Mortgage Loan Fees Increased Thirty-Six Percent in two years: CFPB Launches Inquiry

The Consumer Financial Protection Bureau (CFPB) has issued a Request for Information (RFI) regarding fees imposed in residential mortgage transactions. This initiative aims to gather insights and comments from the public about the escalating costs associated with obtaining a mortgage. As homeowners and prospective buyers, this is an opportunity for you to voice your experiences and concerns regarding these fees.

From 2021 to 2023, the median total loan costs for home purchase loans surged by over 36%, with the median dollar amount paid by borrowers in 2022 nearing $6,000. These rising costs, coupled with increased home prices and interest rates, have significantly strained household budgets. The CFPB’s focus is on understanding the impact of these fees on home affordability and access to credit, particularly for first-time and lower-income buyers who are disproportionately affected.

The CFPB has launched a public inquiry into what they term “junk fees” in mortgage closing costs. According to CFPB Director Rohit Chopra, these excessive fees can drain down payments and push up monthly mortgage costs, making homeownership less accessible. The Bureau is seeking to uncover why these costs are rising, who benefits from them, and how they might be reduced to alleviate the financial burden on both borrowers and lenders.

Mortgage lenders are also affected by these rising costs. Increased expenses for services like credit reports and title insurance can limit lenders’ ability to offer competitive mortgages, as they either pass these costs onto borrowers or absorb them, affecting their bottom line. The CFPB is particularly interested in understanding the competitive pressures and market barriers affecting these fees, as well as gathering data on the broader impacts on housing affordability and home equity.

The CFPB is calling on homeowners, homebuyers, and industry participants to share their stories, data, and insights on mortgage closing costs. Comments can be submitted electronically via the Federal eRulemaking Portal or by email. Your feedback will help shape future regulations and policies aimed at ensuring fair and transparent mortgage practices. For more details, including submission instructions, refer to the full notice from the CFPB below.



Beware of Unjust Fees: Insights from the Latest CFPB Mortgage Report

The Consumer Financial Protection Bureau’s (CFPB) Spring 2024 report on mortgage servicing reveals critical issues that prospective and current homeowners should be aware of. The report highlights a troubling trend of unauthorized charges and deceptive practices in mortgage servicing, which could impact a homeowner’s financial stability and property rights. For instance, some services were found to be charging illegal property inspection fees, particularly on Fannie Mae loans, despite guidelines clearly prohibiting such fees when certain conditions are met. These unjust fees, ranging from $10 to $50, were imposed even when borrowers were actively engaging with their servicers, highlighting a significant breach of trust and a potential drain on homeowner resources .

Moreover, the report exposes servicers for levying unauthorized late fees, violating both consumer trust and regulatory requirements. These overcharges, which occurred due to flawed administrative processes or oversight, are especially egregious as they can unfairly increase the financial burden on homeowners. The CFPB’s commitment to scrutinizing such practices is a reminder of the need for vigilance among consumers. The report’s findings underscore the importance of homeowners staying informed and proactive in managing their mortgage accounts to avoid falling victim to these predatory practices. For a deeper understanding and additional details, consider reviewing the complete report below .


CFPB Supervisory Highlights – Mortgage Servicing Edition – Spring 2024

(click below to access complete report)

CFPB Supervisory Highlights - Mortgage Servicing Edition - Spring 2024

CFPB Orders Wells Fargo To Pay $3.7 Billion…Includes more than $2 B in redress to consumers

Today, the Consumer Financial Protection Bureau (CFPB) released details of a Consent Order they reached with Wells Fargo Bank, N.A. in which Wells Fargo is ordered to pay “more than $2 billion in redress to consumers and a $1.7 billion civil penalty for legal violations across several of its largest product lines.”  According to a press release issued by the CFPB, Wells Fargo’s “..illegal conduct led to billions of dollars in financial harm to its customers and, for thousands of customers, the loss of their vehicles and homes.”   Rohit Chopra, the Director of the Consumer Financial Protection Bureau, stated “Wells Fargo’s rinse-repeat cycle of violating the law has harmed millions of American families”.

