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It’s about time our communities caught a break – Las Vegas Review

Oh, Mr. Friedrich, give me a break! The Nevada Supreme Court got it right! It blows my mind that a Common-Interest Communities and Condominium Hotels commissioner whose seat is earmarked for a homeowner representative would call this ruling “a potential disaster for residential real estate … ”

That’s what Jonathan Friedrich told the Las Vegas Review-Journal in a Sept. 19 article about the recent court decision on the superpriority lien held by local homeowners associations. The court said the superpriority lien could supersede the first deed of trust on the property.

Apparently Friedrich is afraid that banks will stop lending here if they think they could lose their loans. I don’t think the banks will lose their loans without a fight. Remember, all they have to do is pay the HOA assessments like we all do.

This is a complicated matter that will surely involve a flock of attorneys, lawmakers, bankers, investors, title companies and communities. The court is expected to later decide whether late, legal and collection costs would be included in the nine months’ assessment default.

For years, HOAs have felt the brunt of the banks’ inactivity. A hefty financial burden hits communities when banks refuse to pay fees on foreclosed homes. Also, communities suffer when banks don’t keep homes in good physical condition. There are hundreds of homes, many of which have delinquent bank loans and have been abandoned, that yield no assessments for associations and haven’t drawn foreclosure action from banks.

Many associations have been financially unable to initiate foreclosure on delinquent homes for nonpayment of assessments. Many of the homes were upside-down (loans substantially greater than current market value); in these cases, the associations were unable to sell the homes at foreclosure auctions. This left many communities having to pay collection costs, assume homeownership and incur new expenses such as property taxes, maintenance and insurance.

Many HOAs were afraid to foreclose on homes given legal uncertainty. Many are unsure they could get a clear deed. Some ended up renting out the homes.

Mr. Freidrich, who do you think had to pick up the tab? Increased assessments or special assessments were paid by the remaining homeowners within communities to assume the lost income in operating their communities or, worse, increased assessments with decreased services to create a balanced budget. Many owners could not afford to pick up those costs forced on them by their “neighbors.”

In 2013, the Legislature passed Senate Bill 280, which would let lenders impound association fees, in the way lenders of impound property taxes and insurance expenses under Nevada Revised Statutes 116.3116 (3). Lenders could have taken advantage of the new law to insulate themselves from losing loans in their portfolio.

The Nevada Supreme Court decision didn’t address what is included in the superpriority lien. A series of lawsuits against HOAs had been making its way through the court system, claiming the superlien law includes only the last nine months of delinquent assessments and not late, legal or collection costs.

In reading any document, in this case, NRS 116, you can focus on one section of the law to the exclusion of others. This is what some attorneys have done in presenting their case to the courts.

If we look at all of NRS law, what does it say? Under NRS 116.3102, “the powers of the association,” section 1K, the association “may impose charges for late payment of assessments pursuant to NRS 116.3115.” NRS 116.310313, (1), “collection of past-due obligations,” states “an association may charge a unit’s owner reasonable fees to cover the costs of collecting any past due obligation.”

Section 3a of this law defines costs of collecting to “include any fee, charge or cost by whatever name, including without limitation, any collection fee, filing fee, recording fee, fee related to the preparation, recording or delivery of a lien or lien rescission, title search lien fee, bankruptcy search fee, referral fee, fee for postage or delivery and any other fee that an association charges a unit’s owner for the investigation, enforcement or collection of a past due obligation.” (Please note that the law was changed in 2009 to allow the Common-Interest Communities and Condominium Hotels to regulate the amount of fees that an association may charge pursuant to this section of the law). NRS 116.3115 (3) regulates the amount of interest an association can charge against delinquent accounts.

Interesting to note that when the Legislature created a second superlien law that pertained to maintaining units’ exteriors, NRS 116.310312, sections 4-6, the law explicitly included reasonable fees such as interest and collection costs.

By logic, if the Legislature wanted to include these costs in the maintenance superlien, it would also include these costs with the association fees that are association communities’ primary income source for operations.

Before most actions go to court, a Chapter 38 arbitration or mediation must be completed. Interestingly enough, that statute states the following, which I think gets overlooked in this whole process:

NRS 38. 300 defines assessments in an association as,

1. “Assessments” means:

(a) Any charge which an association may impose against an owner of residential property pursuant to a declaration of covenants, conditions and restrictions, including any late charges, interest and costs of collecting the charges; and

(b) Any penalties, fines, fees and other charges which may be imposed by an association pursuant to paragraphs (j) to (n), inclusive, of subsection 1 of NRS 116.3102 or subsections 10, 11 and 12 of NRS 116B.420.

2. “Association” has the meaning ascribed to it in NRS 116.011 or 116B.030.

Courts often consider the Legislature’s intent. In this case, lawmakers who introduced the superlien had explicitly stated that it was to include reasonable fees of late, legal and interest and collection costs. Standard, recognized business procedures for any business that tries to collect a bad debt include not only the principal but late, legal and collection costs. Associations should have the same rights.

Hopefully, the Supreme Court will come to the same conclusion. If not, homeowners, you should prepare to see increased operating expenses in their 2015 budgets that add nothing to the enhancement of your communities but will add higher assessments for them to pay out from your pocketbooks.

Barbara Holland, certified property manager, broker and supervisory certified association manager, is president and owner of HL Realty and Management Co. Questions may be sent to the Association QA, P.O. Box 7440, Las Vegas, NV 89125. Fax is 702-385-3759, email is

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Better bankruptcy laws could save your life

In recent years, political and economic circles have engaged in much debate—and handwringing—over rising income inequality and the future of entitlement programs like Social Security, Medicare, and Medicaid.

