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Robosigning victims soon to get cash from lenders

Robosigning victims soon to get cash payments from lenders

CARLOS BARRIA / Reuters file

A foreclosure sale sign sits in front of a house in Miami Beach, Florida in this file photo taken February 27, 2009.

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Mortgage lenders will begin making cash payments to homeowners harmed by wrongful foreclosures of anywhere between a few hundred dollars to as much has $125,000 beginning in April, federal bank regulators said Thursday.

The payments were part of a deal struck with 10 banks that abruptly ended a comprehensive review of some 4.2 million mortgages after widespread mistakes were found in documents used to foreclose millions of American homes following the housing bust.

But critics of the settlement, first announced in January, say it doesn’t adequately compensate those who lost homes for the harm they suffered.

The review was designed to determine which homeowners were harmed by “robosigning” and other shoddy document practices that resulted in wrongful foreclosures and then compensate those borrowers for their losses. But after more than 18 months and $1.5 billion in fees to independent consultants, only about 104,000 loan reviews had been completed, regulators said Thursday

“It just doesn’t make sense for these (mortgage) servicers to continue funneling money to consultants that could be better used to help distressed borrowers who have lost their homes,” said Thomas Curry, Comptroller of the of the Currency, in a speech earlier this month. “The cost of concluding these reviews would far exceed the harm that would be found.”

The lenders are Aurora Bank, Bank of America, Citibank, HSBC, JPMorgan Chase, MetLife Bank, PNC, Sovereign Bank, U.S. Bank National Association and Wells Fargo Bank. Three other mortgage lenders, GMAC Mortgage, Everbank and OneWest, didn’t sign the deal and will continue their own mortgage reviews.

The banks who agreed to the settlement will pay a total of $3.7 billion to a fund compensating borrowers who were harmed. They’ve been ordered to review eligible loans and divide them into 11 categories depending on the severity of harm borrowers suffered. Regulators have not yet determined how many borrowers fall into each category

The list ranges from relatively minor clerical mistakes all the way to homes that were improperly seized even though the borrower was not in default. The maximum payout will be $125,000. The average payment represents about $850 per eligible loan.

Critics of the review process argue that the amount paid by the banks is inadequate, and that the settlement amount was based on flawed accounting of harm done to borrowers.

“If the review is being done on the basis of the (mortgage) servicer files, and the servicer files are a mess, how can you make a finding that’s accurate?” said Alys Cohen, a consumer attorney at the National Consumer Law Center.

But OCC officials say they had enough information to conclude that the error rate on document processing was about 6.5 percent. Since January, a further review of the data collected indicates the error rate was even lower, Deputy Comptroller Morris Morgan said on a conference call with reporters.

Consumer advocates and several members of Congress are pressing the OCC to disclose the results of the loan reviews that were competed. Earlier this month, Rep Maxine Waters, D-Calif., wrote to Curry requesting a final accounting of the final payments made to homeowners under the settlement.

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“Without this information, the public will have no means by which to determine whether relief was provided in a manner that appropriately reflects the overall impact of foreclosures on certain communities and demographic groups,” she said.

The settlement is also intended to prod banks to modify more loans and stop foreclosures in progress. They’ve agreed to pay another $5.7 billion in so-called “soft dollars” that will be used to write down loan balances and approve short sales, in which the banks approves the sale of a house for less than the balance of the mortgage.

Under formulas similar to those worked out in a separate National Mortgage Settlement with the Department of Justice and state attorneys general, banks will receive a series of credits for various types of mortgage relief. Joseph Smith, the independent monitor appointed to oversee that settlement, recently reported that lenders had earned the bulk of those credits by approving short sales and writing down second mortgages.

Housing advocates note that, unlike relief extended to first mortgages, those measures don’t directly help keep families in their homes.

Though the pace of new foreclosures has fallen since the depths of the housing crisis, the volume of so-called “distressed” sales continues to weigh on housing prices. Foreclosure-related sales made up 21 percent of all U.S. home sales last year, according to the latest data from RealtyTrac. Short sales made up another 22 percent, meaning two in five transfers involved distressed sales.

OCC officials say their settlement terms are also designed to prevent future foreclosures. Consumer advocates and housing counselors say it’s not yet clear whether the measures in place go far enough.

That concern was echoed in Smith’s latest report.

“I believe we have made progress, particularly as it relates to consumer relief,” he said. “But I know from my regular conversations with advocates across the nation that the banks and I have much more work to do on behalf of borrowers.”

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Keep mitts off law reforming payday loans

Published: Thursday, February 28, 2013, 12:01 a.m.

The other day I needed some cash and went to the only ATM I could find. I took out $100 and got charged $3. Sort of an expensive way to access your own money, but the big boys at Chase have to get their slice of our pie.

It got me thinking about the continuing saga of the ways the rich have manipulated our political system to make it easier for them to steal from the poor. In our state, payday loans once created a billion dollar stream of funding, from people in difficult straits, to payday loan kings like MoneyTree. That was before 2010, when our legislature, led by then-Representative and current state Sen. Sharon Nelson, D-Maury Island, completely reformed the payday loan law. They balanced out the deal between the financial companies who provided payday loans and the people who needed them. It became much less likely that the payday loan companies would pile one loan on another, using the second one to repay the first and the third to repay the second, all of which meant more money for the company and more debt for the borrower.