The CFPB order requires Wells Fargo to: 

  • Provide more than $2 billion in redress to consumers: Wells Fargo will be required to pay redress totaling more than $2 billion to harmed customers. These payments represent refunds of wrongful fees and other charges and compensation for a variety of harms such as frozen bank accounts, illegally repossessed vehicles, and wrongfully foreclosed homes. Specifically, Wells Fargo will have to pay:
    • More than $1.3 billion in consumer redress for affected auto lending accounts.
    • More than $500 million in consumer redress for affected deposit accounts, including $205 million for illegal surprise overdraft fees.
    • Nearly $200 million in consumer redress for affected mortgage servicing accounts.
  • Stop charging surprise overdraft fees: Wells Fargo may not charge overdraft fees for deposit accounts when the consumer had available funds at the time of a purchase or other debit transaction, but then subsequently had a negative balance once the transaction settled. Surprise overdraft fees have been a recurring issue for consumers who can neither reasonably anticipate nor take steps to avoid them.
  • Ensure auto loan borrowers receive refunds for certain add-on fees: Wells Fargo must ensure that the unused portion of GAP contracts, a type of debt cancellation contract that covers the remaining amount of the borrower’s auto loan in the case of a major accident or theft, is refunded to the borrower when a loan is paid off or otherwise terminates early.
  • Pay $1.7 billion in penalties: Wells Fargo will pay a $1.7 billion penalty to the CFPB, which will be deposited into the CFPB’s victims relief fund.

To get more information on the CFPB victims relief fund, click here.

Wells Fargo employees who are aware of other illegal activity are encouraged to send information about what they know to whistleblower@cfpb.gov.

 

CFPB Proposes Banning Foreclosures Through The End Of This Year

The Consumer Financial Protection Bureau (CFPB) earlier this week proposed rule changes that would help prevent “avoidable foreclosures” that will come about when the current foreclosure ban expires June 30th.  According to the CFPB, nearly 3 million homeowners are delinquent on their mortgages as a result of the COVID-19 pandemic as well as the economic issues that have come about as a result.

The CFPB’s proposed rule changes include:

  • Require a pre-foreclosure review period that would generally prohibit loan servicers from starting foreclosure until after December 31, 2021 on loans secured by a borrower’s principal residence.
  • Permit loan servicers to offer “certain streamlined loan modification options to borrowers with COVID-19-related hardships.”

The CFPB is going to accept comments on their proposed rules until May 11, 2011 and then afterward will decide how to proceed.

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About the CFPB (from their website)

The Consumer Financial Protection Bureau (CFPB) is a 21st century agency that helps consumer finance markets work by making rules more effective, by consistently and fairly enforcing those rules, and by empowering consumers to take more control over their economic lives. For more information, visit www.consumerfinance.gov.

COVID-19 Pandemic Driven Serious Mortgage Delinquencies To Highest Levels Since The Great Recession

According to a report just released by the Consumer Financial Protection Bureau (CFPB), titled “Housing insecurity and the COVID-19 pandemic“, there are over 2 million homeowners that have fallen behind at least three months on their mortgage payments.  This represents a 250% increase from pre-Covid-19 levels and is now at a level we haven’t seen since the height of the Great Recession in 2010.

Homeowners with an FHA mortgage delinquency rates double rate for all loans:

As the chart below shows, homeowners with an FHA mortgage hit a serious mortgage delinquency rate of 10.8% during the 3rd quarter of 2020, with the rate for all mortgages was just under half that at 5.2%.

Serious Mortgage Delinquency Rate By Loan Type- Q1 2005 – Q3 2020

Seroious Mortgage Delinquency Rate By Loan Type- Q1 2005 - Q3 2020

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Continue reading “COVID-19 Pandemic Driven Serious Mortgage Delinquencies To Highest Levels Since The Great Recession

How Mortgage Forbearance Works Under CARES ACT (Video)

Yesterday, I shared information about forbearance options available to borrowers with an FHA loan that has been impacted by the COVID-19 pandemic.  Today, the Consumer Finance Protection Bureau released a very informative video titled “CARES Act Mortgage Forbearance: What You Need to Know” which is below.  This video contains a great explanation of what forbearance is, how it works and how to request it on your mortgage.

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Home Mortgage Lending In Low and Moderate Income Areas On The Rise

There is little doubt that lower-income individuals and, subsequently, lower-income neighborhoods, were impacted more negatively by the housing market bubble burst in 2008 than other areas.  This resulted in extremely high mortgage delinquency rates, high foreclosure rates, and declining home values.  Afterward, citing “loose” lending standards, sub-prime mortgages, etc, the mortgage market tightened the reins on mortgage lending making it more difficult for everyone to get a loan, but particularly, those folks in the lower income brackets.

