DO YOU HAVE A FANNIE MAE LOAN?

Fannie Mae Announces its Own Foreclosure Prevention Plan Under HAFA

by AUSTIN KILGORE HousingWire

Tuesday, June 1st, 2010, 5:07 pm

[Update 1: Corrects current cash incentives for Treasury HAFA]

Fannie Mae (FNM: 0.94 -2.08%) announced its version of the Making Home Affordable Foreclosure Alternatives (HAFA) program Tuesday, implementing the program for all conventional mortgages that are held in Fannie’s portfolio, that are part of an mortgage-backed security (MBS) pool with a special servicing option, or that are part of a shared-risk MBS pool for which Fannie Mae markets the acquired property.

The Fannie Mae program takes effect August 1, 2010 and is designed to mitigate the impact of foreclosures on borrowers who are eligible for a loan modification under the Home Affordable Modification Program (HAMP) but were unsuccessful in obtaining one, Fannie said. Like the Treasury Department‘s HAFA program, servicers cannot consider a borrower for HAFA until the borrower is evaluated and eliminated from eligibility for a Making Home Affordable Modification Program (HAMP) workout plan.

Also like the Treasury program, Fannie Mae will offer servicers cash incentives for completed HAFA transactions, $2,200 for short sales and $1,200 for deed-in-lieu of foreclosure agreements. Borrowers are also eligible for $3,000 in incentives.

That’s more than in the Treasury’s HAFA program, where servicers are eligible for $1,500. Under the Treasury program, borrowers receive $3,000. In addition, the investor is also eligible for a maximum of $2,000 incentive.

Participating servicers will be required to report on their Fannie Mae HAFA activities to both Fannie and the Treasury and the program sunsets on December 31, 2012.

After announcing the program in October 2009, Treasury’s HAFA program began in April. The Fannie Mae HAFA program is the latest in a string of programs designed to help borrowers avoid foreclosure. In addition to HAFA and HAMP workouts, Fannie Mae is letting some distressed borrowers stay in their homes as renters, under the deed for lease (D4L) program.

Under D4L, the homeowner-turned-renter is required to pay fair market rent to stay in their home for up to 12 months. The renter must have enough income to sustain a 31% income-to-rent ratio and rental payments are not subsidized by Fannie Mae, but could include renters eligible for Section 8 payments.

Also, in March 2010, Fannie Mae instructed its servicers to consider an “alternative modifications” for all mortgages that did not qualify for a permanent conversion under HAMP. That “Alt Mod” program, which sunsets on August 31, 2010, is similar to HAFA.

Write to Austin Kilgore.

The author held no relevant investments.

Chase Sued AGAIN Over Mortgage Modifications Gone Wrong: HUFFINGTON POST

Arthur DelaneyArthur Delaney arthur@huffingtonpost.com | HuffPost Reporting

First Posted: 05- 4-10 03:15 PM   |   Updated: 05- 4-10 04:58 PM

Three frustrated homeowners in New York City are suing JPMorgan Chase over the bank’s failure to permanently modify their mortgages under the Obama administration’s plan to help homeowners avoid foreclosure.Earns Jpmorgan Chase

The complaint, filed in federal court in New York, says the plaintiffs, who are represented by attorneys with the nonprofit Urban Justice Center, relied on promises by Chase that they could have their loans modified if they made reduced payments per the Home Affordable Modification Program (HAMP). Despite making payments on time, they’ve received foreclosure threats but no modifications.

One of the plaintiffs, Alex Lam, a 35-year-old restaurant manager, alleges Chase told him to actually stop making payments in order to be eligible for help. In early 2009, Lam contacted Washington Mutual (since absorbed by Chase) about a modification after his adjustable-rate mortgage blew up in his face. He was told he didn’t qualify for help because he was current on his payments.

“Mr. Lam was specifically told that if he stopped making payments for several months, he could be considered for a modification,” the says the complaint.

