaining information about their foreclosure and making false representations to the beleaguered homeowner.

foreclosure advocate for homeownersAnother type of foreclosure scam which is common involves alleged foreclosure counseling companies. Sometimes these companies solicit business with flyers dropped off in homeowners’ mailboxes or they actually come knocking on the door of homeowners whose homes have been placed into foreclosure by financial institutions.

Federal Government Moves Against Banks

foreclosure defense attorneyThe United States government has brought several lawsuits against some of the largest banks in the world. The purpose of these lawsuits was to hold these banks accountable for their mortgage fraud practices. As a result of legal action, JP Morgan Chase entered into a settlement whereupon they have to pay $5.1 billion dollars to the regulator of Fannie Mae and Freddie Mac. This settlement dealt with allegations related to toxic mortgage securities packaged and sold by JP Morgan Chase which was one of the causes of the financial crisis in America. This settlement was part of a larger settlement involving a $13 billion dollar payment between JP Morgan Chase and federal and state officials with regard to the bank’s improper mortgage practices.

Bank of America

A federal jury has found Bank of America was responsible for mortgage fraud during the financial crisis. Prosecutors in the case are asking for approximately $850 million dollars in damages from Bank of America.

Banks Charged for Their Bad Behavior

It is important that the government, even though it is long after the fact, is taking the appropriate legal action to find banks responsible for their wrongdoing which created the mortgage crisis in America.

Homeowners Not Compensated

The settlement between the federal government, JP Morgan Chase and Bank of America allocates approximately $4 billion dollars in financial relief to homeowners who were victimized by improper mortgage practices. Considering the hundreds of billions of dollars homeowners have lost, this is a mere pittance. The government should have required a much larger fine from JP Morgan Chase for its improper mortgage actions and mortgage fraud.

Conclusion

The government’s action concerning illegal mortgage practices taken against large banks is too little too late!helping homeowners stay in their homes

Courts Flooded with New Foreclosure Cases in New York

foreclosure defense attorneysIt is estimated approximately 45,000 foreclosure cases will be filed in the Supreme Courts of the State of New York in 2013. It is anticipated more foreclosures will be filed in 2013 than in 2011 and 2012 combined in Courts.

The increase in court filings relates to lenders’ ability to provide documentation of their foreclosure lawsuits concerning the accuracy of the foreclosure filings. There was an affirmation requirement imposed by Chief Judge Jonathan Lippman in October 2010, requiring attorneys for financial institutions bringing foreclosure proceedings to attest to the validity of the material in the foreclosure Complaint. On August 30, 2013, a “Certificate of Merit” replaced the attorney’s affirmation. The Certificate of Merit requires the financial institution and its attorneys to document the institution bringing the lawsuit has the mortgage and note and can document the assignments of the mortgage and note from prior financial institutions to them.

Foreclosure Settlement Conferences

Each foreclosure proceeding in the State of New York is subject to a Foreclosure Settlement Conference. More and more homeowners are retaining attorneys to represent them in foreclosure proceedings in New York. Homeowners are utilizing foreclosure lawyers to represent them at the Foreclosure Conferences for the purpose of pressuring financial institutions into granting the homeowners mortgage modifications. It is estimated there will be more than 100,000 Foreclosure Settlement Conferences taking place in the State of New York before the end of the year 2013. The huge number of settlement conferences is causing the legal system in New York to be overburdened.

Approximately half of the homeowners represent themselves at the settlement conferences. Unfortunately, most homeowners representing themselves have difficulties at the settlement conferences and do not obtain good outcomes. Legal representation has a significant impact on the success rate of resolving the foreclosure lawsuits to the homeowners’ benefit.assisting homeowners

Low Down Payment Mortgages

foreclosure defense lawyerLow down payment and no down payment mortgages played a significant role in the mortgage bubble that developed during the housing boom in the United States. When the housing market crashed, many of the families who had obtained mortgages with little or no down payment found their homes worth less than their mortgages and they had no ability to make their monthly mortgage payments. The reality of the situation was consumers were buying homes they could not possibly afford to keep over the long run.
Although it is difficult to obtain a no down payment or low down payment mortgage today, there are still avenues available to obtain these types of mortgages.

