The practice is very common, and such transfers normally take place without a hitch. But you need to make sure the rightful loan servicer receives your payments.
Reporting from Washington - It's the mortgage market's equivalent of a Dear John letter: "Goodbye. We've sold your loan to another lender."Some borrowers receive the missive a few days after they close on their loans. Sometimes it arrives years later. But over the life of the mortgage, practically every homeowner is sure to receive one. The loan may be sold two, three or even four times to other lenders.In mortgage-industry parlance, it's called a "transfer of servicing." But although some borrowers may take the notice as a personal affront, it's really nothing to fret about."People shouldn't take it personally," said Alan Jones, senior vice president for servicing at Wells Fargo Home Mortgage in Des Moines. "It doesn't have anything to do with anything they have done. It's a standard business practice."Wells Fargo is one of the few lenders that rarely transfers the servicing rights to the loans it originates. Otherwise, the practice is very common. Full story!!
http://www.latimes.com/classified/realestate/news/la-fi-lew23-2009aug23,0,714106.story
Monday, August 31, 2009
Hey, it's not my bill to pay!
Hey, it's not my bill to pay!
By Steve Bucci • Bankrate.com
first bold text -->
Dear Debt Adviser,A debt collector called me last week about a debt from 2002! I know this is not my debt. It's for a phone bill from a different state! They had my Social Security number and everything. This is a debt that showed up on my credit report a few years back and I notified the credit bureau that it wasn't mine. They supposedly reviewed it and the matter was to have been resolved, but I never got any paperwork. Now this debt collector is calling and harassing my family and sending me notices. What do I do?
Do I have to pay for another credit report and file a complaint again? This is so upsetting and really causing a lot of stress for me. Can you steer me in the right direction? Thanks so much! -- Amy
Dear Amy,I know how upset you must feel. Having a collector harass you out of the blue is a lot like being the victim of an assault or a crime. Will anyone believe you? How do you prove your innocence? And it is so embarrassing for most of us.
Fortunately, the law is on your side. The Fair Debt Collection Practices Act, or FDCPA, says you have 30 days to respond to a collection attempt and you are well within your rights to dispute the alleged debt. The collector might have the wrong person, or you could be the victim of a scam to get money for a bogus bill. Either way, you have the right to have the collection agency prove that you owe the money.
All you need to do is ask that they provide proof of the debt. Write to them using certified mail, with a return receipt requested. Keep copies of everything and notes of any calls. Demand communication through the mail. Having information mailed opens any possible scammers to mail fraud charges and ups the ante for them. For more tips regarding the FDCPA, go to the Federal Trade Commission's Web site or search under FDCPA.
When you dispute the bill, the collector must stop all collection activity and send you proof before reinitiating contact. If they violate this provision, you can have them sued.
As for your credit report, you no longer have to pay for your credit reports from the three major credit bureaus. All you need to do is visit AnnualCreditReport.com and you can receive a copy of your credit report from Equifax, Experian and TransUnion absolutely free with no strings attached once every year. I typically recommend that requests for reports be spaced out throughout the year rather than getting all three at once, unless it is necessary to see everything that is being reported at one time. Getting all three right away would probably make the most sense for your current situation, but going forward you could space out your review of each bureau's report throughout the year.
I want you to take a look at your credit reports and see if the phone bill debt shows up as "in collection," or for that matter at all. Because this isn't your bill, you need to again dispute the debt with the bureau, or you can dispute it directly with the creditor that reported it. The dispute process will be spelled out in the materials you get from the bureaus. The Fair Credit Reporting Act requires that the credit bureau investigate the dispute and if there isn't sufficient proof that the debt is yours, it must be removed. I also suggest that you write to the creditor and tell that firm to stop reporting debt incorrectly.
Errors on credit reports are not unusual for the simple reason that billions of pieces of information are reported, mostly by computers, and mistakes are bound to happen. Still, that doesn't help your sinking stomach when the phone rings. Once you have disputed the bill and sent your letters, screen your calls with caller ID or an answering machine. If the harassment continues, see an attorney. They just love dealing with collectors who are bullies and mistaken. And that will be the end of that tune!
Good luck!
By Steve Bucci • Bankrate.com
first bold text -->
Dear Debt Adviser,A debt collector called me last week about a debt from 2002! I know this is not my debt. It's for a phone bill from a different state! They had my Social Security number and everything. This is a debt that showed up on my credit report a few years back and I notified the credit bureau that it wasn't mine. They supposedly reviewed it and the matter was to have been resolved, but I never got any paperwork. Now this debt collector is calling and harassing my family and sending me notices. What do I do?
