This Is What's Needed In Virginia

Cuyahoga County Juvenile Judge Peter Sikora faces foreclosure on his lakefront home

Published: Friday, January 07, 2011, 5:15 AM     Updated: Friday, January 07, 2011, 12:05 PM

 By James F. McCarty,The Plain Dealer 

ShareEmailPrint

Marvin Fong, The Plain DealerJuvenile Court Judge Peter Sikora in a courtroom session in 2009.

With Tonya Sams

CLEVELAND, Ohio -- A Cuyahoga County Juvenile Court judge faces foreclosure on his eight-bedroom, lakefront Cleveland home after falling a year behind on a nearly $1 million mortgage and property taxes.

Judge Peter Sikora said he hopes a mediation session scheduled for next month will keep him in his Edgewater Drive home, which the Cuyahoga County Auditor's Office has appraised at $844,000.

Sikora, who makes $121,350 a year as a judge, said in a telephone interview Thursday that he has the money to make his mortgage payments. What got him in trouble was following the advice of officials at JP Morgan Chase & Co., he said.

With property values in decline over the past year in Cleveland, and mortgage rates the lowest in decades, Sikora sought to refinance. But the bank, he said, declined his request.

"The bank advised me that the only way they would consider a loan modification would be if I fell behind on my payments," said Sikora, 59, a judge since 1989. "I took their advice and put the money aside."

Sikora said he was surprised when, in June, during the middle of negotiations, JP Morgan Chase filed the foreclosure lawsuit against him seeking $999,000, including $6,400 in unpaid property taxes.

"It's unfortunate that it's gotten to this situation," Sikora said. "I've been talking with them for more than a year, but the bank hasn't been responsive."

The attorney for JP Morgan Chase did not return a phone call.

Sikora was elected in 2008 as president of the Ohio Association of Juvenile Court Judges. A Democrat, he ran unsuccessfully three times for the Ohio Supreme Court.

He acknowledged it doesn't look good for a juvenile court judge to become delinquent on property taxes, which are used to support schools and the children who appear in his court. But he said the bank is responsible for paying the taxes out of the escrow account.

Original article here:

http://blog.cleveland.com/metro/2011/01/judge_peter_sikora_hopes_media.html

At Last Mainstream Points Out The Role Of Fed Gov In Homeownership: FedGov holds legal title to the majority of real estate in America; if that is not socialism, I don't know what is...

Who Wants a 30-Year Mortgage?

By BETHANY McLEAN

Published: January 5, 2011

• RECOMMEND
• TWITTER
• SIGN IN TO E-MAIL
• PRINT
• SINGLE PAGE
• REPRINTS
• SHARE

AS we all move forward with our New Year’s resolutions, it’s a good time to remember the promises our politicians have been making about the American mortgage market. The Obama administration, at a conference last August on the future of housing finance, pledged to have, come January, a plan for Fannie Mae and Freddie Mac, the mortgage giants that are now wards of the government. Congressional Republicans, in their recent position paper, made an even bolder resolution: to build a mortgage market that “does not rely on government guarantees” and “does not make private investors and creditors wealthy while saddling taxpayers with losses.”

Fogelson-Lubliner

Related in Opinion

• Op-Ed Contributor: Home Team(January 6, 2011)

This latter promise is pleasing populist rhetoric. The problem is, it may be neither politically nor practically feasible. Even if we forget about the gigantic near-term problem — namely, that the federal government is in the housing market mainly because most banks simply won’t issue mortgages that can’t be guaranteed by Fannie, Freddie or the Federal Housing Administration — there’s the fact that federal involvement in housing has been a constant since the 1930s. A market without government support would almost certainly involve the demise (for most of middle-class America) of that populist favorite, the low-cost 30-year fixed-rate mortgage.

For a homeowner, a mortgage with a 30-year fixed rate (especially one that he can pay off early without a penalty) is a wonderful thing. For lenders and investors, however, it is a financial Frankenstein’s monster, an unnatural product filled with the potential for losses. Absorbing some of the risk of those losses is a large part of what the government does in the housing market.

