Now we have news that the nation’s largest mortgage originator, Countrywide, systematically skipped over the basic framework of how property is legally identified and represented in their transactions.

This administrative lapse could cost Bank of America billions of dollars, according to Daily Finance.

A team leader from B of A’s Mortgage Litigation department testified at a New Jersey hearing that it was “customary for Countrywide to maintain possession of the original note and related documents.” That is a surprise, (more…)

While HUD announced the first round of Neighborhood Stabilization Program funding back in February, it has been a slow process getting those dollars into projects.  .

The Department of Housing and Urban Development announced plans to allocate $3.92 billion to buffet the mounting foreclosure crisis. NSP derives its monies from the Housing and Economic Recovery Act of 2008, through the Community Development Block Grant (CDBG) program. HUD announced a second round of NSP funding early this summer.  It is a smaller round, of approximately $2 billion.

Together, this $6 billion program is the most direct response by the government to stimulate the redevelopment of foreclosed properties.  In the context of federal spending, it is a drop in the bucket.  Six billion dollars is less than the sum of dollars spent (more…)

The dollar drives our new economy, says one informal “economist” scouting properties in Southern California’s suburbs.  Single dollars.

Jim the Realtor, who narrates his own tour of foreclosed commercial residential and retail properties in Encinitas, Carlsbad, and a few other suburbs in San Diego County, California, says there is opportunity, as long as prices drop like a rock. It is an expression of creative destruction, expressed in the uniquely Southern California elocution of a drive-by.

It is an interesting tour.  These are not broken down, falling apart buildings reticent of images in places like Cleveland’s  Slavic Village.  Just the opposite, in fact: these are beach side condos, strip malls off the interstate, and (more…)

Yesterday, President Obama signed the Helping Families Save Their Homes Act into law.  What a relief!

There are two main features to this law:

First, it protects renters.  Renters have been one of the groups getting the collateral damage from the foreclosure crisis.  When an investor owner can’t pay his mortgage, he has to turn the home over.  In most cases, that means that the renters need to move on, as well.

Second, it includes a disclosure rule that requires companies buying mortgages on the secondary market to inform borrowers about who now owns their mortgage.

I have talked with so many people who are not sure who owns their mortgage.  I would say that this is a hard thing to understand.  I have tried to explain it numerous reporters.  Many are confused by the idea of a service and an investor on top of an original lender, possibly working with a wholesaler through a mortgage broker.

Definitely my broadcast news reporters couldn’t grasp it.

There are some other good features, too: a two percent cap on origination fees, and a “net tangible benefit” to borrowers during a refinancing.

The ABA and their bankers are a hard group to bargain with.  They have a lot of friends, particularly on the Financial Services Committee.  So, in a way, getting any kind of new law is great.  That said, this law is sort of misleading, because it does not come with the appropriate penalties for financial institutions who break its terms.

That’s because “curing” the problem does not require a systemic fix, but only a solution for the particular borrower.

Cities and counties are now working as fast as they can to get their applications in for Neighborhood Stabilization Program (NSP) grants.  The deadline in North Carolina to file a letter of intent is November 3rd.  Its a short turnaround.

This is a program that is designed to help communities develop strategic plans to counter home foreclosures.  In North Carolina, there is $52 million available.  About one-quarter of that money has to go specifically to non-profits.  There is also another $5.4 million set aside just for Charlotte.  The applicant counties or cities are allowed to keep five percent of any allocated funds for their own administrative needs.  While it sounds like a lot of money, its not nearly enough to handle the problem.  In most cases, cities and counties will have to make a decision on where to triage the crisis.

If you are wondering who in your community has the ability to apply for these funds, the North Carolina list is right here. The national list is available from this site.

Another issue is the complexity of the application.  Applicants have to identify the location of subprime loans, of defaults and delinquincies, and of foreclosures, in their communities.

It will be interesting to see how many applicants are able to provide that data, in less than a few weeks.

The money must go to programs that buy property that is going into foreclosure, into sales in lieu of a foreclosure, or that is blighted.  Condemned properties would qualify.  There is creative room to find ways to use funds to restore infrastructure.  There is a criteria that requires that one-quarter of the beneficiaries of a project must be low-income.

It seems possible that this money could be utilized by an enterprising City or County to buy and rehabilitate a distressed mobile home park.  Certainly, there would be the chance to help LMI families.  One of the challenges of any multiple housing unit intervention is finding a way to negotiate with multiple lien holders, trustees, and servicers.  Mobile home parks might be relatively easy.  The land is probably going to be on one mortgage.  Repairs for park infrastructure would qualify, too!