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2016 Brought Largest Foreclosure Decline on Record

by Short Sale Agent Jerry Gusman on 03/02/17


The foreclosure rate for 2016 had the largest improvement of any year since 2000, according to Black Knight Financial Services Inc.’s (BKFS) First Look at December.

Only 0.95 percent of active mortgages at the end of 2016 were in some stage of the foreclosure process, which amounts to a year-over-year reduction of 30 percent in foreclosure rates. The month of December was down 3.30 percent from November’s foreclosure rate.

“Throughout much of the past year, the rate of improvement in the nation’s active foreclosure inventory continued to pick up pace,” noted Ben Graboske, EVP for BKFS’ Data & Analytics division. “As strong performance of recent originations kept the influx of new problem loans very low from a historical perspective, the industry continued to work through older loans in active foreclosure still lingering—in most cases—from the crisis years. Together, these two factors contributed to increasing the rate of improvement in a trend that we’ve actually been seeing for several years now.”

The elimination of problematic, high-risk loans, which dominated the mortgage lending market during the housing crisis of 2008, paved the way for newly structured loans which had a considerable lower level of risk and chance of default, which resulted in a lower overall foreclosure rate nationwide.

The five states with the highest level of delinquencies and foreclosures as a percentage of the total amount of active loans in the state, also known as the non-current rate, were Mississippi, Louisiana, West Virginia, Alabama, and New Jersey. Mississippi was at the top of the list with a non-current percentage of 11.36, while New Jersey came in fifth at 7.79 percent.

The percentage of loan delinquency rates which were past 30 days due but not yet in foreclosure was 4.42 percent in December, which represents a 0.91 percent decline from November and a 7.49 percent reduction from the previous year.

The regulatory measures initiated by Dodd Frank regarding the issuance of loans, which are intended to stifle the production of high-risk loans, appear to be having the intended effect, so it is imperative that the new presidential administration carefully consider which aspects of Dodd-Frank can be rolled back without detrimentally affecting the housing market.

2017’s Hottest Markets, Go West

by Short Sale Agent Jerry Gusman on 01/06/17

For 2017’s Hottest Markets, Go West

Home Prices Two BHMost of the hottest real estate markets for 2017 will be between the Rocky Mountains and the Pacific Coast, according to predictions made by Zillow on Friday. While the top market prediction for 2017, based on house price value growth and strengthening local economies, is Nashville, markets in the West dominated the list of markets expected to see rising demand.

Utah placed three cities in the top 10 hottest markets-to-be, with Provo, Salt Lake City, and Ogden. Provo’s 2.7 percent unemployment rate was the lowest on Zillow’s list, and house prices in all three Utah markets are expected to grow by at least 4 percent this year.

Seattle, Denver, and Sacramento are also expected to be among the top-growing markets for 2017. Zillow reported that Seattle is seeing home value growth in the double-digits and has some of the fastest rent growth in the country.

Just two weeks before Zillow’s list, Redfin announced its own list of the 10 most competitive neighborhoods in the U.S. Seattle had three neighborhoods on that list. In Factoria, the most competitive market in 2016, the typical home went under contract in seven days and sold for 5 percent above the asking price, while home prices there grew 26 percent over the year.

Sacramento, one of the most affordable large metros in California, is seeing a sharp rise in home prices. Still, Zillow reported, homes in the city are nearly 60 percent more affordable than those in the Bay Area, which is driving up the desire to move there. Zillow is predicting Sacramento home values to appreciate almost 5 percent over the next year.

Portland had the strongest home value growth in 2016 among the 100 largest U.S. metros, with home values up almost 15 percent over the past year, Zillow reported. Housing experts predict that Portland, Seattle and Denver will continue to outperform the average national home value growth in 2017. Nationally, Zillow expects home values to appreciate 3 percent over the next year.

The Fed decision: Rates stay zero-bound

by Short Sale Agent Jerry Gusman on 09/18/15

Home buyers dodge a bullet for now. Feds do not raise the interest rate this week after much consideration. Great for potential home buyers, But rate hikes are expected very soon! 

If you have been thinking of purchasing a home better do it now!  Contact us if any of the great homes we have been sending you interest you. We will schedule an appointment to view them and start the offer process.

Hurry, Don't Delay Any Longer! Even Just A .25% Increase Calculates Into a $60 Increase In Monthly Payment On A $400,000 Home Purchase Amount.

The Fed decision: Rates stay zero-bound

Fed decision: What it means

After months of speculation, the Federal Reserve decided to leave its target borrowing rate unchanged, at 0%—0.25%, at its two-day meeting this week. Earlier in the summer, many investors expected the central bank to raise rates in September for the first time in nearly a decade, as U.S. unemployment continued to fall and GDP continued to grow. But as inflation has come under pressure, the Fed elected to maintain its accommodative position.

Viewpoints checked in with Jurrien Timmer, director of global macro at Fidelity, to discuss the significance of the decision.

Why did the Fed decide to leave rates unchanged, at 0%–0.25%?

Timmer: Essentially, the Fed had to weigh dueling forces, with global economic fears on one side and U.S. economic strength on the other.

The Fed has a dual mandate to promote maximum sustainable employment and stable prices. While the employment side of the Fed’s mandate to raise rates has been met—joblessness fell to 5.1% in August—inflation has been low and remains below its target of 2%. Falling import and commodity prices and a stronger dollar have put more downward pressure on inflation. In the end, the fears about these disinflationary forces won out.

Does the Fed’s decision suggest that the U.S. economy is in trouble?

Timmer: Weakness around the globe doesn’t directly affect U.S. retail sales or employment, but it has taken a toll on market conditions. In recent months credit spreads have moved higher on investment grade corporate bonds and high yield bonds especially, raising the cost of financing; the dollar has moved higher; and inflation expectations have moved down. While everyone is focused on the Fed borrowing rate, these market forces are actually more important—in effect, the market has been tightening for the Fed.

The Fed doesn’t want the market to react too much, especially to the point that it could hinder growth, so it has decided not to raise rates, and I expect it is hoping market volatility calms down.

