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Lender abuse?

As the process dragged on, thousands of homeowners who might have otherwise won modifications to their mortgages and stayed in their homes were instead foreclosed on by the bank, the Bloomberg story contends.

A spokesman for the bank is quoted as blasting the complaints as “baseless” and the work of disgruntled ex-employees.

Article source: http://www.boston.com/realestate/news/blogs/renow/2013/12/lender_abuse.html

NJ foreclosure pipeline clogged

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NEWARK — The number of homes entering foreclosure across the nation is at its lowest level in years, but a persistent backlog has left New Jersey stuck at year’s end with the nation’s second-largest percentage of homes in some stage of foreclosure.

Nearly 7 percent of New Jersey homes are in the foreclosure pipeline, behind only Florida at 7.1 percent, according to real estate data provider CoreLogic.

New Jersey also has the country’s second-highest number of homes — 10.6 percent — that are at least 90 days behind on mortgage payments.

For the most part, the high foreclosure numbers stem from a drawn-out process and a severely backlogged pipeline of cases.

“The rest of the country, about 75 percent of the U.S., will have cleared out their foreclosure backlog by summer 2014,” said Jeffrey Otteau of the Otteau Valuation Group, an East Brunswick-based real estate consulting group. “New Jersey will probably be digesting, working and chopping through all of this until spring 2015.”

New Jersey’s foreclosure process typically takes a long time — 200 to 400 days on average, according to a study by Legal Services of New Jersey. But the process is now taking an average of about 1,000 days in part because of a past freeze on foreclosures and a subsequent logjam.

“You had a slow drip in the bathtub, but it had nowhere to go,” said Sam Khater, deputy chief economist for CoreLogic. “After a while it builds up, and that’s what happened in Jersey.”

The state’s well-off suburbs close to New York City have fared relatively well, Otteau said. But the state’s urban centers, including Newark and Trenton, and its rural and exurban areas, including Sussex County in the north and Cumberland County in the south, have been hardest-hit by foreclosures.

Foreclosures due to damage from Superstorm Sandy, which devastated parts of Ocean and Monmouth counties in 2012, also have contributed to the uptick, Otteau said.

The state announced this month it will stop taking applications for federal foreclosure relief money because it has almost run out.

It received $300.5 million from the Troubled Asset Relief Program, which went to states with a high number of foreclosures.

“Nobody’s paid any attention at all to New Jersey until recently,” said Robert C. Hockett, a professor of law at Cornell University.

In Newark and Irvington, officials want to move forward with a plan to use eminent domain to seize underwater mortgages, a plan Hockett helped devise. It has faced zealous opposition from Wall Street and Washington.

Teresa Stevens-Hamilton of Woodbridge has been in the foreclosure process for more than a year.

“It’s been horrific,” she said. “We expected someone to come to our door and kick us out.”

Article source: http://www.thedailyjournal.com/viewart/20131231/NEWS01/312300023/NJ-foreclosure-pipeline-clogged

Connecticut Plagued By Soaring Foreclosure Rate

In the U.S. last month, home foreclosures fell to the lowest level since the mortgage crisis began eight years ago. But in Connecticut, and several other states, foreclosures are still rising dramatically.

Article source: http://www.npr.org/2013/12/31/258548358/connecticut-plagued-by-soaring-foreclosure-rate

New Maryland bill could shorten debt collection after foreclosure

In many cases, homeowners were pursued years after they had lost their homes.

In Maryland, debt collectors have up to 12 years to take homeowners to court for outstanding mortgage debt after foreclosure. The process is known as a deficiency judgment. The proposed bill would reduce that time to 180 days.

“It smacks of debtors prison and indentured servitude,” said state Sen. Jamie B. Raskin (D-Montgomery), who plans to introduce legislation shortly after the legislature reconvenes Jan. 8. “People should not be indentured servants to the mortgage they used to hold.”

The bill applies only to foreclosures that occur after its passage.

“We feel confident we can pass something to change it going forward,” said Marceline White, executive director of the Maryland coalition. “I think it will be a bigger battle to apply it retroactively.”

Raskin agreed.

“I don’t think we can make it retroactive for constitutional reasons,” he said. “At the very least, we venture into murky constitutional territory.”

At least a dozen states have statutes requiring that a deficiency judgment be brought within three months of a foreclosure sale. Illinois, Kansas and South Carolina require that deficiency judgments be sought at the time of foreclosure.

If approved, Maryland will go from being a state with one of the longest time frames for debt collectors to pursue consumers to one among the states with the shortest, according to Mark Kaufman, Maryland’s commissioner of financial regulation, who oversees debt collectors.

In the District, homeowners can be pursued for only 30 days, according to a report on the Federal Housing Finance Agency Web site. In Virginia, the limit is five years.

The coalition worked with Raskin and other legislators and about 25 state consumer advocates to research the issue and come up with language for the bill.

