Posts Tagged ‘obama foreclosure plan’

The New Normal… NYT Reports: Expect Four Million More Foreclosures Despite Obama’s Mortgage Modification Policy

Friday, October 9th, 2009
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In today’s New York Times (10/9/09) the lead story in the Business section is: “In Trial Phase, Mortgage Bills Fall for 500,000. Is that supposed to be good news or news at all? I am not sure. I guess it depends on whether you think the glass is half full or half empty.

The reality is that by now the Obama administration had anticipated (or promised) about 5 million modifications: not 10 percent of that number!

So the real news is that Mark Zandi, chief economist at Moody’s and one of the top real estate prognosticators in the US is fully anticipating another 4 million foreclosures, as reported in the article today. Now I call that News. That’s right four million! Thus, one can expect at least 35% of those foreclosures to occur right here in Florida.

Further Peter Goodman, the NYT’s reporter failed to actually discuss the percentage decrease that occurs s in modifications or whether there was material principal reduction to date. Well I will tell you: the average successful mortgage modification is between 20%-22%. Little if any principal is reduced. Thus we can anticipate that many of these half million modifications will become part of the 4 million in foreclosure. In fact, based on prior studies, modifications without principal reduction lead to foreclosure half the time.

So don’t expect real estate values to start increasing any time soon as long as folks keep losing their homes. Yes, the economy is no longer in free fall and things are better than last fall: Stock market is rising, retail sales have stopped falling and job losses are decreasing. However, until people are employed and can afford their houses payments again and there are meaningful principal reduction or forbearance of underwater equity nothing much will change. The folks who brought us this mess: the politicians and regulators in Washington, the “bright minds” on Wall Street and the banks, will have to first realize that keeping people in their homes is better for them and for the rest of us too. Welcome to the New Normal.

From Deep in the Trenches,

Roy Oppenheim

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Posted in Florida foreclosures, Florida Law News, Foreclosure Defense | 2 Comments »

Obama’s Report Card on His First 100 Days as President

Wednesday, April 29th, 2009
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With about 6 million folks going to lose their homes to foreclosure this year, I have been repeatedly asked what kind of grade I give the Obama administration in addressing the foreclosure crisis during the first 100 days. I would say a B or B-. Let me explain.

On the one hand, there has been some improvement in the overall credit markets and we are seeing a lot more refinances at historically low interest rates. However, only about 2 in ten families will qualify to refinance this year. That means a whopping 80% will have to proceed on a different course.

The so called “mortgage modifications” so far have been a failure. 50% of all modifications end up in foreclosure. That is the current number. Because the servicers have little control over their obligations to their investors, it is cheaper and safer for them to foreclose.

Short sales have gone way up and it seems that the servicers are more likely to agree to a short sale than a modification where the investor takes a crew cut!

I have always described the “Obama plan” as a three legged stool:

  1. Refis;
  2. Modifications; and
  3. the threat of bankruptcy judge telling the lender that the principal amount of the loan is being reduced or “crammed down” their throats due to the decrease in the property values.

Of course, to date the third leg of the stool does not exist since it got hung up in the Senate. That will not likely change due to the lobbying done by the banking industry. Ironically, it appears that some of the very tax payer bailout money is now being used to pay expensive Washington lobbyists to keep this bill from coming to the Senate Floor. How ironic! Thus it appears that the long sort after weapon that foreclosure defense attorneys were awaiting is remaining elusive and will continue to hinder our ability to get better results in our loan modification negotiations.

So, would I have given the President an A if the bankruptcy laws had actually been changed in these first 100 days???  You bet ya!!!

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Posted in Florida foreclosures | No Comments »

Today’s NYT Foreclosure Policy Editorial; My Thoughts Exactly

Friday, March 6th, 2009
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Déjà vu. I awoke this morning to today’s New York Times top editorial Helping the House Poor . It was a direct reflection of my Florida foreclosure defense concerns discussed at length last night over the Obama Foreclosure plan. We had a full house of Florida homeowners facing foreclosure, real estate professionals dealing with the foreclosure and short sale markets,  as well as WSVN’s Andre Hepkins reporting on this national economic foreclosure crisis.

The Obama Foreclosure plan problem:  it does little for people who have a small amount or no equity in their homes.

The reason is simple: When you have little or no equity in your homes you have little or no incentive to keep the mortgage current.  “Owner” becomes “renter”… of his or her own home. Meaning that at the end you will have built zippo equity after making your mortgage payments.

Thus, the consensus is building fast. The stock market too seems to be speaking. Until the markets and government address a way to eliminate the negative equity in the mortgage market we will likely not get through this foreclosure mess.

The House of Representatives spoke yesterday too! They passed a major change in the bankruptcy rules allowing a judge to alter the principal amounts of outstanding principal balances of mortgages when it exceeds the market value of homes. We all call that a “Cram Down”. Because the judge is cramming down the principal reduction down the throat of the banks. In other words it’s a forced modification. Some people consider it a cram up… but I won’t go there!

As a foreclosure defense attorney, I’ve been strongly advocating for the judges to have this new authority since it gives us attorneys a new weapon to negotiate with the banks. In my opinion, the threat of the cram down is as important, if not more important, than actually going through the whole bankruptcy process.  In fact, just last night I noted this the missing “club” in the weapon’s arsenal of foreclosure attorneys to help level the negotiating playing field.

I must say it has been rather lonely out there– with little support from anyone including the courts. So, it’s great to see we finally we are getting some help from The President and Congress. But the law has not passed yet. The Senate still needs to vote and things are less certain there.

What can you do?

Do what we’ve been trained to do. Call BOTH your United States Senators and tell them what you think. And remember, if you live in one of the hard hit states for foreclosure: California, Florida, Arizona, Nevada, Michigan and a few others. This new law may determine you, your family’s and your State’s financial health.

For those who joined me last night at the Foreclosure and Bailout Workshop… I thank you for your time and input. Be my guest at my up to the minute Foreclosure Defense Workshops on the first Thursday of Each Month. Next one is schedule for Thursday April 2, 2009 at my office.

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Posted in Florida foreclosures, Florida Law News | 2 Comments »

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