Federal report slams Ohio for major delays in helping homeowners in foreclosure

WASHINGTON, D.C. — As thousands of Ohio homeowners faced foreclosure during the last decade’s financial crisis, the state came through, delivering millions in bailout dollars sent from Washington. But first, the homeowners had to wait. And wait some more.

The process was painfully slow, with Ohio homeowners waiting months to get help — and sometimes more than a year, a pace that made the state the worst in the nation for many delays, according to a report being released Wednesday by a federal inspector general.

“When you’re unemployed, you don’t have six months to wait for help, and you certainly don’t have a year,” Christy Goldsmith Romero, the special inspector general for the federal Troubled Asset Relief Program, or TARP, told the Northeast Ohio Media Group in a telephone interview.

The median wait time in Ohio for homeowners seeking unemployment-mortgage help was six months, according to data the inspector general gathered from the Treasury Department, which is in charge of the program and oversees its administration through the states.

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How a homeowner’s foreclosure deal turned into a scam horror story

Broadies Byas knew the foreclosure rescue deal was too good to be true, but desperation made her sign the papers anyway.

After falling ill, the 50-year-old Bedford Stuyvesant resident couldn’t repay $30,000 on a high-interest-rate home equity loan, and had received a notice of foreclosure for the brownstone where she was born and raised.

In a panic, she decided to give an official-sounding company called Homeowners Assistance Services of New York a try in spring 2014. Byas says Homeowners Assistance Services gave her a check for $50,000, but not the new mortgage she expected.

Byas knew something wasn’t right, and she didn’t cash the check. A few weeks later, she learned she’d turned over ownership of the home, currently listed on Zillow at $1.9 million, to alleged con artists who threatened to put her family out on the street.

Her voice at times choked with emotion, Byas spoke to reporters at a mortgage scam and foreclosure prevention workshop last week at Brooklyn’s Borough Hall that drew 90 people.

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Washington Supreme Court Denies Access to Foreclosure Mediation

KENNEWICK, WA — The Washington Supreme Court ruled in favor of the Washington State Department of Commerce today in Brown v. Commerce, a case addressing the rights of Washington homeowners to access mediation with their lenders under the Foreclosure Fairness Act (FFA). Northwest Justice Project (NJP) and Columbia Legal Services (CLS) jointly represented Kennewick homeowner Darlene Brown in the case to advocate for the equal right to mediation for Washington homeowners whose loans are owned by Freddie Mac and Fannie Mae.

This case involved Darlene Brown, a disabled homeowner in Benton County, Washington, who was in danger of losing her home due to unexpected deaths in her family and resultant loss of income. The mortgage note was owned by Freddie Mac, but because the loan servicer M&T Bank as “note holder” was on the mediation-exempt list, Ms. Brown was denied mediation.

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California Teachers Have Been Financing Evictions of Homeowners

The teachers’ pension fund invested hundreds of millions of dollars into a company that has foreclosed on and evicted numerous homeowners, including dozens in the East Bay.

California’s pension fund for public school teachers invested hundreds of millions of dollars in a company that has been criticized for foreclosing on property owners and kicking them out of their homes, including dozens in the East Bay, records and interviews show. The company, Caliber Home Loans, is owned by the private equity firm Lone Star Funds and was featured in a New York Times story last week because of its controversial practices.

In an email to the Express, officials for the California State Teachers Retirement System (CalSTRS) confirmed that the pension fund invested $660 million in two different funds managed by Lone Star, and that the company has used the money to buy up distressed home loans, foreclose on the homeowners, and resell the homes. CalSTRS spokesperson Ricardo Duran said that Lonestar officials have told pension fund managers that the investment has resulted in a lower rate of foreclosure than the industry standard. But according to Duran, CalSTRS has not been provided with data from Lone Star to substantiate these claims.

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9th Cir reverses dismissal of “unlicensed foreclosure trustee” putative class action, holds CAFA’s “local controversy” exception applied

The U.S. Court of Appeals for the Ninth Circuit recently reversed the dismissal of a class action that was removed to federal court under the federal Class Action Fairness Act (CAFA).  In so ruling, the Court held that the case fit the narrow “local controversy exception” to CAFA’s grant of federal court jurisdiction.

A copy of the opinion is available at: http://cdn.ca9.uscourts.gov/datastore/opinions/2015/06/18/13-15185.pdf

The trial court found it had jurisdiction over a class removed from state court under CAFA.  Then, the trial court dismissed the suit for failure to state a claim.  However, the Appellate Court focused its analysis on the jurisdictional question alone and reversed on that basis alone.

The putative class consisted of Nevada borrowers who took out loans against Nevada real property.  Later, those borrowers defaulted, and the six defendants initiated non-judicial foreclosures.  The borrowers alleged the defendants engaged in illegal debt collection activity in connection with those foreclosures.

More specifically, the borrowers alleged the defendants engaged in “claim collection” without being licensed as supposedly required by Nevada Revised Statutes (NRS) Section 649.  The borrowers argued that Nevada law requires foreclosure trustees to be licensed, and that the defendants’ failure to register as “collection agencies” (as defined in NRS Section 649.020), constituted a deceptive trade practice.  The borrowers also alleged that the defendants engaged in unjust enrichment, trespass, quiet title, and elder abuse.Of the six defendants, only one company was domiciled in Nevada.  The borrowers alleged that company engaged in fifteen to twenty percent of the total debt collection activities in the suit.  The borrowers estimated the damages recoverable from that defendant were between $5,000,000 and $8,000,000.  The borrowers also sought equitable relief against that company.

Before turning to the Appellate Court’s analysis, a discussion of is necessary.