And these two issues are inextricably linked, as programs like Social Security can help lessen income inequality by raising the incomes of the least fortunate in society. But these wealth-transferring social insurance programs aren’t the only means the government has at its disposal to help the poor and stem the tide of rising inequality. The legal system can also play its part, and there is no greater example of this than in the bankruptcy code.

In a working paper released Monday by the National Bureau of Economic Research, economists Will Dobbie and Jae Song examine 500,000 bankruptcy filings in the United States to measure the effect of bankruptcy laws on consumers. They found that the bankruptcy code is an incredibly effective social insurance policy. According to their findings, getting approved for Chapter 13 bankruptcy protection “increases annual earnings by $5,562, decreases five-year mortality by 1.2 percentage points, and decreases five-year foreclosure rates by 19.1 percentage points.”

The paper’s authors argue that bankruptcy protection helps workers earn more by removing the disincentive to work resulting from creditors garnishing worker’s paychecks. If a person’s wages are garnished to the point that it didn’t pay to continue working, they often decide to stop working altogether.

The study also found that bankruptcy also helps people live longer, due likely to the fact that dealing with debt problems, rather then letting them fester, significantly reduces stress. Chapter 13 bankruptcy also allows people to stay in their homes because it is designed specifically to allow borrowers to avoid foreclosure.

Since the vast majority of Americans will never have to file for bankruptcy, the bankruptcy code can be described as a social insurance program. We hope to never have to use it, but many of us are glad it is there just in case. Of course, all insurance comes at a cost, and the conventional wisdom is that the easier it is for people to file for bankruptcy, and get away with not paying back all they owe, the higher borrowing costs will be for the general public. That was the logic that lawmakers in Washington used in 2005 when they passed the Bankruptcy Abuse Prevention and Consumer Protection Act (BAPCPA), with the goal of making it more difficult to file for bankruptcy.

While the bill made it more difficult to file for bankruptcy, it hasn’t brought down costs for the rest of us. A 2009 study from the American Bankruptcy Law Journal found that while the reforms did indeed bring down the number of bankruptcies in the U.S., the benefits were captured solely by the financial services industry. “The data suggests that although bankruptcies and credit card company losses decreased, and credit card companies achieved record profits, the cost to consumers of credit card debt actually increased,” the study’s authors wrote. “In other words the 2005 bankruptcy reforms profited credit card companies at consumers’ expense.”

Since tightening standards for declaring bankruptcy hasn’t lowered borrowing costs for the rest of us, loosening standards—especially for student loan debt—could help relieve financial pressure for the lower and middle classes. Dobbie and Song’s findings also provide further evidence that helping underwater borrowers modify their mortgages could provide huge benefits for those people, and the economy overall.

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Oregon foreclosure mediation program averts hundreds of foreclosures, but … – The Oregonian

August was the busiest month yet for Oregon’s foreclosure mediation program, with homeowners and their mortgage servicers meeting nearly 400 times during the month.

It’s still the case that the vast majority of foreclosures go through without a meeting between homeowner and lender, typically either because the homeowner can’t be reached or because they choose not to pay a $200 fee to start the process.

But in hundreds of cases that end up in a “resolution conference,” homeowners on the brink of foreclosure have reached an agreement with their lender to avoid it. And even those who don’t avert a foreclosure overwhelmingly say in surveys that they approve of the program.

“I was treated with dignity and I was treated fairly,” said Carol Lentz of Depoe Bay, who has met twice with her lender through the program. “The outcome might be the same, but you’re not just cast aside and run roughshod over.”

It’s the state’s second crack at a mediation program. The first failed to get off the ground when most banks — because of legal complications outside the mediation program — started foreclosing through the court system, which wasn’t covered by the mediation program.

So the Legislature in 2013 approved a do-over, doubling down on the value of a meeting between homeowners and lenders. This version of the program abandons the “mediation” terminology to avoid the legal entanglements of traditional mediation, notably including confidentiality between the parties. But it did lump in-court and out-of-court foreclosure proceedings into the same pot.

Now the caseload is increasing, and it’s expected to grow further as lenders who were holding off on foreclosures in the revamped program’s early days will eventually have to start filing them again.

Of the 13,000 foreclosures initiated since August 2013:

  • Just over 2,200 homeowners have elected to participate in mediation and submitted their $200 fee.
  • The two sides reached agreement in 593 cases, 74 of them before actually meeting in mediation.
  • No agreement could be reached in 585 cases (although in some of these cases not reflected in the Department of Justice numbers, an agreement was reached outside of a mediation session).
  • In 136 cases, the program administrators said the bank didn’t live up to its responsibilities in the mediation session, usually by not having a decision-maker present. Those lenders received a certificate of non-compliance, the program’s enforcement mechanism, which complicates going ahead with the foreclosure.

The program itself, operated by Florida company Mediation Case Manager, is self-financed through fees paid by participating homeowners and lenders.

Its overseers at the state Department of Justice see the 22 percent participation rate as a strong one, and Deputy Attorney General Frederick M. Boss said he expects that rate to grow.

And, he says, it’s built new protections into the foreclosure process that homeowners didn’t have before.

“Absent a homeowner going out, hiring their own lawyer and filing an injunction to stop the process, there weren’t any protections in place for the average homeowner” in foreclosure, Boss said. “We were able to put in a due process.”

And the state’s contracted administrators for the program point to post-conference surveys that show 80 percent of program participants say they’re satisfied with the process, even if they don’t get a favorable result.