The draft language exempts homeowners from state law that allows up to 12 years for the filing of claims to recover debt. Commercial properties would still be subject to the longer time frame.

Foreclosures in Maryland have risen from 7,864 in 2012 to 14,675 last year, approaching levels not seen since the fallout from the housing crisis in 2009 and 2010, according to an analysis of data provided by RealtyTrac.

The bill would not provide relief to homeowners who went into foreclosure during the housing crisis and are facing a deficiency judgment. In addition, those who went into foreclosure during that period would still face the risk of having a debt collector take them to court.

The bill falls short of addressing the issue of compounding interest. When a property goes into foreclosure, the interest continues to accrue on the home. If debt collectors wait years to pursue a deficiency, that could add tens of thousands of dollars on top of what the homeowner owes. Many homeowners are unaware that interest is accruing after they have moved out, often at a rate equivalent to that of a monthly car note.

Advocates say the legislation could cause state bankruptcy filings to increase because people will be aware of their debt sooner.

“We certainly think that might be a consequence of the legislation,” White said. “We had a lot of heartfelt discussion about it. But most people felt it was better for people if they had to pursue bankruptcy to do it quickly so they could really spend time putting their lives back together and rebuilding their assets.”

Changing the law is a move in the right direction, said Cara Stretch, director of foreclosure prevention at the Baltimore-based St. Ambrose Housing Aid Center, who was among the housing advocates putting together the legislation.

These judgments have “banged up” homeowners’ credit and can prevent them from getting jobs or promotions, particularly if they are government workers with a security clearance because it shows up on their credit report.

“This could really harm people from improving employment,” Stretch said. “Some people have been able to negotiate settlements for lesser amounts and payment plans to cover the debt. But probably one of the biggest concerns is the impact to the homeowners’ credit.”

In June, lawyer Dmitri A. Chernov said he was able to fight his client’s judgment for more than $100,000. The case resulted in a settlement in which his client paid her debt collector a one-lump-sum cash payment of less than $10,000.

“We don’t want people to be haunted the rest of their lives by a mortgage foreclosure,” Raskin said. “We want to give people an incentive to get back on their feet, work hard and save money. We don’t want someone waiting in the wings to pounce on them for the deficiency five or 10 years down the road, when they’ve finally had a chance to get back on their feet.”

The Post reported that more than 400 people in Maryland faced such judgments and that mortgage giants Fannie Mae and Freddie Mac were pursuing thousands more nationwide.

One of those is Jose Faustino Rodas Mendez, who got his notice this year.

He thought he had gotten a 30-year fixed mortgage on the two-bedroom College Park home he bought in 2006. But the payments eventually shot up to $3,000.

Mendez, 38, cleans and maintains office buildings. His wife works at a restaurant. They support three children. To make ends meet, he constructed two bedrooms in his home and rented them out for $400 each.

But it still couldn’t cover the mortgage.

Mendez was foreclosed on in 2009, and Freddie Mac, which had guaranteed the mortgage, took the home. The agency paid Mendez $3,500 to get out.

A spokesman for Freddie Mac declined to comment on the case.

Mendez moved into a cramped apartment in Mount Rainier and has been trying to rebuild over the past three years. Last summer, he pre-qualified for a new mortgage.

That’s when the notice arrived saying a debt collector had taken him to court for nearly $200,000 in unpaid debt and interest — more than half the cost of his $380,000 foreclosed house.

Mendez talked to a housing counselor at the Central American Resource Center in the District.

“They told me that I was being sued and that they [the debt collector] could take money out of my paycheck,” Mendez said.

“My heart was thumping, going boom, boom, boom,” he said. “I thought, ‘How am I going to support my children and pay the rent and all that?’ ”

Mendez would not be protected under the current proposal.

Alexia Campbell and D’Ante Smith, who are attached to The Washington Post’s Investigative Unit through a program with American University, contributed to this report.

Article source: http://www.washingtonpost.com/investigations/new-maryland-bill-could-help-foreclosed-homeowners-avoid-lengthy-debt-collection/2013/12/30/d9812934-6f11-11e3-b405-7e360f7e9fd2_story.html

Grave marker project helps bury the blues

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ST. LOUIS (AP) — Blues guitarist Tommy Bankhead rubbed shoulders with some of the genre’s royalty, from Howlin’ Wolf and Elmore James to Albert King and Sonny Boy Williamson.

But visitors to the overgrown St. Louis cemetery where Bankhead was buried more than a decade ago would never know his musical legacy. Or his name.

Be it neglect, inattention or hard times, Bankhead’s family never added a grave marker to his burial plot. That will soon change thanks to the Killer Blues Headstone Project, a nonprofit effort to bring belated recognition to long-forgotten blues musicians.

Though the group has posthumously honored musicians as far away as California, its efforts are concentrated in a fertile blues corridor that stretches from the Mississippi Delta through St. Louis, north to Chicago and Michigan.

“These guys gave so much to America via music,” said Aaron Pritchard, the project’s vice president. “They deserve a headstone.”