What does this mean for rates going forward?

Timmer: Nearly everyone wants the Fed to be early and shallow—making small rate hikes before inflation accelerates significantly. But if the Fed waits too long and the inflation genie comes out of the bottle, they may have to hike faster. Rapid rate moves have historically been problematic—in the past, rapid rate hikes have tended to slow economic expansion too much, sometimes turning growth into recession

My guess is that the Fed has concluded that the risk of being behind in fighting inflation is much less than the risk of being too early. Given of the deflationary forces in the world today, the Fed has the leeway to wait longer.

I think the Fed also wants to avoid surprising the market, as it did in the “taper tantrum” in 2013. Typically, the market prices rate hikes correctly—the move is known and discounted by investors before it takes place. Maybe in three months, if the market prices it in, that will help make the Fed more comfortable making a change.

What does this mean for investments?

Timmer: The market was not expecting a rate hike, so this outcome is exactly what was priced in. So while there is often a lot of noise immediately following a Fed announcement, there shouldn’t be a lot of market movement in the short term.

Long-term, conditions haven’t really changed. The United States remains the best house in a bad neighborhood—domestic economic progress is better than in most other developed countries. With slow growth, a low rate environment may persist for longer than many investors were anticipating.

When the Fed does raise rates, history suggests that the first hike traditionally isn't been a big problem for the stock market. Usually, the economy's doing pretty well, and we usually have a benign low inflation environment. That's true today. However, what is different today is that we have a much weaker global environment, inflation is much lower, and we've had a lot of market volatility lately.

If the Fed does move to tighten in the near term, it's going to squeeze dollar liquidity even more. In my view, that could potentially be an even bigger headwind for some areas, like China and emerging markets, which have already been hit the hardest. So, my expectation going forward is that the market volatility we're seeing is going to remain relatively elevated.

We will get a rate hike at some point, but I don't think a big spike in interest rates is on the horizon, so I think it still makes sense to diversify with high-quality bonds. If the U.S. economy holds up well, like I think it will, there might be buying opportunities in U.S. stocks.

Jerry Gusman
The Gusman Group
Realty Executives Experts
(888) 213-4208

Existing Home Prices Hit Record; Sales Soar To 8 Year High

by Short Sale Agent Jerry Gusman on 08/14/15

Houses have become stocks... the higher the price, the more demand (especially as the government has your back with low down-payment loans and the re-emergence of IOs). WithExisting Home Sales soaring to a SAAR of 5.49 million, the highest since early 2007, the fact that median home prices are at an all-time high appears to be any problem for the releveraging American (or Chinese) homebuyer.



Lawrence Yun, NAR chief economist, says backed by June's solid gain in closings, this year's spring buying season has been the strongest since the downturn. "Buyers have come back in force, leading to the strongest past two months in sales since early 2007," he said. "This wave of demand is being fueled by a year-plus of steady job growth and an improving economy that's giving more households the financial wherewithal and incentive to buy."

Adds Yun, "June sales were also likely propelled by the spring's initial phase of rising mortgage rates, which usually prods some prospective buyers to buy now rather than wait until later when borrowing costs could be higher."

The median existing-home price for all housing types in June was $236,400, which is 6.5 percent above June 2014 and surpasses the peak median sales price set in July 2006 ($230,400). June's price increase also marks the 40th consecutive month of year-over-year gains.

Price gains were dominated by the $500 k plus range with low-cost home (under $100k ) seeing prices drop 2.6%

As supply continues to drop...

Regional Breakdown
  • June existing-home sales in the Northeast climbed 4.3 percent to an annual rate of 720,000, and are now 12.5 percent above a year ago. The median price in the Northeast was $281,200, which is 3.9 percent higher than June 2014.
  • In the Midwest, existing-home sales rose 4.7 percent to an annual rate of 1.33 million in June, and are 12.7 percent above June 2014. The median price in the Midwest was $190,000, up 7.2 percent from a year ago.
  • Existing-home sales in the South increased 2.3 percent to an annual rate of 2.20 million in June, and are 7.3 percent above June 2014. The median price in the South was $205,000, up 7.2 percent from a year ago.
  • Existing-home sales in the West rose 2.5 percent to an annual rate of 1.24 million in June, and are 8.8 percent above a year ago. The median price in the West was $328,900, which is 9.9 percent above June 2014.
*  *  *

HUD’s Distressed Asset Program Give Borrowers More Protection Against Foreclosure

by Short Sale Agent Jerry Gusman on 04/27/15


The U.S. Department of Housing and Urban Development (HUD) on Friday announced significant changes to its Distressed Asset Stabilization (DASP) program meant to offer more protections to borrowers facing foreclosure and increase non-profit participation in purchasing distressed loans.

Under the new rules, loan servicers are required to delay foreclosure on a home for a year and evaluate all borrowers facing foreclosure for participation in the government's Home Affordable Modification Program (HAMP) or a similar loss mitigation program. Loan servicers could previously foreclose on a home six months after they received the loan and were not required to evaluate borrowers for loss mitigation programs, though they were encouraged to do so.

The improvements to the Neighborhood Stabilization Outcome (NSO) sales portion of DASP include giving non-profits a first look at vacant properties, allowing purchasers to re-sell notes to non-profits, and offering a pool of loans for non-profits only.

"These changes reflect our desire to make improvements that encourage investors to work with delinquent borrowers to find the right solutions for dealing with the potential loss of their home and encourage greater non-profit participation in our sales," said Genger Charles, Acting General Deputy Assistant Secretary, Office of Housing. "The improvements not only strengthen the program but help to ensure it continues to serve its intended purposes of supporting the MMI Fund and offering borrowers a second chance at avoiding foreclosure."

The changes come with stronger reporting requirements that include tougher penalties for non-compliance of quarterly reporting requirements, along with a new requirement of those who purchase loan pools to report on borrower outcomes even if a note is subsequently sold after the original purchase.