The next big surprise came in December, when, after making trial payments of $1,568 for the previous six months, Lam was told he owed the bank $12,000. When he protested, Chase relented and told Lam to apply once again for a mod, this time under HAMP. He made his payments until March, when Chase told him he’d failed HAMP’s opaque “Net Present Value” test, meaning the bank determined the investors who owned the loan would make more money via foreclosure than modification. Lam alleges Chase used bogus inputs for the NPV test and that Chase refuses to show its work.

Lam called the situation “very upsetting” in an interview with HuffPost. “I trusted them because they’re a big bank. I did whatever they asked me to.”

HuffPost asked Lam what he wanted from suing Chase.

“Just to get a modification, that’s all I’m asking for,” he said. “Since day one, that’s all I’m asking for.”

HAMP lawsuits have been flying. Last week a 91-year-old veteran of three wars named Peter Ruplenas sued Bank of America over mortgage mod malfeasance in West Virginia.

In April, Faiz and Khadija Jahani of California sued Chase for reasons similar to Lam’s — the bank told them to stop making payments to qualify for help, then foreclosed. A similar case is brewing in Seattle.

Homeowners are supposed to be eligible for HAMP mods if they’re having trouble making monthly payments, owe less than $729,750, took out the loan before January 2009, and if their payment on their first mortgage is more than 31 percent of their income. In theory, if homeowners make reduced payments (typically $500 cheaper) for three months, they are put in “permanent” modifications that last for five years.

But the banks voluntarily participating in HAMP have given permanent mods to just 230,000 homeowners in the program’s first year, a far cry from the three to four million officials said HAMP would help. Meanwhile, frustrated homeowners’ stories of lost paperwork, dishonesty, and incompetence by banks are piling up.

A Chase spokesman declined to comment on the lawsuit.

Florida Foreclosure Fraud Protection Law Enacted – Foreclosures / Mortgage Loan Modification

Florida Foreclosure Fraud Protection Law Enacted.

The Attorney General clarified that this new law will not apply to the Attorney / Client relationship or the way attorneys are paid when they are hired to help distressed homeowners. This law brings much needed protection to those consumers / homeowners who have been taken advantage of by Mortgage Loan Modification Companies – many of which are scams…Effective October 1st, 2008

501.1377 Violations involving homeowners during the course of residential foreclosure proceedings.

(1) LEGISLATIVE FINDINGS AND INTENT.–The Legislature finds that homeowners who are in default on their mortgages, in foreclosure, or at risk of losing their homes due to nonpayment of taxes may be vulnerable to fraud, deception, and unfair dealings with foreclosure-rescue consultants or equity purchasers. The intent of this section is to provide a homeowner with information necessary to make an informed decision regarding the sale or transfer of his or her home to an equity purchaser. It is the further intent of this section to require that foreclosure-related rescue services agreements be expressed in writing in order to safeguard homeowners against deceit and financial hardship; to ensure, foster, and encourage fair dealing in the sale and purchase of homes in foreclosure or default; to prohibit representations that tend to mislead; to prohibit or restrict unfair contract terms; to provide a cooling-off period for homeowners who enter into contracts for services related to saving their homes from foreclosure or preserving their rights to possession of their homes; to afford homeowners a reasonable and meaningful opportunity to rescind sales to equity purchasers; and to preserve and protect home equity for the homeowners of this state.

(2) DEFINITIONS.–As used in this section, the term:

(a) “Equity purchaser” means any person who acquires a legal, equitable, or beneficial ownership interest in any residential real property as a result of a foreclosure-rescue transaction. The term does not apply to a person who acquires the legal, equitable, or beneficial interest in such property:

1. By a certificate of title from a foreclosure sale conducted under chapter 45;

2. At a sale of property authorized by statute;

3. By order or judgment of any court;

4. From a spouse, parent, grandparent, child, grandchild, or sibling of the person or the person’s spouse; or

5. As a deed in lieu of foreclosure, a workout agreement, a bankruptcy plan, or any other agreement between a foreclosing lender and a homeowner.