FHA Mortgage Loans

The Federal Housing Administration (FHA) has a loan program where they provide financial guarantees for individuals to obtain mortgages with down payments as low as 3.5%. Although the FHA actually doesn’t act as a direct lender, this federal agency insures loans by financial institutions that provides the financial institution security to offer low down payment mortgages.

Lower Credit Scores

The FHA will provide mortgages to potential home buyers with credit scores as low as 575. FHA mortgages come with restrictions. To begin with, there are caps on the house price related to the region the house is located in. Secondly, the home must be purchased to be used as a principal place of residence. FHA loans cannot be used to purchase investment property.

When an individual or family obtains a low down payment loan from the FHA, they are required to purchase private mortgage insurance. This private mortgage insurance protects the financial institution in the event the homeowner is unable to make his home payments or there is insufficient equity in the home to pay back the mortgage at time of the sale of the home. This private insurance program requires an up front insurance premium that is part of the underwriting costs of the loan. In addition, the homeowner must make monthly payments. Due to the additional private mortgage insurance premiums, the monthly mortgage payments on FHA loans are usually higher than those of conventional mortgage loans.

Veterans Administration Mortgage Loans

The Department of Veterans Affairs (VA) has a mortgage loan program for members in the military and former military members. This allows men and women who served their country to obtain a mortgage with no down payment. Similar to the FHA, the VA doesn’t actually make the loans. What they do is they provide insurance which motivates private lenders to participate in this program. There are specific eligibility requirements under the VA mortgage loan program. VA mortgage loans also carry fees at the time of closing, however they do not require private mortgage insurance, which is required under the FHA program. VA loans are an attractive means of purchasing homes for Americans who served their country in the military.

Private Financial Institutions

As indicated earlier in this article, low down payment and no down payment loans were part of the reason for the housing bubble that existed in this country for the past seven years. Although banks have become more aggressive in marketing conventional mortgage loans, new government regulations related to the Dodd-Frank Act which go into effect on January 10, 2014, will make it very unlikely financial institutions will pursue these type of mortgage loans in the future.

homeowner advocatesElliot S. Schlissel is a foreclosure attorney with more than 20 years experience fighting foreclosure lawsuits. He represents homeowners with foreclosure problems in the metropolitan New York area.

Home Loans Will Be Harder to Obtain in 2014! – Part II

foreclosure defense attorneysFewer Foreclosures in the Future

The creation of the Consumer Financial Protection Bureau (CFPB) may make it more difficult for financial institutions to foreclose on homes owned by homeowners who have stopped making mortgage payments. “For every foreclosure, lenders will have to show the CFPB that there was absolutely no way they could do anything else” according to Gaffney. This will require financial institutions to offer homeowners behind in their mortgage, additional options other than foreclosure. Those options may involve short sales, refinancing, cash for keys arrangements (these are arrangements where lenders pay delinquent homeowners to hand over the keys to their residence and walk away from their homes) and other potential options. Due to the necessity of offering these alternatives, lenders may become concerned that taking back homes from delinquent homeowners will be more difficult. This may result in more conservative underwriting requirements by lenders which will end up shutting more prospective homeowners out of the marketplace to obtain mortgages.

Ability to Pay Rules

Under the new rules going into effect in 2014, financial institutions will have less latitude in evaluating prospective homeowners regarding mortgages. The lender will have to take into consideration the “ability to pay” of the prospective borrower. The following are a list of the new rules lenders will have to take into consideration in underwriting new mortgages in 2014:

  1. Current or reasonably expected income or assets;
  2. Credit history;
  3. Monthly mortgage payments;
  4. Current employment status;
  5. Current debt obligations, (alimony, child support, credit card bills);
  6. Monthly payments on other loans;
  7. Monthly payments on mortgage related obligations; and,
  8. Monthly debt to income ratio or residue income.

