Showing posts with label Los Angeles Times. Show all posts
Showing posts with label Los Angeles Times. Show all posts

Monday, April 16, 2012

The future of foreclosures


This week, state lawmakers are set to take up a series of mortgage-related bills backed by Atty. Gen. Kamala Harris.

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Foreclosure
A foreclosure sign hangs on a fence in front of a foreclosed home on April 6, 2011 in Richmond, Calif. This week, state lawmakers are set to take up a series of mortgage-related bills backed by Atty. Gen. Kamala Harris, beginning with a measure (AB 1602) to enshrine the national settlement's safeguards into California law and apply them to all borrowers in the state. ( Justin Sullivan / Getty Images / April 14, 2012)
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April 16, 2012
It's been five years since the housing bubble burst, yet hundreds of thousands of California homeowners remain in default and en route to foreclosure. Some of these troubled borrowers will benefit from new consumer protections included in a nationwide settlement that five major banks agreed to in February, including a requirement that foreclosure proceedings wait until the bank considers a modified mortgage that would be less costly to borrower and lender alike. Those protections, however, extend no further than the five banks and the loans they service. This week, state lawmakers are set to take up a series of mortgage-related bills backed by Atty. Gen. Kamala Harris, beginning with a measure (AB 1602) to enshrine the national settlement's safeguards into California law and apply them to all borrowers in the state. Also included in the package are proposals to improve lenders' record keeping and extend the statute of limitations for prosecuting certain mortgage-related crimes.
The measures are sensible and important, yet they're running into resistance from bank lobbyists. One of the main complaints is that some of the bills would encourage defaulting borrowers to file lawsuits to drag out the foreclosure process, even if they have no intention or ability to keep their homes.
Complaints about potentially abusive lawsuits would be more persuasive if they weren't coming from an industry whose companies foreclosed on properties despite falsified court affidavits (by "robo-signing" documents) and serious discrepancies in the ownership records. Nevertheless, to minimize the risk of spurious claims and delaying tactics, sponsors have amended the legislation to significantly narrow individuals' right to sue. Borrowers also would be deterred from making multiple spurious applications for mortgage modifications.
Ultimately, many foreclosures simply can't be averted. Some borrowers took on too much risk, and the recession cut other borrowers' income so substantially that they can no longer afford their homes. But lenders, overwhelmed by the number of borrowers who ran into financial trouble, took procedural shortcuts that led them to foreclose on many borrowers who could have been rescued with a less costly mortgage modification. The bills Harris has sponsored would provide more protection against abuses and errors in the foreclosure process and promote mortgage modifications without requiring lenders to do anything that's not in their financial interests. That's hardly too much to ask.
Copyright © 2012, Los Angeles Times
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Saturday, April 14, 2012

An ugly foreclosure story, starring Bank of America


Dirma Rodriguez wonders how a house she'd been paying on for years, and which is specially modified for her severely disabled daughter, could be taken from her.

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Bank of America
After homeowner Dirma Rodriguez fell behind on her payments, the Bank of America lowered her monthly obligation, but then sold her house at a foreclosure auction last September. (Associated Press)
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Gale Holland, Los Angeles Times
April 13, 2012
Dirma Rodriguez had five minutes to gather her things and vacate the West Adams house she and her severely disabled daughter had lived in for more than 25 years.

As a property manager changed the locks, Rodriguez fluttered back and forth from the yard — where a pile of stuff lay by the kitchen stove — to her car, where her daughter, Ingrid Ortiz, sat screaming and crying.

How Rodriguez and Ortiz ended up in this predicament is a long, messy story that resounds with a misery all too common in this age of foreclosure.

Rodriguez took out a loan to retrofit her house for her special-needs daughter. After she fell behind on her payments, the Bank of America lowered her monthly obligation, but then sold the house at a foreclosure auction last September. The new owner, a house flipper from El Segundo called West Ridge Rentals, moved to evict the family.