(b) “Foreclosure-rescue consultant” means a person who directly or indirectly makes a solicitation, representation, or offer to a homeowner to provide or perform, in return for payment of money or other valuable consideration, foreclosure-related rescue services. The term does not apply to:

1. A person excluded under s. 501.212.

2. A person acting under the express authority or written approval of the United States Department of Housing and Urban Development or other department or agency of the United States or this state to provide foreclosure-related rescue services.

3. A charitable, not-for-profit agency or organization, as determined by the United States Internal Revenue Service under s. 501(c)(3) of the Internal Revenue Code, which offers counseling or advice to an owner of residential real property in foreclosure or loan default if the agency or organization does not contract for foreclosure-related rescue services with a for-profit lender or person facilitating or engaging in foreclosure-rescue transactions.

4. A person who holds or is owed an obligation secured by a lien on any residential real property in foreclosure if the person performs foreclosure-related rescue services in connection with this obligation or lien and the obligation or lien was not the result of or part of a proposed foreclosure reconveyance or foreclosure-rescue transaction.

5. A financial institution as defined in s. 655.005 and any parent or subsidiary of the financial institution or of the parent or subsidiary.

6. A licensed mortgage broker, mortgage lender, or correspondent mortgage lender that provides mortgage counseling or advice regarding residential real property in foreclosure, which counseling or advice is within the scope of services set forth in chapter 494 and is provided without payment of money or other consideration other than a mortgage brokerage fee as defined in s. 494.001.

(c) “Foreclosure-related rescue services” means any good or service related to, or promising assistance in connection with:

1. Stopping, avoiding, or delaying foreclosure proceedings concerning residential real property; or

2. Curing or otherwise addressing a default or failure to timely pay with respect to a residential mortgage loan obligation.

(d) “Foreclosure-rescue transaction” means a transaction:

1. By which residential real property in foreclosure is conveyed to an equity purchaser and the homeowner maintains a legal or equitable interest in the residential real property conveyed, including, without limitation, a lease option interest, an option to acquire the property, an interest as beneficiary or trustee to a land trust, or other interest in the property conveyed; and

2. That is designed or intended by the parties to stop, avoid, or delay foreclosure proceedings against a homeowner’s residential real property.

(e) “Homeowner” means any record title owner of residential real property that is the subject of foreclosure proceedings.

(f) “Residential real property” means real property consisting of one-family to four-family dwelling units, one of which is occupied by the owner as his or her principal place of residence.

(g) “Residential real property in foreclosure” means residential real property against which there is an outstanding notice of the pendency of foreclosure proceedings recorded pursuant to s. 48.23.

(3) PROHIBITED ACTS.–In the course of offering or providing foreclosure-related rescue services, a foreclosure-rescue consultant may not:

(a) Engage in or initiate foreclosure-related rescue services without first executing a written agreement with the homeowner for foreclosure-related rescue services; or

(b) Solicit, charge, receive, or attempt to collect or secure payment, directly or indirectly, for foreclosure-related rescue services before completing or performing all services contained in the agreement for foreclosure-related rescue services.

(4) FORECLOSURE-RELATED RESCUE SERVICES; WRITTEN AGREEMENT.–

(a) The written agreement for foreclosure-related rescue services must be printed in at least 12-point uppercase type and signed by both parties. The agreement must include the name and address of the person providing foreclosure-related rescue services, the exact nature and specific detail of each service to be provided, the total amount and terms of charges to be paid by the homeowner for the services, and the date of the agreement. The date of the agreement may not be earlier than the date the homeowner signed the agreement. The foreclosure-rescue consultant must give the homeowner a copy of the agreement to review not less than 1 business day before the homeowner is to sign the agreement.

(b) The homeowner has the right to cancel the written agreement without any penalty or obligation if the homeowner cancels the agreement within 3 business days after signing the written agreement. The right to cancel may not be waived by the homeowner or limited in any manner by the foreclosure-rescue consultant. If the homeowner cancels the agreement, any payments that have been given to the foreclosure-rescue consultant must be returned to the homeowner within 10 business days after receipt of the notice of cancellation.