Pritchard, 33, grew up on rock `n’ roll and discovered the St. Louis blues scene after high school but stopped playing music for a living to raise his two small children. A retail manager by day, Pritchard must be equal parts musicologist, cultural historian, archivist and Internet detective for the blues genealogy project.

Several years ago, he met a kindred spirit in Steven Salter of Whitehall, Mich., whose own search for his musical idols began with a detour to the Chicago area while en route to the New Orleans Jazz and Heritage Festival.

After stopping at the graves of McKinley Morganfield, better known as Muddy Waters, and Chester Burnett (aka Howlin’ Wolf), Salter found an unmarked grave for blues pianist Otis Spann. A letter bemoaning Spann’s fate to a blues magazine ignited a successful fundraiser and convinced Salter to launch the headstone project in 2008.

“I figured if I didn’t get to see them while they were alive, I could at least stop by their gravesites and pay my respects,” the 62-year-old said. “When I got there, there was nothing but a piece of grass.”

While heartfelt, the project’s efforts remain modest. They have laid 22 headstones, with several more completed but awaiting placement. The flat grave markers cost between $300 and $400 each and are engraved with the artist’s dates of birth and death, along with images of keyboards, saxophones, musical notes or guitars.

There’s no shortage of candidates: The project’s website lists another two dozen late musicians whose earthly whereabouts are unknown. And Pritchard carries a dog-eared reference book that lists the vital statistics of more than 1,400 blues players, organized by state.

The headstone project follows the path of earlier efforts like the Mount Zion Memorial Fund, which emerged two decades ago when the Mississippi church where blues legend Robert Johnson was buried faced foreclosure. Record label executives and musicians such as John Fogerty and Bonnie Raitt led the efforts to honor Johnson, James and other prominent names.

The Killer Blues project, by contrast, tends to seek out the less famous sidemen, musicians such as Bankhead, a fixture on the St. Louis blues scene who nonetheless had to make ends meet by also working as a sheriff’s deputy and a security guard. Several appreciative family members, including his youngest daughter and her two children, attended an October benefit concert to raise money for Bankhead’s marker.

“I really appreciate what they’re doing for the people,” said Willette Hare, who dated Bankhead. “I thought it was marvelous.”

In early December, the project honored Aaron “Pinetop” Sparks, a hard-living boogie-woogie piano player credited with writing the standard “Every Day I Have the Blues” before his death in 1935 at age 27. Sparks’ grave was unmarked for another 78 years before Pritchard laid a stone at a historically black cemetery in suburban St. Louis.

While some of the project’s graveside ceremonies lead to late-night jam sessions, the Sparks service was somber and simple, with only Pritchard, the cemetery superintendent and several reporters present.

Once the stone was secured, Pritchard placed his iPhone on the ground, Sparks’ signature rollicking song filling the silence.

(Copyright 2013 by The Associated Press. All Rights Reserved.)

Article source: http://www.9news.com/entertainment/371016/343/Grave-marker-project-helps-bury-the-blues-

Bridgeport area’s top 15 newsmakers of 2013

Over the last 12 months, the Diocese of Bridgeport has seen a new bishop, the Rev. Frank Caggiano, installed in Trumbull, while a rising star in the diocese, Msgr. Kevin Wallin, fell precipitously from grace as a drug dealer now awaiting a federal prison sentence.

The Valley saw one of the state’s premier high school football players, Arkeel Newsome, of Ansonia High, run his way into the record books — and a full scholarship to the University of Connecticut.

Likewise, after more than four decades at the helm of the Greater Bridgeport Symphony, Maestro Gustav Meier waved his baton for the last time in 2013, ending another triumphant run.

In Bridgeport, the city’s public school leadership shifted dramatically with the departures of Superintendent of Schools Paul Vallas and Board of Education chairman Rev. Kenneth Moales Jr.

Here are some of the area’s most notable newsmakers of 2013:

1. Paul Vallas

Departing city Schools Superintendent Paul Vallas was busy recently putting the finishing touches on a list of things the district shouldn’t dismantle if it wants to keep momentum moving forward. He also shared a separate list about budgeting with school board members to bring home the point. The list included keeping special education costs under control and salary increases to 1 percent a year. Vallas, who was brought in two years ago to rescue a district on the verge of financial ruin, will leave Bridgeport sometime after the first of the year to run for lieutenant governor of Illinois. The former Chicago, Philadelphia and New Orleans superintendent of schools will depart after winning a state Supreme Court battle over his credentials to serve in that role in Connecticut, but losing a battle with a new school board, elected in November, that wanted to go in a different direction.