Do I have to pay for another credit report and file a complaint again? This is so upsetting and really causing a lot of stress for me. Can you steer me in the right direction? Thanks so much! -- Amy
Dear Amy,I know how upset you must feel. Having a collector harass you out of the blue is a lot like being the victim of an assault or a crime. Will anyone believe you? How do you prove your innocence? And it is so embarrassing for most of us.
Fortunately, the law is on your side. The Fair Debt Collection Practices Act, or FDCPA, says you have 30 days to respond to a collection attempt and you are well within your rights to dispute the alleged debt. The collector might have the wrong person, or you could be the victim of a scam to get money for a bogus bill. Either way, you have the right to have the collection agency prove that you owe the money.
All you need to do is ask that they provide proof of the debt. Write to them using certified mail, with a return receipt requested. Keep copies of everything and notes of any calls. Demand communication through the mail. Having information mailed opens any possible scammers to mail fraud charges and ups the ante for them. For more tips regarding the FDCPA, go to the Federal Trade Commission's Web site or search under FDCPA.
When you dispute the bill, the collector must stop all collection activity and send you proof before reinitiating contact. If they violate this provision, you can have them sued.
As for your credit report, you no longer have to pay for your credit reports from the three major credit bureaus. All you need to do is visit AnnualCreditReport.com and you can receive a copy of your credit report from Equifax, Experian and TransUnion absolutely free with no strings attached once every year. I typically recommend that requests for reports be spaced out throughout the year rather than getting all three at once, unless it is necessary to see everything that is being reported at one time. Getting all three right away would probably make the most sense for your current situation, but going forward you could space out your review of each bureau's report throughout the year.
I want you to take a look at your credit reports and see if the phone bill debt shows up as "in collection," or for that matter at all. Because this isn't your bill, you need to again dispute the debt with the bureau, or you can dispute it directly with the creditor that reported it. The dispute process will be spelled out in the materials you get from the bureaus. The Fair Credit Reporting Act requires that the credit bureau investigate the dispute and if there isn't sufficient proof that the debt is yours, it must be removed. I also suggest that you write to the creditor and tell that firm to stop reporting debt incorrectly.
Errors on credit reports are not unusual for the simple reason that billions of pieces of information are reported, mostly by computers, and mistakes are bound to happen. Still, that doesn't help your sinking stomach when the phone rings. Once you have disputed the bill and sent your letters, screen your calls with caller ID or an answering machine. If the harassment continues, see an attorney. They just love dealing with collectors who are bullies and mistaken. And that will be the end of that tune!
Good luck!
Tuesday, August 25, 2009
Money 101 Buying a Home!!!
Don't buy if you can't stay put.
1. Don't buy if you can't stay put.
If you can't commit to remaining in one place for at least a few years, then owning is probably not for you, at least not yet. With the transaction costs of buying and selling a home, you may end up losing money if you sell any sooner - even in a rising market. When prices are falling, it's an even worse proposition.
2. Start by shoring up your credit.
Since you most likely will need to get a mortgage to buy a house, you must make sure your credit history is as clean as possible. A few months before you start house hunting, get copies of your credit report. Make sure the facts are correct, and fix any problems you discover.
3. Aim for a home you can really afford.
The rule of thumb is that you can buy housing that runs about two-and-one-half times your annual salary. But you'll do better to use one of many calculators available online to get a better handle on how your income, debts, and expenses affect what you can afford.
4. If you can't put down the usual 20 percent, you may still qualify for a loan.
There are a variety of public and private lenders who, if you qualify, offer low-interest mortgages that require a down payment as small as 3 percent of the purchase price.
5. Buy in a district with good schools.
In most areas, this advice applies even if you don't have school-age children. Reason: When it comes time to sell, you'll learn that strong school districts are a top priority for many home buyers, thus helping to boost property values.
6. Get professional help.
Even though the Internet gives buyers unprecedented access to home listings, most new buyers (and many more experienced ones) are better off using a professional agent. Look for an exclusive buyer agent, if possible, who will have your interests at heart and can help you with strategies during the bidding process.
7. Choose carefully between points and rate.
When picking a mortgage, you usually have the option of paying additional points -- a portion of the interest that you pay at closing -- in exchange for a lower interest rate. If you stay in the house for a long time -- say three to five years or more -- it's usually a better deal to take the points. The lower interest rate will save you more in the long run.
