Borrowers at the mercy of lawyers, default service firms

Borrowers at the mercy of lawyers, default service firms


(NEW YORK) Nobody wins when a home enters foreclosure – neither the borrower, who is evicted, nor the lender, who takes a loss when the home is resold. That’s the conventional wisdom, anyway.


The reality is very different. Behind the scenes in these dramas, a small army of law firms and default servicing companies, who represent mortgage lenders, have been raking in mounting profits. These little-known firms assess legal fees and other charges, calculate what the borrowers owe and draw up the documents required to remove them from their homes.


As the sub-prime mortgage crisis spreads, the volume of the business has soared, and firms that handle loan defaults have been the primary beneficiaries. Law firms, paid by the number of motions filed in foreclosure cases, have sometimes issued a flurry of claims without regard for the requirements of bankruptcy law, several judges say.


Much as Wall Street’s mortgage securitisation machinery helped to fuel questionable lending across the United States, default, or foreclosure, servicing operations have been compounding the woes of troubled borrowers. Court documents say that some of the largest firms in the industry have repeatedly submitted erroneous affidavits when moving to seize homes and levied improper fees that make it harder for homeowners to get back on track with payments.


Consumer lawyers call these operations ‘foreclosure mills’. ‘They get paid by the volume and speed with which they process these foreclosures,’ said Mal Maynard, director of the Financial Protection Law Centre, a non-profit firm in Wilmington, North Carolina.


John and Robin Atchley of Waleska, Georgia, have experienced dubious foreclosure practices at first hand. Twice during a four-month period in 2006, the Atchleys were almost forced from their home when Countrywide Home Loans, and the law firm representing it said they were delinquent on their mortgage. Countrywide’s lawyers withdrew their motions to seize the Atchleys’ home only after the couple proved them wrong in court.


The possibility that some lenders and their representatives are running roughshod over borrowers is of increasing concern to bankruptcy judges overseeing Chapter 13 cases across the country. The US Trustee Program, a unit of the Justice Department that oversees the integrity of the nation’s bankruptcy courts, is bringing cases against lenders that it says are abusing the bankruptcy system.


Joel Rosenthal, a US bankruptcy judge in the Western District of Massachusetts, wrote in a case last year involving Wells Fargo Bank that rising foreclosures were resulting in greater numbers of lenders that ‘in their rush to foreclose, haphazardly fail to comply with even the most basic legal requirements of the bankruptcy system’.


Law firms and default servicing operations have made it harder for borrowers to design repayment plans, or workouts, consumer lawyers say. ‘As I talk to people around the country, they all unanimously state that the foreclosure mills are impediments to loan workouts,’ Mr Maynard said\. \– NYT


Source: Business Times

MAS likely to retain $ policy, or tighten it

MAS likely to retain $ policy, or tighten it


Currency strategists expect US$ to hit new all-time lows of S$1.32 to S$1.36 by end-2008




(SINGAPORE) In response to strong price pressures at home and abroad, the Monetary Authority of Singapore is expected to maintain its current policy stance for the trade-weighted Singapore dollar or S$NEER, or even tighten it a notch further, when it issues its semi-annual monetary policy statement next month, say currency strategists.


In its last policy statement on October 10 last year, the MAS left intact its policy of a modest and gradual appreciation of the S$NEER, which has been in place since April 2004, but also decided to ‘increase slightly the slope of the S$NEER policy band’.


In practical terms, currency researchers estimate that this probably raised the annual rate of trend appreciation for the Sing dollar from 2 per cent to closer to 3 per cent currently.


But with price pressures at home and abroad now forcing consumer prices here to 25-year highs in the past two months, there’s a possibility that the MAS may even want to nudge such trend appreciation a notch higher – even if most don’t expect it to re-centre the mid-point of its undisclosed trading bands for the S$NEER, or make any changes to the width of those bands.