As time has passed, home loan requirements have eased and it is now easier to obtain a home loan.  Some of the requirements that have eased are minimum credit scores, down-payment requirements as well as rules affecting seller paid closing costs, gifts, etc, which has, in particular, helped lower and moderate-income home buyers.  The Consumer Financial Protection Bureau (CFPB), the government “watch-dog” of all things financial, tracks and reports data related to home mortgages which reveal that, in fact, home mortgage lending has increased to the highest levels in over a decade in low and moderate-income areas.  The CFPB charts below reveal:

  • Home loan volume in low-income areas topped $3.8 Billion in November 2016, the highest level since the CFPB began tracking this data in January 2009.  The CFPB forecast, predicts that, once the data is in, a record $4 Billion in home loans will be reported for August 2017.
  • Home loan volume in moderate-income areas hit $21.7 Billion in October 2016, also the highest level since the CFPB began tracking this data in January 2009.  The CFPB forecast, predicts that, once the data is in, a record of $23+ Billion in home loans will be reported for July 2017.
  • The middle-income areas have fared well also with home-loan volume hitting a record $76.8 Billion in October 2016.  Unlike the low and moderate income area forecasts, the CFPB is forecasting a slight cooling in the middle-income areas with home loan volume dropping to $73.5 Billion for June 2017 and then slightly lower in July once the data is in.
  • High-income areas are trailing the other areas in terms of home loan volume having peaked at $116 Billion over 4-years ago, in January 2013.  The CFPB is predicting lending data will show $90.5 Billion in home loans in high-income areas for June 2017.

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Low-Income Areas – Home Mortgage Volume

Low-Income Areas - Home Mortgage Volume

Moderate-Income Areas – Home Mortgage Volume

Moderate-Income Areas - Home Mortgage Volume

Middle-Income Areas – Home Mortgage Volume

Middle-Income Areas - Home Mortgage Volume

High-Income Areas – Home Mortgage Volume

High-Income Areas - Home Mortgage Volume

Home Buyers; Do You Know What You’re Worth?

Home buyers for sale!  Buy one get one free!

Ok, it’s not quite like that but, if you are a home buyer, odds are you have been bought and sold whether you know it or not!  Does this sound surprising to you?  I’m guessing it probably does as I don’t think most home buyers realize that, just like the homes they are shopping for, there is a market for home buyers (and sellers, of course)  as well. I’m talking about “real estate leads”.

How home buyers are bought and sold…

Before I go further, or, especially if you are a real estate agent reading this, before you start hating on me thinking I’m bashing the idea of leads, I should explain that I have no issue with “leads”.   Most every real estate agent I know is always looking for leads or that next opportunity to do business with someone.  That is normal.  In fact, especially for new, or newer real estate agents, that have not yet established a large referral base, leads are critical to their survival in this business.  To go one step further and in the interest of full disclosure, my company, MORE, REALTORS®, is known to be one of the best companies in the St Louis area for generating leads or opportunities for our agents.

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St Louis Favorite Real Estate Search Site - Best Site to Search for St Louis Homes For Sale

Google search for “St Louis Favorite Real Estate Search Site” performed on 9-15-2017

So, back to how buyers are bought and sold and where my rub comes in.  You’ve probably heard of Zillow® and even though St Louis’ favorite real estate search site is our local site,  St Louis Real Estate Search (don’t take my word for it, Google it), many, many potential home buyers go to sites like Zillow®, as well as many other large national sites, to search for homes for sale.  What a lot of people don’t realize, or never give a thought to is those types of websites are not operated by real estate companies but instead are operated by companies which depend on, among other things, the sale of buyer leads to produce revenue.

I’m not bashing Zillow® here, or anyone else, just simply pointing out the difference between a website such as that one and a local one, such as StLouisRealEstateSearch.com that is operated by local real estate professionals.  

How does Zillow® sell the buyers that use their site?  Although there may be other ways, what seems to be the most popular way is their Premier Agent® agent program whereby agents pay to be featured next to listings for a particular zip code or many zip codes.  What’s wrong with this?  Nothing, from the standpoint of Zillow® or the agent buying the leads.  From the consumer standpoint though, I’m a strong advocate for informed consumers and, as such, think home buyers should realize that when an agent calls in response  to their inquiry on Zillow® that the only real “vetting” for the agent that got the lead was, for the most part, they are paying for leads in that zip code.  I have to say again, I’m not criticizing those agents or saying they are bad, in fact, many of them are very good.  However, I’m suggesting that you, as a home buyer, be informed and understand how and why they are the one calling you.