8. Before house hunting, get pre-approved.
Getting pre-approved will you save yourself the grief of looking at houses you can't afford and put you in a better position to make a serious offer when you do find the right house. Not to be confused with pre-qualification, which is based on a cursory review of your finances, pre-approval from a lender is based on your actual income, debt and credit history.
9. Do your homework before bidding.
Your opening bid should be based on the sales trend of similar homes in the neighborhood. So before making it, consider sales of similar homes in the last three months. If homes have recently sold at 5 percent less than the asking price, you should make a bid that's about eight to
10 percent lower than what the seller is asking.
10. Hire a home inspector.
Sure, your lender will require a home appraisal anyway. But that's just the bank's way of determining whether the house is worth the price you've agreed to pay. Separately, you should hire your own home inspector, preferably an engineer with experience in doing home surveys in the area where you are buying. His or her job will be to point out potential problems that could require costly repairs down the road.
http://money.cnn.com/magazines/moneymag/money101/lesson8/
1. Don't buy if you can't stay put.
If you can't commit to remaining in one place for at least a few years, then owning is probably not for you, at least not yet. With the transaction costs of buying and selling a home, you may end up losing money if you sell any sooner - even in a rising market. When prices are falling, it's an even worse proposition.
2. Start by shoring up your credit.
Since you most likely will need to get a mortgage to buy a house, you must make sure your credit history is as clean as possible. A few months before you start house hunting, get copies of your credit report. Make sure the facts are correct, and fix any problems you discover.
3. Aim for a home you can really afford.
The rule of thumb is that you can buy housing that runs about two-and-one-half times your annual salary. But you'll do better to use one of many calculators available online to get a better handle on how your income, debts, and expenses affect what you can afford.
4. If you can't put down the usual 20 percent, you may still qualify for a loan.
There are a variety of public and private lenders who, if you qualify, offer low-interest mortgages that require a down payment as small as 3 percent of the purchase price.
5. Buy in a district with good schools.
In most areas, this advice applies even if you don't have school-age children. Reason: When it comes time to sell, you'll learn that strong school districts are a top priority for many home buyers, thus helping to boost property values.
6. Get professional help.
Even though the Internet gives buyers unprecedented access to home listings, most new buyers (and many more experienced ones) are better off using a professional agent. Look for an exclusive buyer agent, if possible, who will have your interests at heart and can help you with strategies during the bidding process.
7. Choose carefully between points and rate.
When picking a mortgage, you usually have the option of paying additional points -- a portion of the interest that you pay at closing -- in exchange for a lower interest rate. If you stay in the house for a long time -- say three to five years or more -- it's usually a better deal to take the points. The lower interest rate will save you more in the long run.
8. Before house hunting, get pre-approved.
Getting pre-approved will you save yourself the grief of looking at houses you can't afford and put you in a better position to make a serious offer when you do find the right house. Not to be confused with pre-qualification, which is based on a cursory review of your finances, pre-approval from a lender is based on your actual income, debt and credit history.
9. Do your homework before bidding.
Your opening bid should be based on the sales trend of similar homes in the neighborhood. So before making it, consider sales of similar homes in the last three months. If homes have recently sold at 5 percent less than the asking price, you should make a bid that's about eight to
10 percent lower than what the seller is asking.
10. Hire a home inspector.
Sure, your lender will require a home appraisal anyway. But that's just the bank's way of determining whether the house is worth the price you've agreed to pay. Separately, you should hire your own home inspector, preferably an engineer with experience in doing home surveys in the area where you are buying. His or her job will be to point out potential problems that could require costly repairs down the road.
http://money.cnn.com/magazines/moneymag/money101/lesson8/
Life after foreclosure!!!
City: Chicago
Price paid: $245,000
Current value: 175,000
Lesson: "My only regret is that ... we signed a contract and then we couldn't fulfill that contract."
Stephanie Thomson's troubles began when her husband Rich, a highly regarded hair designer, became disabled with neuropathy and could no longer work.
The income loss made it impossible for the couple to sustain the payments on their home in a Chicago suburb.
When they bought the house, they took out a hybrid ARM mortgage. The original bill was $1,400 a month. But it went to $1,900 after three years and more than $2,000 after the second reset six months later.
"With my husband unable to work, we could have paid the mortgage without the ARM reset but nothing more," says Stephanie, who tried for months to get help from her lender.
