All Articles Tagged "mortgage"
Bank of America has agreed to pay Fannie Mae $10 billion to settle claims that the bank’s Countrywide Financial business issued home loans that contributed to the housing crash and economic recession in 2008.
“Both Fannie and Freddie [Mac], which have suffered billions of dollars in losses in recent years, have argued that Countrywide misrepresented the quality of home loans that it sold to the two entities at the height of the mortgage bubble,” The New York Times reports. “Bank of America assumed those troubles when it bought Countrywide in 2008.” The bank will pay $3.6 billion to Fannie Mae and buy back $6.75 billion in mortgages.
Bank of America is trying to get out of the mortgage business all together, but as the Times reports, they’ve run into problems with other outstanding lawsuits, including one from the Justice Department that could take $1 billion to settle. Last week, The Wall Street Journal reported that that settlement, which is meant “to compensate minority borrowers for alleged discrimination,” has been delayed with homeowners still being contacted and the possibility that checks won’t go out for another two years.
“The department said Countrywide charged black and Hispanic borrowers higher mortgage-lending fees or steered them into costly subprime loans even though their credit histories qualified them for a mortgage with more favorable terms,” the WSJ says. In its response, BofA tries to distance itself from Countrywide’s pre-acquisition business practices. Recipients will get between $200 and more than $15,000.
Bank of America is also participating in an $8.5 billion settlement (along with other financial institutions like JPMorgan Chase, Wells Fargo, and Citibank) to settle bad loan claims. Only $3.3 billion will go directly to borrowers (3.8 million customers total). The rest will be used for loan modifications and other adjustments, according to Forbes.
Minority neighborhoods in America have been devastated by foreclosures, with banks taking over the homes that remain vacant indefinitely. Several banks, including most recently Bank of America, have been called to task by The National Fair Housing Alliance, which has filed official complaints to the U.S. Department of Housing and Urban Development about the poor maintenance of these vacant homes.
Los Angeles realtor Chantay Bridges of Clear Choice Realty & Associates tells us in an email there are various reasons behind the neglect. For the most part, a lack of legal enforcement allows banks to be careless in black and Latino neighborhoods. “In some states, there are no laws in place to prevent the banks from not adhering to bias practices,” Bridges said. And where there are laws, they are rarely enforced. “It costs the city, tax-paying citizens and banks a considerable amount to maintain foreclosed homes. Therefore some institutions may forego maintenance in lieu of paying a fee for negligence.” In other words, for the banks it most likely doesn’t come down to race, but money.
“For some lenders it may not be a question of black versus white communities, it may be driven by, affluent versus impoverished. Poverty and wealth always plays a role,” she says. “In wealthier neighborhoods you may find more assistance in maintaining a foreclosed home such as alarms, private security companies, strong community organizations, etc. [R]egardless, it is the bank’s responsibility… to maintain the bank-owned homes. It affects property values overall.” Vacant homes also attract squatters and trespassers and can lead to increased crime.
But you can take matters into your own hands.
Bridges suggests taking a petition to the local councilperson, contacting the bank, or the realtor. “Ask for increased fines and penalties for banks that do not maintain their REO properties,” she wrote. “Contact the listing agent on the sign and find out who is responsible for the upkeep. Ask the lender to provide a foreclosure list and who is responsible for each property in your community.”
To prevent other homes from going into foreclosure, try to help neighbors in need. “Organize or host foreclosure-prevention workshops. Request a community-based organization to come to your neighborhood and hold a meeting. The workshops could give your quietly struggling neighbors the assistance they need,” reports Investopedia.com in the article “Don’t Let Foreclosed Homes Ruin Your Neighborhood.”
According to the article, there are various organizations take can give you advice and be a resource to deal with this issue in your neighborhood. They include the National Housing Institute, National Vacant Properties Campaign and Neighborhood Works America.
Speaking of Bank of America, it’s being sued by The National Fair Housing Alliance for alleged “significant racial disparities” in its maintenance of bank-owned homes in minority neighborhoods.
The Alliance said they looked at 373 pieces of property that are owned or managed by the bank, or are otherwise being serviced by it. The analysis, which spanned in eight cities, looked for things like broken windows and overgrown lawns. The group found a discrepancy in the level of upkeep in black and Latino neighborhoods when compared to foreclosed houses in white neighborhoods. It’s not just that the houses aren’t maintained. The lack of maintenance drives down the value of homes surrounding the vacant property, and leads to vagrancy and crime, writes Think Progress.