FHA's single-family note sale program resumed in 2010 as a pilot program allowing pools of loans headed for foreclosure to be sold to qualified bidders that will help bring the loans out of default through some type of loss mitigation. An FHA-backed loan can be include in a pool for sale if the loan is at least six months delinquent and if all loss mitigation options have been exhausted. DASP began in 2012 as a way for FHA to greatly increase the number of seriously delinquent loans for sale and at the same time encourage investment in the communities that were hardest hit by the crisis. Many of the loans are offered for sale as part of geographically-targeted "Neighborhood Stabilizing Outcome" pools, requiring that 50 percent of the loans within a pool that is purchased achieve a neighborhood-stabilizing outcome – which may include holding the property for rent for at least three years if the borrower and servicer are not able to avoid foreclosure.

DASP sales are typically broken into two or more sales – a "National Sale" which consists of loans from across the country, and a "Neighborhood Stabilizing Outcome" in which loans from geographically-targeted areas are sold.

In an update on HUD's single-family loan sale program in mid-March, the Department said that about half of the approximately 79,000 loans sold through the program since 2010 had been resolved via paying the loans current, forbearance agreements, paying the loan in full, a short sale, a third-party sale, or a deed-in-lieu of foreclosure.

Ocwen Responds to Allegations, Accuses Investors of Pushing Homeowners to Foreclosure

by Short Sale Agent Jerry Gusman on 01/30/15

Ocwen Financial

Atlanta-based mortgage servicer Ocwen Financial has responded to a Notice of Nonperformance filed on Friday by law firm Gibbs & Bruns on behalf of investors BNY Mellon, Citibank, Deutsche Bank, HSBC, US Bank, and Wells Fargo, accusing the investors of pushing homeowners to foreclosure.

The notice accuses the servicer of failing to collect on 119 residential mortgage-backed securities trusts with an original balance of more than $82 billion. Gibbs and Bruns said in a public release on Friday that a "lengthy investigation and analysis by independent, highly qualified experts" turned up multiple instances of Ocwen's failure to perform, including use of trust funds to pay borrower relief obligations through modifications on trust-owned mortgages; conflicts of interest with affiliate companies; failure to maintain adequate records and communications with borrowers; and "[e]ngaging in imprudent and wholly improper loan modification, advancing, and advance recovery practices;" among others. The firm said the trusts lost more than $1 billion as a result.

Monday, Ocwen attorney Richard A. Jacobsen responded to the allegations with the following statement:  "Ocwen continues to be committed to meeting all of its servicing obligations in accordance with its contractual arrangements in the over 2,500 Trusts that it services, and in full cooperation and compliance with its industry regulators. Your clients, on the other hand, are asking Ocwen to turn its back on the Trusts as a whole, on the borrowers, and on public policy. Ocwen declines to do so and reserves all its rights and remedies."

Jacobsen said in his response that "Ocwen denies that there is any basis for default under the Trust agreements" and that the servicer would respond to the exhibits mentioned in the letter "at the appropriate time." He further mentioned that the Gibbs & Bruns letter was "drafted in an inflammatory tone, with misleading content, and coordinated with media release so as to create wildy false impressions."

Ocwen's response called the investors' effort to stop loan modifications and push foreclosures on homeowners "ill-conceived" and state that "(w)hile knee-jerk foreclosures may redound to the special economic interests of your clients, they are not in the best interests of the trusts as a whole, not consistent with industry practice, and therefore prohibited under the servicing agreements."

Jacobsen wrote that Ocwen sought to service loans that were in the best interests of the trusts as a whole and not simply those that would benefit the investors economically.

"Perhaps most egregious is your clients' continuing objection to the principal reduction modification targets in the government's national mortgage settlements with RMBS issuers and servicers," Jacobsen wrote. "Indeed, Ocwen's national mortgage settlement provides that such modifications shall be done subject to, and within the confines of, the servicing agreements."

Also on Monday, Ocwen issued a statement responding to similar allegations made by Blue Mountain Capital Management, a purported holder of notes issued by HLSS Servicer Advance Receivables Trust, by addressing the allegations in the letter directly with Deutsche Bank National Trust Company, the indenture trustee. Ocwen vowed in its response to "vigorously defend itself against the allegations in the letter."

Ocwen has had many well-publicized regulatory troubles in the last two years. The servicer ended 2014 with a $150 million settlement with the New York Department of Financial Services over claims that the servicer intentionally backdated hundreds of foreclosure notices in order to deny loan modifications to qualified borrowers. That settlement included the departure of chairman Bill Erbey, who founded Ocwen more than 30 years ago. On Friday following the Notice of Nonperformance filing, Ocwen reached a $2.5 million settlement with the California Department of Business Oversight to resolve claims that the servicer failed to comply with California's Homeowner Bill of Rights.

Can HAMP Borrowers Absorb Higher Payments When Loan Mods Reset?

by Short Sale Agent Jerry Gusman on 01/26/15

HAMP Re-Defaults

Approximately half a million homeowners who received a mortgage loan modification in 2010 through the government's Home Affordable Modification Program, commonly known as HAMP, are due to reset in 2015 – and those homeowners will be facing slowly increasing monthly mortgage payments.

Will these homeowners be able to handle the payment increases, or will there be a massive wave of re-defaults?

The U.S Department of Treasury and Department of Housing and Urban Development (HUD) launched HAMP in 2009 as part of its Making Home Affordable initiative to provide relief for homeowners facing financial hardship by reducing monthly payments to affordable levels through lowered interest rates and modified loan terms. The goal of the modifications was to reduce monthly payments to about 31 percent of the homeowner's income. According to Mark McArdle, Chief Homeownership Preservation Officer at Treasury, HAMP has saved distressed homeowners an average of about $547 per month (about 39 percent) on mortgage payments by lowering their interest rate in many cases to 2 percent.

There are some who are not sold on the effectiveness of HAMP. One of those is Chief Financial Analyst Greg McBride, who said in 2009 that homeowners receiving a modification through HAMP were simply "kicking the can down the road" and now that we are in 2015, "we're at the end of the road" because of all the HAMP mods due to reset this year. Furthermore, he said he thinks many homeowners will be "shocked" to find out that "permanent didn't really mean permanent" and instead meant five years.