“There’s no silver bullet for the foreclosure problem … but this is working,” said Jay Foster, president of Mediation Case Manager. “In most cases, a homeowner facing foreclosure will never get a chance to talk to someone and tell their story. These people want to be heard.”

Lentz, the Depoe Bay homeowner, said she lost much of her retirement money in the stock market and accepts that she simply cannot afford her house on the beach anymore. But selling the house has been tough in the still-slow coastal housing market. Lentz has been trying to turn the house back over to the bank to avoid the muss and fuss — and the credit damage — of a foreclosure.

Before entering the mediation program, she said, “the bank just wasn’t paying any attention at all.” Now, it’s been forced to accept and review her application according to its own rules, she said.

Lenders’ representatives, also surveyed by the program’s administrators, take a more tepid view of mediation. But few gave it a negative review.

In the satisfaction survey, 38 percent of lenders’ representatives said their view of the program overall was “neutral.” Another 37 percent said they were satisfied, and 23 percent said they were very satisfied.

But a lobbyist for the Oregon Bankers Association suggested the program is helping too few people to justify the added time and expense.

“A number of homeowners are deciding they don’t want to participate when given the opportunity to do so,” said Paul Cosgrove, a lobbyist for the Oregon Bankers Association. “We’ve got a system that results in a lot of extra paperwork and not much benefit. At the end of the day, you have to look at, is there something better?”

And while the reviews from homeowners are largely positive, the sentiment isn’t universal. Trish Williams of Oregon City was left frustrated by her experience.

She eventually got a trial loan modification from her servicer, Nationstar Mortgage, which will allow her to stay in her home. But despite two meetings with Nationstar, and several more scheduled and postponed, that modification eventually came out of an appeal outside the context of the mediation program.

The program probably bought her some time to negotiate, Williams acknowledges.

But a two-hour meeting in June was spent reviewing documents submitted electronically months earlier. The documents were uploaded to the mediation program’s portal — to which Nationstar apparently didn’t have access, Williams said.

Then, she said, the lender’s representative could accept the application, but couldn’t decide whether or not she qualified for a loan modification. The mediation law requires that lenders send a representative with the authority to negotiate, but the state hasn’t interpreted that to mean they have to be able to make an underwriting decision, such as whether a homeowner qualifies for a modification.

As a result, in most cases the two sides meet at least twice, and sometimes more — which Williams believes allows lenders to stall and drag things out. She thinks mediators need to take a tougher stance in dealing with mortgage servicers.

“They still play the same game that they played all along,” she said. “And (mediators) don’t hold the lender’s feet to the fire.”

– Elliot Njus

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Ghost houses: Foreclosed properties run the gamut

Copyright © 2014 Albuquerque Journal

The house across the street from Bianca Sanchez in Southwest Albuquerque has been vacant for about five years. The people who lived there, she said, “just disappeared overnight.”

Since then, she said, thieves have broken into the vacant home and stolen copper piping, appliances and the gas meter. Sanchez, who has been in her home for 10 years, calls police when she notices activity at the vacant house at night.

“We see flashlights and candles and don’t know who’s in there,” she said.

Johnny Lopez lives next to the vacant house. He bought his home eight months ago and has called police numerous times because of people breaking in through the plywood-covered windows at the house next door. His own car was recently vandalized in his driveway and he’s afraid someone will break into his home.

Lopez is thinking of trying to sell.

“They’re nice houses in the neighborhood,” he said. “But it’s just too wild.”

Sanchez and Lopez have plenty of company, with an estimated 1,500 to 1,800 abandoned homes in the city at any given time. There are an estimated 700 more in Rio Rancho.

Residents across the metropolitan area can tell of hearing trucks being loaded at night, and waking up the next morning to find neighbors gone and their home vacant.

It can then take months, even years, for a “For Sale” sign to go up at the vacant residence. In between, all kinds of not-so-good things can come about: weeds, litter, graffiti, squatters, drug activity, and theft of appliances, plumbing fixtures and copper, said Albuquerque’s code compliance manager Brennon Williams.

“We feel unsafe,” said Lopez, who lives next to the boarded-up house in a newer subdivision near Old Coors and Gonzales SW.

Foreclosed properties in Albuquerque run the gamut, from high-dollar custom homes in tony areas in far Northeast Albuquerque and Los Ranchos, to manufactured homes and a North Valley residence that was the scene of a murder-suicide.

In Rio Rancho, the local Multiple Listing Service website recently had listings for a 4,676-foot home with a pool for $555,000 and a two-bedroom condo for $57,500.

Owners walk away

During the Great Recession, many homes were abandoned when the homeowners got notice of foreclosure. With a mortgage in excess of equity, many simply pulled up stakes and drove away, leaving the home to the lender.

PEA: Her district is in high-foreclosure area

PEÑA: Her district is in high-foreclosure area

Now, the motivating factor is more likely to be a personal crisis but the net effect is the same.

The length of time a house sits vacant affects the quality of life for neighbors, said Albuquerque City Councilor Klarissa Peña, whose Southwest Albuquerque district is in an area of the city with the highest foreclosure rate.

Realtor Talia Freedman of Signature Southwest Properties said it’s hard to quantify how having foreclosed homes in a neighborhood affects a home’s value.

“But we know that lots of vacant houses on a street make a house hard to sell,” she said.

FREEDMAN: Vacant houses hurt sales on street

FREEDMAN: Vacant houses hurt sales on street

The continued presence of abandoned and often deteriorating houses in Rio Rancho – one councilor recently estimated there are more than 700 in the city – prompted councilors there to ask the city attorney if the city’s nuisance abatement ordinance could be made more effective.