2. Christina Ayala

After two arrests, a reported bar brawl and alleged criminal elections violations, top state and city Democrats in October urged state Rep. Christina Ayala, D-Bridgeport, to resign. The freshman legislator’s troubles began in August 2012, when she was arrested after a hit-and-run accident a day after winning her primary. In December 2012, Ayala was arrested after a fight with a now ex-boyfriend. But Ayala’s woes didn’t stop with the new year. In September, that same ex-boyfriend was charged with allegedly torching Ayala’s and her sister’s cars. Then, the ex-boyfriend’s new girlfriend filed a police complaint accusing Ayala of helping to beat her up at Tito Ayala’s restaurant, hours before the cars went up in flames. In October, House Speaker Brendan Sharkey, D-Hamden, removed Ayala from her committee assignments, something that will hurt her influence in the General Assembly.

3. Manny Moutinho

The controversial developer has battled the city of Bridgeport in court and lined local politicians’ pockets with campaign contributions. But it took a $400,000, taxpayer-funded driveway to elevate Moutinho to a household name uttered with disdain by residents frustrated with how their dollars are being spent. The project — first reported by Hearst Connecticut Newspapers when it was completed in June — was, according to City Hall, necessary to make way for a long-planned runway safety upgrade at Sikorsky Memorial Airport. When the city realized the old driveway was in the way of the runway project, City Hall assumed Moutinho’s building permits and hired him without a formal bidding process to get the job done. Hearst subsequently revealed that Moutinho had a long friendship and had engaged in real estate dealings with airport manager John Ricci, whom Finch then fired for allegedly failing to reveal he had a conflict of interest while helping arrange the driveway work with Moutinho.

4. Kevin Wallin

He was on the road to becoming a bishop. But like a scene out of “Breaking Bad,” the AMC series about a high school chemistry teacher who becomes a drug lord, crystal meth derailed it. And forever after, Kevin Wallin will be known as “Monsignor Meth.” The Roman Catholic priest was indicted and pleaded guilty to federal charges involving dealing meth out of his second-floor apartment in Waterbury. But that was only one aspect of Wallin’s life that shocked his former parishioners at St. Peter’s Church in Danbury and St. Augustine’s Cathedral in Bridgeport. Wallin also frequently dressed like a woman, invited strange men to his rectory room and played with a bag of sex toys. But it all came crashing down when one of his disciples ratted him out to the U.S. Drug Enforcement Administration. An undercover cop made meth buys, a wiretap recorded drug deals and surveillance followed Wallin’s activities. Now, Wallin is undergoing drug rehab and awaiting a sentence anywhere from 11 to 14 years in federal prison.

5. Christopher Toole

A self-styled “urban farmer” from New York City, Christopher Toole’s live-off-the-earth style didn’t fly in Bridgeport, where health officials told him to get rid of the dozen-plus chickens he and his girlfriend were keeping at their apartment. But Toole found a soul mate in Mayor Bill Finch, who has a passion for “green” initiatives and conservation, and decided he had the power to grant Toole’s flock amnesty on some extra property at the city’s animal shelter. It was there that Toole started a farm, complete with donkeys, goats and a pig, with little to no oversight from the city. When the state learned of the setup, inspectors visited and quarantined the farm until Toole had made $2,000 worth of improvements to ensure the health and safety of the animals and the public.

6. Tyree Lincoln Smith

On a cold December day, Tyree Lincoln Smith spread out a picnic lunch of human eyeball and brain, which he devoured before washing it down with a bottle of sake atop his cousin’s grave in Lakeview Cemetery. Smith told investigators that the eyeballs he pulled out of Angel “Tum Tum” Gonzalez’s head tasted very much like oysters. He also considered feasting on a psychiatrist for his next meal. All this convinced a three-judge panel in state Superior Court this summer that Smith, a former Ansonia and Bridgeport resident, was not guilty in Gonzalez’s death by reason of insanity. The panel then ordered Smith, the area’s real-life answer to Hannibal Lecter, committed for up to 60 years at the state’s psychiatric facility for the criminally insane in Middletown.

7. Gustave Whitehead

Pioneering Bridgeport aviator Gustave Whitehead has been dead for 86 years, but his claim that he was the first man to build and fly a heavier-than-air airship got a huge boost in 2013. In September, the former head of the federal General Accounting Office said he’d like to see the GAO take a look at the so-called “agreement” between the Wright family and the Smithsonian, seen by many as a linchpin in the ongoing “first in flight” debate. “Apparently, the Smithsonian may have entered into what appears to be an inappropriate and open-ended advocacy contract between the museum and the Wright family to display an aircraft,” said David Walker, who was the federal comptroller general and the head of the GAO between 1998 and 2008.

8. Rev. Kenneth Moales Jr.

It’s been an eventful year for the Rev. Kenneth Moales Jr., the city’s former Board of Education chairman and current pastor of the Prayer Tabernacle Church of Love. In July, Foundation Capital Resources, a lender to church groups around the country, filed a foreclosure action against Moales’ church, claiming unpaid mortgages totaling $7.3 million dollars. In addition, nearly $1 million in liens were filed against the church and a number of properties it owns in Bridgeport’s East End. A few months later in October, Moales was in the headlines again. This time, he turned himself in to State Police Troop G on an outstanding arrest warrant for failure to appear in court about a speeding ticket state police issued him or driving more than 70 mph in Norwalk.