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Editorial: Foreclosure aid too little, too late

The foreclosure crisis hit Floridians particularly hard. And yet from its inception, Florida’s Hardest Hit Fund failed to prevent foreclosures for too many homeowners despite having nearly $1 billion to provide relief. A report released last week illustrates the depth of Florida’s deficiencies. Florida consistently underperformed when compared with other states that received federal funds to help homeowners. The state made it too hard to qualify for help, had frustratingly long wait times for assistance and failed to be transparent about why homeowners were turned down. At the height of the real estate crisis, the state sat on money that could have helped needy Floridians remain in their homes. There is no excuse for such irresponsible stewardship of federal aid.

The Tampa Bay Times’Susan Taylor Martin reported on Tuesday that a federal investigation of Florida’s HHF revealed that the state had the lowest homeowner admission rate among the agencies tasked by the U.S. Treasury Department with providing mortgage assistance in 18 states and the District of Columbia. Florida also had one of the highest rates of application withdrawals and a denial rate of 27 to 45 percent, above the national average. Five years into the program, only 22,400 people have been helped, a paltry number given the magnitude of the real estate crisis in Florida.

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RESPA Claims Cited by Foreclosure Defendants Fall Flat in Florida

Homeowners using the Real Estate Settlement and Procedures Act (RESPA) as a shield to foreclosure saw their claims fall flat in Florida court in recent months.

At least two cases decided by the United States District Court Southern District of Florida ended with the court siding against the homeowners and for the servicers, giving financial firms a bit more room when interpreting a significant part of RESPA.

Essentially, two cases – Russel v. Nationstar and O’Brien v. Seterus – tested the limits of a provision in RESPA, which requires servicers to respond to all written requests from borrowers who ask for information on their loans, including servicing information and payment schedules.

In Russel v. Nationstar, a borrower facing foreclosure claimed that Nationstar failed to provide a complete profile of the homeowner’s loan payment history. This report largely stemmed from the fact that the loan was previously transferred from another servicer. To retrieve the payment history, the borrower filed a series of qualified written requests to the servicer asking multiple times for their complete payment history, which dated back to a previous financial institution.

Because Nationstar did not provide an entire listing of each payment made to the prior servicer, the borrowers claimed their request for information under RESPA had not been met. The court sided with Nationstar, noting that all of the borrower’s responses were met and that the loan had not been delinquent at any time before Nationstar took over the servicing component. Based on the provisions outlined in RESPA, the court sided with the servicer and agreed Nationstar complied with the law by responding to each interrogatory issued by the borrower.

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Florida’s Hardest Hit Fund program blistered in report

In a blistering report released today, federal investigators say Florida has consistently “under-performed” other states in using federal mortgage assistance money to help desperate homeowners facing foreclosure.

Of the 18 states participating in the Treasury Department’s Hardest Hit Fund, Florida has the lowest rate of approving homeowners for assistance, one of the highest rates of denying assistance and an overall “slowness” in processing thousands of applications.

Five years into the program, only 22,400 Floridians had been helped as of March — just 20 percent of all who applied and the lowest percentage of any state. Estimates of the total number to receive assistance by the program’s end in December 2017 have plunged from the original 106,000 to just 39,000.

“After five years, Hardest Hit Fund Florida still has half of their HHF funds despite Florida homeowners experiencing critical need,” according to the Special Inspector General for the Troubled Asset Relief Program, or TARP.

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New wave of foreclosures, this time by hedge funds

Private equity and hedge fund firms have bought more than 100,000 troubled mortgages at a discount from banks and federal housing agencies, emerging as aggressive liquidators for the remains of the mortgage crisis that erupted nearly a decade ago.

As the housing market nationwide recovers, this is a dark corner from which banks, stung by hefty penalties for bungling mortgage modifications and foreclosures, have retreated. Federal housing officials, for the most part, have welcomed the new financial players as being more nimble and creative with terms for delinquent borrowers.

But the firms are now drawing fire. Housing advocates and lawyers for borrowers contend that the private equity firms and hedge funds are too quick to push homes into foreclosure and are even less helpful than the banks had been in negotiating loan modifications with borrowers. Federal and state lawmakers are taking up the issue, questioning why federal agencies are selling loans at a discount of as much as 30 percent to such firms.

One company has emerged as a lightning rod, criticized by housing advocates and lawyers for borrowers, but admired by investors: Lone Star Funds, a $60 billion private equity firm. In just a few years, Lone Star’s mortgage servicing firm, Caliber Home Loans, has grown from a bit player to a major force in the market for distressed mortgages.

An examination by the New York Times of housing data and court filings, as well as interviews with borrowers, lawyers and housing advocates revealed a pattern of complaints that Lone Star was quick to begin foreclosure proceedings, whether the firm had bought a delinquent mortgage at a federal auction or directly from a bank.

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Man trying to keep home from foreclosure says Ocwen didn’t credit payments

AURORA, Colo. — A loan service company based in Florida has one Aurora man afraid he’s about to lose his home.

So he reached out to the FOX31 Denver Problem Solvers trying to find help.

We have been digging, working for weeks to help solve loan collection problems for a man in Aurora who says he’s also dealing with a language barrier.

But we found the company has more barriers than just language, when it comes to dealing with frustrated customers.

Vi K. Tran shows us some of the paperwork he says he’s collected. He’s trying to keep his home in Aurora from going into foreclosure.

“I’m so upset about it,” said Tran. “I want to solve the problem; They don’t want to.”

“They” is Ocwen Loan Servicing of central Florida, essentially a debt collection company now handling his mortgage after he ran into some hard times.

“They told me ‘your house will go into foreclose,’” said Train. “I say ‘What?! What? I been making payment.’”

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