Councilors spent half of a monthly work session this summer discussing how to find a practical, cost-effective way to combat the problem.

CLAYTON: Vandals hit empty home on his street

CLAYTON: Vandals hit empty home on his street

Currently, the city can petition the District Court for an inspection order, but it is a monthslong process.

Rio Rancho City Councilor Lonnie Clayton talked about an abandoned home on his street, where vandals painted an obscene image on the garage door. He wants the city to have the ability to compel whoever is responsible for the empty homes to maintain them.

Rio Rancho passed an ordinance in 2011 requiring financial institutions that own foreclosed homes to maintain them, but councilors who discussed the issue this summer said they want legislation with more teeth.

WILLIAMS: Complaints overwhelm inspectors

WILLIAMS: Complaints overwhelm inspectors

An Albuquerque city ordinance passed in 2004 requires owners of homes that are vacant for 90 days or more and aren’t listed with a real estate agent to register them with the city. Williams estimated the Duke City typically has 1,500 to 1,800 vacant abandoned residential homes registered.

Williams’ code enforcement staff receives 45 to 50 complaints daily during the winter and up to 180 a day during the summer months, primarily about vacant homes. Williams said his 15 field inspectors are overstretched.

In cases where his staff or police respond repeatedly to complaints about break-ins or suspected drug activity, the City Council has the authority to condemn a property for demolition. Williams estimated that’s happened to 15 to 20 properties in the past year.

Albuquerque police detective Daniel Champine said appliances and metal stolen from abandoned houses are typically sold to pawn shops or recycling yards.

High-end foreclosure

Valerie Padilla’s parents live across the street from a four-bedroom, five-bath foreclosed home on a street of custom homes north of Paseo del Norte which was listed for $522,600.

“The people just seemed to leave one night and got everything out. You could hear the trucks,” Padilla said. She said the place has been empty a few months and they hadn’t had any problems, but, she added, “This is a nice neighborhood.”

Nathan Clark lives next to an older adobe home near Fourth and Alameda NW where, he said, a son shot his father and then himself. The three-bedroom, one-bath foreclosed house is listed at around $45,000. Clark said it’s had renters but has mostly been empty for about four years.

Unlike during the recession in 2009, when the country saw an explosion in foreclosures linked to sub-prime mortgages, most foreclosures now are the result of a personal crisis, said Alan Fowler, executive vice president for First Mortgage Company in Albuquerque.

“It’s an event, a job loss, divorce, death or going from a full-time job to part time,” Fowler said.

Foreclosure processes required by the state and individual financial institutions are the key reasons it can take so long to get an empty house sold, Fowler said.

This foreclosed home on Gonzales Road SW appeared on the local Multiple Listing Service at just under $38,000. Southwest Albuquerque has the highest rate of foreclosures in the city. (Greg Sorber/Albuquerque Journal)

This foreclosed home on Gonzales Road SW appeared on the local Multiple Listing Service at just under $38,000. Southwest Albuquerque has the highest rate of foreclosures in the city. (Greg Sorber/Albuquerque Journal)

Why so long

In New Mexico, foreclosure is a judicial procedure requiring a court action that typically takes longer than in states with non-judicial procedures.

Before that process can start, a homeowner must be at least four months behind on payments. There are also “loss mitigation” programs that oblige lenders to work with borrowers for up to 12 months to avoid foreclosure, Fowler said.

A borrower who files for bankruptcy protection can also stave off a foreclosure. Fowler had a case where a husband and wife filed separately, one after another.

“They were playing the system. They knew what they were doing. They ended up living in the house three-and-a-half years without paying for it,” Fowler said.

Sometimes the companies responsible for processing payments don’t want to take on the legal and financial responsibility of owning more homes. As soon as foreclosure is completed, a bank becomes responsible for costs such as property taxes, repairs and homeowners’ association dues, according to

Freedman said foreclosed homes can be a low-cost buying opportunity for buyers who are often looking to fix them up and resell or rent them.

But unless they pay cash, said Freedman, would-be buyers of foreclosed properties often have difficulty getting proper documentation and financing, particularly if the homes need extensive repairs.

Between mid-September 2013 and mid-September this year, 20 percent of the 6,502 homes sold in Albuquerque were cash deals, according to Southwest Multiple Listing Service data.

FOWLER: Law change could speed foreclosures

FOWLER: Law change could speed foreclosures

Court action means slow foreclosures

At present, New Mexico is one of more than a dozen states where foreclosure is a judicial process requiring court action. It can typically take several months to complete.

Speeding up the process would require a change in state law to allow a trustee to oversee the process instead of going through a court, said Alan Fowler, executive vice president for First Mortgage Company in Albuquerque.

In states where foreclosure is a non-judicial process, it typically takes less time to complete, Fowler said.

There has been some talk at the Legislature about changing the law but no action has been taken so far.

This four-bedroom, five-bath custom home north of Paseo del Norte was on the local Multiple Listing Service at $522,600, one of the more expensive foreclosed residential properties for sale in the city. (Rosalie Rayburn/Albuquerque Journal)

This four-bedroom, five-bath custom home north of Paseo del Norte was on the local Multiple Listing Service at $522,600, one of the more expensive foreclosed residential properties for sale in the city. (Rosalie Rayburn/Albuquerque Journal)

Foreclosure rates falling in ABQ area

Although foreclosure rates for the metro area continue to drop in the aftermath of the Great Recession, Albuquerque and Rio Rancho still have hundreds of abandoned and neglected homes.

The slow economic rebound and sluggish job growth continue to put some mortgage holders in a squeeze.