9. Most. Rev. Frank Caggiano

The introduction of the Most Rev. Frank J. Caggiano as the Diocese of Bridgeport’s next bishop inspired squeals of joy, sighs of relief and shouts of “it’s about time” throughout Fairfield County in July. Roman Catholics in the diocese, which stretches from Bridgeport to Danbury to Greenwich, had been waiting for the appointment of a new spiritual leader since Bishop William Lori’s departure in March 2012. Many people likened going 16 months without a bishop — Monsignor Jerald A. Doyle had served as administrator of the diocese in the interim — to wandering without direction. Caggiano, who formerly served as auxiliary bishop of the Diocese of Brooklyn, N.Y., was installed Sept. 19 in Trumbull.

10. John Marini

It’s rare when a Republican mayor is elected in Ansonia, a once-thriving industrial, overwhelmingly Democratic city of 19,000. The last time that happened was in 1997. But to have a mayor and treasurer elected as well as gain control of the Board of Alderman and Board of Education? Well, even politically savvy octogenarians in this city can’t remember the last time, if ever, that happened. But that’s what the revitalized GOP led by David Cassetti, its mayoral candidate, and John Marini, its town chairman, did in November, stunning Valley political pundits and capturing statewide attention. Cassetti, a local businessman, upset James DellaVolpe, whose seven, two-year mayoral terms are the longest in the city’s history. What’s more, Cassetti’s coattails were long enough to pull in a city treasurer and enough Republican compatriots to give the party control over the Board of Aldermen and the Board of Education.

11. Arkeel Newsome

Arkeel Newsome’s legs may be responsible for the state’s high school football record keeper experiencing carpal tunnel syndrome in his hands. Nearly every time Newsome touched the ball this fall, it seemed he was setting some new record. By the time his high school career ended on Dec. 13, Newsome had set state career records with 943 carries; 10,672 yards and 1,162 points; and state season records with 333 carries; 3,867 yards and 68 touchdowns. But just as important as the records, the Newsome-led Ansonia Charger teams won three state championship and 43 consecutive games. After an offseason of building speed and strength, Newsome is looking forward to playing at the University of Connecticut next fall and taking handoffs from quarterback Casey Cochrane, the former Masuk High standout.

12. Westport Little League

The Westport Little League team finished fourth at the Little League World Series in Williamsport, Pa., this summer. The boys became the first team from Connecticut to reach the U.S. championship game since 1989, when Trumbull went on to win the Little League World Series title. Westport reached the U.S. championship game, where it eventually lost to Chula Vista, Calif., by staging a dramatic, seven-run rally to overtake Sammamish, Wash., 14-13. The boys were later given a hero’s welcome with a special parade in town.

13. Gustav Meier

After spending 41 years as conductor of the Greater Bridgeport Symphony, Maestro Gustav Meier traded his white tie and tails for retirement in 2013. As the face and soul of the symphony, the Swiss-born Meier touched the arts community for decades with his passion and professionalism. Mayor Bill Finch declared April 20 as “Gustav Meier Day” to mark Meier’s contributions to the city and his final concert with the Greater Bridgeport Symphony, an all-Brahms program. A love of teaching also carried Meier to conducting programs at some of America’s most prestigious music schools and conservatories: Yale University, the University of Michigan, Eastman School of Music in Rochester and Tanglewood. Ultimately, Meier said the timing was right to leave, while he still enjoys good health and the stamina to present his popular conducting workshops all around the world.

14. Sal DiNardo

Who embodies Bridgeport’s maddeningly contradictory redevelopment efforts better than developer Sal DiNardo? Who else is the principal owner of the crumbling, blighted mess of a Barnum Avenue foundry that once housed the thriving Remington Arms? Who else pays the city more than $1 million in annual property taxes, but watched his bill on the Remington plant fall from $7.4 million to $5.4 million in 2011 — not because he opened his wallet but because he exhausted the city’s 15-year statute of limitations for paying taxes? And yet, when city officials decided a developer not named Sal DiNardo had been sitting too long on an eyesore South End property, who nearly received city help in acquiring that property, too, by eminent domain? You guessed it. In early December, politicians peddled visions anew of an East Side railroad station that could pull in millions of state and federal dollars as part of a broader economic revival. Of course, getting that project up and running would require cleaning up that Remington site. “The cost of demolition is probably now four to five times the worth of the property,” DiNardo said in September.

15. Phil Kuchma

Phil Kuchma, the man trying to pull a trick worthy of P.T. Barnum by reigniting the city’s downtown, was at it again in 2013. The principal force behind much of the 900 apartment units clustered in the city’s core, Kuchma pushed forward on the land swap he had negotiated with city leaders in 2012 that gives him three city-owned parcels in exchange for building a new senior center for Bridgeport across from City Hall. He dropped $1.8 million to convert the former American Legion Hall on Golden Hill Street into a new senior center. He’ll next convert the former Eisenhower Center into a neighborhood gym, apartments and a restaurant. He’s also moving forward with the construction of a 50-unit apartment building next to the Eisenhower Center. “Our enthusiasm (for downtown Bridgeport) is growing, not slipping at all,” Kuchma said in August.