(c) An agreement for foreclosure-related rescue services must contain, immediately above the signature line, a statement in at least 12-point uppercase type that substantially complies with the following:

HOMEOWNER’S RIGHT OF CANCELLATION

YOU MAY CANCEL THIS AGREEMENT FOR FORECLOSURE-RELATED RESCUE SERVICES WITHOUT ANY PENALTY OR OBLIGATION WITHIN 3 BUSINESS DAYS FOLLOWING THE DATE THIS AGREEMENT IS SIGNED BY YOU.

THE FORECLOSURE-RESCUE CONSULTANT IS PROHIBITED BY LAW FROM ACCEPTING ANY MONEY, PROPERTY, OR OTHER FORM OF PAYMENT FROM YOU UNTIL ALL PROMISED SERVICES ARE COMPLETE. IF FOR ANY REASON YOU HAVE PAID THE CONSULTANT BEFORE CANCELLATION, YOUR PAYMENT MUST BE RETURNED TO YOU NO LATER THAN 10 BUSINESS DAYS AFTER THE CONSULTANT RECEIVES YOUR CANCELLATION NOTICE.

TO CANCEL THIS AGREEMENT, A SIGNED AND DATED COPY OF A STATEMENT THAT YOU ARE CANCELING THE AGREEMENT SHOULD BE MAILED (POSTMARKED) OR DELIVERED TO (NAME) AT (ADDRESS) NO LATER THAN MIDNIGHT OF (DATE) .

IMPORTANT: IT IS RECOMMENDED THAT YOU CONTACT YOUR LENDER OR MORTGAGE SERVICER BEFORE SIGNING THIS AGREEMENT. YOUR LENDER OR MORTGAGE SERVICER MAY BE WILLING TO NEGOTIATE A PAYMENT PLAN OR A RESTRUCTURING WITH YOU FREE OF CHARGE.

(d) The inclusion of the statement does not prohibit the foreclosure-rescue consultant from giving the homeowner more time in which to cancel the agreement than is set forth in the statement, provided all other requirements of this subsection are met.

(e) The foreclosure-rescue consultant must give the homeowner a copy of the signed agreement within 3 hours after the homeowner signs the agreement.

(5) FORECLOSURE-RESCUE TRANSACTIONS; WRITTEN AGREEMENT.–

(a) 1. A foreclosure-rescue transaction must include a written agreement prepared in at least 12-point uppercase type that is completed, signed, and dated by the homeowner and the equity purchaser before executing any instrument from the homeowner to the equity purchaser quitclaiming, assigning, transferring, conveying, or encumbering an interest in the residential real property in foreclosure. The equity purchaser must give the homeowner a copy of the completed agreement within 3 hours after the homeowner signs the agreement. The agreement must contain the entire understanding of the parties and must include:

a. The name, business address, and telephone number of the equity purchaser.

b. The street address and full legal description of the property.

c. Clear and conspicuous disclosure of any financial or legal obligations of the homeowner that will be assumed by the equity purchaser.

d. The total consideration to be paid by the equity purchaser in connection with or incident to the acquisition of the property by the equity purchaser.

e. The terms of payment or other consideration, including, but not limited to, any services that the equity purchaser represents will be performed for the homeowner before or after the sale.

f. The date and time when possession of the property is to be transferred to the equity purchaser.

2. A foreclosure-rescue transaction agreement must contain, above the signature line, a statement in at least 12-point uppercase type that substantially complies with the following:

I UNDERSTAND THAT UNDER THIS AGREEMENT I AM SELLING MY HOME TO THE OTHER UNDERSIGNED PARTY.

3. A foreclosure-rescue transaction agreement must state the specifications of any option or right to repurchase the residential real property in foreclosure, including the specific amounts of any escrow payments or deposit, down payment, purchase price, closing costs, commissions, or other fees or costs.

4. A foreclosure-rescue transaction agreement must comply with all applicable provisions of 15 U.S.C. ss. 1600 et seq. and related regulations.