One in every 1,181 homes in Albuquerque was in some stage of foreclosure in July, according to California-based RealtyTrac, which gathers housing data. In Rio Rancho, one in 455 homes was in foreclosure. The national average was one in 1,203 housing units in foreclosure in July.

Rio Rancho at one point had one of the highest foreclosure rates in the country. In early 2009, one in 32 homes was in some stage of foreclosure, according to RealtyTrac. That put Rio Rancho in a league with Stockton, Calif., and Detroit.

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CFPB Fines Flagstar $37.5 Million for Blocking Foreclosure Prevention

seal-on-moneyThe Consumer Financial Protection Bureau (CFPB) ordered Michigan-based bank Flagstar to pay $37.5 million in penalties for violating the new mortgage servicing rules by failing to devote sufficient resources to its foreclosure prevention programs, CFPB announced on Monday.

CFPB said that Flagstar illegally blocked borrowers’ efforts to avoid foreclosure by unnecessarily delaying the processing of foreclosure relief applications, intentionally delaying permanent loan modifications, failing to notify borrowers when their applications for foreclosure relief were incomplete, and denying qualified borrowers of loan modifications.

Flagstar was ordered to pay $27.5 million in restitution to the victims and an additional $10 million fine, totaling $37.5 million in penalties, according to CFPB.

“Because of Flagstar’s illegal actions and unacceptable delays, struggling homeowners lost the opportunity to save their homes,” CFPB Director Richard Cordray said. “The Bureau has been clear that mortgage servicers must follow our new servicing rules and treat homeowners fairly. Today’s action signals a new era of enforcement to protect consumers against the cost of servicer runarounds.”

Flagstar, a federal savings bank and mortgage servicer, is responsible for soliciting borrowers for its loss mitigation programs and subsequently processing the applications, determining borrowers’ eligibility, and implementing the programs to qualified borrowers.

The Bureau’s investigation found that Flagstar failed consumers “at every step of the foreclosure process” by not devoting sufficient resources toward implementing the loss mitigation programs. CFPB discovered upon examination that during 2011 and continuing on into 2014, Flagstar had more than 13,000 active loss mitigation applications but only 25 full-time employees and a third party vendor in India reviewing them, increasing the wait time to review a single application to nine months in some cases and pushing the number of Flagstar’s backlogged applications to more than 1,000. CFPB found that the average wait time to Flagstar’s loss mitigation call center was 25 minutes, with more than 50 percent of calls being abandoned. CFPB found Flagstar’s actions to be in violation of the new mortgage servicing rules with respect to loss mitigation that went into effect in January 2014. The alleged violations began in 2011 and continued on into 2014, CFPB said.

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Free foreclosure counseling extended two years

New York homeowners facing foreclosure can get two more years of free housing counseling and legal advice, due to an additional $40 million in funding.

The infusion will bring the total amount spent on New York’s Homeownership Protection Program to $100 million, said Attorney General Eric T. Schneiderman, who oversees the effort.

The 2-year-old aid program had been set to expire next September. The new funding will extend it through September 2017. Roughly 34,000 New York homeowners have gotten assistance so far, the attorney general reported.

“No individual or family should have to navigate the foreclosure process alone,” Schneiderman said in a statement released late Sunday.

Funding for the aid program comes from the $25 billion accord reached in 2012 between state and federal agencies and the nation’s five largest mortgage lenders, settling charges of foreclosure abuses. New Yorkers have received nearly $2 billion in mortgage assistance under the settlement, including modifications, loan forgiveness and short sales — more than three times the amount predicted, Schneiderman reported, citing federal statistics released in May.

Under the aid program, Long Island has gotten about 20 percent of the statewide funding for direct services, with 8,800 homeowners receiving help, the attorney general reported.

Maureen Steiger is among those who received housing counseling. Two years ago her overtime income as a teacher’s aide was reduced just as her husband, Robert, a school custodial engineer, lost his part-time evening job. She said they paid $1,400 to a company that promised to modify their loan, but no help ever came.

The Steigers, both 57, feared they would lose the North Babylon home where they had lived for 25 years and raised their four children. A counselor with the Long Island Housing Partnership, which receives funding from the statewide program, got them a trial loan modification in June; Steiger said she hopes to receive the final paperwork soon. The new loan is expected to lower their payments and reduce their interest rate from 9 percent to 2 percent, she said. The modified loan, Steiger said, would “just give us a little peace of mind and maybe make life a little easier.”

Many Long Islanders have lost income due to the recession, and they are struggling to remain in their homes, said Carol Yopp, director of counseling for the Long Island Housing Partnership. “There’s a lot of agencies that would have to shut down their programs if we didn’t have that funding stream,” Yopp said.

Hard-hit Long Island communities have some of the highest delinquency rates in New York State. In Hempstead, 28 percent of mortgages are at least 90 days behind on payments, the attorney general reported. Delinquency rates stood at 24 percent in Brentwood, and 18 percent in Bay Shore.

For more information, call 855-HOME-456 or visit AG

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Sandy Annabi in foreclosure, again

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New Cleveland Fed President Loretta Mester talks about Ohio jobs, security … – The Plain Dealer

Loretta Mester became president/ CEO of the Cleveland Federal Reserve Bank in June. 

CLEVELAND, Ohio — If you’re concerned about getting a job or keeping your job, or if you worry that inflation in the years ahead could hurt your wallet, you should take interest in the new president of the Federal Reserve Bank of Cleveland.