And don’t forget

There were plenty of other newsmakers in the Bridgeport area during 2013, including Trumbull resident Al Barbarotta, the president and CEO of AFB Management, who was at the center of a controversy involving groundskeeping costs at Gov. Dannel P. Malloy’s home in Stamford; former New York Mets and Boston Red Sox manager Bobby Valentine, who was hired as Sacred Heart University’s new athletic director; sports talk host Mike Greenberg of Westport, who traded his microphone for a pen to write a compelling book about those fighting cancer with courage; and Suzanne Kachmar and Robbin Zella, two tireless advocates of the visual arts in Bridgeport.

Article source: http://www.ctpost.com/local/article/Bridgeport-area-s-top-15-newsmakers-of-2013-5098780.php

Bay State man faces charges in loan modification scam



A Bay State man faces federal charges in Florida in an alleged loan modification fraud scheme.

A Bay State man faces federal charges in Florida in an alleged loan modification fraud scheme.






Thomas Grillo
Real Estate Editor- Boston Business Journal

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A Massachusetts man is facing federal charges in Florida in an alleged loan modification fraud scheme.

Robert Harry Bacon, 34, of West Newbury, Mass., and nine others have been charged with wire and mail fraud. Authorities allege that between September 2008 and August 2009, the defendants collected more than $7 million in upfront fees from 2,000 distressed homeowners purportedly in exchange for obtaining loan modifications for the homeowners which were, with few exceptions, never provided.

The indictment alleges that Jason Andrew Vitulano, 38, of West Palm Beach, operated FHA All Day.com, Housing Assistance Law Center, and Safety Financial Corp., in Boca Raton and Deerfield Beach. Bacon was an operations manager who wrote and edited sales scripts, while the other eight defendants — mostly from Florida and one from New York — served as team managers of four to eight telemarketers who made thousands of phone calls to homeowners behind on their mortgage payments, according to the indictment.

The defendants routinely told customers that they had been approved by an “underwriter” and that they had a team of “expert attorneys” who would finalize the loan modifications, according to the complaint.

The indictment further alleges that the defendants targeted homeowners that were facing foreclosure, falsely telling them that the company would stop the foreclosure process and that homeowners could stop making mortgage payments while they waited for the company to finalize their loan modifications.

FHA All Day, as alleged in the indictment, moved its offices and changed its corporate name several times to avoid law enforcement scrutiny and to hamper consumer complaints.

Article source: http://www.bizjournals.com/boston/real_estate/2013/12/MA-man-faces-charges-in-loan-mod-scam.html

Fannie Mae and Freddie Mac: What They Do and Why We Need Them

A lot of news stories today have to do with Fannie Mae or Freddie Mac , which have both become household names as a result of the mortgage crisis. However, even though these are both very well-known companies, not very many Americans really know what the companies do and why they were created.

With that in mind, here’s a crash course in the two companies to help investors improve their understanding of Fannie Mae and Freddie Mac.

A brief history
Fannie and Freddie are both government-sponsored enterprises, or GSEs, that buy mortgages on the secondary market, pool them together, and then sell them as “mortgage-backed securities” to investors. The goal of these companies was to increase the supply of money available for mortgage lending and, therefore, increase the money available for home purchases.

Fannie Mae was created as part of the New Deal in 1938 in response to the Great Depression in an attempt to stimulate the housing market.  Fannie Mae split in 1968 into a private corporation and a publicly financed institution, which became known as Ginnie Mae. The difference was that Ginnie Mae explicitly guaranteed its mortgages, while Fannie Mae did not, but it was implied that the government would guarantee the loans.

Freddie Mac was established by Congress in 1970 in order to provide competition for Fannie Mae and to further boost the availability of funds for mortgage lending. Both companies are only allowed to buy “conforming” loans, which meet certain size limits that are set in relation to the mean home price. 

The financial crisis and Fannie and Freddie’s roles
Even today, it remains unclear just how much blame for the most recent financial crisis should be placed on Fannie and Freddie. There are still ongoing investigations by the Justice Department that aim to determine just how much financial institutions misrepresented the quality of their loans that they sold as “investment grade.” Some of these investigations have already found wrongdoing by the banks and have awarded large settlements to the GSEs.