So how is this different from the way our company handles leads, or other local real estate companies?  Well, while I can’t speak for all companies, I can share how we do it at MORE…For starters, as I mentioned before, our site, StLouisRealEstateSearch.com, is owned and operated by a St Louis real estate company, MORE, REALTORS.  At MORE, only agents of good character, that conduct themselves in an honest and ethical manner and are true professionals in every sense are invited to join our firm.  Next, we don’t sell our home buyer leads to any agent that pays the price.  Instead, when a home buyer makes an inquiry on StLouisRealEstateSearch.com, we match them up with one of our agents that is knowledgeable and experienced in the area, property type, etc that the home buyer is interested in and have that agent follow up.  This way we can ensure that a home buyer on our site is going to get the information they want from a local, real estate professional who obtained the lead by being qualified to properly serve the needs of the home buyer.

A final word, and where I do have a problem with Zillow® leads…

I would be remiss if I ended this article without sharing the fact that it has become very common for mortgage lenders, to pay for Zillow® leads for an agent.  The issue here is, the loan officer paying for the leads, naturally, expects the agent to refer any buyers that come off the leads back to them for their mortgage.  While on the surface this may not seem like a problem, real estate transactions are governed, in part, by the Real Estate Settlement Procedures Act (RESPA) which prohibits kickbacks.  In other words, a loan officer can’t pay for leads for an agent and expect the agent to refer the lead back to them for their loan without being in possible violation of RESPA.  You can reach more about this in an article I did previously about Zillow coming under fire by the CFPB over this issue here.

I don’t believe the loan officers paying for Zillow® leads for agents are bad.  Many of them are very good.  I just think it is good for consumers to know how it works, so if you make an inquiry on Zillow, just realize how and why the agent that called you got your info.  Then, later, if that agent makes a lender recommendation to you, realize that the lender he or she recommended may have been selected by them based upon that lender “paying for you” rather than simply based upon merit or qualifications of the loan officer.    Granted, the lender chosen by the agent to have pay for their leads may very well be the lender that the agent likes doing business with because of their skill and qualifications, but under RESPA the type of arrangement I described appears to be problematic.

My advice…

To home buyers:

  • Use a great real estate search site, such as StLouisRealEstateSearch.com, that is backed by local, real estate professionals ready, and qualified, to properly serve you.
  • Whether an agent contacts you from our site, Zillow®, or any other site, do your homework on the agent and have the agent share their qualifications and experience with you before deciding whether or not to have that agent represent you.
  • When you get a lender recommendation from your agent ask if the agent has any sort of financial relationship with that lender for starters, then check out the lender just like you did the agent.  By the way, if there is any sort of financial or business relationship between the agent and lender, that should be disclosed to you without asking.

To real estate agents:

  • Before you allow a lender, title company or another party to your real estate transactions to pay for leads for you, or provide services or gifts in exchange for business, get up to speed on RESPA.
  • Seek out a company like MORE, REALTORS, which produces enough leads, as well as has the tools, resources and coaching for agents to produce their own leads, thereby eliminating the need to enter into agreements with lenders that may put them at risk.

To loan officers:

  • Don’t buy into the “everyone’s doing it so it must be ok” mentality.  Pay close attention to the news coming out from Inman and other credible sources about the Zillow investigation by the CFPB as well as reports by the CFPB of fines being levied against loan officers and agents.
  • If your company is participating in buying leads for your agents, and particularly if they are telling you it’s ok to do, have them write the check to Zillow® instead of having you do it and then reimbursing you as part of your “expense reimbursement”.
  • Find ways to support agents and build your agent network that will not conflict with RESPA.  Contact me and I’ll share some ideas.
(Zillow® and Premier Agent® are registered trademarks of Zillow® – REALTOR® is a registered trademark of the National Association of REALTORS®)

What To Look Out For In Credit Repair Companies

The housing bubble that led to the housing bubble burst in 2008 started a decline in the value of homes, including those in St Louis, for the following 3 to 4 years.  This resulted in a much larger number of homeowners facing financial struggles including late payments, foreclosures, short sales, bankruptcy and the like, than was the historic norm.  As a result, while maybe not a new concept but certainly one that had been more obscure in the past, credit repair, became a lucrative and growing business as consumers sought to repair the damage done and position themselves to buy a home.