Likewise, if you want mortgage and credit card rates to stay low or if you can’t wait until CDs are worth having again, or if you wish something more would be done about all of these boarded-up homes across the region, then the work done by Loretta Mester in the years ahead will affect you.

Mester, 55, became the new president and CEO of the Cleveland Fed three months ago, succeeding Sandra Pianalto, who retired after 11 years in the top post. Mester previously worked for the Philadelphia Fed, for nearly 30 years, starting as an economist and climbing to executive vice president and director of research. As CEO here, she oversees 950 employees in Cleveland, Cincinnati and Pittsburgh who conduct research about the economy, supervise banks and provide payment services to banks and the U.S. government. 

Charles Plosser, president and CEO of the Philadelphia Federal Reserve Bank, worked with Mester for eight years, said in an interview that her appointment is huge for Greater Cleveland and the entire region.

“I think they’ve got a gem on their hands and they should feel very fortunate,” Plosser said. He called Mester “a talented and insightful economist” who is “very wise about the system and the challenges the Fed faces.” He added that she’s “an incredibly hard worker . . . I’ve never seen anyone work as hard as her.”

A Baltimore native, Mester is the middle of three children; her father was a research physicist and her mother was a homemaker. They stressed education; Mester’s brother is a physicist and her sister an associate dean at a university.

Mester’s husband, George Mailath, is also an economist and is a professor at the University of Pennsylvania. He comes to Cleveland on weekends and she works in trips to Philadelphia while traveling to Washington, D.C., for Federal Reserve meetings.

Mester, who now calls the Warehouse District in Cleveland home, said in an interview Wednesday she’s been most surprised about two things here.

First: “The people here are extremely nice. This whole thing about Midwesterners being nice, it’s really incredible. I was at a restaurant (in the Warehouse District), my husband and I were there and the waitress took our order and came back and actually sat down at the booth with us, just invited herself to sit down at the booth … She was going to Oxford (University) and she heard what we were talking about, so she wanted to talk to us about economics. That was kind of fun.”

Second: Cleveland is more bustling than she realized in her two visits during the interview process. “There is more going on with the restaurant scene than I might have expected and there’s certainly a lot of downtown development. You can see all of the construction going on. I guess I didn’t expect it. That’s a pleasant surprise. You like to be in a place that’s coming back with stuff going on.”

One bad surprise: Midges — the large mosquito-like insects that take over many lakefront neighborhoods during the spring and fall. Even though they live only five to 10 days, they’re still annoying and a little disturbing. “I had never heard of them,” Mester said, although she does remember hearing about some bugs attacking New York Yankees relief pitcher Joba Chamberlin during a 2007 playoff game. Those were midges.

In her first major interview, Mester said she has embraced Greater Cleveland and the bank’s Fourth District, which covers Ohio, western Pennsylvania, the northern panhandle of West Virginia and eastern Kentucky.

“I find the economy very similar to the economy in the Third District where I came from,” she said. “The Philadelphia district is very similar in terms of having a manufacturing base for a long, long time and having to do the transition to a more “eds and meds” kind of economy (education and medicine). That’s kind of how I view the Northern Ohio area. It’s basically having to do the transition from a very manufacturing intensive (economy) to a service/high-skilled manufacturing/eds/meds. I think that’s very interesting, being able to do that transition.”

Before the questions started, Mester offered that she had read a past interview this writer did with Pianalto about whether everyone should go to college. Mester wanted to weigh-in before being asked.

“I think there is a wage premium for going to college,” she said.

“Certainly, we all want to encourage an education, but does it have to be college? Probably not,” she said. “There are a lot more avenues for education now than there used to be. And when you talk to business contacts, a lot of them say they’re having trouble finding skilled workers, and a lot of the skills (they need) are not necessarily skills you’d get in college.” 

She noted that many skilled manufacturing jobs pay well. “How do you get that kind of training? This is one area where I think Europe might have it better than us, in the sense that, in Germany, there’s an apprenticeship program. You could be a journeyman and work your way up. We’ve not really emphasized that in this country,” she said. “So there are lots of ways of being educated. i think the main thing is education. You need to have skills and you can get skills in various ways.”

Here’s what Mester had to say on a range of other topics during the one-hour interview:

Interest rates haven’t moved in six years. You’ve been quoted as saying you thought the Fed in the past had sometimes raised interest rates too slowly. Are you concerned about that this time?

“I think there’s good evidence that basically says we typically are slow to raise rates. Then what happens if you’re too slow, you get behind and then you have to have a steeper path,” she said. But she’s not yet worried that’s happening this time around.

“At this point, now, there is still more progress we need to make (before we raise rates),” she said. “I do believe it’s appropriate to keep interest rates at the zero to 0.25 percent range. But I also think it’s prudent planning to be prepared to move rates” because the economy could heat up quickly. “If things start moving faster than we anticipate, then I want to be prepared to raise rates.”

For older folks who’ve traditionally relied on CDs and savings accounts for interest income, they’ve been getting crushed by low rates for all of these years. What words of encouragement or comfort do you have?

“I don’t know whether this is comforting, but I do believe that the Fed needed to take the actions that it did (to cut rates) given the depth of the financial problems that we were facing. I think we’re better off that we did this than if we hadn’t. If the economy hadn’t come back, I think everyone would have been in a worse place, including the savers.

“Monetary policy always has distributional impacts. You’re right, it’s extraordinary policy. Those (impacts) have been more amplified this time. We’ve been at zero for a long time. But the hope is the economy gets back to our goals faster because we’ve taken these actions. And this is going to help everyone,” she said. “I don’t know whether that’s going to be comforting to the people who are earning so little on their savings. But the policies were taken to make sure the economy comes back.”