I came upon Rodriguez's story through Occupy Fights Foreclosure, the latest offshoot of the 99% movement. Occupy interceded to stop her eviction March 26, and it just may have saved her home for good. Bank of America said last week it is considering a loan modification that would return the home to Rodriguez and her family.

But how did it come to this? Bank of America took a $45-billion bailout from taxpayers when it got into financial trouble. Why couldn't the bank have shown Rodriguez — a widow whose life was already a trial — the same courtesy when she got squeezed?

"I would pray to God the executives from Bank of America would come over here and see what I have to deal with," Rodriguez said through a Spanish-speaking Occupier last week.

Ortiz, now 27, has cerebral palsy and does not speak. Her vision is poor, and she can walk with leg braces, but she generally finds it easier to slide around the house on her knees. She often cries and wails loudly.

The stucco house on South Rimpau Boulevard, which Rodriguez keeps immaculate, is custom-conditioned for Ortiz, with gleaming floor tiles to ease her movements and a wheelchair ramp. In the summer, Rodriguez spreads a blanket on the lawn so Ingrid can enjoy the sun and gaze at the dozens of unblemished rose bushes her mother planted in honor of her quinceañera.

Given the circumstances, it's hard to picture Rodriguez spending her loan money on a cruise. Or finding another place where Ortiz could live comfortably.

"I built all this house so she could have a castle," Rodriguez said through a translator last week. Two portraits of a smiling Ortiz in a white quinceañera dress with rosebud trim hung nearby. "This is the only world she knows," her mother said.

Bank of America inherited Rodriguez's loan from Countrywide. After her payment jumped, and she fell behind, the bank placed her in a trial loan modification. She made her payments faithfully for 13 months and was awaiting a permanent modification package when the bank sold her home out from under her, she says.

How and why this came to pass is in dispute. Rodriguez says the bank began returning her payments, then put her into foreclosure without notice. Bank of America spokesman Rick Simon said she received ample notification, and the foreclosure was aboveboard.

Getting at the truth is complicated by "advocates" that Rodriguez brought in to try to save her home. One of them, G & G Financial of Los Angeles, earned a grade of "F" from the Better Business Bureau for allegedly charging homeowners advance fees to work on loan modifications, which is illegal in California. A man who answered the phone at G & G hung up on me when I tried to ask about Rodriguez's case.

Another company, Golden Global Investments of Van Nuys, said through an employee that it helped Rodriguez fight eviction. But West Ridge lawyer Alan Dettelbach says no one was in court for Rodriguez when the eviction proceeding was heard.

Bank of America's assertion that the foreclosure was proper might be more persuasive if it and four other banks hadn't just signed a $25-billion settlement with the federal government and state attorneys general over shoddy, and possibly illegal, foreclosure practices. Or if it had established more of a record of helping longtime homeowners hang on to their properties.

Bank of America was the only lender that joined a 2009, $1.1-million city pilot program to help homeowners in the North San Fernando Valley obtain loan modifications. But as of February, the bank could find no "eligible borrowers," city staff reported to the City Council.

Really? REALLY? There's not a single Bank of America borrower in North Hollywood or Sun Valley deserving of a break?

Rodriguez owed $457,000 on the house; West Ridge picked it up for $300,100. You might wonder why Bank of America found it smarter to sell at a loss than to work out reasonable terms with Rodriguez, who made mortgage payments for more than 20 years without incident.

Basically, the bulk of the loss falls not on Bank of America, the loan servicer, but on the loan's owner — in Rodriguez's case, Freddie Mac.

Dettelbach, the attorney, said West Ridge is willing to walk away if the bank repays its money plus costs. Simon, the spokesman, said the bank has to be certain Rodriguez can afford the payments before they agree to a modification.

"We are certainly sympathetic to the situation involving her daughter and the renovations that have been done to the home," Simon said in an email.

"I don't want a free house. I just want to make my payments," Rodriguez said.

gale.holland@latimes.com
Copyright © 2012, Los Angeles Times
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