Fannie Mae and Freddie Mac, for instance, were created by the federal government to buy up mortgages from lenders, thereby enabling them to turn around and issue more mortgages. Among other things, this allowed the lenders to get off their books the two kinds of risk that a mortgage carries. We’re all now sadly familiar with one kind, credit risk — that is, the danger that a borrower won’t pay back the mortgage. The second is interest-rate risk, the danger that interest rates will rise sharply after the mortgage has been made, thereby burdening the bank with money-losing loans. (Interest-rate risk was the root cause of the savings and loan crisis.) The longer a mortgage lasts, the more difficult it is to manage both of these risks. And 30 years is an awfully long time.

With the advent of securitization, or the ability to package up mortgages and sell them off as securities, the market found some investors — bond funds, insurance companies and others — that were willing to take on interest-rate risk. But even in those halcyon days when credit risk wasn’t supposed to be an issue, the majority of investors still didn’t want it. So Fannie and Freddie solved the problem by guaranteeing the payment on mortgages before the securities were sold off to investors. (In the non-government market, the ratings agencies provided a solution, by stamping large pieces of securitizations with the supposedly ultrasafe triple-A rating.)

Today, credit risk is anathema, and by shouldering it, Fannie and Freddie are propping up the housing market. The banks that make the mortgages don’t want credit risk, and neither do investors. Indeed, William Gross, the co-founder and managing director of the investment firm Pimco, has said his funds wouldn’t buy pools of so-called private label mortgages — those lacking a government guarantee — unless the homeowners involved had made a down payment of at least 30 percent.

The proposed Fannie-Freddie reform that has gotten the most traction recently — various iterations of this have been endorsed by Hank Paulson, the former Treasury secretary, among others — calls for new private-sector entities that would continue to provide credit guarantees on mortgages. These guarantees would not be entirely private, however, because they would be explicitly backed by the full faith and credit of the United States.

There are various proposals for how this could be done with less risk to taxpayers than Fannie and Freddie pose, but, obviously, we’re still talking government involvement. And there’s something perverse about creating companies that would be saddled with exactly the same kind of risk — credit risk — that took down Fannie and Freddie in 2008. Furthermore, we’re kidding ourselves if we don’t think that once the memory of the housing bubble begins to fade, these new creatures won’t find themselves under political pressure to keep the price of their credit guarantees low, in order to help keep the price of the 30-year mortgage low as well.

Wouldn’t a better solution be for banks and other financial institutions to offer mortgage products that they actually want to keep on their own books? Maybe these would take the form of 15-year mortgages with a rate that would be adjusted after five years so that the banks wouldn’t have to worry about long-term interest-rate risk. This might not even mean the disappearance of 30-year fixed-rate mortgages — the private market has historically provided them to consumers whose mortgages are too big to qualify for a Fannie and Freddie guarantee. But these are usually issued only to the wealthiest, most credit-worthy consumers.

Related in Opinion

• Op-Ed Contributor: Home Team(January 6, 2011)

And therein lies the rub. Almost certainly, any 30-year product would be offered on a more limited basis and at a higher price than it is today. How much higher, it’s hard to say. In the pre-crisis days, Fannie used to argue that its guarantee enabled consumers to pay one quarter to one half of a percentage point less in annual interest on their mortgages; today, Mr. Gross says that mortgages without a government guarantee would cost at least several percentage points more. If his numbers are right, then mortgages — and 30-year mortgages in particular — would be far more expensive, and the pool of American homebuyers would shrink.

This may well be the right long-term answer. After all, other countries manage fine without the widespread availability of 30-year fixed-rate mortgages. But is there an American politician alive who would accept responsibility for depressing the housing market further?

In any case, even a willingness to have more expensive mortgages would not get the government out of the housing market completely. Recall that, before the bubble burst in 2007, the private sector didn’t do much better than the government-sponsored entities at monitoring mortgage risk. What would happen years down the road if one of our increasingly large banks, one that is critical to the mortgage business, ran into trouble? Even assuming that we’d solved the issue of allowing such banks to be too big to fail, there’d still be deposit insurance. Taxpayers would still be on the hook.