Many people don’t understand exactly what the Fed does. How do you explain why your job and the Cleveland Fed are important to everyday people here?

Foremost, the Fed has two main goals, Mester said. Achieving maximum employment and making sure prices are stable. If as many people as possible who want jobs actually have jobs, that’s good for their lives and for the community, she said.  “Ultimately, we work for the public. We are public servants. And we care about the district, learning from people in the district, how their businesses are doing, what their concerns are.”

About Loretta Mester

* Became president/CEO of Cleveland Fed in June.
* Native of Baltimore.
* Worked for Philadelphia Fed for 29 years.
* Married to Dr. George Mailath, professor of Economics at the University of Pennsylvania.
* Interests include playing the piano, the opera and fitness rowing.
* Enjoys reading mysteries. Currently reading: “Orpheus in the Marketplace: Jacopo Peri and the economy of Late Renaissance Florence”.
* Favorite TV shows: The Castle, Daily Show and the Colbert Report.
* Board affiliations include the economics advisory council of Drexel University’s LeBow College of Business, and the finance department advisory council of Temple University’s Fox School of Business and Management. She is also founding member and director of the Financial Intermediation Research Society, a practitioner director of the Financial Management Association International, a member of the advisory board of the Financial Intermediation Network of European Studies (FINEST), and a member of the advisory committee of the Financial Engineering and Banking Society.

Second, people’s wallets are certainly impacted by whether prices are stable. “This affects their everyday lives,” she said. “We don’t want prices to be going up so high that they go into the grocery store and then think, ‘I’d better buy everything today because tomorrow the price is going to be much higher.’

“Price stability is very important for the economy, and I think it’s important in people’s lives.”

The Fed is also relevant every day because the Fed helps make sure banks are sound, Mester explained, so that consumers know the money they have in a checking or savings account is safe.

What are other key roles for the Cleveland Fed?

Mester highlighted community development. “I think the community development work we’re doing is very important.”

“I had a nice tour of Slavic Village, which was fascinating. We got to go into some of the rehabbed houses and see how they’ve been able to finance them and get people in them. That’s really important.

“What the Federal Reserve is very good at doing is sort of bringing together all of these constituencies that can affect an area,” she said. The Fed is also good at research and documenting the results of some of the community development programs — what works and what doesn’t, she said.

The Cleveland Fed also continues to work on financial literacy programs that try to help people learn about mortgages and credit cards and managing debt, Mester said. The Fed is trying to measure the impact of various programs, she added. “The Fed does impact Main Street people.”

You mentioned Slavic Village. What can be done in some of these communities that still have so many boarded-up properties?

“There is some work in land banks going on, which i think is productive. My understanding is that it actually works. There are pockets of policies that are actually working … There have been some efforts in trying to limit the supply of foreclosed houses.”

Another issue, she said, is how long it takes in some states to move properties through the foreclosure process. New Jersey, which she was familiar with, was one logjam state. Ohio is another. The process needs improved “so that you don’t have these buildings in limbo.” Often times, developers want to move fast, she said, but run into all sorts of road blocks.

The Cleveland Fed can and will study these issues, look at what policies are working and publish papers about what should happen, she said. “That’s how we can influence the debate. A lot of what we can do is get the right people in the room to talk about these issues from all different perspectives. You can’t have a solution unless you get all of the right parties in the same place, and then publishing very sound analytical work in these areas. I think that is what our role should be.”

You mention research here, and you were the director of research in Philadelphia. What kinds of research will the Cleveland Fed focus on?

“We’re going to focus on things where we’ve already established a niche,” she said. “Our ‘inflation central’ is an area the Cleveland Fed has been known for for a long time. It’s produced very good work, very good measures of inflation that are used nationally and internationally in gauging inflation. That’s an area where we’re going to try to focus.”
The Cleveland Fed also has an expertise because this district probably has more mid-sized, regional banks than any other district. Other areas of interest: Household finance, community development and payments.

On the topic of payments, you oversaw the payment cards office in Philadelphia. With all of the security breaches we’re having, at huge retailers like Target and Home Depot, do you think this will affect people’s use of credit and debit cards in the future?

“It’s certainly something that’s a concern. This whole thing, are your payments secure? … It’s something we take very seriously. In particular, the Fed’s focus is on fraud. We want to make sure there’s no fraud in the system. But I think cyber security in general is a challenge for the country. What kinds of things can be done to protect data? I think that’s a challenge for all companies.” Technology is great, she said, because it provides efficiencies, but with that comes the opportunity to penetrate weaknesses in security.

She’s not sure whether she believes the retail breaches will push people away from plastic.

“The convenience of using a credit card or a debit card over cash is pretty high. My personal view is it may have a short-term impact or small impact, but I think we’re all much more electronically geared,” she said. “At the Fed, we’ve been thinking about how can we make payments faster at the same time, secure. It goes hand in hand. It’s hard for me to believe we’re going to go back to a cash-based economy.”

Clearly, these retail breaches are not OK, with Jimmy John’s becoming the latest target we know of. What needs to happen to fix this?

“The current environment for addressing payment security is complex — there are many different parties working to improve technology, standards and protocols. One of the Federal Reserve’s top priorities is to improve industry coordination on these fronts. We think a collaborative approach will be key to the success of these efforts.”

But Mester said she understands that some people are frustrated that stores and banks haven’t invested more in preventing fraud and instead are willing to eat losses when they occur. She said she welcomes changes like chip-and-PIN cards and other new technology, such as mobile payments, that should help stop some of the fraud.

