Sunday, June 26, 2011
Real Estate Stabilization Act
The proposed Real Estate Stabilization Act of 2011 (RESA 2011) is a tri-party collaborative proposal mandating cooperation from lenders, government and homeowners that will stabilize the real estate markets, enabling a full economic recovery. This presentation represents the short form plan.
Overview
Legislation to require the holder of any note or portion thereof, said holder having received funds through EESA, TARP or any other relief/economic stabilization program, secured by 1-4 unit residential housing; the beneficial interest thereof obtained in any manner including, but not limited to origination, purchase in the secondary markets or acquisition of another institution, shall be required to offer loan modification.
Statement of Facts
Since the onset of the economic crisis, in California alone there have been over 3.5 million REO re-sales and Short Sales, with the resulting loss in real estate taxes exceeding $9 Billion (the projected deficit being $9.25 Billion). In addition there are another 2.5-3 million homes with negative equity; plus some 400,000 bank owned vacant properties that have yet to impact the real estate tax base. As the crisis that the states find themselves is caused by a banking crisis, and thus under federal regulation, they have no direct control over their financial destiny. The only options available, cost cutting, mostly through lay-offs and curtailing of services are by their very nature counter productive, actually worsening the downturn. Using the current FHA/HUD actuarial of 4% appreciation for the next 20 years, left unchecked, the real estate crisis will prevent an overall recovery until, at the earliest, 2022.
Lender Contribution
1. Existing mortgage to be written down to the current fair market value of the property
2. New mortgage loan to be written 5 year reset with a 50 year amortization.
3. Initial interest rate to be the lesser of 4% or 1 % over the
current yield of the 10 year treasury note, with an adjustment margin of 2.5%.
4. Rate cap each 5 year period shall be 2%+/-, with a 5% lifetime cap.
5. The note shall be assumable and carry no pre-payment penalty.
6. No traditional debt-to-ratio qualifying.
7. In instances where the homeowner is currently unemployed, 1 year Principal-Interest to be calculated and added to the principal amount due. However, borrower to fund the tax a insurance escrow account.
Federal Government
Contribution
1. Employing current loan-loss guaranty formulae, lender to be reimbursed for loan write down to 80% of the original principle, plus any accruals.
2. Lender to receive additional tax incentives to offset the write down.
3. Lender reimbursement to be treated as a loan to the homeowner; and repaid through the waiver of the mortgage interest deduction.
5. On a dollar for dollar basis, lenders to be relieved of loan loss requirements for all modified loans. Caveat being that loans must be made for the easing. "Lend it or Lose it".
Homeowner Contribution
1. Waive the mortgage interest write off on federal and state tax returns.
2. In the instance of an existing foreclosure, a forbearance agreement to included with the note, and
recording documents.
3. Waive any reduction in real estate taxes
4. Establish an escrow account for taxes and insurance with the lender at 0%.
5. Should the homeowner fail to fund the escrow account, the lender shall be relieved of the terms of
RESA; and free to proceed with alternative methods of relief including deed in lieu,
foreclosure or short sale.
6. Government contribution to be a personal indebtedness. May be retired through the sale of the
subject property and/or the mortgage interest waiver in #1 above
Benefits
2.Halts the dramatic erosion of the real estate tax base, thereby aiding in the financial recovery of the various states, and local governments.
3. Retains citizens in their homes.
4. Prevents the erosion of neighborhoods and communities.
5. Provides the confidence required for consumer spending needed to fuel the recovery.
6. Government contribution (stimulus) will result in greater overall confidence and consumer spending thereby fueling the recovery.
Monday, March 14, 2011
Uprising In Washington
Has the time arrived for every person in the US who has or is going through the months long, excruciatingly abusive and demeaning process of attempting a loan modification... been lied to by numerous bank representatives... been passed around from one agent to the next... to the next...always getting the same treatment...even with proof of delivery is provided, has repeatedly been told that documents that have been sent were not sent... been told that the bank will not even consider a loan modification when you are current, compelling you to become delinquent, and in default, only to eventually have been rejected due to the Treasury dept. agreement with the banks, allowing them to use the mysterious Net Present Value (NPV)... thereby denying any form of mortgage relief... without which there can be no real truet economic recovery.
The "experts" state that there are some 20,000,000 plus homes underwater in the United States... "We the People" were told that the banks were "too big to fail"; and we bailed them out. These rare the very same banks which are now refusing any form of mortgage relief... without which there can be no real true recovery for the economy... it must be that our congress believes that "We the People" are too small to save...
Perhaps the time has arrived for a peoples mortgage uprising in Washington... Perhaps if a million or millions people protest on the Mall, congress might.... just might correct this massive injustice...
