Daily Archives: July 28, 2015

Reverse-mortgage nightmare can start after borrower dies

Financial decisions can have consequences that outlive the people who make them.

In the case of three women, two in South Philadelphia and one in Delaware County, the decision to take out a reverse mortgage – a special kind of loan that allows borrowers 62 and older to convert a portion of their home’s equity into cash – has made their lives a nightmare.

All three were younger than their spouses and not yet 62, which meant they did not qualify for these mortgages and could not be co-borrowers. Their names were removed from the deeds so their husbands could qualify.

Once their husbands died, and, in some cases, even with their names back on the deeds, they faced foreclosure because the law allowed lenders that option.

Ruth Guerriero of South Philadelphia remembers the day she got the letter that “scared me to death” – the one threatening to foreclose because of a reverse mortgage she didn’t know existed.

She was sifting through the day’s mail at her dining room table in one of those postage-stamp-sized brick ranchers you can see from I-95. It had been 17 months since her husband, Alfred “Big Al” Guerriero, died at age 89, and she was still getting Mass cards from friends.

But this piece of mail in early October 2013 was from OneWest Bank, informing her that it was foreclosing on the house in the 2800 block of South Hutchinson Street that the couple had bought in 2006 for $200,000. Without her knowledge, Guerriero said, her husband – 23 years her senior – had taken out a reverse mortgage in September 2007.

To clear the way for the mortgage but without telling her the real reason, her husband asked her to remove her name from the deed, Guerriero said.

“He said if I did, our property taxes would be less since he was older.”

Because her name was neither on the title nor listed as a co-borrower on the reverse mortgage, OneWest insisted that Guerriero, now 69, had no claim to the house after his death.
Read more at http://www.philly.com/philly/business/real_estate/20150728_Reverse-mortgage_nightmare_can_start_after_borrower_dies.html#1jVewy6rD5kI0PMz.99

Rent-to-Own Homes Make a Comeback

Wall Street firms have found a new way to profit from consumers with blemished credit who can’t qualify for a mortgage: let them rent a home first with the option to buy it later.

Rent-to-own programs, once run mainly by small operators, were popular with cash-strapped consumers during the 1990s. They faded a decade later when easy lending made it possible for almost anyone to buy a home with no money down, but with lenders setting a higher bar, they are making a comeback.

For investors, it is a chance to profit off the recovering housing market. Consumers get a chance to lock in a home before they have the money together for a down payment. But the price may be higher rent in the interim and a higher purchase price the longer they wait to move from renting to owning.

Read on.

CFPB orders Paymap to repay $33.4 million for deceiving customers

The Consumer Financial Protection Bureau announced Tuesday that it is ordering Paymap, a Colorado-based payment processing company, to return $33.4 million to consumers for falsely promising mortgage savings to borrowers who used their biweekly mortgage payment program.

According to the CFPB, Paymap, along with LoanCare Servicing, a Virginia-based residential mortgage servicer, marketed a electronic payment system that boasted it could save borrowers as much as $33,000, while in actuality, borrowers did not save much, if at all.

Paymap and LoanCare advertised an “Equity Accelerator Program” – an electronic payment system that enabled consumers to make automatic mortgage payments via electronic debits taken from their bank accounts.

According to the CFPB, consumers are typically charged an enrollment fee of $295 when signing up for the Equity Accelerator Program, and a transaction fee for each automatic debit that Paymap makes, typically $2.50.

Since July 21, 2011, approximately 125,000 consumers enrolled in the Equity Accelerator Program and paid Paymap $33.4 million in fees.

And now Paymap is being ordered to return all of those fees to all of those customers.

Read on.

Fannie Mae: Mortgage lenders unnecessarily restrict credit

(Image courtesy of Fannie Mae)

It appears the post-recession mantra of mortgage lenders is “better safe than sorry.”

