Senator Menendez sent a letter last week to the CEOs of 20 major mortgage companies raising concerns about the rate of participation in and cooperation with the program meant to help struggling homeowners modify the terms of their mortgages. The Senator urged the mortgage companies to review and revise their loan modification efforts to help achieve the goals of the program.
"Our nation's housing crisis is the root of the global economic crisis that we are faced with. Preventing foreclosures helps keep families in their homes, helps the surrounding communities maintain property values and helps lift the economy, which are results that I believe we can all support," wrote Menendez. "I fully expect you to review your company's policies and procedures regarding loan modifications to find a balanced approach that not only ensures the financial viability of your company, but also achieves the goal of the program, which is to reduce consumers' foreclosures on their mortgages. I look forward to hearing the steps your company is taking to achieve more loan modifications."
Menendez helped chair a Banking Committee hearing focusing on preventing foreclosures at which representatives of the U.S. Department of Treasury, the U.S. Department of Housing and Urban Development and representatives from mortgage lenders and consumer groups testified. A Wall Street Journal article says that Senators blasted the slow progress of foreclosure prevention efforts:
Under questioning from Sen. Bob Menendez, D-N.J., Allison estimated the administration could achieve 3 million to 4 million modifications by the end of 2012, a pace of around 20,000 a week.
"In the last few weeks, we've actually exceeded that number," he said.
State Attorney General Anne Milgram announced today two separate lawsuits charging 10 defendants with mortgage-related fraud. According to the lawsuits, filed on Friday, the companies promised to help modify mortgages for people struggling to keep their homes. But instead of providing assistance, they pocketed the fees paid by homeowners.
"It is some of the most egregious conduct we've seem," Milgram said. "They're trying to profit off someone's misery."
These programs have to be closely monitored because you have people that are desperate for hope to make their situation better, being taken by those just looking to prey on the vulnerable. It's a difficult situation as you have some people looking to give more hope, while others are praying on that to cause more heartache.
The February report shows 601 new foreclosures were scheduled for auction last month, down from 783 foreclosures scheduled for auction in the state in January. In February 2008, some 793 foreclosures went up for auction, according to PropertyShark, which provides reports on foreclosures and other property listings.
But not all parts of the state are faring the same in this housing market:
"Areas that have lower economic status are going to get hit worse," Staniford said. Essex County had the highest number of new foreclosures up for auction last month; cities with the most new foreclosures included Newark, with 37; Paterson, with 29; and 24 for both Trenton and Elizabeth.
And the CEO of PropertyShark.com doesn't think we're on the right track:
Staniford said White House policies are convincing banks to ease their stance on foreclosures to negotiate more with homeowners, but "my belief is the government action is prolonging the problem, rather than solving the problem."
If the economy does not turn around as hoped and substantial layoffs continue, Staniford said there is little more the government can do. "If someone loses their job and becomes incapable of paying their mortgage, they are going to have to sell or go into foreclosure," he said.
That's exactly why they have taken action to stabilize the economy as a whole. The lack of government action allowed the problem to grow into the mess we have today. People knew what was going on, but no one stepped in to do anything about it. Every domino that falls triggers the next one. If people lose their job, their home gets added to the list of things they can't afford. That doesn't mean you continue the policy of standing by and doing nothing.
One overall skeptical Republican was state Sen. Joseph Kyrillos (R-Monmouth).
?The governor and others will tout the bills as major reform efforts,? said Kyrillos, who resisted all but one of the stimulus bills.
The bottom line, in Kyrillos? view, is the bills won?t stimulate the economy, and his colleague, state Sen. Gerald Cardinale (R-Bergen), agreed.
?I think the stimulus package is well-intentioned by people who don?t understand point one of economics,? Cardinale said. ?I will put Corzine in that category, unfortunately. I thought Corzine, being a successful person, on Wall Street business, would understand business. But, as we?ve now seen, Wall Street firms don?t understand business, and neither does the governor.?
Foreclosure filings fell about 40 percent last month in New Jersey, compared with February 2008, as lenders adjusted to a new state law aimed at helping homeowners in distress, RealtyTrac reported Wednesday.
At the same time, foreclosure filings were up 30 percent nationwide.
About one in every 1,067 Garden State households received some foreclosure filing last month, compared with one in every 440 nationwide. In Bergen County, one in every 1,596 households received a filing; in Passaic, the number was one in every 632 households; in Hudson, one in every 1,544; and Morris, one in every 1,884.
Daren Blomquist, an analyst with RealtyTrac, said that the drop in foreclosure activity in New Jersey may be a result of the Mortgage Stabilization and Relief Act, which was signed by Governor Corzine in January.