What do you want people here to know about you and your leadership style?

“I want to lead by example. I want people here to feel they can make decisions, take ownership for their work,” she said. “I want people to think of new ways of doing things.

“I’m really ambitious for the Cleveland Fed. I really think we can make an impact in the region and an impact in the nation and even internationally with our thought leadership. We work for the public, and I take that public service aspect of the job very seriously. I know the staff does here, as well. I just want to inspire that.”

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Two Tennesseans make Richest Americans list for 1st time

Forbes announced its list of the 400 richest Americans list this week, and two Tennesseans made the list for the first time.

To make this year’s list, participants needed a net worth of at least $1.55 billion, the highest total since Forbes began tracking the numbers in 1982.

Here are the listmakers from Tennessee:


Thomas Frist and his father founded HCA in 1968 and eventually built the nation’s largest for-profit hospital company. He and his family still own a major share in the company.


Martha Ingram took over Ingram Industries after her husband, Erskine, died in 1995. The company has a number of key business lines in the distribution, publishing and marine business. In 2013, she helped broker a deal that helped save Nashville’s symphony hall from a foreclosure auction.


Frederick Smith is the founder and CEO of FedEx, the largest overnight shipping company in the world. He developed the idea for the company while an undergrad at Yale University.


Franklin’s Brad Kelley owns about 1.5 million acres of ranchland in Texas, New Mexico and Florida. Kelley, who became a billionaire by building his discount cigarette business, purchased the Lonely Planet line of tourist guidebooks in 2013 through his NC2 Media.


Forrest Preston is the founder and chairman of Cleveland, Tenn.-based Life Care Centers of America Inc., the nation’s third-largest nursing home operator.
The nation’s aging population has helped sparked growth for Preston’s company and helped him make the list for the first time as a result.
The company operations more than 200 facilities nationwide.


JImmy Haslam – the brother of Gov. Bill Haslam – is the CEO of the Pilot Flying J truck stop chain and the current majority owner of the Cleveland Browns of the National Football League. For more than a year, Haslam’s company has been under investigation for an alleged rebate scam. Several executives with the company have already pled guilty and the company has agreed to pay back in millions to customers.


Entrepreneur Jon Yarbrough, who founded Video Gaming Technologies in 1991, made the list for the first time after selling his company to Australian gaming company, Aristocrat Leisure Limited, for $1.3 billion.
VGT makes and sells video gaming machines, primarily to tribal gaming centers in the United States. Last year, the company brought in $236 million in revenue.

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UPDATE 2-Flagstar Bank to pay $37.5 mln over servicing violations -CFPB

(Adds Flagstar comment, paragraph 6)

By Emily Stephenson

WASHINGTON, Sept 29 (Reuters) – The U.S. consumer watchdog
on Monday said Flagstar Bancorp would pay $37.5 million
over allegations that it broke new mortgage servicing rules and
hurt struggling borrowers’ efforts to stay in their homes.

The U.S. Consumer Financial Protection Bureau (CFPB) said
Michigan-based Flagstar failed to notify borrowers when their
applications for foreclosure relief were incomplete, denied loan
modifications to eligible people and took too long to finalize

The action was the bureau’s first settlement over new rules
that took effect in January 2014. The rules seek to prevent the
kinds of sloppy servicing practices that contributed to an
explosion of foreclosures after the 2007-2009 financial crisis.

“Because of Flagstar’s illegal actions and unacceptable
delays, struggling homeowners lost the opportunity to save their
homes,” CFPB Director Richard Cordray said.

Flagstar, which neither admitted nor denied the bureau’s
findings, said in August that it was pursuing a settlement.

“With this matter now behind us, everyone at Flagstar Bank
is committed to building on the significant progress we have
achieved while continuing to operate with integrity,
responsiveness and a commitment to our core values,” Flagstar’s
chief executive, Alessandro DiNello, said in a statement.

Mortgage servicers, including banks and non-bank firms,
collect monthly payments, modify loans for people who struggle
to make payments and process foreclosures.

After the crisis, servicers were swamped by borrowers facing
foreclosure and cut corners in handling the cases. Problems
included poor record-keeping, little customer service and
“robo-signing,” or the automated signing, of unread and
sometimes inaccurate foreclosure documents.

The consumer bureau, which was created by the 2010
Dodd-Frank law, sought to clean up the industry. Its new rules
require clear procedures to help troubled borrowers keep their
homes and prevent “dual-tracking,” or initiating foreclosure at
the same time a borrower is trying to modify a loan.

Flagstar lacked the resources to handle all of its cases of
distressed borrowers, the bureau said. In 2011, the bank had
13,000 applications for loss-mitigation programs, but only 25
full-time staff and a third-party call center handling them.

Flagstar was “simply not equipped” to handle the influx,
Cordray said on Monday.

In some cases, it took Flagstar up to nine months to review
applications for loss mitigation, the CFPB said. Flagstar would
then clear its backlog of mitigation requests by closing expired
applications, even if the documents had expired because the bank
did not act fast enough, Cordray said.

The bank also denied some requests for loan modifications
based on miscalculations of borrowers’ incomes and gave
homeowners inaccurate information about whether they could
appeal after their applications were denied.

Flagstar must pay $27.5 million to 6,500 borrowers whose
loans it serviced, about 2,000 of whom were foreclosed upon, the
CFPB said. The bank also must pay a $10 million fine, stop
acquiring servicing rights for loans that are in default, and
contact harmed borrowers who did not go through foreclosure to
help them remain in their homes.

(Reporting by Emily Stephenson; Editing by Bernard Orr and
Grant McCool)

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