"They told me they would pray for me. That's an exact quote," she says.
The Thomsons decided to stop paying their mortgage last July -- their first time missing a payment. They didn't pay for 10 months, during which time YouWalkAway.com helped guide them through the foreclosure process.
In April, having saved what they would have paid in mortgage, they relocated to Elyria, Ohio, where Stephanie has relatives. Unfortunately, their credit scores had dropped so low that it was difficult to rent -- much less buy -- a new place. So Stephanie's mom bought a house and rents it to them.
"It's less expensive here; we were able to get a larger house in a wonderful neighborhood," she says. "My only regret is that I'm a proud person. We signed a contract and then we couldn't fulfill that contract because of my husband's illness. It was very difficult."
Price paid: $245,000
Current value: 175,000
Lesson: "My only regret is that ... we signed a contract and then we couldn't fulfill that contract."
Stephanie Thomson's troubles began when her husband Rich, a highly regarded hair designer, became disabled with neuropathy and could no longer work.
The income loss made it impossible for the couple to sustain the payments on their home in a Chicago suburb.
When they bought the house, they took out a hybrid ARM mortgage. The original bill was $1,400 a month. But it went to $1,900 after three years and more than $2,000 after the second reset six months later.
"With my husband unable to work, we could have paid the mortgage without the ARM reset but nothing more," says Stephanie, who tried for months to get help from her lender.
"They told me they would pray for me. That's an exact quote," she says.
The Thomsons decided to stop paying their mortgage last July -- their first time missing a payment. They didn't pay for 10 months, during which time YouWalkAway.com helped guide them through the foreclosure process.
In April, having saved what they would have paid in mortgage, they relocated to Elyria, Ohio, where Stephanie has relatives. Unfortunately, their credit scores had dropped so low that it was difficult to rent -- much less buy -- a new place. So Stephanie's mom bought a house and rents it to them.
"It's less expensive here; we were able to get a larger house in a wonderful neighborhood," she says. "My only regret is that I'm a proud person. We signed a contract and then we couldn't fulfill that contract because of my husband's illness. It was very difficult."
Rent-to-own your home: Pro and con!!!
It's tough for buyers to find financing and hard for sellers to find buyers. A solution that can work well for both is renting with an option to buy.
NEW YORK (CNNMoney.com) -- With buyers scarce and financing tight, some home sellers are offering rent-to-buy options to potential buyers. In fact, there's been enough of a spike in interest that ForSaleByOwner.com added it as a search option on the site, says spokesman Eric Mangan.
These deals, also called rent-to-own and lease-option, usually require buyers to pay extra rents each month plus up-front fees of about 5% of the purchase price. The regular rent then goes in owner's pocket (presumably to pay the mortgage), but the additional payments are used to buy down the price of the home.
"Lease option agreements, if properly drafted, by and large are an effective way of enabling people to buy who are having trouble arranging financing or coming up with down payments," said Lawrence Jacobson, a real estate attorney in Los Angeles.
The Advantages
Because the contract is typically written to close in 12 to 36 months, it gives buyers the chance to experience homes and neighborhoods without having to make major commitments.
But the biggest reasons buyers opt for rent-to-buy deals are to build up down payments and to improve their credit profiles so obtaining a mortgage is easier.
For example, if they buy a $200,000 home, paying $5,000 up-front and a rent premium of $400 a month on top of their $1,000 market rent, they'll have $9,800 saved after one year and $19,400 after three.
In New York City, condo conversions are increasingly offering the option after having units sit empty. For example, the developers of a former commercial building on Wall Street are offering to apply 100% of "buyers" rents toward the purchase prices. And there are no up-front fees.
It's a luxury building with prices starting at $630,000 for a studio to $8.4 million for a four-bed penthouse. Sales were slow because buyers were having difficulties arranging financing, according to sales director Larry Kruysman.
"What we were finding from customers was that banks were making it more difficult to purchase," he said. The lenders were asking borrowers to put up 30% of the purchase price to obtain a mortgage rather than the traditional 20%.
But most rent-to-buy offers are from individual sellers, often people who have purchased new homes, can't sell their old ones and need to offset some of their mortgage costs.
Renee Haworth, a Louisiana homemaker, tried to sell a house in Mandeville, La., for many months without success.
"We had two or three buyers ask us if we would do a lease option," she said. "We hadn't thought about it before that."