So be wary of politicians bearing promises of a perfect world where average Americans can get the mortgages to which we now all feel entitled and the government is nowhere to be seen. It’s a mirage.

Original article here: 

http://www.nytimes.com/2011/01/06/opinion/06mclean.html

Ibanez court opinion

The full text of the opinion can be accessed on the court's website or here:
http://www.scribd.com/doc/46482460/Ibanez-01-07-2011

The Tide is REALLY Turning: Ibanez Ruling in Mass. in Favor of Borrowers

Top Court in Massachusetts Voids Foreclosures by 2 Banks

By REUTERS

Published: January 7, 2011

In a ruling that may affect foreclosures nationwide, the Massachusetts high court has voided the seizure of two homes by Wells Fargo & Company and US Bancorp after the banks failed to show that they held the mortgages at the time of the foreclosures.

Add to Portfolio

• US Bancorp (Del)
• Wells Fargo & Co
• JPMorgan Chase & Company

Go to your Portfolio »

Friday’s decision by the Supreme Judicial Court of Massachusetts, which upheld a lower court ruling, is among the earliest to address the validity of foreclosures conducted without full documentation.
That issue prompted an uproar last year that led lenders like Bank of America, JPMorgan Chase and Ally Financial to temporarily stop seizing homes.
Courts in other states are considering similar cases, and all 50 state attorneys general are examining whether lenders are forcing people out of their homes improperly.
Friday’s decision may also threaten banks’ ability to package mortgages into securities and raises the possibility that loans that were transferred improperly might need to be bought back.
In the ruling, Justice Ralph D. Gants wrote for a unanimous court that Wells Fargo and US Bancorp lacked authority to foreclose after having “failed to make the required showing that they were the holders of the mortgages at the time of foreclosure.” Massachusetts is one of 27 states that do not require court approval to foreclose.
Wells Fargo was not immediately available for comment. A US Bancorp spokesman, Steve Dale, said the ruling had no financial impact on the bank, which had “no responsibility for the terms of the underlying mortgage or the procedure by which they were transferred” into a mortgage trust.
In the Massachusetts case, US Bancorp and Wells Fargo had said they controlled through different trusts the respective mortgages of Antonio Ibanez as well as Mark and Tammy LaRace, who lost their homes to foreclosure in 2007.
The banks bought the homes in foreclosure, and sought court orders confirming they had title. A lower court judge ruled against them, and Friday’s decision upheld the ruling.
In a concurring opinion, Justice Robert Cordy lambasted “the utter carelessness” that Wells Fargo and US Bancorp demonstrated in documenting their right to own the properties.
Justice Gants did suggest in his opinion how banks might properly transfer mortgages via securitization trusts.
“The executed agreement that assigns the pool of mortgages, with a schedule of the pooled mortgage loans that clearly and specifically identifies the mortgage at issue as among those assigned, may suffice to establish the trustee as the mortgage holder,” he wrote. “However, there must be proof that the assignment was made by a party that itself held the mortgage.”

original article here:
http://www.nytimes.com/2011/01/08/business/08mortgage.html?_r=2&hp

BOA gets another piece of covert subsidy:

BofA in settlement with Fannie Mae, Freddie Mac

• 0 votes
• • Email
  • Print

Reuters – The sign of a Bank of America branch is pictured in downtown Los Angeles October 8, 2010.REUTERS/Fred …

RELATED QUOTES

^DJI	11,678.28	+100.77
^GSPC	1,271.61	+13.97
^IXIC	2,690.19	+37.32

By Joe Rauch – 2 hrs 55 mins ago

CHARLOTTE, North Carolina (Reuters) – Bank of America Corp agreed to pay Fannie Mae and Freddie Mac $2.8 billion to settle claims that it sold the mortgage finance companies bad home loans, signaling that the bank may be closer to containing its outsized housing losses.

The news sent Bank of America shares up 5.5 percent to $14.08 in midday trading on the New York Stock Exchange. The deal triggered hopes that other banks may soon make similar settlements, and shares of Citigroup Inc and JPMorgan Chase & Co also rose.

