Bo’s News Clips: Foreclosure Settlement

Ten major banks are settling with the Federal Reserve to repay bilked borrowers $5.2 billion in direct assistance. The settlement will finally end a review of the foreclosure scandals led by the Office of the Comptroller of the Currency. Consumer advocates say, however, that the settlement does not compensate for the trillions of dollars of damage to communities ravaged by foreclosures. As the settlement transpires, Bank of America sells off $400 billion in collection rights to foreclosed mortgages.

For a pdf version of the full stories, plus contextual articles in social, environmental and legal areas, contact Bo McCarver at bmccarver@austin.r.com

 

Big Banks Agree To Pay $8.5 Billion To Settle Foreclosure-Abuse Claims

By Mark Memmott       NPR       January 7, 2013

Ten of the nation’s major mortgage servicing companies, including household names such as Bank of America and Citibank, have agreed to pay $8.5 billion to resolve claims that they abused some homeowners when they foreclosed on mortgages during the recent housing crisis, the Federal Reserve and the Comptroller of the Currency announced late Monday morning.

According to the Fed, $3.3 billion of the settlement will be “direct payments to eligible borrowers” and $5.2 billion will go toward “other assistance, such as loan modifications and forgiveness of deficiency judgments.”

It adds that “eligible borrowers are expected to receive compensation ranging from hundreds of dollars up to $125,000, depending on the type of possible servicer error.”

Along with BofA and City, the companies in the agreement are: Aurora, JPMorgan Chase, MetLife Bank, PNC, Sovereign, SunTrust, U.S. Bank, and Wells Fargo.

The New York Times, which last night broke the news that the settlement was about to be announced, writes that the deal should “resolve claims of foreclosure abuses that included flawed paperwork used in foreclosures and bungled loan modifications. … The settlement concludes weeks of feverish negotiations between the federal regulators, led by the Office of the Comptroller of the Currency, and the banks, and will end a troubled foreclosure review mandated by the banking regulators.”

Earlier today, Bank of America agreed to pay the Federal National Mortgage Association (Fannie Mae) $3.6 billion in cash and will to buy back $6.75 billion worth of mortgage-backed securities to resolve claims related to securities sold to Fannie Mae by the bank and Countrywide Financial Corp. (which BofA acquired in 2008).

Full story at: http://www.npr.org/blogs/thetwo-way/2013/01/07/168790359/big-banks-agree-to-pay-8-5-billion-to-settle-foreclosure-abuse-claims

Banks’ mortgage settlement draws skepticism

By Carolyn Said       San Francisco Chronicle       January 8, 2013

Consumer advocates on Monday questioned the effectiveness of an $8.5 billion settlement to resolve charges that 10 major banks mishandled foreclosures and loan modifications, saying details remain murky and that the amount of money will be minimal once distributed among millions of people.

Some of the settlement, which was announced by federal regulators after weeks of negotiations, will go directly to people whose homes were repossessed, while other funds are targeted to help struggling homeowners avert foreclosure.

“We want to see that borrowers are made whole in as many ways as possible,” said Sasha Werblin, senior program manager at the Greenlining Institute, a Berkeley nonprofit that works for economic equity. “The $8.5 billion and other settlements are not comparable to the trillions of dollars in wealth sucked from communities by” poor lending standards that triggered the housing crisis.

In a separate action also announced Monday, Bank of America agreed to pay $10 billion to Fannie Mae to settle charges that its Countrywide Financial subsidiary sold the agency mortgages obtained with slipshod underwriting, such as failure to verify borrowers’ incomes or homes’ values. Many of those mortgages, issued from 2000 to 2008, later went into foreclosure, triggering big losses.

The two huge settlements are seen as an indication banks are trying to put the mortgage meltdown behind them, even as distress continues to linger for many homeowners.

Full story at: http://www.sfgate.com/realestate/article/Banks-mortgage-settlement-draws-skepticism-4173641.php

Exclusive – Bank of America to sell rights on $100 billion in mortgages: sources

Reuters          January 8, 2013

Bank of America Corp is looking to sell collection rights on at least another $100 billion of mortgages in the wake of announcing a sale of $300 billion in mortgage servicing rights on Monday, according to two sources familiar with the situation.

