It’s hard to believe but it has been one year since news of the “robo-signer” scandal broke.  In their rush to foreclose defaulted loans, lenders were filing false foreclosure notices and fraudulent legal actions.  In the immediate aftermath, some lenders stopped foreclosing but the pace soon picked up when lenders realized that Washington wasn’t going to do anything about it.  Since then, the only sanction has been lawsuits by the Attorney Generals of several States against the lenders. Settlement negotiations have been going on for six months with no resolution in sight since lenders are demanding immunity from future prosecution.

Throughout all of this, despite all the hype, there remains no effective help for upside down homeowners who are frustrated and angry at unfulfilled promises such as the HAMP Program which remains mostly ineffective at reducing loan costs to overwhelmed debtors.  Instead, lenders seem to prefer foreclosure even if that results in less of a money recovery for their investors. As reported on foreclosureradar.com, Notice of Default filings in California are up 69.5%. In Sacramento, August NOD’s were up 85% over July.  Much of this increase is Bank of America. Market watcher Dataquick.com reported that BofA foreclosure filings in California increased 200% between July and August!

As I have written before, I have concern with BofA’s survivability as they continue to deal with the incredible losses from their Countrywide purchase. In July BofA reported an $8 billion 2nd quarter loss and there’s billions more of losses yet to go.  A BofA spokesman stated that even this increase may not be enough. BofA appears committed to forcing as much bad debt off their books as they can as quickly as they can.  Meanwhile, lawsuits continue to mount.  Insurance giant, AIG, filed a $10 billion lawsuit against BofA in early September; and FNMA is reportedly about to file a $20 billion plus lawsuita against BofA and others.

What all of this means is that we’re in for more troubling financial times as lenders try to rebound from the deep recession caused by the collapse of the real estate bubble. Added to this is continued economic instability in California, nationally, and in fact world-wide all of which is causing buyers and investors to question whether now is the time to buy.  California Association of Realtors (CAR) is predicting that sales will remain flat through 2011 and that property prices will fall 4%. They further project a small, less than 2%, price growth in 2012.  CAR’s chief economist, Leslie Appleton-Young, stated: “the best decription of what can be expected next year is the market will be bouncing along the bottom.” … “One of the biggest uncertainties in today’s market is what are the negative equity homeowners going to do going forward and how big a percentage will end up in the foreclosure process”.

So the bottom line is insecurity on the economy and continued efforts by lenders to clear defaulted loans off their books.  This means more short sales, more foreclosures and more REO properties.  For some, this will spell an opportunity to acquire good properties at a low price with cheap loans.  For others, it will be wait and see how low the markets go.  None of this is good news for upside down owners hoping to save their homes.  Looking forward to a 2012 Presidential election years, it is not at all likely that any further relief for homeowners can be expected befor2 2013.

If you are an upside down homeowner struggling to hang on, don’t give up all hope.  Keep trying for that Loan Modification. Although most will not get one, many loans are getting modified. Just keep pushing.  If you can’t hold on, then get good legal, finance, and real estate advice on your options.  If you are a California property owner, consider our $200 Attorney Consult program that will help you determine all of your options and choose the best strategy to enable you to move forward as intact as possible.  To learn more, contact me at sjbeede@bpelaw.com or call us at 916 966-2260.

The Treasury Department has released the results of its second-quarter assessment of the 10 largest servicers participating in the government’s Making Home Affordable program.  As resported in DSNews.com, Officials say they will continue to withhold program incentives owed to Bank of America and JPMorgan Chase. The two were determined to need “substantial improvement” in key areas of borrower outreach, borrower evaluations, and program reporting, although Treasury did note that “some improvements have been made” by the companies since its previous assessment.

BofA and JPMorgan received the same score last quarter, as did Wells Fargo, but Wells Fargo has now elevated its grade to needing “moderate improvement” and with the movement has reopened the flow of incentive payments for loss mitigation actions completed under the Making Home Affordable umbrella. American Home Mortgage Servicing, CitiMortgage, Ocwen Loan Servicing, and Select Portfolio Servicing also received the “moderate improvement” rating.  Three servicers have been identified as needing only “minor improvement” – GMAC Mortgage, Litton Loan Servicing, and OneWest Bank. Treasury’s previous quarterly assessment put no servicers in this category, which is the highest on the three-level scale.