CPI readings for the Republic hit 6.6 and 6.5 per cent highs in January and February this year, compared to 4.4 per cent in December last year. And, compared to full-year rises of 1 and 2.1 per cent in 2006 and 2007, the Ministry of Trade and Industry raised its official 2008 forecast for headline CPI to a 4.5 to 5.5 per cent range last month, from an earlier estimate of 3.5 to 4.5 per cent.


Joseph Tan, a senior strategist at Fortis Bank here, sees the local CPI topping out closer to 7 per cent before falling back, but argues that the MAS may well want to raise trend appreciation for S$NEER a touch higher, to a 4 per cent annual rate. In currency terms, this could translate into another new all-time high of S$1.32 vis-a-vis the US dollar by the end of this year.


Explained Mr Tan: ‘I think there’s a real danger that food and energy prices will continue to remain at elevated levels this year; oil prices, for example, may continue to trade above US$100 a barrel even in H2.


‘We also have to remember that price pressures at home are not only coming from the effects of higher GST, but extends to the spillover effects from rising house prices and rentals. I think the MAS will need to check inflation there too – because if the US economy bottoms out later this year, we could well see house prices here shooting up again.’


Barclays Capital’s regional economist Leong Wai Ho concedes that such inflation concerns – and others – have also persuaded him to think in terms of a steady to firmer MAS stance next month.


‘I think it’s no longer just an inflation story, but an issue of cost competitiveness now – which renders policy decision-making even more difficult.’


Mr Leong, who expects the US dollar to finish 2008 closer to S$1.34, pointed to anecdotal evidence such as a Cushman & Wakefield report that Singapore’s office rentals had vaulted 10 notches higher in 2007, to seventh most expensive – surpassing even the rates charged in mid-town Manhattan.


On top of that, he warned, local price pressures have spilled over from the consumer to the production side as well, citing all-time highs in a Q4 2007 URA tender price index.


On balance, however: ‘It’s become less clear that the MAS can tighten further now that external forces have deteriorated faster than expected, due to a rapidly slowing US economy, so we expect them to maintain the current status quo without re-centring or changing the slope of the band,’ said Mr Ho.


Claudio Piron, JP Morgan’s head of Asia forex research, also believes the MAS is likely to retain its current status quo, and his firm is looking for the greenback to finish the year closer to S$1.36 – with risks to the downside of that.


He explained that for the moment, headline inflation remains high, domestic economic conditions are robust in terms of consumer demand and jobs, and external trade hasn’t fallen off a cliff. But should the US slowdown deepen, commodity price pressures could ease later this year.


‘The other thing to point out here is that the S$NEER is somewhat of a blunt tool that may not solve all the price pressure problems – so the authorities here may need to look at some other additional policies to alleviate the pressures faced by those worst-hit by rising prices at home – both on the business and individual level,’ he added.


Since the early 1980s, the MAS has adopted the S$NEER as its main monetary policy tool for offsetting imported price pressures in the very open local economy.


Estimates of the model employed by the MAS to fine-tune the local currency’s international value suggest its current policy of modest and gradual appreciation should translate into trend S$NEER appreciation of approximately 2.5 to 3 per cent per annum – fine-tuned by the local central bank inside estimated trading bands of between 1 and 2 per cent on either side of a gradually rising central value.


Source: Business Times

Mortgage relief to be expanded: Bush

Mortgage relief to be expanded: Bush


Monday • March 31, 2008


President George W Bush said the government will expand efforts to help homeowners avoid foreclosure as Democrats increase pressure on his administration to reduce unaffordable home-loan payments.


The White House is “committed to building on” its programme to help borrowers refinance mortgages, Mr Bush said in his weekly radio address yesterday. Officials are weighing measures to “provide some additional help to some homeowners”, White House spokesman Tony Fratto said.


Support is growing among policy makers, including Federal Reserve chairman Ben S Bernanke, to urge lenders to write down the principal on loans to keep homeowners from abandoning their properties.


Mr Bush has so far resisted using government funds or guarantees to stem the surge in mortgage foreclosures.