Bank of America spokesman Dan Frahm declined to comment on specific transactions but said the bank has been selling MSRs for years and that approach remained part of the bank’s strategy.

“By reducing the size of our portfolio, we improve customer service capacity and resolve legacy mortgage issues and reduce risk in our portfolio,” he said.

End of story: http://www.reuters.com/article/2013/01/08/us-bankofamerica-mortgages-idUSBRE9070ML20130108

US construction spending dips, as decline in federal projects offsets home construction gain

Associated Press       January 3, 2013

WASHINGTON — Spending on U.S. construction projects fell in November from October because a steep drop in volatile federal projects offset another gain in home building.

Construction spending dipped 0.3 percent in November, the Commerce Department said Wednesday. It was the first decline since March and followed a 0.7 percent increase in October, which was revised lower.

Total spending declined to a seasonally adjusted annual rate of $866 billion. That is 16.1 percent above a 12-year low hit in February 2011. Even with the gain, the level of spending remained only about half of what’s considered healthy.

The November figures were dragged lower by a 5.5 percent decline in spending on federal government projects. Federal spending fluctuates sharply from month to month. In October, it rose 9.7 percent.

Full story at: http://www.washingtonpost.com/business/us-construction-spending-dips-03-percent-in-november-first-decline-in-8-months/2013/01/02/ebbb3bf2-54f1-11e2-89de-76c1c54b1418_story.html?hpid=z10

Many repeat customers refinance mortgages

By Carolyn Said      San Francisco Chronicle      January 5, 2013

Brian Flynn and Dora Drimalas have refinanced their house in San Francisco’s Clarendon Heights neighborhood near Twin Peaks twice in the past six months, most recently locking in a 3.5 percent interest rate.

“With housing prices what they are in San Francisco, every time you go down a quarter of a point or a half of a point (on the interest rate), you save a significant amount of money,” Flynn said.

As mortgage interest rates flirt with historic lows, some homeowners have turned into repeat refinancers, taking out ever-lower mortgages on their homes every few months.

“It’s a common scenario – people are refinancing multiple times and knocking off a few hundred dollars a month (on payments) every time they do it,” said Guy Cecala, publisher of Inside Mortgage Finance in Maryland. “With no-cost refinance transactions, there is absolutely no reason not to do it.”

Full story at: http://www.sfgate.com/realestate/article/Many-repeat-customers-refinance-mortgages-4168946.php

2012’s Top 5 Wins for Affordable Housing

Rooflines      January 7, 2013

From the proposed short-funding of Project Based Section 8 to the fiscal cliff, it’s been a scary year for affordable housing. There were some 11th hour victories, such as the extension of the New Markets Tax Credit and the 9 percent fixed rate for the Low-Income Housing Tax Credit. However, I think the legacy left by 2012 is one of local communities enacting some common sense changes to improve affordable housing opportunities for their neighbors. Check out the top 5 after the jump, from trust fund victories to inroads on ending chronic homelessness.

Full story at: http://www.rooflines.org/3008/2012s_top_5_wins_for_affordable_housing/

 

Non-White Gentrification Changes a Neighborhood, But Not Its Perception

Chicago’s Bronzeville neighborhood has seen a dramatic rise in incomes and property values over the past decade. Emily Badger examines the historically black neighborhood’s non-white gentrification, and how it’s viewed differently than other areas.

Planetizen       January 3, 2013

On the South Side of Chicago, Bronzeville has been making great strides since its high-rise public housing projects were demolished starting in the 1990s. And although, as Badger mentions, “[c]ommunity leaders in Bronzeville want middle-class outsiders to come in, at least to consume the redeveloped neighborhood as a quasi-tourist destination on par with the city’s Chinatown or Greektown, as a mecca for black history and culture,” the gentrification (if one can call it that) of the neighborhood by black residents hasn’t attracted outsiders in the same way that the rise of the nearby Pilsen neighborhood has.

A recent study by Matthew Anderson and Carolina Sternberg, published in the journal Urban Affairs Review, compares the different experiences of gentrification in the two neighborhoods, and the impact on our understanding of the phenomenon. Pilsen, a destination for Mexican migrants over the past half-century, and now “a draw for residents across the city in search of Mexican food and culture…has pulled off what Bronzeville hasn’t.”

