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DSNews.com – BofA Agrees to Pay $108 Million to Overcharged Countrywide
Borrowers Representing one of the largest judgments imposed in a Federal Trade Commission (FTC) case, two Countrywide mortgage servicing companies, now part of Bank of America Home Loans, have been ordered to pay $108 million to settle charges that they collected excessive fees from cash-strapped borrowers who were struggling to keep their homes. In a statement released Monday, the FTC said the $108 million settlement will be used to reimburse overcharged homeowners whose loans were serviced by Countrywide before it was acquired by North Carolina-based Bank of America in July 2008. Bank of America said it agreed to the settlement “to avoid the expense and distraction associated with litigating the case.” According to the FTC, Countrywide used unlawful practices in servicing homeowners’ mortgages. The company allegedly charged excessive fees for default-related services, made claims about amounts owed by homeowners in bankruptcy that were false or couldn’t be backed up, and didn’t tell people going through bankruptcy when new fees or charges were being added to their loans. Going forward, borrowers in Chapter 13 bankruptcy must be sent a monthly notice with information about what amounts are owed – including any fees assessed during the prior month. Additionally, the defendants must implement a data integrity program to ensure the accuracy and completeness of the data they use to service loans in Chapter 13 bankruptcy.
Economic Recovery Losing Shape?
The latest jobs report spooked investors Friday because it showed that the labor market isn’t bouncing back as rapidly as it was predicted. Some say the dollar’s strength is the reason for the sharp drop in oil and copper prices. But others worry it’s a sign of weak global demand. It looks like the V-shaped recovery is just a mythical beast. Some economists worry that this could be a double-dip recession, and it could take longer to recover. The job growth outside of federal government was anemic though there are reports of positive signs in the job market. Bill Cheney, chief economist with John Hancock Financial Services in Boston, said that the market may have been making too much over one monthly report and ignoring the general trend.
This was the fifth month of job growth after all and it may make sense for companies to slow down the pace of new hires in light of the recent market volatility and concerns about Europe. There are plenty of signs that the U.S. economy, and the global economy for that matter, are still in precarious shape, as the prices of oil, copper and commodities prices continue to fall as the dollar gains ground against the euro, kicking off a worrisome trend. Michael Pento, senior market strategist with Delta Global Advisors in Huntington Beach, Calif said, “If there was truly a lasting global recovery, these commodities would be rising. The only logical conclusion is that we are having a global slowdown, and we are all interconnected.”
Bernanke: Recovery ‘won’t feel terrific’
Federal Reserve Chairman Ben Bernanke says the recovery, “won’t feel terrific because it’s not going to be fast enough to put back 8 million people who lost their jobs within a few years. It’s going to take a while.” In an interview with veteran TV journalist Sam Donaldson, in Washington, Bernanke dodged a question about whether he fears a double-dip recession, saying “nobody knows with any certainty.” He warned the unemployment rate will remain high “for a while,” explaining, “that means that a lot of people are going to be under financial stress.” The Fed chairman said he couldn’t predict when the Fed would raise interest rates next and that it depends on the state of the economy, unemployment rates and inflation trends.
Bernanke talked about the need for U.S. leaders to take control of the nation’s deficits over the medium term, some three to six years from now, in a way “that will allow us to bring our fiscal house in order over a long period of time.” But when asked if the nation has such a plan, or if he’s seen one, Bernanke said: “No. Not yet. I don’t.” While sharing his views, he said that he wouldn’t give recommendations as to whether Congress should raise taxes to cut deficits and he didn’t want a blanket ban that would prohibit banks from being able to legitimately hedge risk in some cases, a comment on the “Volcker Plan.” He said he favors the Senate version which gives regulators, including himself, the power to figure out when a bank is shedding risk as a “legitimate customer service” and when is it “gambling with the banks’ capital — ultimately with taxpayers as a backstop,” and that it can be made to work.
What commercial real estate crash?
Investors have now spent years dodging disaster in one area of the markets, only to find their investments coming to a bad end elsewhere. Oddly, commercial real estate(CRE) has survived since 2007. For much of 2008 and 2009 CRE was awash in red ink, and yet it hangs on. Richard LeFrak, chairman of the LeFrak Organization, said at the Milken Institute Global Conference in April, “The failure that we were all anticipating in the commercial real estate market, it kind of didn’t happen. We blinked, it went away.” The only question now is how long it can keep up the sprint, while the sector is haunted by $1.4 trillion in loan maturities looming large, three years over the horizon. Some experts predict foreclosures, loan defaults and a national crisis of disastrous proportions.
A few other investors in commercial properties and buyers of commercial mortgage-backed securities believe that the commercial real estate market will continue to suffer until it hits a bottom, but it will never crash in the way that the residential market collapsed. But the bigger danger to the capital markets — and to banks — are speculative commercial loans, like those in construction and land loans. Those aren’t backed by firm assets and are a key part of the reason that many smaller banks have failed in recent years. It is these loans that could yet bring a reckoning to CRE. If the CRE can escape the same kind of crash that took down residential real estate, then we have a case study in how investors and government can prevent a crash before it happens. If it doesn’t work, however, the economy could be hit again at a moment when it is least able to bear the punch.