"What happens is that payment starts to normalize – that 2 percent increases by 1 percentage point per year," McBride said. "So what's going to happen is these homeowners are going to see their mortgage payments go up this year, next year, and in many cases, the year after that. That's where the potential problem is. Household incomes have been stagnant and many homeowners don't have the additional room in their budget to absorb higher payments. Even if they can absorb the first payment increase, the cumulative increase of payments in subsequent years could prove problematic."

Just how problematic will the interest payment increases be? That remains to be seen, but even without the interest increases, re-default rates on HAMP mods have hovered around 40 percent for mods with a 2010 vintage.

As of the end of Q3 2014, the latest data available, HAMP has helped about 1.4 million distressed homeowners receive permanent loan modifications.  Of the approximately 60,000 permanent modifications completed in 2009, the first year of HAMP, about 42 percent of those modifications were 90 or more days delinquent 42 months after the modification became permanent. Of the nearly 511,000 HAMP modifications with a vintage of 2010, that percentage was about the same for those with a 2009 vintage – about 41 percent. That is double the percentage of overall 90-day delinquency rate of all HAMP mods completed through the second quarter of 2013, which is 20 percent.

Treasury has been considering the possibility of re-defaults on HAMP mods and has ways of helping those borrowers for years.

"In addition, we are looking at whether financial counseling for borrowers at the beginning of a modification can be effective in reducing re-default risk," McArdle wrote in 2013. "While re-default remains an unfortunate outcome for some borrowers, clearly without HAMP, national foreclosures rates would have been much higher and many borrowers would not have received the assistance they needed. HAMP continues to be the strongest available program for mortgage modifications. Receiving assistance through HAMP gives homeowners a valuable opportunity to strengthen their financial footing and stay in their homes."

McArdle said that only a small percentage of borrowers who re-default on HAMP mods actually go into foreclosure. Many who re-default are later able to find solutions to avoid foreclosure.

"Of those homeowners who have not been able to keep up with their modified payments under HAMP, the majority have received other forms of assistance or reinstated or paid off their mortgage loans," McArdle wrote. "HAMP requires servicers to reach out to any homeowner who falls behind on a modification to review all other assistance options, before the servicer starts foreclosure proceedings."

McArdle is scheduled to be a panelist on the "Modifying Modifcation" panel at the upcoming Five Star Government Forum in Washington, D.C. on March 18. This panel will assess HAMP and its effect on stabilizing the housing market and assisting distressed homeowners.

With regard to the possibility of re-default, McArdle said Treasury is ready.

"Treasury will maintain its oversight of participating servicers," McArdle said in a note to servicers last March. "We will monitor the interest rate resets to ensure that if signs of homeowner distress arise, servicers are ready and able to help by providing loss mitigation options and alternatives to foreclosures."

McBride said although there will be HAMP re-defaults, it will likely not trigger a housing bust similar to the one the country experienced seven years ago.

"The numbers aren't that big relative to what we saw during the housing bust and it's spread out over a period of several years, so it's not coming all at once," McBride said.

Mortgage Forgiveness Debt Relief Act Extended Through 2015

by Short Sale Agent Jerry Gusman on 01/02/15

Mortgage Forgiveness Debt Relief Act Extended Through 2015

H.B. 5771 Tax Increase Prevention Act of 2014

Just before Christmas, President Barack Obama signed into law H.B. 5771, known as the Tax Increase Prevention Act of 2014, which retroactively extended 55 tax provisions – including one that provides distressed homeowners relief on forgiven mortgage debt.

The bill was introduced by U.S. Representative Dave Camp (R-Michigan), Chairman of the House Committee on Ways and Means, on December 1, 2014. Two days later, on December 3, the bill passed in the House by a vote of 378 to 46. On December 16, the Senate passed the bill by a 76 to 16 vote. The president signed the bill into law on December 19.

The tax provisions covered by the bill, which expired on December 31, 2013, are retroactively extended for one year until December 30, 2014, and will be effective on income tax returns filed for the year 2014. One of those provisions, covered under Section 102 of the bill, allows homeowners to exclude forgiven mortgage debt (the remaining mortgage loan balance when a home is sold in a "short sale" to avoid foreclosure) from their gross income when filing tax returns.

This provision is an extension of the Mortgage Forgiveness Debt Relief Act of 2007, originally signed into law by President George W. Bush, which originally relieved distressed homeowners from having to pay taxes on forgiven mortgage debt for the three calendar years of 2007 through 2009. That tax exemption was extended three more years until the end of 2012 with the Emergency Economic Stabilization Act of 2008, and it was extended until the end of 2013 with the American Taxpayer Relief Act of 2012.

Section 104 of the new bill allows taxpayers who own homes to count qualified mortgage insurance premiums as interest for the purpose of mortgage interest deduction on their tax returns.

"USMI commends passage by Congress last night of a one year extension of vital homeowner tax relief,"U.S. Mortgage Insurers said in a prepared statement. "We are especially pleased that the legislation includes the tax-deductible treatment of mortgage insurance premiums for low and moderate income borrowers.  We look forward to working with Congress towards permanent enactment of this important tax relief for homeowners."

Many of the lawmakers who voted to pass the bill agreed that while extending the tax breaks another year is a step in the right direction, a more permanent solution is needed.

"I will support this bipartisan compromise but I would have preferred a two year tax extenders agreement that gave working families and Wisconsin businesses more long-term certainty," said Senator Tammy Baldwin (D-Wisconsin), one of the 76 senators who voted in favor of the bill. "Wisconsin families and businesses don’t plan on one year increments and we need long-term solutions, not short-term Band-Aids."

Senator John Boozman (R-Arkansas), who voted in favor of the bill, said he believes the nation's tax code needs reform in order to make things fairer and simpler for every American.

"However, in the interim, extending these tax provisions is just plain commonsense," Boozman said. "By doing so, we prevent tax increases on hardworking Arkansans, as well as small businesses and farmers who are our state’s economic engine."