In St Louis, there are many companies offering credit repair services, with many making some pretty enticing sounding claims with regard to removal of negative items from your credit, improving your credit score in a short time period and so on.  While there are reputable companies out there doing a good job for St Louis homebuyers looking to improve their credit no doubt, there are also some that are probably not doing much more for the consumer than they could easily do on their own or, worse yet, perhaps very little at all for the fee paid.

How do you find a good credit repair company in St Louis?

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Get Home Prices and Sale Charts For ANY Area- STLMarketCharts.com
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Continue reading “What To Look Out For In Credit Repair Companies

Zillow Under Investigation By CFPB Over Co-Marketing Program With Real Estate Agents

Zillow, the behemoth real estate search site, revealed in it’s Form 10-Q filed with the Securities and Exchange Commission earlier this month for first quarter 2017, that the Consumer Finance Protection Bureau (CFPB) is investigating some practices by Zillow.  According to the filing, what is under review is their co-marketing program in which the CFPB is alleging that Zillow violated parts of both RESPA as well as the Consumer Financial Protection Act.  The complete Form 10-Q can be viewed here.  On page 40 (outlined in red by me) is the section where Zillow makes this disclosure, and I have pasted that section of the report below as well (the emphasis and color have been done by me).

Excerpt from Zillow’s 10-Q –
“In April 2017, we received a Civil Investigative Demand from the Consumer Financial Protection Bureau (“CFPB”) requesting information related to our March 2017 response to the CFPB’s February 2017 Notice and Opportunity to Respond and Advise (“NORA”) letter. The NORA letter notified us that the CFPB’s Office of Enforcement is considering whether to recommend that the CFPB take legal action against us, alleging that we violated Section 8 of the Real Estate Settlement Procedures Act (“RESPA”) and Section 1036 of the Consumer Financial Protection Act. The purpose of a NORA letter is to provide a party being investigated an opportunity to present its position to the CFPB before an enforcement action may be recommended or commenced. This notice stems from an inquiry that commenced in 2015 when we received and responded to an initial Civil Investigative Demand from the CFPB containing a broad request for information. We believe our response to the NORA letter addresses the CFPB’s concerns related to our co-marketing program under which a lender pays us to appear in advertising alongside a real estate agent. We are continuing to cooperate with the CFPB in connection with their most recent request for information. We continue to believe that our acts and practices are lawful and that our co-marketing program allows lenders and agents to comply with RESPA. Should the CFPB commence an action against us, it may seek restitution, civil monetary penalties, injunctive relief or other corrective action. We cannot provide assurance that the CFPB will not ultimately commence a legal action against us in this matter, nor are we able to predict the likely outcome of the investigation into this matter. We have not recorded an accrual related to this matter as of March 31, 2017 or December 31, 2016, as we do not believe a loss is probable. There is a reasonable possibility that a loss may be incurred; however, the possible loss or range of loss is not estimable.”

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Continue reading “Zillow Under Investigation By CFPB Over Co-Marketing Program With Real Estate Agents

How Will Implementation of Dodd-Frank Affect The Real Estate Market?

In case you are concerned that the real estate industry is not subject to enough regulation, do not let your heart be troubled as new regulations imposed by the Dodd–Frank Wall Street Reform and Consumer Protection Act, which was signed into law back in 2010, affecting home mortgages go into effect October 3, 2015.   There has been much talk in the industry about the changes, which are fairly wide-sweeping including changes in the timing of, and type of required disclosures to the borrower as well as a brand new combination loan disclosure form and closing statement.  Below, is an overview of some highlights of the changes that I think will most affect St Louis home buyers and sellers as well as links to several additional resources as well.

The New TRID

Presently, a home buyer, at closing, receives a Truth In Lending Disclosure as well as a HUD-1 closing statement.  The former provides the details of the loan including interest rate, APR, costs associated with the loan as well as other details to comply with the Truth in Lending Act (TILA) CFPB Guide (TILA) and the latter provides a summary of the home purchase transaction such as purchase price, credits or charges to the buyer as well as other details required by the Real Estate Settlement Procedures Act (RESPA).

