As the ink dries on a $25 billion settlement with the government last year, big banks resume their sleazy mortgage practices. The state of New York is preparing the suit that includes abuses in other states that signed-on to the settlement.
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New York claims more proof of bank mortgage abuses
By Karen Freifeld Reuters May 24, 2013
New York Attorney General Eric Schneiderman said there is mounting evidence that Bank of America Corp (BAC.N), Wells Fargo and Co (WFC.N) and other banks violated the terms of a settlement designed to end mortgage servicing abuses.
Schneiderman – who has said he plans to sue Bank of America and Wells Fargo for failing to live up to their obligations under the deal – said other states had found similar problems.
“Several other states have identified similar recurring deficiencies by the participating servicers,” Schneiderman said in a letter dated May 23 to the monitor for the settlement, former North Carolina Banking Commissioner Joseph Smith. The letter was obtained by Reuters on Friday.
The $25 billion settlement was brokered last year between five banks and 49 state attorneys general. The other banks are JPMorgan Chase & Co (JPM.N), Citigroup Inc (C.N), and Ally Financial Inc (GKM.N). The banks agreed to provide relief to homeowners and comply with a set of servicing standards to atone for foreclosure misconduct.
In his letter, Schneiderman did not identify which other states had provided evidence of banks failing to abide by the settlement. Nor did he identify the banks with recurring deficiencies.
He said receipt of his letter to Smith and a concurrent one to a monitoring committee would start the clock on a waiting period before lawsuits could be filed against the banks. The settlement authorizes the monitor to first work with a mortgage servicer to correct any potential violations and sue if the servicer does not fix the errors.
A Freddie Mac Rule Change May Help Some Borrowers
By Ann Carrns New York Times May 27, 2013
A change in Freddie Mac’s rules could help retiring baby boomers, and other home buyers with limited incomes but substantial financial assets, qualify for low-rate conventional mortgages.
Freddie Mac, the giant mortgage finance company, actually changed the rule two years ago. But many borrowers and loan underwriters are apparently unaware of it, according to a blog post on the company’s Web site.
Why would someone near or in retirement want to take on a mortgage? They may want to refinance an existing loan at a lower rate. Or, they may want to sell and downsize to a smaller property. The slow housing market and depressed home values have made that difficult for some, until recently.
Now, the housing market is improving, values are rebounding, and interest rates are still relatively low. Those improvements, plus the more expansive income eligibility criteria, may help more people move into new loans, said Brad German, a spokesman for Freddie Mac.
“Perhaps someone was waiting for home prices to come back so they could sell their home and responsibly combine part of the sale proceeds with a mortgage to buy a smaller home or a retirement home,” he said in an e-mail.
The change allows lenders to take into account a significant portion of a borrower’s financial assets when determining if their income qualifies them for a Freddie Mac mortgage. (Freddie Mac doesn’t make loans directly; rather, it buys them and pools them for sale to investors, and guarantees them against default.)
Selling the public on public housing
By Sarah Goodyear The Atlantic Cities May 23, 2013
If you don’t live in public housing, you probably don’t think about it very much. When you do think about it, vague and negative stereotypes likely come to mind, about high crime rates and entrenched poverty. You might not think that the housing projects in your city have anything to do with you.
A new public relations initiative called ReThink is trying to change those attitudes. Funded by Housing Authority Insurance, Inc., which provides insurance to public and affordable housing projects, ReThink aims to educate Americans about the benefits of public housing not only for the people who live in it, but for society as a whole.
Perceptions of public housing, according to research funded as part of the ReThink project, are a jumble of preconceptions and contradictory attitudes. Sixty-three percent of those surveyed say they would support public housing in their communities, but 53 percent don’t want to live close to it. Sixty-one percent believe that public housing has some positive impact on its residents, but nearly a third of respondents (31 percent) don’t think public housing residents are hard-working members of society.
Adrianne Todman, executive director of the District of Columbia Housing Authority, says the stereotypes just aren’t fair. “It’s not welfare queens,” she says. “Our residents are children, seniors, veterans, people who are working and paying rent.” In fact, all public housing tenants pay at least some rent.
Nationally, according to ReThink, 2.2 million people live in public housing. At least 500,000 are on waiting lists, including 70,000 in Washington, D.C., where there are just 8,000 units. The long economic downturn has intensified the demand, while belt-tightening in Washington has meant budgetary pressures on housing authorities. The sequestration alone has meant a loss of $1 million a month for the DCHA, says Todman.