She consulted an attorney and made a deal this past March. It calls for a sale price of $217,000 for the four-bedroom two-and-a-half bath house. The buyer put $3,000 down and pays $1,400 a month, $400 of which accumulates toward the sale price.
The renters agreed to exercise their option after 12 months. Under terms on their contract, if they decide to walk away, they lose both the $3,000 deposit and the $400 per month they pay over normal market rents. The Drawbacks But there are drawbacks to these deals. You need a good contract and a healthy sense of "buyer besmeared."
Losing your investment: For one, there's little protection for buyers who fall behind in payments. If you fall behind and are evicted, you lose any up-front fees and rent premiums you paid. Can't get a loan: If you still can't arrange financing at the end of the rental period, you may have to forfeit all the extra cash you've invested. The terms for that scenario would need to be spelled out in the contract. In buyers' markets, you may have the leverage to get a contingency clause specifying any up-front fees and extra rent be returned if you don't qualify for a loan.
Falling home prices: Buyers may be hesitant to lock into a set price a year in advance considering how much home values are plunging. If the comparables are significantly more attractive when it's time for your deal to close, you can sometimes renegotiate, but that's at the seller's discretion. If renegotiating is impossible, then you have to decide whether it's cheaper to walk away or go through with the deal.
Foreclosure scams: Some renters have been burned by doing lease-option deals with owners who are going through foreclosures. After months of taking the inflated rent payments even though they are in foreclosure, the owners finally have the home repossessed by the bank and the renters are served with eviction notices and are out their investments.
There have also been instances of foreclosure-prevention scams in which fraudsters take title to homes and do lease-option deals with unsuspecting renters. Instead of applying the initial deposit and the extra rent money to the down payments, the scam artists simply pocket everything and disappear. Because the renters don't get a title to the property until they close the bank loan, they are again out their investments.
Walk aways: Pitfalls exist for sellers as well. Renters may decide to not exercise their options if prices fall. That can leave sellers with large paper losses by the end of the lease compared with if they had sold the home when they originally planned. They are also stuck carrying the costs of the home until they find other buyers or tenants. Affordability
Most importantly, however, buyers must be cautious about entering into a deal that's unaffordable. The payment can seem manageable when you're just looking at the monthly "rent" payment. But there are more expenses than that.
First, the mortgage payment on a $200,000 home after paying $20,000 down, comes to more than $1,000 a month at the current very low interest rates, which are only available to borrowers with the best credit.
Over the past few weeks, rates have been creeping up again, so there's no guarantee they will be as low when the purchase is completed. Plus, credit-damaged buyers can expect to pay one or two percentage points higher at a minimum. That could add another $250 or more to the monthly bill.
Then add in private mortgage insurance, property taxes, all the utility and routine maintenance costs, and it could push the monthly payment past $2,000 - and affordability.
NEW YORK (CNNMoney.com) -- With buyers scarce and financing tight, some home sellers are offering rent-to-buy options to potential buyers. In fact, there's been enough of a spike in interest that ForSaleByOwner.com added it as a search option on the site, says spokesman Eric Mangan.
These deals, also called rent-to-own and lease-option, usually require buyers to pay extra rents each month plus up-front fees of about 5% of the purchase price. The regular rent then goes in owner's pocket (presumably to pay the mortgage), but the additional payments are used to buy down the price of the home.
"Lease option agreements, if properly drafted, by and large are an effective way of enabling people to buy who are having trouble arranging financing or coming up with down payments," said Lawrence Jacobson, a real estate attorney in Los Angeles.
The Advantages
Because the contract is typically written to close in 12 to 36 months, it gives buyers the chance to experience homes and neighborhoods without having to make major commitments.
But the biggest reasons buyers opt for rent-to-buy deals are to build up down payments and to improve their credit profiles so obtaining a mortgage is easier.
For example, if they buy a $200,000 home, paying $5,000 up-front and a rent premium of $400 a month on top of their $1,000 market rent, they'll have $9,800 saved after one year and $19,400 after three.
In New York City, condo conversions are increasingly offering the option after having units sit empty. For example, the developers of a former commercial building on Wall Street are offering to apply 100% of "buyers" rents toward the purchase prices. And there are no up-front fees.
It's a luxury building with prices starting at $630,000 for a studio to $8.4 million for a four-bed penthouse. Sales were slow because buyers were having difficulties arranging financing, according to sales director Larry Kruysman.