BofA is the second largest mortgage lender in the US and it has been on notice about its failure to look after these homes since 2009. Now it, along with US Bancorp, is facing a lawsuit filed with the U.S. Department of Housing and Urban Development.
Bank of America provides a list of homes that are real estate owned (REO) around the country. If you know of a bank-owned home that’s fallen into disrepair, we’ll suggest that you bring it to the attention of the Alliance. Here’s their website. Info about this lawsuit is on the homepage now.
More and more Americans are looking to refinance their homes to take advantage of lower mortgage rates. Reuters reports on data from the Mortgage Bankers Association, “Applications for home mortgages dipped last week, though demand for refinancing rose as mortgage rates fell to a record low.” Applications for mortgage refinancing rose 81 percent.
But African Americans looking to refinance their homes may find they have more obstacles than white homeowners, states an article in the Charlotte Post. “Lenders consider credit score, timely payments, property values, and employment in mortgage refinancing. They also make it harder for blacks especially to swap out old loans to reduce their interest rate,” it says. The magazine bases these conclusions on a national study, “Paying More for the American Dream V,” and concludes, “Across the board, the new report finds that financial lenders have significantly decreased access to conventional refinance lending in communities of color, which bore the brunt of the subprime mortgage foreclosure crisis.”
Besides refinancing, African Americans start out as homeowners with more hurdles than average. In fact, many minority communities have been prone to foreclosures because of ridiculously high rates and outrageous conditions.
Considering all of this, black homeowners may find themselves prey to scam artists who are looking to benefit from their desperation. As we previously reported, “Through December 31, 2011, the Federal Bureau of Investigation (FBI) had more than 2,500 pending investigations into mortgage fraud around the country. Although the scope of losses for homeowners, legitimate businesses and to the economy caused by mortgage fraud are difficult to calculate, CoreLogic, a research and analytics company, has estimated that losses due to mortgage fraud in 2011 were $7.4 billion.”
If you do want to refinance, SmartMoney gives some tips. Among them:
• Check the payoff. Even with a lower rate, a new mortgagee isn’t always the best move.
• Consider time in the home. It’s not worth the closing costs or taxes if you’re only going to stay in the house for two more years.
• Be mindful of debt reduction. Refinancing doesn’t get rid of debt it just restructures it.
• Don’t go with a loan provider who solicits you. Homeowners should be weary of lenders who come knocking at their door.
SmartMoney also has an online Refinance Calculator to help you figure out your rates and odds. Refinance Calculator.
The Mortgage Professor offers a variety of calculators based on specific refinancing situations.
More than two decades after Virginia Gov. L. Douglas Wilder proposed a national slavery museum, it looks to be just as much of a distant dream as it was back then.
Gov. Wilder was the nation’s first black governor. According to The Washington Post, when he took office, he proclaimed that he would make this museum a reality. A decade ago, a real estate company donated more than three dozen acres of land in Fredericksburg, VA for the project. Fundraising was supposed to be underway, the ball rolling.
Last September, the project filed for bankruptcy, not a brick has been laid and the city tried to take the land because no taxes had been paid on it. About $300,000 is owed, not to mention the $5 million owed to an architecture firm. Now that a promise to pay the taxes has gone unfulfilled, the city is trying to sell the land. And Celebrate Virginia South, an organization that wanted to use the museum as the centerpiece of its efforts to draw tourism to the area, laments the opportunities that it allowed to slip away while waiting for this museum to be built.
Based on the information provided by the Post, the project is now in turmoil and seems unlikely to come to pass. “We don’t understand what Governor Wilder is doing,” the president of Silver Cos, Jud Honaker, told the newspaper. Silver Cos has been involved in the project. “He hasn’t shown any effort to make this thing a reality since he announced it, practically. I don’t know why he keeps perpetuating this disaster of a story.”
In Minneapolis, another museum, the Minnesota African American Museum, was supposed to open on Saturday. That didn’t happen. The city has promised the museum a $1 million grant, which would go towards construction costs, but they’ve asked that they be listed atop the museum’s bank mortgage so it can recover some of its money should the museum fail. The museum’s founder, Roxanne Givens, told the Minneapolis Star-Tribune via text message that it is “negotiating” with the bank. This is the third time the museum didn’t open on the appointed date.
Both of these institutions certainly don’t lack for enthusiastic support. Rather, it’s the people in charge that seem to be incapable of getting financial matters in order to bring these projects to eager audiences. Above all else, this is a real shame.
Applying for a home loan can be overwhelming — what with the paperwork, credit requirements, terms and other banking jargon. But don’t be deterred. Just as you would comparison shop for any big-ticket purchase, do the same when it coms to loans. Various banks will offer you different rates and terms. Select the one that’s best for your financial situation.