So, republicans were very quick to jump all over this, and now that NJ (which now has lower foreclosure rates than the rest of the country after being in the top 10 last year), and there was a 40% decrease from this time last year in NJ foreclosures at a time when the rest of the country saw an increase of 30%. The issue is really a basic one, and one that too many don?t seem to grasp ? if you stay in your home, that benefits you. That benefits the community as there are less houses sold (at lower prices) or foreclosed on, also dragging down the overall property values in their communities. Oh yeah, and more people out of their homes means more homelessness which means more crime.
As for the other ?don?t bite off more than you can chew? argument, which is nonsensical to begin with, it too shows a complete lack of understanding of (1) the foreclosure process, (2) the impact it has on lenders as well as homeowners and (3) is patently false when it comes to this particular Act. According to some basic information on the Act itself and the requirements:
To qualify for assistance, a homeowner?s household income may not exceed 120 percent of the area median household income or the HMFA?s Mortgage Program income limits, which vary by County, but are as high as $135,380. The lender must agree to write the mortgage down to the current value of the home. Homeowners who accept program assistance are required to participate in agency approved household budget counseling sessions.
So basically, we are talking about many lower to middle income families in the first place ? the same ?middle class? that the republican party keeps throwing under the bus while saying is being squeezed by Corzine and NJ Democrats. Well, as usual, facts and reality don?t enter into play when it comes to a cheap shot or sound bite. I?m sure these same families would rather have been kicked out of their houses ? just as these republicans would have had it if they got their way on this Act.
Rep. Scott Garrett, R-Wantage, questioned whether the Obama administration is simply prolonging economic bad news rather than preventing it with its latest plan to assist homeowners facing foreclosure.
At a House Financial Services Committee hearing Wednesday where Federal Reserve Board Chairman Ben Bernanke testified, Garrett voiced the anger of families that have been paying their mortgages and didn't buy houses they couldn't afford. Here's part of a statement he released afterward:
"I'm worried that the administration's proposed efforts will only delay the inevitable full correction of the market, while saddling future generations with tens of billions of dollars of additional debt.
"Delaying the onset of a true housing bottom, it seems to me, has other unintended negative consequences, as well. Not until we reach a bottom will we begin to provide certainty on the value of so-called toxic mortgage-related assets found on financial institutions' balance sheets around the world. The uncertainty surrounding the value of these assets is one of the main contributors to the downward spiral of our economy, so the sooner we reach certainty, the better."
The problem here is that Garrett is supposed to represent people and families, as opposed to corporations, and if you were to look at a summary of foreclosures in January 2009 by county, Passaic, Sussex and Warren Counties are ranked first, fourth and eighth in the state in homes foreclosed.
What does Garrett propose that these families do while waiting for a "true housing bottom"? What is Garrett's plan for helping the families out in his own district - with not one, not two but THREE of the top eight counties in terms of foreclosures?
I guess those families can wait for the corporate tax breaks to put food on their table, find them a new place to live or pay for heat.
About 62,500 properties in New Jersey faced foreclosure filings in 2008 - twice the number in 2007, RealtyTrac reported Wednesday. Foreclosures rose about 180 percent in Bergen and Passaic counties.
Nationally, 2.3 million properties were in some state of the foreclosure process in 2008, an 81 percent increase from 2007, according to RealtyTrac, a California company that follows the foreclosure scene. Worst hit were California, Florida and Arizona.
"And 2009 is going to be even worse," she said, because many adjustable loans are scheduled to reset at higher payment levels this year.
"Add to that the fact that home values continue to drop, and the number of foreclosure filings is going to be through the roof in 2009," she said. "I think there is a lot of distress and hardship out there for New Jersey families."
The state has tried to take some action recently, but you wonder if it's like shoveling sand off the beach at this point. Things are still going to get worse before they get better. It's a vicious cycle too, because more foreclosures and vacant properties will drive down the home values even further than they have already fallen.
There are alot of people who need help with making the payment on their home during the current economic difficulties. Unfortunately, people trying to get help last Friday by calling the Statewide foreclosure hotline encountered some difficulties:
A statewide foreclosure prevention hotline that began Friday has been unable to handle the overload of calls, said David Wald, a spokesman for the Attorney General's Office.
The response has been pretty phenomenal," he said.
Melville D. Miller Jr., president and general counsel of Legal Services of New Jersey, which runs the hotline, said a gas main break near his Edison-based office Friday required a powering down of the building, resulting in a scrambling of computer servers handling the calls.
Even with no gas main break, however, the system still would not have been able to handle the volume, he said. He noted that by 2 p.m. yesterday, the hotline's three dozen staffers had received 6,000 calls.
The State has also been trying to take action to help stabilize the NJ housing market. The Governor recently signed legislation aimed at providing some assistance:
The Mortgage Stabilization Program will allow homeowners to apply for loans of up to $25,000 to reduce mortgage payments to affordable levels. The program is limited to homeowners below income limits that vary according to county.
