Foreclosure

Reisenfeld & Associates LPA, LLC, a Cincinnati, Ohio-based legal services provider, recently announced the addition of Joel F. Bornkamp, Philip Q. Ratliff, Michael J. Lubes, and Majenica L. Springer to its legal team. Reisenfeld & Associates is a full-service creditors' rights law firm offering legal services to the mortgage, banking, and default servicing industries. The firm provides representation in all counties and federal districts in the states of Ohio, Kentucky, and Indiana, and is currently designated counsel for Fannie Mae and Freddie Mac.

As several large servicers begin the lengthy process of an independent foreclosure review, Rep. Maxine Waters of California is repeating her request that the process be made public. Waters addresses several concerns in her most recent request, including the difficulty of reaching some of the affected borrowers, conflicts of interests between the banks and the independent reviewers, and the qualifications of those contracted to audit foreclosure cases. Fifteen of Waters' colleagues joined her in her appeal for transparency.

Mortgages backing homes that were foreclosed on in September had been delinquent for an average of 624 days, according to Lender Processing Services (LPS). That's up from 484 days in September of last year. LPS says almost 40 percent of loans in foreclosure have not made a payment in two years. Modification volumes have been falling steadily since last year, but on the plus side, LPS says close to 90 percent of the mods completed over that time have reduced borrowers' payments, and as a result, redefault rates have dropped significantly.

The Office of the Comptroller of the Currency (OCC) and the Federal Reserve Board both announced Tuesday that the independent foreclosure reviews of 14 large servicers issued in April are now under way. About 4.5 million borrowers could have their loans reviewed and potentially be compensated for imposed financial hardship, according to a previous statement by the OCC. The federal regulator says the review will take several months due to the sheer volume of cases to evaluate.

The administration unveiled its revamped Home Affordable Refinance Program (HARP) last week to allow borrowers who owe significantly more than their home is worth take out new loans with lower interest rates. CoreLogic says the impact will be targeted to those markets and local economies that have suffered the most from the housing collapse. The company believes HARP 2.0 will be positive for the GSEs and the origination market, negative for bondholders, and neutral for housing itself because distressed borrowers and shadow inventory are left out of the equation.

Short sales are growing throughout the nation as distressed homeowners and servicers continue to seek alternatives to foreclosure and home buyers increasingly opt for the significant discounts that come with short sales. With 9,145 completed short sales, the Los Angeles area had more short sale transactions than any other metropolitan statistical area (MSA) in the second quarter of this year, according to a recent blog post from RealtyTrac. These short sales came with an average discount of 32 percent and at an average price of $350,237.

State attorneys general and the nation's five largest mortgage servicers could be within weeks of reaching a $25 billion agreement to settle allegations that foreclosures were improperly processed. Details of the settlement terms obtained by DSNews.com indicate that individual servicer penalties will be based on the number of foreclosures they've completed. Collectively, $5 billion would come in the form of cash fines and $20 billion would be satisfied with principal-reducing modifications and refinancing for underwater borrowers.

Long-term, fixed-rate mortgages are often seen as a safe loan product, but one Federal Reserve economist says adjustable-rate mortgages (ARMs) are not as risky as some perceive them to be and did not play a major role in the recent housing crisis. To those who believe payment shocks caused by ARMs were a major player in the foreclosure crisis, Paul Willen, senior economist at the Federal Reserve Bank of Boston, says, the ""data refute that theory."" He says those with ARMs were almost as likely to have seen a payment reduction as a payment increase.

Federally funded mortgage relief programs continue to struggle to reach homeowners, according to the Special Inspector General of the Troubled Asset Relief Program (SIGTARP). A new report from the watchdog agency says only $2.5 billion of the $45.6 billion in TARP funds earmarked for housing programs has been spent. Regarding the Home Affordable Modification Program (HAMP), the agency estimates that as many as 600,000 homeowners who are eligible will not receive a permanent mod before the program expires next fall.

Thirty-three senators have put out a letter encouraging the Obama administration and the Federal Housing Finance Agency (FHFA) to work quickly in developing a program to make vacant foreclosed homes available for rent. The administration is currently sifting through responses to the request for information (RFI) it issued in August regarding an REO rental program. The senators want federal officials to respond with a timeline for when they expect to finish reviewing the RFIs and their next steps.