Despite pushes from the Federal Housing Finance Agencyand the Federal Housing Administration, many mortgage lenders are still applying additional credit overlays to loans delivered to Fannie Mae and Freddie Mac, a new survey of lenders showed.

The survey, conducted by Fannie Mae’s Economic & Strategic Research Group and based on responses from senior mortgage executives in May 2015, found that approximately 40% of lenders who deliver loans to the GSEs or Ginnie Mae reported applying credit overlays that are more stringent than what the GSEs or Ginnie Mae require.

Fannie Mae’s quarterly Mortgage Lender Sentiment Survey also found that 64% of lenders who deliver loans to the GSEs or Ginnie Mae said that credit overlays are applied on a “limited basis,” which is 20% or less of their loan originations.

Read on.

Bank of America CFO’s exit reportedly linked to desire to lead company

Bank of America (BAC) shocked the market a bit last week, when it announced the departure of Bruce Thompson, the bank’s chief financial officer and chief risk officer, without a great deal of explanation as to why Thompson was leaving after more than five years.

Now, a Reuters report sheds some light onto the reason that Thompson is stepping down.

According to the Reuters report, citing sources, Thompson wanted to lead Bank of America, not just manage its finances, and worried that he’d have to wait too long to replace current CEO Brian Moynihan.

From the Reuters report:

Thompson’s interest in heading a company was at least one reason for his leaving, the sources said: his ambitions ranged beyond managing cost cutting campaigns and fixing a big bank’s books.

Thompson, 51, believed he would have a long wait to be CEO of Bank of America, given that CEO Brian Moynihan is just 55, one of the two sources said. The two sources said they spoke to Thompson.

A previous Reuters report speculated that Thompson’s departure may have been related to the results of March’s Dodd-Frank Stress Test.

From the earlier Reuters report:

Thompson was one of the senior executives who played an important role in the firm’s stress-test submissions to the U.S. Federal Reserve.

However, BofA failed to win unconditional approval from the U.S. Federal Reserve in March and was asked to get a better grip on its internal controls and data models.

Source: Reuters

NY state senator convicted in foreclosure embezzlement scheme

New York State Senator John Sampson, D-Brooklyn, was convicted by a federal jury for one count of obstruction of justice and two counts of making false statements to federal agents related to his practice of embezzling foreclosure funds. (Technically, former Senator, as of today.)

The guilty verdicts follow evidence at trial and publicly filed documents establishing that, among other things, Sampson as an attorney practicing in Brooklyn embezzled funds he held in escrow from the sale of real estate properties.

Sampson vacated his senate seat on Friday after the conviction.

Concerned that his theft might be discovered by law enforcement, the Democrat lawmaker in 2006 asked an associate for $188,500 to replenish the stolen funds.

In exchange, Sampson used his position as a Senator to assist the associate’s real estate business interests.

Read on.

John Boehner Cries During Golf Channel Interview

Boehner-cries

The Weeper of House is at it again.. I shudder to think that this man is 3rd in line to the Presidency..

He’s weeping again. The sun rises in the east. All is well in the world.

Huffington Post:

WASHINGTON — If there’s one constant in the United States House of Representatives, it is Speaker John Boehner (R-Ohio) crying. He cried at an event honoring painter Constantino Brumidi. He bawled through a congressional award ceremony honoring an astronaut. Hewept during a Taco Bell event.

Why not cry in a Golf Channel interview?

Golf Channel host David Feherty landed an interview with Boehner that’s set to air Aug. 3, and a preview shows his waterworks in full effect.

“I wanted to make sure that every kid had the same chance I did,” Boehner tells Feherty, with tears falling down his cheeks. “An opportunity.”

The two also admire a framed photo in Boehner’s office that shows him talking with two former colleagues. What are they talking about?

“The three of us are talking about how easily we turn to tears,” says Boehner.

Emily Schillinger, a spokeswoman for the GOP leader, said he became emotional because he is grateful for the chances at success he’s had.