Debt to Income Ratio

The debt to income ratio under the new rules will create problems for many families who seek to obtain mortgages. Under the new rules going into effect on January 1, 2014, the monthly debt to income ratio will be set at a maximum of 43%. This means homeowners will not be able to utilize more than 43% of their income to pay all of their financial debts. These debts will include car loans, credit cards, personal loans, and other financial obligations over and above the prospective mortgage they seek to obtain.

Conclusion

Applying for a mortgage in 2014 is going to be more difficult. If you are interested in obtaining a mortgage, apply now!foreclosure advocate for homeowners

How Good Does Your Credit Score Have To Be To Obtain a Low Interest Rate Mortgage?

mortgage modification attorneysIf you are in the market to buy a new home or an existing home, one of the most important issues is whether you can afford the mortgage payments. But before you can consider whether you can make your mortgage payments, you need to obtain the mortgage. Credit scores are the most important factor financial institutions look into with regard to underwriting mortgage loans. Today it is recommended individuals applying for a mortgage have a credit score of 740 or above. Credit scores are based on a total potential perfect credit score of 850 points. The 740 credit score that is requested by financial institutions today is among the highest asked by banks at any point in time. Pursuant to www.zillow.com, a mortgage information company, approximately 40% of Americans have credit scores high enough to obtain the best possible mortgages.

Mortgage Rejection Rate

There is currently a 30% rejection rate by financial institutions for those individuals applying for a mortgage. When you take into consideration the housing market has been improving in the United States, and foreclosure rates have been going down in most metropolitan areas, a 30% rejection rate is very high.

So what do you do if you do not have a 740 or above credit score? You can still obtain a mortgage. However, you will most likely have to pay a higher interest rate for the mortgage.

Credit Reports

Before going into the housing market to look for a home to purchase you should check your credit score. You can obtain a copy of your credit report on the internet. Carefully look at your credit report to determine if all the material on your report is accurate. If there are inaccuracies in your credit report contact the credit reporting agency in writing to correct these inaccuracies. Your credit report will also show you the balances on credit lines, personal loans, and credit cards. It will be helpful to bring the balances on your indebtedness down prior to submitting a mortgage application. Banks take into consideration all of your overall debt when they underwrite a mortgage.

helping homeowners stay in their homesElliot S. Schlissel is a foreclosure attorney with extensive experience in representing clients regarding foreclosure lawsuits, mortgage modifications and fraudulent mortgage practices of banks. His goal is to help clients stay in their homes.

Issue of Standing in Foreclosure Lawsuit is Waived By Failure to Plead It In The Defendant’s Answer

foreclosure defense attorneysColumbia Capital had loaned Mr. Cuervo $130,000. They had received a mortgage against real estate owned by Mr. Cuervo as security for this loan. Mr. Cuervo had executed a note and a mortgage to Columbia Capital at the time of the closing on the purchase of the property.

Summary Judgment Motion

Columbia had made an application for summary judgment. Their application was based on their cause of action for foreclosure. (A summary judgment motion sought to have the court render a decision there was no question of fact that the plaintiff, in this case, was entitled to a judgment based on their allegations and no trial was necessary). In their summary judgment application Columbia asked the court to strike all of the affirmative defenses made by the defendant.

Columbia Claims Mortgage is in Arrears

Columbia claimed that Mr. Cuervo did not make his mortgage payments pursuant to the note and mortgage and that they were entitled to summary judgment because there were no issues of fact in the case. The opposition papers submitted by Mr. Cuervo’s attorney alleged Columbia did not have standing to bring this lawsuit. (Lack of standing means Columbia was not the appropriate party to move forward with this foreclosure lawsuit).