One happy outcome of this is that the number of payday loans decreased significantly from over 3,250,000 in 2009 to 855,000 in 2011. The amount of money tied up in these loans dropped from over $1.3 billion to $300 million. At 15 percent interest, that meant a $150 million loss to the payday loan industry … and a $150 million gain for the folks who took out payday loans.

And it’s not like you can’t get a payday loan anymore. Sixty-eight companies had 256 locations around the state in 2011, two years after the reform bill passed. If you take out a payday loan for $700 for six months, you would end up paying back $914. That includes 15 percent interest and a loan origination fee of $95. On an annual basis, that all adds up to a 35 percent interest rate. Lots of money still there for MoneyTree!

But apparently not enough. So this year the money lenders have connived to legally extort poor people by proposing a new pathway for companies like MoneyTree. Under this new bill, if you take out a $700 loan for six months, you pay 36 percent interest, and you pay a loan origination fee of $105, and you pay a monthly maintenance fee of $52.50 a month. When you are done paying off your loan, you have doubled MoneyTree’s money — you borrowed $700 and you paid back almost $1,400. On an annual basis, your interest rate is 192 percent!

The state Senate approved this proposal for legal extortion, by a vote of 30 to 18. It helps to follow the money. Dennis Bassford is the CEO of MoneyTree. He lives in a multimillion-dollar mansion hidden in a private forest on Mercer Island. I wonder how he got all that money?! But now he wants more. So last year he and his brother Dave and sister-in-law Sara gave $5,000 to Sen. Don Benton, R-Vancouver. That $5,000 meant something, as Benton won with 50.07 percent of the vote, just 78 more votes than his opponent! Benton is vice chair of the Financial Institutions Committee and helped to shepherd this bill through the Senate.

Sen. Steve Hobbs, D-Lake Stevens, is the chair of the Financial Institutions Committee. He not only voted for this bill, he enabled its passage out of committee. Along with Hobbs, Snohomish County Sens. Barbara Bailey-R, and Kirk Pearson-R, voted for this bill for MoneyTree. On the Democratic side, Snohomish County Senators Maralyn Chase, Nick Harper, Rosemary McAuliffe, and Paull Shin all voted to stop MoneyTree from raiding the pocketbooks of desperate people.

If there are any heroes in this sordid story of the Legislature taking from the poor and giving to the rich, it is Sen. Sharon Nelson. She sponsored the reform bill back in 2009, and she adamantly opposed the take-backs envisioned this year. She knows no action means that Dennis Bassford will still get his 35 percent interest rate and still sleep in his mansion. But the folks he lends to will also be able to sleep with a roof over their heads and some sense of security. Now we have to hope that the House agrees and buries this bill before it goes any further.

John Burbank is the Executive Director of the Economic Opportunity Institute (www.eoionline.org). He can be reached via email at john@eoionline.org

[…]

Keep mitts off law reforming payday loans | Economic Opportunity …


Keep mitts off law reforming payday loans

Posted on February 28, 2013 by John Burbank

Commentary | February 28th, 2013 | By John Burbank | Everett Herald

In our state, payday loans once created a billion dollar stream of funding, from people in difficult straits, to payday loan kings like MoneyTree. That was before 2010, when our legislature completely reformed the payday loan law. But now some lawmakers are looking to roll back those consumer protections.

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Repaying your payday loans – Some important steps to follow

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Are you amongst those who take out pay day loans one after the other and thus, find yourself entrapped into enormous debt? If this is your situation, then you will have to look for suitable ways as to how you can repay your payday loans and get rid of them. So, if you had taken out fast payday loan to meet your emergencies, you should also make it a point to eliminate them so as to get rid of debt burden soon.

5 Essential steps to pay down payday loans and get out of them

Read on to know about the 4 essential steps to pay down payday loans and get out of them.

  1. Do not take out a payday loan The first step in eliminating payday loans is to be sure that you’ll not take out another one in future. This is the solution to eradicate debt cycle. Make sure you have a clear idea as to what the payday loans will do to your money and work out the figures. Also, know about the rate of interest that you’ll pay on your payday loans.
  1. Find someone who will lend you money In order to come out of payday loan debt trap, you’ll have to find someone who will lend you money or earn money for you. The banks and the credit unions will not lend you any money unnecessarily and so, you had taken out payday loans. Your friends and family members can help you in lending money when you require during emergencies.
  1. Take up a part time job for sometime If your fixed income does not enable you to pay down the payday loans, you can always take up a part-time job that you’ll do during your leisure time. This way, you will be able to make some extra income and use the money to get rid of payday loan as soon as possible. If you’ve some things at home that you do not use anymore, you can sell them off and make some money. Make use of this money to reduce payday loan debt trap.
  1. Reduce your expenses to as much as you can You must be having the habit of spending money unnecessarily for the sake of luxury. It’s advisable that you cut down your expenses and spend money only on the things that you’ll need the most. This way, you’ll be able to save at least some money from your income from month. You may use your savings to repay payday loans at the earliest time possible.
  1. Get in touch with a credit counselor You may get in touch with a credit counselor if you cannot understand as to how you’ll come out of payday loans. Begin by contacting the national foundation for Credit Counseling. If you do not want to call them up, you can always check out their website. The credit counselors have a great way to help you get back your personal finances on the right track.

So, if you’ve incurred payday loans, follow the above-mentioned steps. You will be able to come out of payday loan debt trap soon.

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