For example, Deutche Bank just recently agreed to pay $1.9 billion to the GSEs ($1.63 billion to Freddie Mac and $300 million to Fannie Mae) in response to accusations that the bank misled both companies about the quality of $14.2 billion in mortgage-backed securities. Earlier this year, Bank of America agreed to pay $3.55 billion to Fannie Mae and to repurchase $6.75 billion in questionable mortgages. The list goes on and on…

In a nutshell, banks began to use lower lending standards in order to make more loans and boost earnings, and at first, they didn’t meet the standards of Fannie and Freddie, so private mortgage-backed securities (MBSes) became more commonplace. This took business from the GSEs and forced Fannie and Freddie to drastically lower their standards to reclaim the market share they were losing in order to keep their profits fat for their private shareholders.

As we now know, this was unsustainable, and by 2008, the companies owned or guaranteed over $5 trillion in mortgage debt, a lot of which was substandard. The share prices of both companies began to drop drastically, and investors were fearful of a collapse amid skyrocketing foreclosure rates and plummeting housing prices, worrying that the companies lacked the capital to absorb the predicted losses.

In September 2008, both companies were placed into conservatorship of the FHFA, and the Treasury was issued preferred shares and warrants for a 79.9% stake in each company, which effectively ended the implicit guarantee and made both Fannie and Freddie into government-operated companies.

Fannie and Freddie today
The basic role of Fannie and Freddie has not changed very much. The companies still guarantee and purchase loans from mortgage lenders, and the companies have taken steps (including raising fees) in order to improve their financial condition and build a profitable business. 

According to Fannie Mae’s website, between 2009 and the present, the company provided about $3.9 trillion in liquidity, which enabled 3.4 million purchases and 12 million refinancings. Freddie Mac says that they have provided $2.1 trillion of funding since 2009, including purchases and refinancings.

One aspect of the GSEs’ business that was not really there before the crisis is loan modifications, designed to help borrowers stay in their homes and avoid foreclosure. Since 2009, Fannie Mae has modified over 1 million loans and has implemented programs to reach those at risk.

Currently, more than three-quarters of the mortgage loans being made in America are subsequently guaranteed by Fannie and Freddie, so odds are that if you financed your home, your loan is guaranteed by one of these companies, even if you don’t know it.

Article source: http://www.dailyfinance.com/2013/12/30/fannie-and-freddie-what-they-do-and-why-we-need-th/

Foreclosure assistance program deadline extended

Foreclosure assistance program deadline extended

By Jim Hagerty
Staff Writer

Illinois Gov. Pat Quinn (D) signed legislation Dec. 26 that extends assistance for homeowners faced with losing their houses in foreclosure.

The law extends access to the Home Affordable Modification Program (HAMP) until Dec. 31, 2015.

Under the law, lenders are required to solicit modification services on certain distressed home loans and determine whether foreclosure is financially beneficial before initiating the process.

Illinois families must have access to the tools they need to protect their home,” Quinn said. “More than 1 million families have received help through the Illinois Foreclosure Prevention Network, and we want to make sure even more homeowners can remain home for the holidays and the long term.”

The law strengthens Quinn’s Illinois Foreclosure Prevention Network (IFPN), a network of resources that offers financial counseling, legal advice and various mortgage assistance programs.

The network also includes a 2010 law that helps families avoid foreclosure if they can prove they applied for a HAMP modification and the foreclosure process violated terms of the program.

More than 45,000 Illinois homeowners have qualified for HAMP assistance since 2009.

Gov. Quinn understands that linking homeowners with crucial assistance stabilizes communities by preventing foreclosures before they happen,” said Illinois Housing Development Authority (IHDA) Executive Director Mary R. Kenney.

In 2012, IHDA helped more than 2,700 working families qualify for more than $305 million in capital to purchase homes, a more than 770 percent increase from 2010.

The median monthly savings for Illinois homeowners in active permanent mortgage modifications under HAMP is about $570 — and now more families statewide can apply for lower monthly payments,” Kinney added.

Quinn has been a longtime supporter of affordable housing in Illinois and made a commitment of $130 million in state capital funds to create more affordable opportunities. He’s worked to spur affordable homeownership and multifamily rental development by proclaiming 2013 as the Year of Homeownership.

The new law takes effect immediately.

From the Jan. 1-6, 2014, issue


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Article source: http://rockrivertimes.com/news/2013/12/30/foreclosure-assistance-program-deadline-extended/

New Maryland bill could help foreclosed homeowners avoid lengthy debt …

In many cases, homeowners were pursued years after they had lost their homes.

In Maryland, debt collectors have up to 12 years to take homeowners to court for outstanding mortgage debt after foreclosure. The process is known as a deficiency judgment. The proposed bill would reduce that time to 180 days.

“It smacks of debtors prison and indentured servitude,” said state Sen. Jamie B. Raskin (D-Montgomery), who plans to introduce legislation shortly after the legislature reconvenes Jan. 8. “People should not be indentured servants to the mortgage they used to hold.”

The bill only applies to foreclosures that occur after its passage.

“We feel confident we can pass something to change it going forward,” said Marceline White, executive director of the Maryland coalition. “I think it will be a bigger battle to applying it retrospectively.”

Raskin agreed.