Foreclosure Protection Bill for Servicemembers Passes in Both House, Senate

by Short Sale Agent Jerry Gusman on 12/16/14

Foreclosure Protection Bill for Servicemembers Passes in Both House, Senate

S.2404 Foreclosure Protection Servicemembers

The U.S. Senate and the House of Representativeshave both unanimously voted to pass a bill that give military servicemembers who have recently returned from duty added protection from foreclosure, according to an announcement from Senator Sheldon Whitehouse (D-Rhode Island), who introduced the bill in May.

S.2404, also known as the Foreclosure Relief and Extension for Servicemembers Act of 2014, unanimously passed in the Senate on Thursday, December 11 and in the House on Friday, December 12, according to the announcement from Whitehouse.

The bill extends until January 2016 a provision that sets one year as the time a servicemember's house is protected from foreclosure upon his or her return from active duty, if the mortgage was obtained before the servicemember was an active member of the military. The Commission on the National Guard and Reserves had submitted a report that prompted the foreclosure protection extension from 90 days to nine months in 2008. The period was extended to nine months as part of the Servicemembers' Civil Relief Act (SCRA) in 2008 and lengthened further to one year in 2012 as part of a bill introduced by Whitehouse.

The one-year period was set to expire at the end of December and would have reverted back to its pre-2008 level of 90 days at the beginning of 2015. Whitehouse's bill that he introduced back in May called for the permanent adoption of the one-year foreclosure protection period.

"After fighting for our country overseas, our troops shouldn’t have to fight to keep a roof over their heads when they return home," Whitehouse said. "Servicemembers returning from active duty often need time to regain their financial footing, particularly those in the National Guard and Reserves who give up their full-time jobs to fight for our freedom. We should ultimately pass legislation to make this protection permanent, but I’m glad we were able to secure peace of mind for our veterans for one more year."

The SCRA contains other protections for military members and their families from auto repossessions and other personal property while the servicemember is on active duty. Under the current law, servicemembers and their families cannot be evicted from housing due to nonpayment of rent that is less than $1,200 per month while the servicemember is on active duty.

Freddie Mac Announces New Foreclosure Prevention Guidelines, Revisions

by Short Sale Agent Jerry Gusman on 11/19/14

Freddie Mac Announces New Foreclosure Prevention Guidelines, 

Freddie Mac Foreclosure Prevention

Government-sponsored enterprise Freddie Mac has announced a set of new loss mitigation and foreclosure prevention guidelines and revisions in Guide Bulletins 2014-19 and 2014-20 that include a new deeds-in-lieu of foreclosure incentive, increased foreclosure timelines, and additional foreclosure relief for service members and their dependents.

Freddie Mac is offering a supplemental incentive of up to $7,000 for new borrower evaluations for deeds-in-lieu of foreclosure that are conducted on or before December 1, 2015. Borrowers in Connecticut, District of Columbia, Illinois, Maryland, Massachusetts, New Jersey, New York, or Pennsylvania who complete a Freddie Mac standard deed-in-lieu of foreclosure transaction are eligible. The new deed-in-lieu borrower incentive is scheduled to go into effect on February 1, 2015, but servicers at Freddie Mac have been encouraged to implement the new incentive as early as November 14, 2014.

Foreclosure timelines have been increased in 47 jurisdictions for all foreclosure sales completed on or after November 1, 2014, as a result of Freddie Mac's recent review of state foreclosure timelines. An updated list of Freddie Mac's state foreclosure timelines can be found in Guide Exhibit 83.

As part of Freddie Mac's commitment to active duty servicemembers, Freddie Mac is offering additional foreclosure relief to service members and their dependents. Foreclosure relief will be extended to mortgages while the service member is active for one year after military service ends when the borrower: 1) is a service member and the mortgaged property is the service member's primary residence, regardless of when the mortgage loan was originated; 2) is a dependent of the service member and the mortgaged property is the primary residence of the service member or his or her dependent; 3) was a service member who died during active military service and the mortgaged property continues to be the primary residence for a dependent of the service member. Servicers can determine if a borrower is eligible for these benefits by checking Freddie Mac's Mortgage Relief Options for Service Members web site.

Repeat Foreclosure Percentage Increases to Tie All-Time High

by Short Sale Agent Jerry Gusman on 11/12/14

Repeat Foreclosure Percentage Increases to Tie All-Time High

repeat foreclosures

The percentage of September's foreclosure starts that were repeat foreclosures rose by two percentage points month-over-month to account for 53 percent of foreclosure starts, tying the highest percentage for a single month, according to Black Knight Financial ServicesSeptember 2014 Mortgage Monitor.

In all, there were 91,000 foreclosure starts nationwide during September, an increase of 11.5 percent from August but a decrease of 16.5 percent from September 2013, when 109,000 foreclosure starts were reported, according to Black Knight. For September 2014, Black Knight reported that 48,200 of the 91,000 foreclosure starts were repeat foreclosures – a total of 53 percent, which tied July 2014 for the highest percentage in a single month since Black Knight began tracking the data in January 2008.

September 2014's percentage of repeat foreclosures represented an increase of 2 percentage points from August (41,500 out of 81,600, for 51 percent) and 4 percentage points from September 2013 (53,400 out of 109,000, a total of 49 percent). September 2014 was the eighth consecutive month in which the percentage of repeat foreclosures accounted for 50 percent or more of foreclosure starts and the 28th consecutive month in which the percentage totaled 40 percent or more. The percentage has not been below 40 percent since May 2012, when 80,800 out of 218,900 foreclosure starts were repeat foreclosures for a total of 37 percent, according to Black Knight.

The lowest percentage of repeat foreclosures was reported in February 2008, just prior to the housing bust, when 29,100 out of 205,000 foreclosure starts were repeats (14 percent). The percentage has been 20 percent or more every month since March 2009; the last month where repeat foreclosures made up less than 20 percent of foreclosure starts was February 2009 (48,200 out of 265,300, 18 percent), according to Black Knight.