Justice Peter Mayer sitting in the Supreme Court in Suffolk County held the opposition submitted by Cuervo’s attorney did not raise any questions of fact. It did not rebut Columbia’s prima facie showing of entitlement to summary judgment. Judge Mayer went on to state the failure to raise as an affirmative defense the issue of standing by Mr. Cuervo’s attorney acted as a waiver concerning this potential defense to the lawsuit. In other words, since Cuervo didn’t plead a lack of standing, the Court would not hear arguments as to whether there actually was a lack of standing for Columbia to bring this foreclosure proceeding.

Columbia’s application for summary judgment was granted by Judge Mayer.

Conclusion

Defense counsel should allege a lack of standing in all foreclosure lawsuits. At the time the answer is submitted by the defendant, the defendant is usually not in a position to know whether the plaintiff has standing. These issues are clarified during the discovery process of the lawsuit.foreclosure advocate for homeowners

Federal Government Seeks $863 Million from Bank of America For Defective Mortgages

foreclosure defense lawyerThe United States government has gone into the Federal District Court in New York City requesting Bank of America pay $863.6 million dollars in monetary damages related to fraudulent activities concerning defective mortgages which were sold by Countrywide Financial Services in 2008. It is claimed Bank of America defrauded Fannie Mae and Freddie Mac, government controlled mortgage companies, with regard to the sale of loans purchased from Countrywide in 2007 and 2008. These mortgage loans generated $1 billion dollars in losses.

The Hustle

The case filed in United States District Court in Manhattan claims Countrywide operated a program called high speed swim lane or HSSL, nicknamed the “Hustle”. The Hustle program was set up to provide financial incentive for employees to make as many loans as possible. The program eliminated many underwriting requirements to ensure loans met minimum standards. The government’s position is penalties are necessary “to send a clear and unambiguous message that mortgage fraud for profit will not be tolerated” stated Judge Jed S. Rakoff, who presided over the trial in this matter. The amount of the penalties requested is based on the losses Fannie Mae and Freddie Mac incurred.

assistance for homeownersElliot Schlissel, Esq. is a foreclosure attorney representing homeowners concerning mortgage modifications and foreclosure litigation.

New York’s Backlog of Foreclosure Cases

mortgage modification lawyerThe foreclosure process in New York, even under optimum circumstances, can take as long as three years. New York has enacted legislation regarding the robo-signing scandal that was uncovered in 2010. There are new court imposed rules affecting attorneys representing banks that seek to bring foreclosure lawsuits.

New Foreclosure Requirements

The attorneys for financial institutions must prepare an affidavit or swear under penalties of perjury that the foreclosure documents being submitted are accurate. Consternation by lender’s attorneys with regard to the accuracy of notes, mortgages and assignments of mortgages have caused delays as long as two years in the New York foreclosure process.

Lenders themselves must verify, when a foreclosure action is initiated, that the lender has the right to sue. This deals with the issue of standing. Notes and mortgages are sold as commercial paper. If the sale is not accompanied by an appropriate assignment from one bank to another, the second bank has no right to bring a foreclosure lawsuit.

The delays in foreclosure proceedings can cause interest and penalties to accrue against the homeowner.

Foreclosure Settlement Conferences

When a foreclosure lawsuit is initiated in the State of New York, the homeowner is entitled to attend a foreclosure settlement conference. At these conferences, judges and their staff seek to mediate foreclosure issues and assist homeowners in obtaining mortgage modifications. Unfortunately, the reality is many of the homeowners whose homes have gone into foreclosure could not afford, when they bought the homes, to pay the mortgages and due to the economic crisis facing America have even less capability today of paying their mortgages.

foreclosure advocate for homeownersElliot S. Schlissel, Esq. is a foreclosure defense lawyer representing homeowners throughout the metropolitan New York area who seek to fight foreclosure lawsuits.

Foreclosure Defense in Valley Stream, Lynbrook, Baldwin, Malverne, Freeport, Oceanside, Long Beach, Elmont, Lakeview, West Hempstead, Hempstead, Merrick and Bellmore, New York

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