The Housing Assistance and Recovery Program will help homeowners facing imminent foreclosure to stay in their homes while paying rent until they are able to buy back their homes.
The state has allocated $25 million for the mortgage program and $15 million for the recovery program, drawing the money from a fund intended to reduce long-term debt.
Overall, the state hopes to stave off at least half of the 60,000 foreclosures anticipated for 2009; there were an estimated 48,000 in 2008.
Here's a video summary from the bill signing:With all the action taken, it still looks like things may get worse before they get better. We are still waiting for the adjustable mortgages to reset early this summer. That says nothing about the families who were hanging onto their homes through the holidays barely making payments. We still have a great deal of work ahead.
Responding to published reports that tenants were being forced out of buildings that were going through foreclosure, the Public Advocate was on the case:
At a press conference in Newark, New Jersey Public Advocate Ron Chen said landlords who force tenants out without a legal eviction order face both civil and criminal charges. Under state law, a landlord who does that can be arrested as disorderly person.
"This is a tragedy," Chen said. "Folks don't know it, but they don't have to leave."
These are tough times for people, but lacking knowledge of the applicable laws only compounds the problem.
State Banking and Insurance Commissioner Steven Goldman said tenants are being forced out because many lawyers, real estate agents, mortgage lenders, police and judges also are unaware of the 2006 law.
Goldman's office is sending letters out to real estate agents to let them know that they can lose their licenses and face individual fines up to $10,000 if they threaten a client with eviction to clear out a property.
If the letter doesn't get people's attention, a few stiff fines will certainly open eyes.
Dover's board of aldermen said they will consider Monday night whether to give themselves a 60 percent raise, or more than $3,000 more each year, and whether to give the mayor a 70 percent raise, an annual pay hike of nearly $5,000.
We're not talking huge sums of money, but talk about tone deaf. I hear from friends having difficulty filing for unemployment and they're voting themselves raises for part time jobs? I loved the justification too:
Alderman Michael Picciallo said the pay increase should not be considered a raise because it's less than the alderman received five years ago. He said the board and the mayor deserve salary increases because they work hard, put in extra hours and contribute money to town organizations.
"I'm not doing this to make money," said Picciallo, a business analyst for Cablevision. "I feel the more money I get, the more I can help the community ... whatever comes in goes out."
Not a raise, was he able to say that with a straight face? Should the people who are collecting unemployment not call it a pay cut because they made less before they got the job to be fired from? An on helping the community, the last time I went to serve meals at the food bank, they didn't charge me. If you want to help the community, do it. If you need more money, get another part time job that isn't on the taxpayers dime.
Alderman Fahy voted no and talked about what has been cut in the town recently:
Fahy agreed, saying the town has cut capital improvement projects and services like recycling and leaf pickups, "and now, all of a sudden we find this money for an almost 70 percent increase in the (mayor's) salary? I think it's ridiculous."
"It's not like we haven't had a raise and now we're trying to backtrack," Fahy added. "We've had raises over a period of time."
And don't forget, this will also get them a better deal in the pension system. The town has been considering consolidation, they've cut services and projects yet these guys are focused on putting some more money in their pockets? At the very least, this is bad timing.
Some 5,582 filings were reported in the month, a mix of mortgage delinquency notices, scheduled sheriff's sale auctions and bank repossessions, according to RealtyTrac, an Irvine, Calif.-based data collection firm. That number represented a 34 % decline from October.
One in 622 New Jersey homes received a foreclosure filing in November, below the national rate of one-in-488 households. The Garden State ranked 15th in rate of filings for the month, down from 8th in October.
Unfortunately drowning less water is still drowning. They call this a temporary "lull" and I can only imagine what the February numbers will look like after the holidays and new year. The real wave may be coming this summer and has barely been talked about:
"The next wave (of foreclosures) is coming next year and in 2010, and that is primarily due to these pay-option ARMS and the five-year, adjustable-rate hybrid ARMS that are coming up for reset," said William Longbrake, retired vice chairman of Washington Mutual. The giant Seattle-based bank, which collapsed this year under the weight of its bad mortgage loans, was one of the biggest originators of pay-option ARMs during the lending boom.
The next wave may be even more difficult to handle than the last one.
"It's going to get tougher to modify loans as these option ARMs come into their resets," Federal Deposit Insurance Corp. Chairwoman Sheila Bair told msnbc.com this week. "Those are more difficult than the subprime and traditional adjustable rates to modify because there is such a huge payment differential when they reset."
