A preliminary count by Madison-based ForeclosureAlarm.com showed 2,511 filings in courts around the state last month, compared with 2,484 in August of 2009

The August filings jumped 13.7% from 2,208 in July of this year.

In Milwaukee County, foreclosure cases rose to 514 after two consecutive months with fewer than 500, court records show. In August of 2009, there were 558 in Milwaukee County.

In the seven-county southeastern Wisconsin region, foreclosure filings topped 1,000 for the first time since April, at 1,037. Foreclosure filings increased in Kenosha, Ozaukee, Racine, Walworth, Washington and Waukesha counties from August of last year.

Source: By Kevin Drum, MotherJones.com, ref. Andy Kroll

The Obama administration’s program to address home foreclosures, HAMP, has been a pretty dismal failure. Only a small fraction of the money allocated to help homeowners has been spent and only a few hundred thousand loans have been modified. So what’s next? James Pethokoukis passes along the latest dirt:

Main Street may be about to get its own gigantic bailout. Rumors are running wild from Washington to Wall Street that the Obama administration is about to order government-controlled lenders Fannie Mae and Freddie Mac to forgive a portion of the mortgage debt of millions of Americans who owe more than what their homes are worth. An estimated 15 million U.S. mortgages — one in five — are underwater with negative equity of some $800 billion. Recall that on Christmas Eve 2009, the Treasury Department waived a $400 billion limit on financial assistance to Fannie and Freddie, pledging unlimited help. The actual vehicle for the bailout could be the Bush-era Home Affordable Refinance Program, or HARP, a sister program to Obama’s loan modification effort. HARP was just extended through June 30, 2011.

….Keep in mind the political and economic context. The nascent recovery is already running out of steam….The president’s approval ratings are continuing to erode, as are Democratic election polls. Democrats are in real danger of losing the House and almost losing the Senate. The mortgage Hail Mary would be a last-gasp effort to prevent this from happening and to save the Obama agenda. The political calculation is that the number of grateful Americans would be greater than those offended that they — and their children and their grandchildren — would be paying for someone else’s mortgage woes.

Maybe this happens, maybe it doesn’t. But it would sure be an improvement over spending the money on “foreclosure mills,” as Fannie and Freddie do now:

The business model is simple: to tear through cases as quickly as possible. (Stern’s company handled 70,382 foreclosures in 2009 alone.) This breakneck pace stems from how the mills get paid. Rather than billing hourly, they receive a predetermined flat fee for the foreclosure — typically around $1,000 — plus add-ons for each of the related services. The more they foreclose, the more they make. As a result, consumer attorneys and legal experts say, even families who have been foreclosed upon illegally—and who can afford to make good on their mortgages—end up getting steamrolled. “It’s ‘How fast can I turn this file?’” says Ira Rheingold, executive director of the National Association of Consumer Advocates in Washington, DC. “For these guys, the law is irrelevant, the process is irrelevant, the substance is irrelevant.”

The Real Estate Settlement Procedures Act (“RESPA”)

“Section 6 of RESPA provides borrowers with consumer protections relating to the servicing of their loans. If a borrower sends a “qualified written request” to his loan servicer concerning the servicing of the loan, the servicer must provide a written acknowledgment within 20 business days of receipt of the request. Not later than 60 business days after receiving the request, the servicer must make any appropriate corrections to the borrower’s account, and must provide a written clarification regarding any dispute. During this 60-day period, the servicer may not provide information to a consumer reporting agency concerning any overdue payment related to such period or qualified written request.

In accordance with the required steps of the program my client met with a Housing Counselor and the Counselor prepared her recommendation.  US Bank then requested some additional documentation regarding his income.  We submitted the information 3 months ago.

At the status conference the Judge wanted to know what’s going on with the case?  So did I.  The attorney for US Bank informed the Judge they needed more time to conduct a HAMP Analysis.  He went even further, it is routine now for a HAMP Analysis 6 to 9 months to complete.

I believe that back log is going to get even worse.  Under Treasury Directive 10-02 persons in active Bankruptcy must be given an opportunity to modify their mortgage under the HAMP program.  We have contacted our clients to alert them to the changes.  Many have expressed an interest in getting their mortgage modified.

Remember if your experiencing problems with your mortgage give me a call, I can help!  Call me at 414-647-2222

One glaring omission; not one word about the law.  Nothing about asserting your legal rights against mortgage companies.  It’s no wonder over 90% of foreclosures filed in Milwaukee County go unanswered.  Everyone is afraid to tell you the mortgage company may have done something wrong.

Foreclosure Prevention Workshop:  PLANNING IN DIFFICULT TIMES

Learn about programs to help you manage your mortgage .
Leave with tools and resources to help you make informed decisions

Where: Urban League @ the Villager Mall
2222 South Park Street / Madison 53713

Time & Date:   June 21st and June 28th 6 – 8 pm

*Must attend both nights*

Sign up Contact: Annie Beaman at 608.261.5677
Limited seating.
Registration is required.

The Dane County Foreclosure Prevention Taskforce is a coalition of government agencies, nonprofit
organizations and other community partners working to address the foreclosure problem at a local level.

Bank of America will pay $108 million to settle federal charges that Countrywide Financial Corporation, which it acquired nearly two years ago, collected outsized fees from about 200,000 borrowers facing foreclosure.

The Federal Trade Commission announced the settlement Monday and said the money would be used to reimburse borrowers.

Bank of America purchased Countrywide in July 2008. FTC officials emphasized the actions in the case took place before the acquisition.