Beginning October 3, 2015, the two forms above will be combined into one, consumer-friendly, TRID (TILA-RESPA Integrated Disclosure) form.  The new TRID will present all the important financial details of the loan and home purchase into one form which will be much easier for the typical consumer to benefit form than the current forms.

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Search St Louis Homes For Sale HERE
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5 Key Strategies To Assure A Quick Home Sale At The Maximum Price
Continue reading “How Will Implementation of Dodd-Frank Affect The Real Estate Market?

New QM Rules Going To Put Home Loans Out of Reach For Some Buyers Come January

Dennis Norman - St Louis RealtorJanuary 10, 2014 new QM rules (qualified mortgage) will go into effect and will most likely negatively impact the ability of some home buyers to obtain a mortgage.  In terms of how many borrowers the new rules will affect, it is hard to say.  There have been several analysis’ done of the percentage of home loans originated in 2012 would not have met the QM rules and the estimates vary from 12 percent to more than half.  Personally, I think the lower estimates are probably closer to accurate, but it is still a significant number…potentially somewhere around 1 of every 9 home buyers may not be able to obtain a mortgage that, absent the new QM rules, would have been able to.

UPDATE 12/06/13 – Read/download the CFPB Compliance Guide for new QM rule

Watch CFPB Video on QM Rule Here 

What are the QM Rules and who do they affect? Continue reading “New QM Rules Going To Put Home Loans Out of Reach For Some Buyers Come January

Free Credit Scores As A Result of New Act

Free Credit Scores

Tyler Frank,
Paramount Mortgage
NMLS ID 942420

Free Credit Scores are Not Part of the Free Annual Credit Report Consumers Currently Receive

Consumers currently have the right to  request their free credit report once a year, but a credit report does not include free credit scores. These two items are often confused to be the same, which they are not.

You generally must pay to see your credit score. It’s a three-digit grade that predicts how risky you are to a lender.

Earlier this month, bills were introduced in the House and Senate to allow all consumers free access to credit scores once a year. The Free Access to Credit Scores Act was authored by U.S. Sen. Bernie Sanders of Vermont and U.S. Rep. Steve Cohen of Tennessee.

Continue reading “Free Credit Scores As A Result of New Act

Forty-one percent of survey respondents think home prices will increase; up from thirty percent a year ago

Saint Louis Realtor, Dennis Normanst-louis-real-estate-realtor-dennis-normanForty-one percent of the respondents to the Fannie Mae National Housing Survey for January 2013 said they expect home prices to rise in the next 12 months which is down slightly from 43 percent last month but up significantly from a year ago when only 30 percent felt home prices would rise.   Ten percent of the respondents feel home prices will drop in the coming year and 45 percent said they feel prices will remain the same.

Continue reading “Forty-one percent of survey respondents think home prices will increase; up from thirty percent a year ago

Bank of America, J.P. MOrgan Chase, Wells Fargo, Citigroup and Ally Financial reach $25 Billion Agreement with Fed & State Government over Foreclosure Abuses

The Justice Department, the Department of Housing and Urban Development (HUD) and 49 state attorneys general announced today the filing of their landmark $25 billion agreement with the nation’s five largest mortgage servicers to address mortgage loan servicing and foreclosure abuses. Continue reading “Bank of America, J.P. MOrgan Chase, Wells Fargo, Citigroup and Ally Financial reach $25 Billion Agreement with Fed & State Government over Foreclosure Abuses

Shadow Inventory Continues to Decline; Good news for the housing market

Dennis Norman St Louis

A report released this morning by CoreLogic shows that the current residential “shadow” inventory as of July 2011 declined slightly from 1.7 million units in April to 1.6 million units, and was down from 1.9 million units a year ago. This current shadow inventory represents a 5 month supply. CoreLogic includes in it’s shadow inventory numbers properties that are either 90+ days delinquent on mortgages, in some stage of foreclosure, or an REO but not presently for sale in an MLS. Continue reading “Shadow Inventory Continues to Decline; Good news for the housing market

Consumer organization blasts House Appropriations Committee on recent vote; fear return to policies that allowed predatory lending