Many March, April Pending Home Sales May Never Close: Economist
The jump in pending home sales seen in April and even March — ahead of the first-time homebuyer tax credit expiration on April 30 — may not necessarily translate into sales, according to outlook and commentary services firm Econoday. By extension, the firm said, the “unexpected strength” in pending sales during recent months may not take as many homes off the market as initially suggested, shared Econoday senior economist Mark Rogers in recent commentary.
The possibility that many pending sales never become final, taken alongside recent plummets in purchase mortgage applications measured by the Mortgage Bankers Association, indicates home sales are “almost certain to slump in May,” Rogers added. Pending sales grew 6% in April, following a 7.1% spike in March, according to the National Association of Realtors. Year-on-year, pending home sales are up 22.4% from April 2009.
DSNews.com – BofA Agrees to Pay $108 Million to Overcharged Countrywide Borrowers
Representing one of the largest judgments imposed in a Federal Trade Commission (FTC) case, two Countrywide mortgage servicing companies, now part of Bank of America Home Loans, have been ordered to pay $108 million to settle charges that they collected excessive fees from cash-strapped borrowers who were struggling to keep their homes. In a statement released Monday, the FTC said the $108 million settlement will be used to reimburse overcharged homeowners whose loans were serviced by Countrywide before it was acquired by North Carolina-based Bank of America in July 2008. Bank of America said it agreed to the settlement “to avoid the expense and distraction associated with litigating the case.” According to the FTC, Countrywide used unlawful practices in servicing homeowners’ mortgages. The company allegedly charged excessive fees for default-related services, made claims about amounts owed by homeowners in bankruptcy that were false or couldn’t be backed up, and didn’t tell people going through bankruptcy when new fees or charges were being added to their loans.
Going forward, borrowers in Chapter 13 bankruptcy must be sent a monthly notice with information about what amounts are owed – including any fees assessed during the prior month. Additionally, the defendants must implement a data integrity program to ensure the accuracy and completeness of the data they use to service loans in Chapter 13 bankruptcy.
Now on to our real estate education section…
Lessons Learned from Greece 2010
The recent melt-down in Greece may serve as a strong warning for the UK and the USA according to experts like Marc Faber and legendary investor Jim Rogers. For those that are unfamiliar with Greece, it is a small island nation that represents less than 10 percent of the EU economy (roughly 6 percent in fact).
How does a relatively insignificant economy suddenly strike fear in the hearts of nations throughout the world? Simple; Greece has been acting like a major investment for larger nations and essentially funding their own infrastructure based upon the exchange of funding rather than growth or taxation (sound familiar?).
The situation in Greece mirrors the situation taking place within the financial sectors of the United States; as one investment is marked down, related parties are forced to reassign new (lower) values to their own assets resulting in a domino effect throughout the banking industry. What began in the business sector has now reached national levels as nations which invested in Greece are now forced to reexamine their own holdings.
Wondering how this relates to real estate? Greece has many valuable lessons for average Americans specifically due to their reduced work force, aging demographics and high cost of social programs. Fewer workers, a declining manufacturing industry and over-reliance upon outside investments by other nations worked great…while it lasted. As we have seen in the media, once the money ran out, Greece has been forced to take drastic measures such as reducing benefits and increasing taxation. Citizen took to the streets in protest but the grim reality is the money must come from somewhere.
The situation in Greece is especially noteworthy due to the impact upon seniors and others in an aging population. Much like the United States, Greece has a growing population of retirees and elderly citizens. Not only do they use a disproportionate amount of medical care but retirement funding and other benefits have come to be expected as a primary source of security in old age. Unfortunately, much of that has now come to an end as foreign investments dried up and the nation of Greece is unable to afford the care and benefits previously enjoyed by the elderly.
Can the same thing happen in the United States? Many people think so.
Historically retirement earnings have been especially sensitive to disruption during times of economic and social unrest. For example, Argentina “wiped out” the private retirement funds for most of their citizens leaving those that had relied upon private pensions with little recourse. Those in Greece are facing a similar situation during a period of time when they can least afford it.
Short sale investors and others interested in real estate should recognize the opportunity to purchase income generating real estate in order to create their own ‘safety net” later in life. Although the majority of people don’t expect government sponsored Social Security benefits to be there by the time they retire…what about 401k, IRA’s or other private pension plans?
What would happen if the United States decided to adopt the strategy of Argentina either by privatizing or taxing away the income? Perhaps the situation in Greece is repeated years later. Whatever the outcome, one thing is certain…to date, the only safe and reliable method to guarantee a lifelong income in old age has been real estate.
See you at the top!
Chris McLaughlin
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Copyright Loss Mitigation Institute LLC 2009.
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About the author:
Chris McLaughlin is widely known as America’s top
Real Estate Attorney and Investment Consultant.
* As the top Florida foreclosure and pre-
foreclosure expert, he oversees more than
100 short sale & REO closings each month
* Long-time authority on real estate investing
and rapid reselling of distressed homes. Owns
portfolio of nearly 100 high-value, high-profit
properties
* Owner of one of Florida’s largest Real Estate firms,
running 4 different offices, supporting over
400 agents, uniquely positioning him to help
thousands of investors make money in the
biggest market opportunity ever!
* Highly sought-after speaker, consultant, and
seminar leader for current trends and hot topics
in Real Estate Investing, Entrepreneurship, and
Wealth Building
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