(b) The homeowner may cancel the foreclosure-rescue transaction agreement without penalty if the homeowner notifies the equity purchaser of such cancellation no later than 5 p.m. on the 3rd business day after signing the written agreement. Any moneys paid by the equity purchaser to the homeowner or by the homeowner to the equity purchaser must be returned at cancellation. The right to cancel does not limit or otherwise affect the homeowner’s right to cancel the transaction under any other law. The right to cancel may not be waived by the homeowner or limited in any way by the equity purchaser. The equity purchaser must give the homeowner, at the time the written agreement is signed, a notice of the homeowner’s right to cancel the foreclosure-rescue transaction as set forth in this subsection. The notice, which must be set forth on a separate cover sheet to the written agreement that contains no other written or pictorial material, must be in at least 12-point uppercase type, double-spaced, and read as follows:

NOTICE TO THE HOMEOWNER/SELLER

PLEASE READ THIS FORM COMPLETELY AND CAREFULLY. IT CONTAINS VALUABLE INFORMATION REGARDING CANCELLATION RIGHTS.

BY THIS CONTRACT, YOU ARE AGREEING TO SELL YOUR HOME. YOU MAY CANCEL THIS TRANSACTION AT ANY TIME BEFORE 5:00 P.M. OF THE THIRD BUSINESS DAY FOLLOWING RECEIPT OF THIS NOTICE.

THIS CANCELLATION RIGHT MAY NOT BE WAIVED IN ANY MANNER BY YOU OR BY THE PURCHASER.

ANY MONEY PAID DIRECTLY TO YOU BY THE PURCHASER MUST BE RETURNED TO THE PURCHASER AT CANCELLATION. ANY MONEY PAID BY YOU TO THE PURCHASER MUST BE RETURNED TO YOU AT CANCELLATION.

TO CANCEL, SIGN THIS FORM AND RETURN IT TO THE PURCHASER BY 5:00 P.M. ON (DATE) AT (ADDRESS) . IT IS BEST TO MAIL IT BY CERTIFIED MAIL OR OVERNIGHT DELIVERY, RETURN RECEIPT REQUESTED, AND TO KEEP A PHOTOCOPY OF THE SIGNED FORM AND YOUR POST OFFICE RECEIPT.

I (we) hereby cancel this transaction.

Seller’s Signature

Printed Name of Seller

Seller’s Signature

Printed Name of Seller

Date

(c) In any foreclosure-rescue transaction in which the homeowner is provided the right to repurchase the residential real property, the homeowner has a 30-day right to cure any default of the terms of the contract with the equity purchaser, and this right to cure may be exercised on up to three separate occasions. The homeowner’s right to cure must be included in any written agreement required by this subsection.

(d) In any foreclosure-rescue transaction, before or at the time of conveyance, the equity purchaser must fully assume or discharge any lien in foreclosure as well as any prior liens that will not be extinguished by the foreclosure.

(e) If the homeowner has the right to repurchase the residential real property, the equity purchaser must verify and be able to demonstrate that the homeowner has or will have a reasonable ability to make the required payments to exercise the option to repurchase under the written agreement. For purposes of this subsection, there is a rebuttable presumption that the homeowner has a reasonable ability to make the payments required to repurchase the property if the homeowner’s monthly payments for primary housing expenses and regular monthly principal and interest payments on other personal debt do not exceed 60 percent of the homeowner’s monthly gross income.

(f) If the homeowner has the right to repurchase the residential real property, the price the homeowner pays may not be unconscionable, unfair, or commercially unreasonable. A rebuttable presumption, solely between the equity purchaser and the homeowner, arises that the foreclosure-rescue transaction was unconscionable if the homeowner’s repurchase price is greater than 17 percent per annum more than the total amount paid by the equity purchaser to acquire, improve, maintain, and hold the property. Unless the repurchase agreement or a memorandum of the repurchase agreement is recorded in accordance with s. 695.01, the presumption arising under this subsection shall not apply against creditors or subsequent purchasers for a valuable consideration and without notice.

