Low 2011 Mortgage Rates Won't Stop 2012 Foreclosure Wave

By Shanthi Bharatwaj12/30/11 - 01:35 PM EST

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NEW YORK (TheStreet) -- Mortgage rates remained amazingly low for 2011, but that won't stop a coming wave of foreclosures in 2012.

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Mortgage rates finished near all-time historic lows in 2011. Freddie Mac(FMCC.OB) on Thursday released the results of its Primary Mortgage Market Survey. The 30-year fixed rate mortgage rate ended 2011 with an average 3.95% for the week ending Dec.29, 2011, up from the previous week's rate of 3.91 % but significantly lower than the 4.86% averaged in the year-ago period.

The 15-year fixed-rate mortgage averaged 3.24%, up from 3.21%, but lower than the 4.20% averaged a year earlier.

Looking ahead, Freddie Mac economist Frank Nothaftexpects mortgage rates to remain very low at least through mid-2012, as the Federal Reserve has indicated that it will keep the federal funds rate near zero till as late as mid-2013.

He does expect housing prices to bottom in the later part of 2012. " Low mortgage rates and existing house prices could lead to a bump-up in sales by 3 to 5 percent in 2012 over the 2011 level," he wrote in his commentary. "While encouraging, sales volume is still low, given the strong current affordability of housing. And ample distressed sales and sluggish home-buying demand will continue to keep prices soft in many markets: We expect U.S. house-price indexes to move lower before bottoming out in 2012, with modest appreciation forestalled until 2013."

With rents climbing and housing affordability remaining at its best level in years, some economists are predicting that buyers who have stayed on the sidelines will return to the market in 2012. Hedge funds are beginning to bet on a recovery in the housing market, theWall Street Journal reported on Thursday.

Recent housing data has sent confusing signals about the direction of the housing market. The S&P Case-Shiller Housing Price Index showed home values in the 20-city composite falling 3.4% in October on a year-on-year basis and 1.2% over September.

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One Week to Go - 15 times at Bat

I need to have my appeal filed by next Tuesday, Jan 5, 2012

This will be the 15th time the court will be able to give me my day in court, my right to be heard. The facts are undeniable, and the law is settled, yet no court has given me 'my day in court'.


March 2003    Bankruptcy Court denies hearing

August 2003    District Court affirms lower court

June 2005       9th Circuit rules for bank

August 2005    9th Circuit denies reconsideration

November 2005   United States Supreme Court denies review

April 2006  United States Supreme Court denies reconsideration after BAP reversal of court.

April 2007  Bankruptcy Court Motion for hearing denied

August 2008   District Court affirms Bankruptcy Court

May 2009  9th Cir denies my petition for mandamus (order)

June 2009  9th Circuit denies appeal

August 2009  9th Circuit denies reconsideration

January 2010 Supreme Court denies review

January 2011 Bankruptcy Court dismisses Motion for Hearing

May 2011  Petition for Mandamus to Court

June 2011  Appeal to 9th Circuit

Detail emerge between banks and AG's

Details of Mortgage Settlement Between Banks and AGs Begin to Emerge

December 27, 2011 By Steve Dibert Leave a Comment

Massimo Calabresi, Time Magazine

Iowa AG Tom Miller

The never-ending negotiations between the 50 state attorneys general (minus a few big ones) and five major banks over penalties and standards for past, present and future mortgage servicing are finally ending, and some details are beginning to emerge from sources familiar with the deal. The big number is the $25 billion that the banks will commit to three categories of the settlement: $5 billion in cash payments, mostly to the states, $3 billion in refinancing for underwater mortgages, and $17 billion in principal reduction. Here’s the breakdown:

Of the $5 billion, $1.5 billion will go to people who have been foreclosed on and were abused in some way during the process. The claims are nearly instantaneous–”we don’t read anything, it’s check the box,” says one state AG negotiator. But the payments are also small: $1,500 to $2,000. Now, the vast majority of people who lost their homes over the last several years probably would not have been able to make their payments even if the banks had been behaving well. For them a no-questions-asked $2,000 check from the bank for the poor treatment they received in the process may be fair. On the other hand, those who were unfairly evicted may be insulted by the small amount. But no one taking the payment would be giving up any rights to bring cases against the banks for wrongful eviction or other claims they may have. The federal regulator with oversight of the issue, the Office of the Comptroller of the Currency, has sent out 4.5 million forms to potentially wrongfully evicted families; processing those claims will be paid for by the banks.

Around $2.75 billion of the $5 billion in cash the banks are coughing up will go to state programs for foreclosure mitigation efforts like legal aid hotlines, mediation between homeowners and banks and counseling. Some $750 million to the federal government for its foreclosure mitigation programs.

The $3 billion for refinancing underwater loans targets a limited population: only those who are current on their payments and who have been current for several months. The Obama administration has launched its own less-than-ambitious program in this regard. Mortgage refis tend to help those who need it least–particularly if they’re limited to people who are current on their payments. Refis also only reduce interest payments, not the actual value of the underlying loan.

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Big Bank Bonuses: Big Picture 12/21/11

 
• The Big Picture With Thom Hartmann

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The New Bottom Line organization projects that the nation's 7 largest banks will have bonuses equal to $156 billion. Meanwhile, there are currently 1.6 million homeless children in America (or 1 in 45 children). In the 2008 bailout, taxpayers dished out $116 to these banks. Instead of using their excess to bail out the 99% or allow their benefits to "trickle-down," these banksters have simply pocketed that much and more.