Investors have feared for months that Bank of America would have to buy back billions of dollars of home loans it sold to investors at the height of the housing boom.

"I think 2011 will see the issue hopefully behind us," said Alan Villalon, a senior bank analyst at Chicago-based Nuveen Investments, which owns Bank of America shares.

The agreement with Fannie Mae and Freddie Mac resolves the bulk of Bank of America's exposure to those government-sponsored enterprises (GSEs), but likely means the bank will post its second straight quarterly loss when it announces fourth-quarter earnings on January 21.

Before the settlement was announced, analysts projected the bank would post a profit of 25 cents per share for the quarter, according to Thomson Reuters I/B/E/S. The settlement had some analysts revising their estimates.

For example, Sandler O'Neill analyst Jeff Harte reduced his fourth-quarter earnings estimate from a profit of 20 cents per share to a loss of 20 cents.

Bank of America said it would set aside $3 billion in the fourth quarter to help cover the Fannie and Freddie claims. It also said it expects to take a $2 billion charge in the quarter to write down goodwill linked to its home loans and insurance business unit, amounting to an admission that the unit is not as profitable as the bank had expected.

Despite the settlement, the bank still faces potential liabilities from mortgages it sold to private investors, as well as big losses from home loans it has made and kept on its books.

"This doesn't get the bank completely out of trouble. They're still going to face litigation on repurchases from private-label investors," said Chris Whalen, senior vice president and managing director of Institutional Risk Analytics.

Mortgage investors say the home loans should never have been sold to them in the first place because they did not meet investors' underwriting requirements.

Bank of America said it made a $1.28 billion cash payment to Freddie Mac as part of an agreement to end all claims, including future claims, related to mortgages sold through 2008 by Countrywide, a mortgage company bought by the bank that same year.

The bank paid Fannie Mae $1.34 billion in cash and applied certain credits to reach an agreed $1.52 billion settlement on 12,045 Countrywide loans from 2004-2008. Fannie Mae has reserved the right to bring future claims against the bank.

BofA Chief Financial Officer Charles Noski said on a conference call with analysts that the bank does not expect to add significantly to the reserve for additional repurchase requests from Fannie or Freddie in the future, though the agreement only covers loans originated by Countrywide.

The bank estimates it will have $2.7 billion in outstanding repurchase requests from Fannie and Freddie not covered by the settlement. Noski said this includes $832 million of requests due to incomplete documentation that can be resolved without large losses to the bank.

In October, Bank of America said it was two-thirds of the way through its GSE-owned mortgage repurchases and had bought back $11.4 billion in mortgages from Fannie Mae and Freddie Mac.

SETTING PRECEDENTS

The agreement is similar to but much larger than a recent $462 million settlement between Ally Financial Inc and Fannie Mae.

The regulator for Fannie Mae and Freddie Mac, the Federal Housing Finance Agency, suggested other banks may be forced to follow suit.

"While these agreements are an important step, the Enterprises (Fannie Mae and Freddie Mac) have other outstanding claims across a range of counterparties and they are being pursued," said Edward DeMarco, acting director of the FHFA.

As the largest mortgage servicer in the United States, Bank of America has been at the center of the multi-year foreclosure crisis. The agreement with Fannie and Freddie is not the end of the problem.

Bank of America said during its third-quarter earnings presentation that it had received $8.7 billion in repurchase requests from outside investors and monoline insurers, on $910 billion in mortgage-backed securities sold to those two groups during the housing boom.

Nuveen's Villalon said the agreement with Fannie Mae and Freddie Mac could set a precedent in the bank's negotiations with private investors, since the GSEs had stricter underwriting standards.

The bank started negotiating with a group of mortgage investors -- including the Federal Reserve Bank of New York and PIMCO -- last month in an apparent shift in its stance toward such claims.

In October, Bank of America Chief Executive Brian Moynihan said the bank would fight back against investors whose attitude was: "I bought a Chevy Vega but I want it to be a Mercedes."

(Reporting by Elinor Comlay in New York and Joe Rauch in Charlotte; additional reporting by Maria Aspan in New York; Editing by John Wallace)

Ron Paul on Federal Reserve