Dennis Norman St LouisThis week, in response to the House Appropriations committee voting to slash funding for the newly formed Consumer Financial Protection Bureau (CFPB) and to subject the new agency to a “politically-charged” funding process, Mike Calhoun, President of the Center for Responsible Lending, made the following comment: “the House Appropriations Committee yesterday voted for a return to policies that allowed predatory financial products to plunder our economy. Clearly some lawmakers have forgotten the lesson of today’s financial crisis, which continues at great cost to taxpayers, shareholders, retirees and, of course, tens of millions of families who have needlessly lost their homes or seen them plummet in value.” Continue reading “Consumer organization blasts House Appropriations Committee on recent vote; fear return to policies that allowed predatory lending

New disclosure form aims to make home mortgage terms easier to understand

The newly formed Consumer Financial Protection Bureau (CFPB), one of the newest agencies under the Federal Government, created “to make markets for consumer financial products and services work for Americans”. Hmm, sounds good, but as usual, I was skeptical. However, thus far, I’m pretty impressed with the CFPB’s approach to changing mortgage disclosure statements in an effort to make it easier for consumers to understand the terms of the home mortgage they have been offered as well as to shop “apples to apples” for the best home mortgage. Continue reading “New disclosure form aims to make home mortgage terms easier to understand

H.R. 4173; The Dodd-Frank Wall Street Reform and what it means to appraisers

Frank Gregoire

Frank Gregoire

My world was much different in the late 1980’s. Although I was in the real estate business and the real estate appraisal profession for a decade, political activity did not interest me. Here at Gregoire & Gregoire, we had already been using a networked mini-computer for appraisal reporting since 1983, but I did not have an email account or address. I did not surf the web. Our clients were savings and loan associations, FHA lenders, loan discount companies (purchasers of privately originated first and second mortgages), real estate brokers, and several lawyers. All our research was completed through examination of paper and microfiche records. We went through Polaroid SX-70 film packs by the case and always kept a spare camera or two in the back seat or trunk of the car. Life was good. The appraisal profession, at least here in the Sunshine State, was one coveted by many. Continue reading “H.R. 4173; The Dodd-Frank Wall Street Reform and what it means to appraisers

Five Indicted in Foreclosure Rescue and Mortgage Fraud Scheme

Scam Involved Lawyers, Mortgage Brokers, and More Than $14.6 Million in Loans

PHILADELPHIA—A 15-count indictment was filed today against five defendants charged in a $14.6 million mortgage fraud scheme that resulted in at least 35 fraudulent mortgage loans, announced United States Attorney Michael L. Levy, Special Agent-in-Charge of the FBI Janice K. Fedarcyk, and Pennsylvania Secretary of Banking Steven Kaplan. Charged are Edward G. McCusker and John Alford Bariana, owners of Axxium Mortgage, Inc., McCusker’s wife, Jacqueline, and Jeffrey A. Bennett and Stephen G. Doherty, owners of the Doylestown law firm Bennett & Doherty, P.C.

According to the indictment, the defendants targeted financially distressed homeowners facing foreclosure, falsely promised them help in saving their homes, engaged in real estate transactions with straw purchasers, and obtained dozens of fraudulent mortgages. The defendants took whatever equity the homeowner had left, funneled it through various shell corporations they controlled, used some of it to pay the new mortgages, and put the rest of the equity into their own bank accounts.

“Unfortunately, the downturn in the economy has given rise to unscrupulous predators looking to cash in on the misfortune of others,” said Levy. “This sort of fraudulent activity not only preys on desperate homeowners, it weakens our financial institutions, destroys neighborhoods by leaving properties abandoned, and devalues the homes of innocent neighbors. This office will investigate and prosecute those who victimize financially distressed homeowners.”

The indictment alleges that the defendants promised financially distressed homeowners that they would find an “investor” who would help them save their home. The defendants would then arrange for a straw purchaser to obtain a fraudulent mortgage and then transfer of the title of the homeowner’s residence to the straw purchaser. Using their company Axxium Mortgage, Edward McCusker and Bariana, along with Jacqueline McCusker obtained the fraudulent mortgages by submitting false documents to mortgage lenders and making false claims about the straw purchasers’ finances. The defendants also concealed from the lender the fact that the homeowner was going to continue to reside in the home and that the mortgage payments were going to continue to be made, in part, by the distressed homeowner and funneled through the straw purchaser. Bariana and Jacqueline McCusker each acted as straw purchasers for 10 homes. The defendants also recruited at least seven other persons to act as straw owners in order to obtain additional fraudulent mortgages.