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Cleveland judge rejects most of Cleveland’s suit against banks over subprime loans

December 10, 2011 By Steve Dibert Leave a Comment

Pat Galbincea, The Plain Dealer

A Cuyahoga County judge has dismissed most of a 2008 public nuisance lawsuit Cleveland officials filed against 21 banks and mortgage companies in an attempt to punish them for bankrolling subprime loans.

The dismissal cuts off another avenue the city sought to collect millions of dollars in damages related to the foreclosure crisis. A similar suit was dismissed in July 2010 by the U.S. Circuit Court of Appeals in Cincinnati.

The lawsuit languished on Cuyahoga County Common Pleas Judge Brian J. Corrigan’s docket for more than a year with no action taken until a Plain Dealer editor inquired about it on Nov. 15.

On Nov. 22, Corrigan dismissed the city’s charges that bank mortgage lending practices created a public nuisance, and that the banks violated the Ohio RICO Act which city lawyers say “by knowingly instituting foreclosure proceedings with documents falsely claiming titles to the underlying mortgages, constituting a pattern of corrupt activity.”

In May 2009, U.S. District Judge Sara Lioi ruled that Cleveland could not make a nuisance claim because it had no authority to regulate mortgage lending or prove direct relationship between the city’s damages and the bank’s activities.

Corrigan wrote that too many other factors like urban decline, proper foreclosure actions and increased crime rate also contributed to the city’s lost tax revenues and increased expenditures.

That also was similar to Lioi’s ruling, when she said the city could not prove banks were directly responsible for blight, crime and other problems foreclosures had caused in Cleveland.

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COMMON SENSE

Few Avenues for Justice in the Case Against Citi

By JAMES B. STEWART

Published: December 2, 2011

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Is anyone going to be held legally accountable for the financial crisis? When the Securities and Exchange Commission announced recently that it was settling fraud charges against Citigroup for a paltry (for Citigroup) $285 million, the only person actually named in the S.E.C.’s charges was Brian Stoker.

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Never heard of him? He’s a 40-year-old Harvard Business School graduate and, until 2008, was a midlevel director in Citigroup’s “CDO structuring group” (he denied the charges and didn’t reach any settlement agreement). Charles Prince, the since-departed Citigroup chief executive at the time of the alleged misdeeds, isn’t mentioned. Four other Citigroup executives, including at least two senior to Mr. Stoker, are described in the complaint as being involved in the dubious transactions yet remain unnamed and uncharged.

This week Judge Jed S. Rakoff of Federal District Court issued a blistering 15-page opinion rejecting the proposed settlement, characterizing the penalty as “pocket change” for Citigroup and the overall settlement as “a very good  deal” for Citigroup and a “mild and modest cost of doing business.” Confronted with allegations that Citigroup in customary fashion neither admitted nor denied, Judge Rakoff said he lacked an adequate factual basis for evaluating the settlement and ordered the parties to trial.

It looked like Citigroup and its wayward executives might finally get their due.

Or so I thought until I read the submissions in the case and did some further reporting. The S.E.C. may have been lucky to get what it did. It’s a textbook example of why it’s hard to hold anyone legally accountable for the financial crisis. You can’t fault the agency for not trying — it spent four years digging into Citigroup’s mortgagederivatives operation. If anything, the S.E.C. might be criticized for being too aggressive, using its considerable power to extract a settlement in a case whose weaknesses, if it finally goes to trial, will probably become readily apparent.

Let’s stipulate that the behavior of Citigroup and its executives is every bit as bad as the agency alleges. Though Citigroup neither admitted nor denied the allegations, in its court submissions it actually admits quite a lot, and the key facts aren’t in dispute. In February 2007, as the real estate bubble was growing increasingly overextended and the first signs of distress were surfacing in mortgage markets, Citigroup Global Markets helped put together a $1 billion package of mortgages that it marketed and sold to clients still hoping to cash in on the real estate boom.

Then Citi itself took a short position on a portion of the mortgages, betting the security it created would decline in value. The Citi mortgage package was declared in default a mere nine months later, and according to the S.E.C., Citigroup’s clients lost over $700 million while Citi raked in a $160 million profit on its short position. For his efforts, Mr. Stoker took home a $1.05 million bonus and was further rewarded with a $2.25 million “guaranteed bonus” at the end of the year.

But bad deals, even really bad deals like Citigroup’s, aren’t illegal. They’re not criminal. They’re not inherently fraudulent. If Citigroup’s clients, all of them sophisticated institutional investors, were foolish or careless enough to buy what Citigroup sold them, then arguably they deserved their losses. Their remedy, presumably, would be never to do business with Citigroup again.

This poses a major obstacle for prosecutors and the agency’s enforcers. They have to prove that bank executives misrepresented the terms of the deal and misled investors. Fraud has an even higher standard of proof: the statement must be intentionally false about a material fact. The reason Mr. Stoker and no one else was charged is that he appears to be the only Citigroup executive who had any responsibility for the disclosure materials who also knew enough about the deal to ensure their accuracy.

Stripped of its complexity, the case boils down to just two allegations: that Citigroup helped choose the mortgages in the security and withheld that information; and that Citigroup failed to disclose that it was taking a short position.

So what did Citigroup actually say to potential clients?

The offering circular describing the deal states: “the composition of the Eligible Collateral Debt Securities will be determined by the selections of the Manager” which was Credit Suisse. Citigroup suggested mortgages for the collateralized debt obligation, most of which were included (along with others identified by Credit Suisse), but maintains that Credit Suisse “determined” the assets in that it had no obligation to accept Citi’s recommendations and that Citi had no veto power over what Credit Suisse decided to include.

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A version of this article appeared in print on December 3, 2011, on page B1 of the New York edition with the headline: Few Avenues For Justice In t