(6) REBUTTABLE PRESUMPTION.– Any foreclosure-rescue transaction involving a lease option or other repurchase agreement creates a rebuttable presumption, solely between the equity purchaser and the homeowner, that the transaction is a loan transaction and the conveyance from the homeowner to the equity purchaser is a mortgage under s. 697.01. Unless the lease option or other repurchase agreement, or a memorandum of the lease option or other repurchase agreement, is recorded in accordance with s. 695.01, the presumption created under this subsection shall not apply against creditors or subsequent purchasers for a valuable consideration and without notice.

(7) VIOLATIONS. – A person who violates any provision of this section commits an unfair and deceptive trade practice as defined in part II of this chapter. Violators are subject to the penalties and remedies provided in part II of this chapter, including a monetary penalty not to exceed $15,000 per violation.

YET ANOTHER: Owners say their Boise home was sold without their knowledge

A Boise family fights eviction after what its lawyer calls a botched loan modification.

BY SANDRA FORESTER – sforester@idahostatesman.com
Copyright: © 2010 Idaho Statesman
Published: 04/07/10

Editor’s note: This is a corrected story. An earlier version included an incorrect surname for MetLife spokesman Ted Mitchell and an incorrect assessed value of the Rudans’ home. It is assessed at $191,900.

•••

Zijad and Hata Rudan, refugees from Bosnia-Herzegovina, moved to Idaho in 2000. When they bought a new home in 2006 in a quiet, middle-class West Boise neighborhood, they planned to raise their three children, care for Zijad Rudan’s elderly, disabled mother, and finish their lives there.

A self-employed construction worker and stone mason, Zijad put thousands of dollars of labor, upgraded materials and landscaping into the house.

Now they’re on the verge of being thrown out. To the Rudans’ dismay, the house was sold last month at a foreclosure sale.

The sale occurred despite what the Rudans say were their loan servicer’s promises not to sell it. The family fell behind last year on monthly mortgage payments after the Valley’s housing downturn sharply cut Rudan’s income. The company that bought the home says it did nothing wrong. The loan servicer, in response to Idaho Statesman inquiries, said Tuesday that it is working with the Rudans to solve the problem.

“We hope to stay in the house,” Zijad Rudan said.

WHAT WENT WRONG

In 2008, Zijad’s income dropped to barely half what he made the year before. The family struggled but kept making house payments until February 2009. They owed $220,000 and were paying $1,684.78 a month.

Last April, they applied to their loan servicer, MetLife, for a loan modification.

The family said MetLife offered in May to let them pay $1,052.68 a month – a 38 percent reduction – through a three-month trial period while they were considered for a permanent modification under the federal Home Affordable Mortgage Program.

The federal program requires mortgage servicers to review the mortgage modification with the homeowner at the end of the trial period, convert the mortgage to the lower amount or consider other alternatives such as a short sale or taking the deed in lieu of payment before putting the home into a foreclosure sale.

The Rudans made two more full payments for March and April, with late fees. In June, they said, the payments were sent back to them.

Zijad Rudan said he called MetLife to ask why. He said he was told not to be concerned because the application for modification was still being processed. MetLife told him to start paying the reduced amount, he said. So he did.

THEN, AN UNHAPPY SURPRISE

The next month, the Rudans received a notice of trustee’s sale.

Alarmed, they called MetLife again. The Rudans said a representative again told them not to worry, saying the modification process was moving forward and they should throw the notice in the garbage. The family was told that their July payment had been received and that all was well.

They continued to make the required modified payments each month. As MetLife continued work on the loan-modification application, it sought more information. The Rudans faxed numerous documents, such as paycheck stubs, sometimes several times, the family said.

On Feb. 8, they wrote another monthly check. MetLife still had not notified them of any decision on their permanent loan modification request, they said. But the check returned Feb. 17.

Once again, the couple called MetLife. They said they spent the morning calling the company and reached only recorded messages, so then went to a MetLife office in Eagle for help.