Let me say up front that I am able to pay the mortgage on my condo thankfully, but this is the wave I would get swept up in eventually if things aren't re-examined. Luckily I still have 4 years until my 2nd mortgage resets because I got a 7 year ARM (Adjustable Rate Mortgage). The problem is that mortgage companies aren't doing 100% mortgage financing now, so my 80/20 mortgage can't be redone unless I come up with a nice amount of cash. The thinking was that my home would be worth more and that I would be in a better place financially. There were no problems getting loans, there was plenty of refinancing going on and nearly everyone was able to get approved. We think it's bad now, but this seems like it's just the 1st wave passing by. I can only imagine how many others are in my position. Sorry to ruin your day.
I don't now if he'll get it, but speaking today before members of the mortgage lending industry, Governor Corzine talked about freezing mortgage foreclosures:
New Jersey Gov. Jon Corzine on Monday called for a three-to-six month forclosure time-out, while government officials set up systems to help homeowners modify their mortgages. "We need a bottom up approach to modifying mortgages one home at a time," Corzine told a gathering in Washington organized by the Office of Thrift Supervision. "It's going to be messy but you got to get on the ground level." Corzine said government officials should consider an approach similar to one put forward by Federal Deposit Insurance Corp. chairwoman Sheila Bair that would use $24.4 billion of a federal government $700 billion Troubled Asset Relief Program to modify loans.
"The TARP plan is a piece of cloth concealing the most real and fundamental problem" of foreclosures, Corzine said at the Office of Thrift Supervision's National Housing Forum.
The first $350 billion of the TARP has primarily been used to inject capital into banks' balance sheets, but has failed to significantly increase lending to consumers, Corzine said.
Corzine said a better use of the funds would be a broad, systematic plan to modify troubled home loans and said the second half of the TARP should go to stabilizing the mortgage markets.
He also said the U.S. government should announce a time out on foreclosures and should return to pre-2005 bankruptcy rules.
Many other states have requested a break on foreclosures, but it appears Corzine is proposing a blanket program to help take some of the strain off of the system, but not everyone thinks this is a good idea:
HousingWire's sources have consistently said a foreclosure moratorium alone is not enough to prevent foreclosures. Dustin Hobbs, a spokesman for the California Mortgage Bankers Association, called a blanket moratorium "a Band-Aid approach" that fails to address the situations and circumstances of each borrower and find a suitable solution. "The only way to stop a foreclosure is to modify the loan, and that has to take place between the servicer and the borrower," Hobbs said in an interview. "So, as good as it sounds, [a blanket moratorium] really doesn't have any teeth to it, as far as actually changing a borrower's situation."
New Jersey was ranked eighth nationally with a foreclosure filing rate of one out of every 410 homes, a nearly 75 percent increase from October 2007.
We were ranked 10th in May, so the trend is definitely going in the wrong direction. I'm not near smart enough to say I have the answers to this problem because it certainly wasn't created overnight. I don't think taking any one action will be a quick fix. This is going to take some time and pain, but we need serious discussions because the problem got worse as a result of people not seeing the risk before their eyes or not being willing to discuss what they saw in hopes it would just go away Now that risk has turned into a catastrophe and continuing to wait only does more harm. I know we need to find the right answers to the problem, but no answers or condemning the ideas that are suggested don't advance a solution.
If you're going through the economic ups and downs struggling with your home mortgage, tell us what you are experiencing.
Once again, the Bush administration is like a fire department showing up late with only a garden hose. Preventing up to 16,000 foreclosures is better than nothing, but at least half a million families will join those already facing foreclosure if stronger action isn't taken between now and the Obama administration. Last week, the Bush administration announced a plan to modify mortgages for only a small segment of struggling homeowners, and now we see a freeze on an extremely limited number of foreclosures. Clearly, if they don't understand by now that stabilizing the housing market helps stabilize the entire economy, they never will.
Along with the foreclosure problem, we need to stabilize the market because you have people that have lost so much value in their homes versus what they owe on the mortgage that they're walking away altogether.
There are many culprits who can share in the responsibility for this chaos in the housing market, but trying to apply a bandage to a wound that needs a tourniquet at this point is probably not going to do the job. That's why they have warning signs, which were ignored by virtually everyone with decision making power. So that you don't have to deal with the massive problems we face now
Foreclosure filings in New Jersey rose 49 percent in August compared to a year ago, well above the national average, according to fresh data from a firm that tracks the information.
The state had 6,475 filings -- default notices, scheduled sheriff's sales, bank repossessions -- during the month, a rate of one filing for every 536 households, Irvine, Calif.-based RealtyTrac found. In previous months, the counties hardest hit by foreclosures have been Mercer, Sussex and Union, according to the firm.
It's clear people are struggling, but the national campaigns are too busy arguing over who said what, when and how they meant it. This is the type of bread and butter issue they need to be focused on. Most voters have a friend or know a neighbor who is struggling, about to lose a home or has already gone through that process. Instead, we're getting lipstick.