The bank said it agreed to the settlement “to avoid the expense and distraction associated with litigating the case,” which also resolves litigation by bankruptcy trustees. “The settlement allows us to put all of these matters behind us,” the company said.

Countrywide hit the borrowers who were behind on their mortgages with fees of several thousand dollars at times, the agency said. The fees were for services like property inspections and landscaping.

Countrywide created subsidiaries to hire vendors, which marked up the price for such services, the agency said. The company “earned substantial profits by funneling default-related services through subsidiaries that it created solely to generate revenue,” the agency said in a news release.

The agency also alleged that Countrywide made false claims to borrowers in bankruptcy about the amount owed or the size of their loans and failed to tell those borrowers about fees or other charges.

As of March, banks had an inventory of about 1.1 million foreclosed homes, up 20% from a year earlier, according to estimates from LPS Applied Analytics. Another 4.8 million mortgage holders were at least 60 days behind on their payments or in the foreclosure process, meaning their homes were well on their way to the inventory pile. That “shadow inventory” was up 30% from a year earlier.

Based on the rate at which banks have been selling those foreclosed homes over the past few months, that entire inventory, real and shadow, would take 103 months to unload. That’s nearly nine years.

The HAMP (Home Affordable Modification Program) program started by the Obama Administration is trying to modify loans so that lenders will not foreclose:

According to Goldman Sachs, HAMP started less than 80,000 trial modifications in March, less than half the number in the peak month of October 2009. At the same time, a growing number of modifications are being canceled as borrowers prove unable to pay. By Goldman’s count, about 68,000 were canceled in March.

All this means that little can stop banks’ inventory of distressed homes from growing. Too many people owe too much more on their homes than they can afford. For the housing market, that could mean a long-lasting hangover.

In a piece from the Wall Street Journal on Saturday, LPS Applied Analytics estimated that foreclosures would create so much market supply that it would take 103 months to liquidate it.

As of March, banks had an inventory of about 1.1 million foreclosed homes, up 20% from a year earlier, according to estimates from LPS Applied Analytics. Another 4.8 million mortgage holders were at least 60 days behind on their payments or in the foreclosure process, meaning their homes were well on their way to the inventory pile. That “shadow inventory” was up 30% from a year earlier.

Based on the rate at which banks have been selling those foreclosed homes over the past few months, that entire inventory, real and shadow, would take 103 months to unload. That’s nearly nine years.

The HAMP (Home Affordable Modification Program) program started by the Obama Administration is trying to modify loans so that lenders will not foreclose:   According to Goldman Sachs, HAMP started less than 80,000 trial modifications in March, less than half the number in the peak month of October 2009. At the same time, a growing number of modifications are being canceled as borrowers prove unable to pay. By Goldman’s count, about 68,000 were canceled in March.
All this means that little can stop banks’ inventory of distressed homes from growing. Too many people owe too much more on their homes than they can afford. For the housing market, that could mean a long-lasting hangover.

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Effective immediately, HUD is classifying any property that is at least 60 days behind on the mortgage or the property owner is 90 days or more delinquent on tax payments as a “foreclosed” home.

In addition, HUD is expanding the definition of an “abandoned” property to include homes where no mortgage or tax payments have been made by the property owner for at least 90 days or a code enforcement inspection has determined that the property is not habitable and the owner has taken no corrective actions within 90 days of notification of the deficiencies.

HUD officials say the new wordsmith-ing will help communities acquire, rehabilitate, and re-sell foreclosed and abandoned properties more quickly under the Neighborhood Stabilization Program (NSP) and help prevent further decline in hard-hit neighborhoods.

The changes come just as reports are surfacing that states and local municipalities have spent less than half of the $4 billion available through the NSP initiative to buy up distressed properties in their communities.

According to the Associated Press, as of March 16, only 38 percent of the grant money had been “obligated,” meaning a municipality has a formal contract at a specific address

in place to purchase a foreclosed or abandoned home. The state and local governments must commit the money to projects by September or the funding is lost, the news agency explained.

HUD says its new expanded definitions will increase the reach of NSP by allowing more properties to qualify and will remove existing barriers caused by market conditions.

“The original NSP rules…limited the impact of the Neighborhood Stabilization Program and we’ve heard that clearly from our partners on the ground,” said HUD Secretary Shaun Donovan. “The rules needed to be more flexible so our local partners can put taxpayer dollars to work quickly to stabilize neighborhoods hard-hit by foreclosure.”

HUD previously defined the term foreclosed to apply only to properties where the foreclosure process was completed. Local communities suggested this narrow definition was not a good fit for market conditions since many properties were lingering in the foreclosure process and beyond the reach of NSP.

Properties will now be eligible for NSP assistance if: the mortgage on the property is 60 or more days delinquent and the owner has been notified; the property owner is 90 days or more behind on the taxes; or foreclosure proceedings have been initiated or completed under state or local law.

The word abandoned was previously defined as a property that had been foreclosed upon and was vacant for at least 90 days. This definition effectively excluded properties abandoned by owners but where tenants were still in place, precluding local communities from assisting the properties with NSP funding or protecting the tenants’ occupancy. HUD determined this limitation was a substantial barrier to the preservation of existing affordable housing.

To address this limitation, HUD is now also classifying “abandoned” as a home where mortgage or tax payments are overdue by at least 90 days, or a home that has received a code violation that makes the property uninhabitable and no remedial action has been taken to bring it up to code for 90 days.