"What we were finding from customers was that banks were making it more difficult to purchase," he said. The lenders were asking borrowers to put up 30% of the purchase price to obtain a mortgage rather than the traditional 20%.
But most rent-to-buy offers are from individual sellers, often people who have purchased new homes, can't sell their old ones and need to offset some of their mortgage costs.
Renee Haworth, a Louisiana homemaker, tried to sell a house in Mandeville, La., for many months without success.
"We had two or three buyers ask us if we would do a lease option," she said. "We hadn't thought about it before that."
She consulted an attorney and made a deal this past March. It calls for a sale price of $217,000 for the four-bedroom two-and-a-half bath house. The buyer put $3,000 down and pays $1,400 a month, $400 of which accumulates toward the sale price.
The renters agreed to exercise their option after 12 months. Under terms on their contract, if they decide to walk away, they lose both the $3,000 deposit and the $400 per month they pay over normal market rents. The Drawbacks But there are drawbacks to these deals. You need a good contract and a healthy sense of "buyer besmeared."
Losing your investment: For one, there's little protection for buyers who fall behind in payments. If you fall behind and are evicted, you lose any up-front fees and rent premiums you paid. Can't get a loan: If you still can't arrange financing at the end of the rental period, you may have to forfeit all the extra cash you've invested. The terms for that scenario would need to be spelled out in the contract. In buyers' markets, you may have the leverage to get a contingency clause specifying any up-front fees and extra rent be returned if you don't qualify for a loan.
Falling home prices: Buyers may be hesitant to lock into a set price a year in advance considering how much home values are plunging. If the comparables are significantly more attractive when it's time for your deal to close, you can sometimes renegotiate, but that's at the seller's discretion. If renegotiating is impossible, then you have to decide whether it's cheaper to walk away or go through with the deal.
Foreclosure scams: Some renters have been burned by doing lease-option deals with owners who are going through foreclosures. After months of taking the inflated rent payments even though they are in foreclosure, the owners finally have the home repossessed by the bank and the renters are served with eviction notices and are out their investments.
There have also been instances of foreclosure-prevention scams in which fraudsters take title to homes and do lease-option deals with unsuspecting renters. Instead of applying the initial deposit and the extra rent money to the down payments, the scam artists simply pocket everything and disappear. Because the renters don't get a title to the property until they close the bank loan, they are again out their investments.
Walk aways: Pitfalls exist for sellers as well. Renters may decide to not exercise their options if prices fall. That can leave sellers with large paper losses by the end of the lease compared with if they had sold the home when they originally planned. They are also stuck carrying the costs of the home until they find other buyers or tenants. Affordability
Most importantly, however, buyers must be cautious about entering into a deal that's unaffordable. The payment can seem manageable when you're just looking at the monthly "rent" payment. But there are more expenses than that.
First, the mortgage payment on a $200,000 home after paying $20,000 down, comes to more than $1,000 a month at the current very low interest rates, which are only available to borrowers with the best credit.
Over the past few weeks, rates have been creeping up again, so there's no guarantee they will be as low when the purchase is completed. Plus, credit-damaged buyers can expect to pay one or two percentage points higher at a minimum. That could add another $250 or more to the monthly bill.
Then add in private mortgage insurance, property taxes, all the utility and routine maintenance costs, and it could push the monthly payment past $2,000 - and affordability.
Thursday, August 20, 2009
BofA's Countrywide loses court ruling on mortgages
NEW YORK (Reuters) – A federal judge has ruled that Bank of America Corp (BAC.N) cannot have a lawsuit by investors seeking to force it to buy back mortgages heard in federal court, saying he lacks jurisdiction to decide the case.
Tuesday's ruling by Judge Richard Holwell of the U.S. District Court in Manhattan means the case will move to state court. Holwell did not decide the merits of the case.
"Congress passed two statutes within a year of each other to address the mortgage crisis," the judge wrote. "In neither of these statutes did Congress federalize the case."
The ruling is a win for investors, to the extent that Holwell rejected a claim by the bank's Countrywide Financial Corp unit that new federal laws to encourage loan modifications to help struggling borrowers stay in their homes govern this case.
Countrywide had argued that the laws negated obligations it might have had to buy back modified loans. In 2008, Countrywide agreed with some 11 state attorneys general to modify $8.4 billion of loans made to roughly 400,000 borrowers.
Investors who own mortgage securities typically receive interest and principal payments. If servicers modified the underlying loans to reduce borrower obligations, investors would be harmed because they would receive lower payments.