The highest overall number of repeat foreclosures for any one month was reported in March 2011, when 109,500 repeat foreclosures were reported out of 263,900, for a total of 41 percent. The only other month in which the total number  of repeat foreclosures exceeded 100,000 for a month was in March 2012 (103,800).

Loan Mods Down, Foreclosure Starts Up in July

by Short Sale Agent Jerry Gusman on 09/17/14

Loan Mods Down, Foreclosure Starts Up in July


The total number of homeowners receiving permanent loan modifications declined in July, as did the number of modifications made under the Home Affordable Modification Program (HAMP), according to figures released this week by HOPE NOW.

Including both HAMP and proprietary programs, permanent completed modifications totaled 35,402 in July, according to HOPE NOW, down from 38,489 the month prior.

The decline reflected a drop in both the number of proprietary mods, which totaled nearly 25,000 compared to June's more than 27,000, and in the number of HAMP mods, which fell to 10,177 from 10,813 in June.

Since 2007, HOPE NOW estimates nearly more than 7.1 million homeowners have been granted a loan modification, including 1.4 million made through HAMP (dating back to 2009).

Factoring in short sales, deeds in lieu of foreclosure, and other workout plans, the group reports that servicers worked with homeowners to come up with nearly 157,000 solutions to avoid foreclosure.

Meanwhile, foreclosure starts rose a little more than 1,000 from June to settle at 70,401, the highest level of starts since January. Through the first seven months of 2014, foreclosure starts totaled nearly half a million; for all of 2013, starts came to an estimated 1.2 million.

Meanwhile, completed foreclosure sales rose to 38,428 compared to 36,826 in June.

Extrapolating from data provided by the Mortgage Bankers Association (covering approximately 88 percent of the industry), HOPE NOW estimates the number of loans with delinquencies of 60 days or more came to nearly 1.86 million, down from 1.88 million in June. The percentage of total loans overdue by 60 or more days stayed constant for the 11th straight month at 4 percent.

Fannie Mae Relaxes Waiting Period for Distressed Borrowers

by Short Sale Agent Jerry Gusman on 09/12/14

Waiting Period Distressed Borrowers

Fannie Mae recently released a report revising the waiting periods for distressed borrowers with a derogatory credit event such as a foreclosure, bankruptcy, short sale, or deed-in-lieu of foreclosure on their credit history to obtain a new loan.

For borrowers with a short sale or deed-in-lieu of foreclosure on their record, Fannie Mae's new mandated minimum waiting period to become eligible for a new loan is four years. The time is shortened to two years if there are extenuating circumstances. According to Fannie Mae, extenuating circumstances are defined as "nonrecurring events that are beyond the borrower’s control that result in a sudden, significant, and prolonged reduction in income or a catastrophic increase in financial obligations."

If a borrower has a foreclosure on his or her credit record, the new minimum waiting period is seven years. Under extenuating circumstances, that period is shortened to three years with some additional requirements for up to seven years.

For those with a bankruptcy (chapter seven or 11), the waiting period is four years (two years with extenuating circumstances). For distressed borrowers with a chapter 13 bankruptcy, the required waiting period is now two years from the discharge date and four years from the dismissal date. If there are extenuating circumstances, the waiting time from the dismissal date is shortened to two years.

If there are multiple bankruptcy filings on a borrower's record, the waiting period for a new loan is five years if there has been more than one filing in the previous seven years.  Under extenuating circumstances, the waiting period is cut to three years from the most recent dismissal or discharge date.

Fannie Mae said in the report that it is "focused on helping lenders to provide access to mortgages for creditworthy borrowers while supporting sustainable homeownership" and that the new policy "provides opportunities for borrowers to obtain a loan to Fannie Mae’s maximum LTV (loan-to-value) sooner after the preforeclosure (short) sale or DIL."

The new policy is effective for loans with application dates on or after August 16, 2014.

Under the previous policy, the standard waiting period for borrowers with a derogatory credit event was two years with a maximum 80 percent LTV ratio; four years with a maximum 90 percent LTV ratio; or borrowers were eligible for a new loan after a standard seven-year waiting period. For borrowers with extenuating circumstances, the previous waiting period was two years with a maximum 90 percent LTV ratio.

For More information contact

Jerry Gusman, The Gusman Group


SIGTARP Calls for Changes to HAMP

by Short Sale Agent Jerry Gusman on 07/31/14


The office of the Special Investigator General for TARP (SIGTARP) released its quarterly report on the progress and status of the Troubled Asset Relief Program.

Among the report’s findings was the assertion that TARP’s signature housing program, The Home Affordable Modification Program (HAMP), has not provided enough sustainable foreclosure relief given the unspent TARP funds that Treasury has set aside. Treasury had allocated $45.6 billion in funds to be provided for housing relief. To date they have spent $12.8 billion.

HAMP’s foreclosure relief is only sustainable if the homeowner does not fall out of the permanent mortgage modification during the five year period, increasing the risk of foreclosure.

HAMP has seen its share of problems. As of June 30, 2014, only 958,549 homeowners were active in a HAMP permanent modification. In an effort to attract more people, Treasury continues to extend the application period for Making Home Affordable (MHA) programs such as HAMP, and did so again on June 26, 2014, further extending the programs  through December 31, 2016.

Twenty Nine Percent of the individuals that had taken advantage of the program and obtained a modification on their home loan have since fallen out of the program because of an inability to pay their new, lower mortgage payment.

SIGTARP implored the Treasury Department to implement the changes to HAMP that the office had previously suggested.

First, the report says that Treasury should promulgate benchmarks and goals for acceptable program performance for all MHA servicers, including the length of time it takes for trial modifications to be converted into permanent modifications and the length of time it takes to resolve escalated homeowner complaints.

Next, the report argues that Treasury should complete a public assessment of the program performance of the top 10 MHA servicers’ against acceptable performance benchmarks. Criteria would include the length of time it takes for trial modifications to be converted into permanent modifications, the length of time it takes to resolve escalated homeowner complaints, and the percentage of required modification status reports that are missing.