The local MetLife representative called the parent company. MetLife again asked the family for more information and pay stubs. The Rudans said they faxed the documents that day.

The couple called March 4 to check on their status. They say they were told the modification was still being processes and they should call back March 10.

Instead, they called on March 8 and were told that their files had been turned over to a different department, and that a foreclosure sale had been scheduled but postponed. The Rudans said they were told not to make payments for February and March.

A MAN ON THE DOORSTEP

On March 12, a representative of Gorilla Capital Inc. showed up at their door. The Oregon company buys homes at foreclosure sales and says it sells them for about $20,000 less than comparable houses in the market.

The Gorilla representative said he’d bought the house at a foreclosure auction at 11 a.m. that day for $111,201, just $1 more than MetLife bid on it. The home is assessed at $191,900, said the Rudans’ attorney, Richard Eppink of Idaho Legal Aid.

The Gorilla representative started eviction proceedings against the family that day, court documents say.

Since then, the family has been in turmoil, trying to find help and to work through the legal process.

On Tuesday, the couple appeared in Ada County Magistrate Court, where a hearing to evict them was postponed for a week.

Eppink also filed a District Court lawsuit against MetLife Bank, Transnation Title and Gorilla Capital Inc. to undo the trustee’s sale and declare the Rudans the rightful owners.

“We’re trying to stop the eviction process until we get this sorted out and get everyone into court,” Eppink said.

FEELING CHEATED

Through an interpreter, the Rudans said they are confused because they did everything MetLife asked of them through the past year.

Eppink said he hopes MetLife will recognize what it’s done wrong and work things out, and that Gorilla will negotiate in good faith.

“I can assure you that MetLife Home Loans is working diligently to resolve this situation, and remains in contact with the customer,” MetLife spokesman Ted Mitchell said in an e-mail to the Statesman.

Gorilla CEO John Helmick said he would be delighted to see the Zudans buy back their home as some other homeowners have done with homes his company acquired.

He said he would sell it to them for $149,000 – one-third less than they owed to MetLife.

Gorilla said his company followed the law.

“Gorilla Capital has not been provided with any documentation showing that MetLife and the borrower reached an agreement,” Helmick said.

“Instead the trustee has taken our money and provided us with the deed to the house.”

Sandra Forester: 377-6464

New Obama Mortgage Plan: A Backdoor Bank Bailout

  • MARCH 30, 2010, 3:38 P.M. ET WSJ
  • New Obama Mortgage Plan: A Backdoor Bank Bailout

    We are looking at tens of billions of taxpayer dollars again being funneled to the very banks behind the mortgage crisis.

    By MARK A. CALABRIA

    From the Cato Institute

    Today President Obama announced an expansion and modification of his Home Affordable Modification Program (HAMP). While one can debate the merits of incentives to keep unemployed families in their homes while they search for jobs — I personally believe this will more often than not keep those families tied to weak labor markets — what should be beyond debate is the various bailouts to mortgage lenders contained in the program’s fine print.

    Several of the largest mortgage lenders, including some that have already received huge bailouts, carry hundreds of billions worth of second mortgages on their books. As home prices have nationally declined by almost 30 percent, these second mortgages are worthless in the case of a foreclosure. Second mortgages are usually wiped out completely during a foreclosure if the price has decreased more than 20 percent. Yet the Obama solution is now to pay off 6 cents on the dollar for those junior liens. While 6 cents doesn’t sound like a lot, it is a whole lot more than zero, which is what the banks would receive otherwise. Given that the largest lenders are carrying over $500 billion in second mortgages that may need to be written down, we are looking at tens of billions of taxpayer dollars again being funneled to the very banks behind the mortgage crisis.

    If that bailout isn’t enough, the new plan increases payments to lenders to not foreclose, all at the expense of the taxpayer. While TARP was passed under Bush’s watch, and he rightly deserves blame for it, Obama continues these bailouts in the name of avoiding a much needed correction in our housing market.