Bennett and Doherty participated in the scheme at the front and back end. Doherty solicited and referred distressed homeowners to Edward McCusker and used fraudulent bankruptcy filings for some of the distressed homeowners to delay foreclosure until McCusker had obtained an investor and a mortgage. Bennett handled the closings for the real estate transfers, manipulating the information provided to the lender in order to hide the nature of the scheme until after the loan was funded.

“Governor Rendell and I are pleased when state and federal agencies can cooperate to protect consumers and deter improper and criminal activity,” said Pennsylvania Secretary of Banking Steve Kaplan. “U.S. Attorney Levy’s announcement today helps underscore our respective commitments to consumer protection and the Department of Banking’s ability to bring financial expertise to criminal prosecutions.”

“The type of criminal activity alleged in this indictment is particularly despicable in that it targeted those victims who were the most vulnerable financially and the most desperate for some type of assistance to avoid foreclosure on their properties,” said Special Agent-in-Charge Janice K. Fedarcyk of the Philadelphia Division of the FBI. “It also represents an affront to the millions of hard-working Americans who struggle every day to meet their mortgage obligations and keep their families in their homes. The FBI is committed to aggressively pursuing those who engage in schemes designed to illegally profit from the current economic situation of many of our fellow Americans.”

The defendants are charged with conspiracy to commit mail and wire fraud, mail and wire fraud, and conspiracy to commit money laundering. Doherty is also charged with bankruptcy fraud.

INFORMATION REGARDING THE DEFENDANTS

Department of Justice Press Release

NAME ADDRESS YEAR OF BIRTH
EDWARD G. MCCUSKER New Hope, PA 1964
JEFFREY A. BENNETT Springfield, PA 1966
STEPHEN G. DOHERTY Doylestown, PA 1966
JOHN A. BARIANA Mullica Hill, NJ 1972
JACQUELINE D. MCCUSKER New Hope, PA 1964

Defendants Edward and Jacqueline McCusker, Jeffrey Bennett, and John Bariana face maximum sentences of 240 years’ imprisonment, $3.25 million in fines, three years supervised release, and a $1,200 special assessment. Defendant Stephen Doherty faces a maximum sentence of 385 years’ imprisonment, $4 million in fines, three years supervised release, and a $1,500 special assessment. These are the maximum sentences that may be imposed if the defendants are convicted; the advisory United States Sentencing Guidelines call for a sentence less than the statutory maximum.

The indictment seeks forfeiture of the proceeds of the fraudulent scheme, which is alleged to be approximately $14.6 million.

This case was investigated by the Federal Bureau of Investigation and the Pennsylvania Department of Banking. It is being prosecuted by Assistant United States Attorney Nancy Rue.

Title Insurance 101 from a St. Louis Title Professional – Final post in the series

Dennis Norman

Dennis Norman

By: Dennis Norman

Over the past two days I published the first part and second part of my E-View TMwith Wendy Cromer, Vice-President of Marketing for Security Title Insurance Agency, LLC about title insurance, the new laws affecting it and things consumers should know.

Wendy Cromer, Vice-President of Marketing, Security Title Insurance Agency LLC

Wendy Cromer, Vice-President of Marketing, Security Title Insurance Agency LLC

Today were going to do the final part of our E-View TM with Wendy:

Dennis-Wendy, title insurance seems to be one of those things that is a mystery to most homeowners.  Can you please explain what title insurance is and give us an idea of how it works? Continue reading “Title Insurance 101 from a St. Louis Title Professional – Final post in the series

Avoid mortgage modification and foreclosure rescue scams

foreclosureBy: Dennis Norman

Recently the The Office of the Comptroller of the Currency issued a Consumer Advisory.  The Advisory contains consumer tips for avoiding mortgage modification scams and foreclosure rescue scams.

The advisory states; “Scams that promise to “rescue” you from foreclosure are popping up at an alarming rate nationwide, and you need to protect yourself and your home.   If you’re falling behind on your mortgage, others may know it too – including con artists and scam artists.  They know that people in this situations are vulnerable and often desperate.”

The OCC suggests that before you do business with someone offering to negotiate a loan modification for you or to stop or delay foreclosure for a fee that you carefully check his or her credentials, reputations, and experience.  Watch out for warning signs of a scam, and always maintain personal contact with your lender and mortgage servicer. Continue reading “Avoid mortgage modification and foreclosure rescue scams