Further, SIGTARP calls for more stringent enforcement. Specifically, they want Treasury to ensure that all servicers participating in MHA comply with program requirements by strenuously enforcing the terms of the servicer participation agreements. Treasury should be transparent and make public all remedial actions taken against any servicer.

Foreclosure Starts Rise for the First Time in Months

by Short Sale Agent Jerry Gusman on 07/03/14

Foreclosure Starts Rise for the First Time in Months

Foreclosure Starts Rise for the First Time in Months

Foreclosure starts rose for the first time in eight months in May, but there is still reason to be optimistic about the United States housing market, according to the latest Mortgage Monitor Report of the latest available data released by Black Knight Financial Services. The report indicated that foreclosure starts nationwide rose by 9.5 percent.

The rise in May reverses the eight month trend of continuing decline in starts. However, the outlook for the housing market is still trending upward compared to years past and Black Knight cautioned against reading too much into the backwards step.

"While foreclosure starts did rise over 9 percent in May, it's important to remember the historical trend is still one of improvement," said Kostya Gradushy, Black Knight's manager of Loan Data and Customer Analytics. "On a year-over-year basis, January through May foreclosure starts were still down 32 percent, and we are still looking at the lowest level of foreclosure starts in seven years."

"Additionally, over half of these starts are repeat foreclosures, rather than new entries into the pipeline, That is, these are loans that had been in foreclosure, shifted back to either current or delinquent status by way of modification, repayment plan or some action by the borrower, but have now fallen into foreclosure once again."

New Jersey was the only state in the union to see a year over-year increase in foreclosure starts and almost 80 percent of starts nationwide came from loans originating in 2008 or earlier.

Although foreclosure starts were up in May there were positive notes to take from the report. The total U.S. foreclosure pre-sale inventory rate actually dropped 5.62 percent in the month. Foreclosure inventory is down 37.23 percent year-over-year, signaling that Americans are more likely to be able to pay their mortgages now than they have been at any point since the financial crisis began.

Likewise, the overall loan delinquency rate (the number of loans 30 or more days past due, but not in foreclosure) is down 7.55 percent from this point last year and stayed static in May at 5.62 percent.

This bump in the road notwithstanding, a look at the recent trend in mortgage performance and other indicators reveal that there is still good reason to be cautiously optimistic that housing will continue on its long, gradual path to recovery.


Jerry Gusman, The Gusman Group

(888) 213-4208

Mortgage Collectors Silence Homeowners with ‘Gag Orders’

by Short Sale Agent Jerry Gusman on 06/24/14

Mortgage Collectors Silence Homeowners with ‘Gag Orders’

Mortgage Collectors Silence Homeowners with ‘Gag Orders’

A curious piece of text is appearing in some homeowner's loan modification agreements—by accepting a modification from the bank or non-bank servicer, the homeowner agrees to never publicly say, write, or post anything negative about the company doing the modification.

As originally reported by Reuters, Ocwen, Bank of America, and PNC Financial Services Group are adding new terms to their modification contracts to prevent homeowners from publicly disparaging the companies as part of a mortgage modification agreement.

Essentially, the gag orders are being used when distressed homeowners use litigation to resolve foreclosure and loan modification cases, making the modification contingent upon a homeowner's silence. The deal often extends to lawyers handling litigious cases on behalf of the injured parties.

Reuters cited, "A 2013 report by the National Consumer Law Center found that servicers routinely lost borrowers' paperwork, inaccurately input information, failed to send important letters to the correct address—or sometimes just didn't send them at all."

"These clauses can hurt borrowers who later have problems with their mortgage collector by preventing them from complaining publicly about their difficulties or suing, lawyers said. If a collector, known as a servicer, makes an error, getting everything fixed can be a nightmare without litigation or public outcry," Reuters noted.

According to the original report, the restrictive text is also now showing up when servicers grant regular modifications outside of the courtroom.

These new requirements are creating problems for homeowners—and ire from regulators. New York's Superintendent of Financial Services Benjamin Lawsky said he is investigating Ocwen's use of these clauses.

"Reports that Ocwen is imposing a gag rule for certain struggling homeowners—preventing them from criticizing the company—are troubling and deeply offensive," said Lawsky in an emailed statement to Reuters. "We will investigate this issue immediately."

PNC's vice president of external communications, Marcey Zwiebel, told Reuters that "these clauses are part of the consideration we receive for agreeing to settle the case. This helps to ensure that the discussion is not re-opened in public after the case has been settled."

Modifications still play an important role in the ongoing housing recovery. According to the U.S. Department of the Treasury, 1.3 million loan modifications have been completed under the Home Affordable Modification Program (HAMP). Servicers have completed an additional 5.6 million modifications.

"The banks are attempting to hold our clients hostage with a provision they know we cannot agree to," said University of Notre Dame law professor Judith Fox to Reuters, who runs a clinic for troubled homeowners and who has also petitioned the Indiana Bar Association over attempts to muzzle attorneys. "It is coercive and unethical."

For more information contact:

Jerry Gusman, The Gusman Group

(888) 213-4208

Black Knight: 1 in 10 Borrowers Underwater

by Short Sale Agent Jerry Gusman on 05/05/14

Black Knight: 1 in 10 Borrowers Underwater

In Black Knight Financial Services’ latest Mortgage Monitor Report, the company found that only one in ten Americans are underwater, down from one in three in 2010. Overall, the company’s look at March data reflected a shifting landscape. As home prices have risen over the past two years, many distressed loans have worked their way through the system and the percentage of Americans with negative equity has declined considerably.

The company noted that 55 percent of loans in foreclosure have been delinquent for over two years.

"Two years of relatively consecutive home price increases and a general decline in the number of distressed loans have contributed to a decreasing number of underwater borrowers," said Kostya Gradushy, Black Knight's manager of Loan Data and Customer Analytics.

"Looking at current combined loan-to-value (CLTV), we see that while four years ago 34 percent of borrowers were in negative equity positions, today that number has dropped to just about 10 percent of active mortgage loans," Gradushy said.