Numerous Houston ZIP codes flooded with underwater homes
By Dan X. McGraw Houston Chronicle May 23, 2013
A new report found numerous Houston neighborhoods are full of homes with negative equity, but as a whole, Texas is in much better shape than the rest of the nation, according to a new report.
A Zillow report released this week found 25.4 percent of U.S. homeowners have negative equity in their homes. The report also notes another 18 percent of owners likely don’t have enough equity to move out of their current homes.
Owners who bought their homes near the housing peak have seen the value drop by 18.7 percent since 2007, according to Zillow. Some areas, including Houston, have seen home prices rebound over the past few years.
In the Bayou City, the real estate market appears to be faring much better than other parts of the country and the state. According to Zillow, 19 percent of Harris County homeowners are underwater on their mortgages and 7 percent are delinquent.
Both numbers are far below the national average, but it isn’t all rosy in Houston.
Zillow’s report found Houston communities north and south of Beltway 8 have some of the highest rates of negative equity in the area. Some, such as ZIP codes 77010 and 77073, have some of the highest percentage of underwater mortgages in the nation.
Nearly all the ZIP codes inside of the 610 Loop are well below the Harris County average. The few exceptions were near Reliant Stadium and in downtown Houston.
Zillow Chief Economist Stan Humphries said equity is an important factor in the real estate market because positive equity will help homeowners move into new homes. That fluidity can allow the housing market to regain some of the ground lost during the housing bubble.
The opposite is true of negative equity.
“Looking at the effective negative equity rate could explain why recent, healthy declines in the number of underwater borrowers haven’t yet translated into more homes for sale,” Humphries said. “The only cure is patience, as rising home values continue to build equity to the point where more homeowners can realistically sell.”
Texas cities again lead nation in population growth
By Steve Campbell Fort Worth Star-Telegram May 23, 2013
The Texas growth machine is still running at high speed.
Eight of the 15 fastest-growing U.S. cities and towns for the year ending July 1, 2012, were in the Lone Star State, according to population estimates released today by the U.S. Census Bureau.
Texas also stood tall in total growth, with five of the 10 cities that added the most people over the year — No. 2 Houston, No. 4 San Antonio, No. 5 Austin, No. 7 Dallas and No. 10 Fort Worth.
“Dallas-Fort Worth, Houston, the Austin-San Antonio corridor and Midland-Odessa continue to dominate growth in Texas and across the country. It’s phenomenal growth and it hasn’t slowed down,” said Steve Murdock, a Rice University professor, longtime Texas state demographer and former Census Bureau director.
Cowtown added 16,328 people for a total of 777,992, retaining its spot as the nation’s 16th-largest city. That yearly hike was just a tad below the 16,708 the city added in 2011. Since an April 1, 2010, census estimate, Fort Worth has grown by 35,926, or 4.8 percent. The city has added 243,298 residents since the 2000 Census.
Austin, which added 25,395 for the year, to 842,592, moved up from the 13th- to the 11th-most-populous city, supplanting Jacksonville, Fla., while Indianapolis slipped from 12th to 13th.
Other Texas cities in the top 20 are No. 4 Houston, No. 7 San Antonio, No. 9 Dallas and No. 19 El Paso.
Survey: Crime and homelessness drop in Austin, but poverty on the rise
By Andrea Ball Austin American-Statesman May 23, 2013
Austin has made gains in its efforts to tackle some of its toughest community problems in recent years, improving its crime rate, unemployment numbers and percent of uninsured people, according to a report released Thursday.
But although Austin weathered the recession better than most of the country, the city continues to struggle with a rising poverty level and more people are paying over 30 percent of their income for housing, the Community Action Network reported in its annual review.
“While we are excited about Austin’s growth, that the economic downturn was not as bad as other parts of the country and that we’re on everybody’s top 10 list of the best places to live in, we still have work to do,” said board chairman Ashton Cumberbatch.
Each year since 2010, the Community Action Network — a local organization that assesses community conditions — releases its analysis of trends in issues including crime, education, poverty and health. The report compiles data from sources such as the Texas Department of Public Safety, the Travis County Clerk’s Office, Texas Department of Transportation and the U.S. Census Bureau.