A plan being considered seeks to tackle underwater loans, or mortgages that are larger than the value of a home, the Washington Post reported yesterday, citing unidentified officials.


The Federal Housing Administration will encourage banks to forgive part of the debt and refinance smaller mortgages with backing from the government, the Post said. — Bloomberg


Source: TodayOnline

Address change: Aren’t these rules contradictory?

Address change: Aren’t these rules contradictory?


Monday • March 31, 2008


Letter from GOH KIAN HUAT


I REFER to the report “Changed your address? Prove it” (March 26).


With effect from tomorrow, Singapore identity card (IC) holders who want to report a change in address will have to produce proof such as a bill, statement or letter sent to their new address.


This new procedure aims to prevent false reporting of address changes — some parents, for example, may make use of a third party address to secure a choice primary school for their children.


Bills within the last three months, including those from Internet service providers, insurance and telecommunications companies or Singapore Power, or statements within the last six to 12 months from the Housing and Development Board, Land Transport Authority (LTA) or the Central Provident Fund (CPF) Board can be accepted as documentary evidence.


But being able to provide these documents may also mean that the person has failed to report his change of residential address within 28 days as required under the National Registration Act.


Will the Immigration and Checkpoints Authority (ICA) take the offenders to task? If not, then how will the 28-day rule be enforced? Is it still relevant?


If anyone is unable to provide an acceptable document, he may submit an application to the ICA to enable a letter to be mailed to him, which he can then use as proof. Even then, it is still possible for anyone to make arrangements with third parties to use their address.


In addition, under the current one-stop reporting procedure, IC holders who report a change of address to the ICA or police are not required to make separate reports to other government agencies such as the CPF Board or the LTA.


Now, it appears that the new address has to be reported to these agencies first in order to get a statement billed to the new address — which would then be used as documentary proof for the ICA. Isn’t this taking a step backwards?


What if the LTA or the CPF Board require an identity card to be produced first to effect the change of address at their end?


Source: TodayOnline

Bush readying plan to rescue home owners

Bush readying plan to rescue home owners


Proposal encourages lenders to forgive part of debt and refinance mortgages


WASHINGTON – THE Bush administration is finalising a plan to rescue thousands of home owners facing foreclosure by helping them refinance into more affordable loans, the Washington Post said.


The proposal is aimed at assisting borrowers who owe their banks more than their homes are worth because of declining home prices, the newspaper reported in its Saturday edition, citing unnamed government officials.


If enacted, it would mark the first time the White House is committing federal dollars to help the most hard-pressed borrowers.


President George W. Bush said on Saturday that the government would expand efforts to help home owners avoid foreclosure.


The White House is ‘committed to building on’ its programme to help borrowers refinance mortgages, he said in a weekly radio address.


Officials are weighing measures to ‘provide some additional help to some home owners’, White House spokesman Tony Fratto said.


Under the plan, the Federal Housing Administration (FHA) would encourage lenders to forgive a portion of these loans and issue new, smaller loans in exchange for the backing of the US government, the Post said.


Two leading Democratic lawmakers have proposed a similar programme to expand the FHA, so that it absorbs more failing mortgages once lenders have erased some of the loan amount.


Senate Banking Committee chairman Christopher Dodd and House Financial Services Committee chairman Barney Frank are expected to push their FHA plan when lawmakers return to Washington this week.


Bush administration officials have told the Post that they believe they can accomplish some of the same goals of the legislation through regulatory changes, though important details need to be nailed down.


Administration officials told the Post they opposed some aspects of Mr Frank’s legislation, including a provision to spend US$10 billion (S$13.8 billion) buying vacant foreclosed homes.


The plan could dampen criticism from Democrats, who say the administration has so far been more concerned with helping Wall Street than with aiding those losing their homes in the foreclosure crisis that threatens to push the US economy into a deep recession.


But it could agitate conservatives, who might view the programme as another government bailout, the Post said.


The plan is unlikely to be unveiled before Mr Bush returns from a trip to Europe this week, officials told the paper.


Source: Straits Times