“[Pilsen’s Mexican] culture seems somehow more marketable,” says Badger. Whereas, “[t]he city seems less willing or able to change its perception of Bronzeville.”

“In Anderson’s interviews with white middle-class Chicago residents, it sounds almost as if they can’t distinguish between poor and middle-class blacks living there. It’s as if gentrification can’t happen without an influx of white residents, and so it must not be happening there. How can the neighborhood’s prospects have really changed if its demographics haven’t? Bronzeville’s historic “blackness” – to borrow a term from the academics – appears to overwhelm any sense of its identity as a neighborhood on the way up.”

End of story: http://www.planetizen.com/node/60014

“LIVABILITY” VS. LIVABILITY: THE PITFALLS OF WILLY WONKA URBANISM

By Richey Piiparinen        newgeography       Dec, 31m 2912

livability: (livable) fit or suitable to live in or with; “livable conditions”.

“Livability” has been a buzz word in city development for some time, and for good reason, as who doesn’t want livability, outside the zombie cohort? Things get hairy, though, when “livability”—as an economic development strategy—gets unpacked, because questions arise: “Livability” for whom? “Livability” at what cost?

Making a city “livable” these days largely means appealing to a select group of folks so as to form “an attractive economic place”. This notion of “livability” really came on in the late 1980’s, and was done under the presumption that certain cities offered higher quality of life, read: better lifestyles. For instance, in 1989 geographer David Harvey wrote that cities need to “keep ahead of the game [by] engendering leap-frogging innovations in life-styles, cultural forms, products, and service mixes…if they are to survive.” This was a radical departure from previous societal efforts to make quality of life a priority (think: pollution remediation) in that “life” was swapped out for “lifestyle”.

Full story at: http://www.newgeography.com/content/003369-livability-vs-livability-the-pitfalls-willy-wonka-urbanism

Leaked Settlement Shows How NIMBYs “Greenmail” Developers

By James Brasuell           Curbed        January 5, 2013

A few years ago, a developer had a plan to put up roughly 100 condos at Melrose and Larchmont, but the development was challenged by local homeowners’ group La Mirada Avenue Neighborhood Association. Eventually, the developer and the homeowners association settled under confidential terms. The story is all pretty standard in the world of Los Angeles development–California has a very controversial statute called the California Environmental Quality Act that’s supposed to allow little guys to take on big, potentially environment-destroying or neighborhood-changing projects. But the practice is often abused, projects get held up in lawsuits for years, and there have been a million calls for some kind of reform (they’ve been getting louder lately). Now here’s a new piece of the puzzle: the leaked terms of that confidential settlement between the developer and La Mirada (which has challenged several projects in Hollywood under CEQA).

The documents reveal a practice sometimes called “greenmail,” in which businesses and homeowners groups use the threat of CEQA-based lawsuits to generate cash from developers for things that have nothing to do with the environment. Because land use agreements are confidential, the public isn’t aware of these agreements–they are also cut out of negotiations between challengers and developers to change the size, scope, and design of the development. “This is business as usual, but everyone acts like it doesn’t happen,” says a local developer with knowledge of the project who spoke under terms of anonymity.

Full story at: http://la.curbed.com/archives/2013/01/leaked_settlement_shows_how_nimbys_greenmail_developers_1.php

‘Homeless bill of rights’ proposed by California state lawmaker

By Jim Sanders        Sacramento Bee      January 4, 2013

California law protects its residents from discrimination based on sex, race, religion and sexual orientation.

Now a state lawmaker is pushing to add another category to the list: homelessness.

New legislation titled the “Homeless Bill of Rights” by Democratic Assemblyman Tom Ammiano of San Francisco is meant to keep communities from rousting people who have nowhere to turn.

The measure is sure to be controversial in cities such as Sacramento, which has battled for years over “tent cities” for homeless people, and San Francisco, where voters passed an ordinance barring sitting or lying on sidewalks.

The heart of Assembly Bill 5 would give legal protection to people engaging in life-sustaining activities on public property. Among other activities, it specifically mentions sleeping, congregating, panhandling, urinating and “collecting and possessing goods for recyling, even if those goods contain alcoholic residue.”

Full story at: http://www.mcclatchydc.com/2013/01/04/179003/homeless-bill-of-rights-proposed.html