“I don’t think we can make it retroactive for constitutional reasons,” he said. “At the very least, we venture into murky constitutional territory.”

At least a dozen states have statutes requiring that a deficiency judgment be brought within three months of a foreclosure sale. Illinois, Kansas and South Carolina require that deficiency judgments be sought at the time of foreclosure.

If approved, Maryland will go from being a state with one of the longest time frames for debt collectors to pursue consumers to among the states with the shortest, according to Mark Kaufman, Maryland’s commissioner of financial regulation who oversees debt collectors.

In the District, homeowners can only be pursued for 30 days, according to a report on the Federal Housing Finance Agency Web site. In Virginia, the limit is five years.

The coalition worked with Raskin and other legislators and about 25 state consumer advocates to research the issue and come up with language for the bill.

The draft language exempts homeowners from state law that allows up to 12 years for the filing of claims to recover debt. Commercial properties would still be subject to the longer time frame.

The legislation also would affect only homeowners who went into foreclosure after the bill was passed.

Foreclosures in Maryland have risen from 7,864 in 2012 to 14,675 last year, approaching levels not seen since the fallout from the housing crisis in 2009 and 2010, according to an analysis of data provided by RealtyTrac.

The bill would not provide relief to homeowners who went into foreclosure during the housing crisis and are facing a deficiency judgment. In addition, those who went into foreclosure during that period would still face the risk of having a debt collector take them to court.

The bill falls short of addressing the issue of compounding interest. When a property goes into foreclosure, the interest continues to accrue on the home. If debt collectors wait years to pursue a deficiency, that could add tens of thousands of dollars on top of what the homeowner owes. Many homeowners are unaware that interest is accruing after they have moved out of the home, often at a rate equivalent to that of a monthly car note.

Advocates say the legislation could cause state bankruptcy filings to increase because people will be aware of their debt sooner.

“We certainly think that might be a consequence of the legislation,” White said. “We had a lot of heartfelt discussion about it. But most people felt it was better for people if they had to pursue bankruptcy to do it quickly so they could really spend time putting their lives back together and rebuilding their assets.”

Changing the law is a move in the right direction, according to Cara Stretch, director of foreclosure prevention at Baltimore-based St. Ambrose Housing Aid Center, who was among the housing advocates putting together the legislation.

These judgments have “banged up” homeowners’ credit and can prevent them from getting jobs or promotions, particularly if they are government workers with a security clearance because it shows up on their credit report.

“This could really harm people from improving employment,” Stretch said. “Some people have been able to negotiate settlements for lesser amounts and payment plans to cover the debt. But probably one of the biggest concerns is the impact to the homeowners’ credit.”

In June, lawyer Dmitri A. Chernov said he was able to fight his client’s judgment for more than $100,000. The case resulted in a settlement in which his client paid her debt collector a one-lump-sum cash payment of less than $10,000.

“We don’t want people to be haunted the rest of their lives by a mortgage foreclosure,” Raskin said. “We want to give people an incentive to get back on their feet, work hard and save money. We don’t want someone waiting in the wings to pounce on them for the deficiency five or 10 years down the road, when they’ve finally had a chance to get back on their feet.”

The Post reported that more than 400 people in Maryland faced such judgments and that Fannie Mae and Freddie Mac were pursuing thousands more nationwide.

One of those is Jose Faustino Rodas Mendez, who got his notice last year.

He thought he had gotten a 30-year fixed mortgage on his two-bedroom College Park home he bought in 2006. But the payments eventually shot up to $3,000.

Mende, 38, cleans and maintains office buildings. His wife works at a local restaurant. They support three children. To make ends meet, he constructed two new bedrooms in his home and rented them out for $400 each.

But it still couldn’t cover the mortgage.

Mendez was foreclosed on in 2009, and Freddie Mac, who had guaranteed the mortgage, took the home. The agency paid Mendez $3,500 to get out.

A spokesman for Freddie Mac declined to comment on the case.

Mendez moved into a cramped apartment in Mount Rainer and has been trying to rebuild over the past three years. Last summer, he pre-qualified for a new mortgage.

That’s when the notice arrived saying a debt collector had taken him to court for nearly $200,000 in unpaid debt and interest — more than half the cost of his $380,000 foreclosed house.

Mendez talked to a housing counselor at the Central American Resource Center in the District.

“They told me that I was being sued and that they [the debt collector] could take money out of my paycheck,” Mendez said.

“My heart was thumping, going boom, boom, boom,” he said. “I thought, ‘How am I going to support my children and pay the rent and all that?’ ”

Mendez would not be protected under the current proposal.

Alexia Campbell and D’Ante Smith, who are attached to The Post’s Investigative Unit through a program with American University, contributed to this report.

Article source: http://www.washingtonpost.com/investigations/new-maryland-bill-could-help-foreclosed-homeowners-avoid-lengthy-debt-collection/2013/12/30/d9812934-6f11-11e3-b405-7e360f7e9fd2_story.html