Gradushy references the 10.1 percent negative equity average, but what states homeowners reside in paint a clearer picture of negative equity across the spectrum. Judicial states have a higher negative equity rate at 13.4 percent, compared to the 7.9 percent rate experienced in non-judicial states.

Regardless, Gradushy notes that both judicial and non-judicial states have experienced declines. "Overall, nearly half of all borrowers today are both in positive equity positions and of strong credit quality—credit scores of 700 or above. Four years ago, that category of borrowers represented over a third of active mortgages," Gradushy said.

Loans, on average, are in foreclosure for 966 days.

The total delinquency rate is 5.37 percent, the lowest since October 2007 according to Black Knight. Month-over-month, delinquency rates have declined to 7.57 percent and are down yearly 16.29 percent in March.

The total U.S. foreclosure pre-sale inventory stands at 2.07 percent, the lowest figure since October 2008. Inventory rates are down 36.69 percent year-over-year.

Black Knight had more positive news in its Mortage Monitor Report: leading indicators, such as foreclosure starts, new problem loan percentage, 90-day defaults count, and 30 to 60 roll count are all down heading into the second quarter.

The company offered that the 2013 population of loans was "the best vintage on record," but the statement belies the fact that higher credit restrictions severely hampered new originations for lower credit borrowers.

The top five states with the highest total non-current loans were Mississippi (13.4 percent), New Jersey (12.9 percent), Florida (12.1 percent), New York (11.1 percent), and Maine (10.6 percent).

Excluding Mississippi, the remaining four states are judicial states, suggesting the longer timelines required to resolve foreclosures are impacting non-current loan rates, depressing the market's ability to quickly clear the remaining backlog in foreclosure pipeline.

For more information contact

Jerry Gusman, The Gusman Group


Clear Capital: Best Home Deals in ‘Mid-Tier’

by Short Sale Agent Jerry Gusman on 05/05/14

Clear Capital: Best Home Deals in ‘Mid-Tier’

Clear Capital recently released its Home Data Index Market Report, which found the best deals in the housing market now reside in the middle-tier of available homes. The group found that following more than two years of recovery, low-tier homes are no longer the best value for homebuyers.

Mid-tier homes are homes selling between $95,000 and $310,000, nationally.

The company reported that low-tier homes experienced 32.3 percent growth from the trough in 2011. Mid-tier homes are still 30.6 percent off of peak values, while the low-tier price sectors remained just 21.5 percent below peak values. Top-tier homes, on average, are just 18.2 percent off of peak values.

"Very interesting dynamics are at play as we head into spring. Though our April data suggests the spring buying season is off to a slow start, we aren't concerned about the sustainability of the recovery," said Dr. Alex Villacorta, VP of research and analytics at Clear Capital.

Villacorta continued, "To be clear, there are lots of adjustments taking place in housing markets across the country. Everything from lender regulation, consumer confidence, investors tapering purchases, local economics, and rising home prices have forced participants to continually adjust to a market that has been anything but stable."

The company found that quarterly rates of growth for the nation and three of four regions remain virtually unchanged.

Nationally, housing markets experienced a 0.9 percent growth quarter-over-quarter. The largest gains were in the West, which experienced a 1.8 percent increase from the previous quarters. The South was next at 0.8 percent growth, followed closely by the Midwest (0.7 percent) and the Northeast (0.6 percent).

"Generally speaking, we see price growth stabilizing throughout 2014, which should help boost the confidence and purchase activity from buyers on the fence," Villacorta said.

Villacorta continued, "The days of double digit price gains are behind us, and the market will continue to calibrate to the new reality of annual growth rates between 3% and 5%. A strong spring buying season might be a casualty of the major adjustments underway, but it's no reason to ring the alarm bells quite yet."

Average number of days it took to complete a short sale!

by Short Sale Agent Jerry Gusman on 05/03/14

Is Your Loan Modification Going Nowhere?

by Short Sale Agent Jerry Gusman on 04/12/14

Is Your Loan Modification Going Nowhere?


With the recent passing of the California Homeowners Bill Of Rights, mortgage lenders in California were mandated to offer distressed homeowners an alternative to foreclosure as part of the banks restitution in the lawsuit by the state.


Many distressed homeowners were given loan modifications in lieu of foreclosure even if they did not qualify previously. These homeowners had already applied for a loan mod and were declined by the same litigators. So why would they allow the loan mod again? The answer is because the state mandated they do. If a homeowner could not afford to pay a loan modification prior, how would they be able to now? Well, they can’t. And that’s why over 56% of these loan mods and homeowners have already re defaulted on their mortgage again.


In trying to help these distressed homeowners, the state has actually just prolonged the agony and inevitable of foreclosure for these families. Now these families will have to again seek alternatives to foreclosure. After exercising a loan mod, there are not many options left and should elect to short sale their home. An alternative that should have been done much sooner but wasn’t due to this mandate.


A short sale should be used in lieu of foreclosure all the time. The short sale option will salvage your credit and give you a much quicker recovery from your misfortune. In most cases if you short sale your home and continue to pay on time your other creditors, in 18-24 months you should be able to buy another home. With foreclosure a family is looking at 5 years to recover and the foreclosure can haunt them and remain on their credit report for up to 10 years.


If you are a distressed homeowner and have been considering a short sale or are in the middle of the process and your bank offers you a chance to get a loan mod even when they turned you down in the past. Make sure you weigh all the possibilities. If you know you will not be able to make the payments you may not want to prolong the inevitable. Your recovery starts as soon as you take the steps towards a recovery option such as a short sale.


There are many benefits to a short sale; especially tax wise, such as the debt relief act extended to 2014 insures you will not have to pay taxes on the amount forgiven. There are qualifications for this, but most will take advantage of this. Always discuss all the aspects of a short sale with your agent before you agree to enter into the agreement.


Make the right choice for your future. Too many distressed homeowners have blinders on and only look at the short term. Loan mods last 3-7 years, you must look at your future past 7 years and base your decision on where you want to be in 3-7 years. That is the real deciding factor!

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