There are the things you should do before going shopping, according to Charon D. Darris, VP and senior business banker for New York City’s, KeyBank Corp. “Know your credit scores and credit reports,” he said in an email. The three credit rating services are Experian, TransUnion, and Equifax. “These reports and scores can differ from company to company. It’s important you pull all three to ensure you have a comprehensive picture of your full credit profile and can proactively address any discrepancies you may uncover.”
Darris suggests using “an online mortgage calculator” to first do your calculations at home. “Most banks have a section of their website that will estimate what size loan you can handle given your income, property taxes, and other deductions,” he explains.
And before you hit the major banks, consider the smaller institutions. “Start with community banks. Often people start with the big names like Chase, Bank of America and Citi. However, underwriting standards and pricing are likely to be more negotiable at smaller financial institution,” advises Darris.
Now you’re ready to shop around. Here are a few tips from Darris on what you should ask each bank.
• Will you cover my closing fees? And if not, do you have a cap on closing fees?
• What is maximum tenor will you provide for my loan? (Tenor is the length of time until a loan is due.)
• What is the minimum down payment I will need to provide and when do I need it?
• Would an additional guarantor help the bank be more comfortable?
• Are there any government programs I qualify for?
Armed with knowledge, you’re ready to haggle for the best deal.
Buying and owning a home is a big chunk of the so called “American Dream,” but owning a home doesn’t come at the snap of your fingers. Monetary necessities aside, buying a home takes a lot of time and effort as well as a lot of know how in order to not only secure a mortgage loan, but to ensure that the loan you land is one you can afford for years to come.
The process of buying a home almost always involves the need for a mortgage loan, unless you of course have hundreds of thousands of dollars spilling out of your pockets. This process in itself is quite tedious and sometimes many first-time home owners make choices that can be the deciding factor in whether or not a loan is approved. Here are 6 common yet avoidable mortgage mistakes you will want to avoid if you’re looking to own a home in the near future.
Buying a home can be a wonderful and rewarding experience- or it can be a financial disaster if you find yourself house-poor or facing foreclosure. Avoid disaster and make sure your new home purchase is a positive experience by following these simple tips.
Buying a home is a great investment in your future and a great way to build wealth. However, few people – if any- can just buy a home. Instead, you need to get a mortgage. Mortgages are secured loans that use the house as collateral. They are structured differently than other types of loans because they typically are paid off over a much longer time.
Mortgages come in different types, and have different terms- so be sure to be aware of what your mortgage means to your finances before you sign on the dotted line.
In January we told you about Texana Hollis, the 101-year-old woman who had been evicted from her home in Detroit after her son failed to pay property taxes linked to a reverse mortgage. Despite being told she could go back to her home, there was another hitch when the U.S. Department of Housing and Urban Development (HUD) said her house “was completely unsuitable for a person to live in,” and forbid her to return. Well, finally things have turned around for Ms. Hollis and she is on her way to being back in her cherished home.
When Tuesdays with Morrie author and Detroit Free Press columnist Mitch Albom came across this woman’s this story, he was motivated to act. Through his charity S.A.Y. Detroit, Ms. Hollis’ home has been purchased from HUD and volunteers are now helping to renovate the house. Tomorrow, the organization will give Ms. Hollis the keys to the house Mitch said she never should have lost.
“The mark of a society is how it treats its neediest citizens, especially its neediest senior citizens. Texana Hollis should never have been thrown out — no matter what mistakes her son made — and it should not have taken this long to get her back in,” he wrote in his Sunday column.
“Texana Hollis cried on the sidewalk when she was evicted; I hope she is laughing this week. She is a joyous piece of our city’s living history, and we should cherish her.”
S.A.Y. Detroit has given the home new floors, walls, appliances, a repaired roof, heating, electrical, a security system, a new kitchen, and even painted the living room in Ms. Hollis’ favorite bright colors to make sure the dwelling is up to standard. When Mitch told her the good news, she replied, ”You don’t know how happy you have made me.”
When we first ran this story, many of you asked if there was a place you could donate to help Texana Hollis, and Mitch Albom has now set up a fund to help her with her future expenses. Here is the contact information if you’d like to help out:
Texana Hollis Fund, c/o Detroit Rescue Mission Ministries, Room 101, 150 Stimson, Detroit 48201. You can also call 313-993-4700 or go to www.saydetroit.org.
I’m glad this story has an even happier ending than could have been imagined.
Brande Victorian is a blogger and culture writer in New York City. Follower her on Twitter at @be_vic.
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