Friday, January 7, 2011
More Wells Fargo Lies
This a letter I wrote to Congresswoman Barbara Lee ,CA 9th, seeking assistance in loan modification for a young couple in her district. For privacy, I have removed their names.... so, the bloodbath and lies continue...
January 7, 2011
Representative Barbara Lee
2444 Rayburn HOB
Washington, D.C. 20515
Via Fax: (202) 225-9817
RE: Ramona Ave., Piedmont, CA 94611
I am writing on behalf of the above referenced couple, residents of your district. They purchased the above captioned residence five years ago at the peak of the real estate boom. Using what the mortgage industry refers to as a piggy-bag loan; a first mortgage combined with a second or Home Equity Line Of Credit (HELOC) the home was financed by Wells Fargo Bank. This financing package was structured by the bank’s representative as a 7/1 Fixed ARM first loan, and a 5 year balloon second lien. Frankly, in my almost thirty years in the industry I cannot recall ever having seen this sort of “dangerous” financing funded by a major bank. As it absolutely would require a refinance, this sort of financing arrangement could only be deemed self serving by the bank and broker involved; while at the same time place their client at the complete mercy of the market.
Last September, realizing that the loan was coming due, the (name deleted) contacted me seeking a possible refinance. They have managed their personal financial affairs in a manner that, as parents, would make you and me proud. Credit scores exceed 800, excellent job history, they have some reserves, and easily qualified for the financing required. All payments have been timely. However, as you know, both the property and applicant must “qualify”; and in this instance, due to the real estate crisis, the appraisal was returned at a level not adequate to provide the required Loan-To-Value.; leaving them with only two options, a loan modification or a short sale.
They then contacted Wells Fargo seeking a loan modification in ONLY the term of the loan... they are “OK” with the 7% interest rate... they are NOT seeking a principle write down, ONLY a common sense modification in the term of the loan! A very common sense business approach to this situation, enabling them to keep their home and credit intact; and Wells Fargo to keep a performing asset on their books..
Yet, WFB is virtually refusing to cooperate... refusing to honestly consider making this sensible business decision. To the contrary, as the course that that Wells Fargo is now embarking upon, a course destined to make a shambles of a hard earned credit history.
Despite what the banks are telling members of congress, from my firm’s first hand experience, the lenders are refusing to even consider any loan modification until the homeowner first becomes delinquent. for a minimum of sixty days; an act that reduces a credit score by some 140-180 points! The bank’s analyst is following the industry “MO”, by delaying, losing documents, failing to return calls and or writings; and in general guilty of bad faith dealing. On Monday the 10th of January, their grace period runs out; and the process of destroying this couple’s credit commences.
This past week Wells Fargo issued a press release announcing that it was going to “voluntarily” modify a vast number of the Wachovia/World loans that it had acquired through a purchase from the FDIC. We both know this act was strictly for the media, and to indicate to congress that the management of Wells Fargo wears a white hat as it drives the stage coach! By their very actions, and benefiting from the loan loss guaranties provided by the FDIC insuring the bank a substantial profit (on the backs of those homeowners) this announcement is a pure sham.
I write you, pleading with your office to, in any way, in any manner intercede on behalf of this young couple. They deserve a better fate than that being thrust upon them by a bank, which has, is and will continue earning huge profits in no small part through the generosity of “We the People”.
Thanking you in advance for whatever assistance you may offer, I remain
Very truly yours,
Stan Brody
Thursday, January 6, 2011
Reading the Constitution
Interesting... the country is going broke.... millions of us losing their homes... some 18 million of us out of work, and the House is wasting OUR TIME and treasure reading the constitution... a document that each member ought to have been well-informed of before having been elected!!! Had they taken the same approach to reading the legislation that they vote on, we might not be in this financial abyss!!!
Tuesday, January 4, 2011
What Will Congress Do About the Deficit
The mid-term elections are over, resulting in a real shift of power in Washington. Questions are being raised as to how this new "fiscally conservative" congress will address the deficit. Congress is at fault for the financial straights we are in.... by looking the other way and doing their bidding, Congress is a codependent with the banks actions and failures... the same is true of Wall Street... the crime here is that, with the members of congress full cooperation it is the lobbies for these industries who actually lay the groundwork of new legislation that is supposed to "regulate" those very same industries... they are already at work crafting any changes to existing law designed to minimize the effect of that new legislation.
The answer to my question is, as "we the people" have little to say, congress will act in its own best interest (raising campaign contributions) and only reduce the deficit in ways that can only hurt middle America. We the People will get the mookey end of the stick yet again...
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