Holwell did rule that investors bear the burden of showing that pooling and servicing agreements for their loans, taken "as a whole," require Countrywide to buy back the loans.
Bank of America could not immediately be reached for comment. A published report said a spokeswoman agreed that the court did not rule on the merits of the plaintiffs' claims.
The current case was brought by two investment funds holding Countrywide mortgages, Greenwich Financial Services Distressed Mortgage Fund 3 LLC and QED LLC.
These investors complained they would be harmed if Countrywide shifted the burdens of loan modifications to 374 trusts into which loans had been repackaged and securitized.
These investors would rather Countrywide repurchase modified loans for the full unpaid amounts.
Countrywide had been the largest U.S. mortgage lender before Bank of America acquired it last July for $2.5 billion.
The case is Greenwich Financial Services Distressed Mortgage Fund 3 LLC and QED LLC v. Countrywide Financial Corp, U.S. District Court, Southern District of New York (Manhattan), No. 08-11343.
(Reporting by Jonathan Stempel, with additional reporting by John Tilak in Bangalore
Tuesday's ruling by Judge Richard Holwell of the U.S. District Court in Manhattan means the case will move to state court. Holwell did not decide the merits of the case.
"Congress passed two statutes within a year of each other to address the mortgage crisis," the judge wrote. "In neither of these statutes did Congress federalize the case."
The ruling is a win for investors, to the extent that Holwell rejected a claim by the bank's Countrywide Financial Corp unit that new federal laws to encourage loan modifications to help struggling borrowers stay in their homes govern this case.
Countrywide had argued that the laws negated obligations it might have had to buy back modified loans. In 2008, Countrywide agreed with some 11 state attorneys general to modify $8.4 billion of loans made to roughly 400,000 borrowers.
Investors who own mortgage securities typically receive interest and principal payments. If servicers modified the underlying loans to reduce borrower obligations, investors would be harmed because they would receive lower payments.
Holwell did rule that investors bear the burden of showing that pooling and servicing agreements for their loans, taken "as a whole," require Countrywide to buy back the loans.
Bank of America could not immediately be reached for comment. A published report said a spokeswoman agreed that the court did not rule on the merits of the plaintiffs' claims.
The current case was brought by two investment funds holding Countrywide mortgages, Greenwich Financial Services Distressed Mortgage Fund 3 LLC and QED LLC.
These investors complained they would be harmed if Countrywide shifted the burdens of loan modifications to 374 trusts into which loans had been repackaged and securitized.
These investors would rather Countrywide repurchase modified loans for the full unpaid amounts.
Countrywide had been the largest U.S. mortgage lender before Bank of America acquired it last July for $2.5 billion.
The case is Greenwich Financial Services Distressed Mortgage Fund 3 LLC and QED LLC v. Countrywide Financial Corp, U.S. District Court, Southern District of New York (Manhattan), No. 08-11343.
(Reporting by Jonathan Stempel, with additional reporting by John Tilak in Bangalore
Home Buying FAQ's
The Home Buying Questions Master Category is one of four Master Categories (the others being home selling, mortgage and home ownership) dedicated to addressing Frequently Asked Questions. This Master Category focuses on the home buyer and questions related to the home buying selling process. Categories include:
http://www.realestatewiki.com/wiki_content/Buying_Disclosure_&_Inspection.htm
http://www.realestatewiki.com/wiki_content/Buying_Disclosure_&_Inspection.htm
Wednesday, August 19, 2009
Home sales up 3.8%
Home sales rose in most of the country in the second quarter compared with the first, a trend driven by falling prices, lower interest rates, and a tax credit for first-time home buyers.
http://www.usatoday.com/money/economy/housing/2009-08-12-higher-prices-homes_N.htm
http://www.usatoday.com/money/economy/housing/2009-08-12-higher-prices-homes_N.htm
Paying off mortgage not risk-free
There's a psychic satisfaction that comes from owning your home free and clear. Conservative investors look at the tumult in the stock market and use that as a justification for staying out of the financial markets and investing in things that have very little risk to principal. With low current returns on safe investments such as CDs and savings accounts, it's attractive to just empty those accounts to pay down or pay off the mortgage.
http://www.bankrate.com/finance/mortgages/paying-off-mortgage-not-risk-free.aspx
http://www.bankrate.com/finance/mortgages/paying-off-mortgage-not-risk-free.aspx
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