FORECLOSED HOMEOWNER HAS CAUSE TO SUE BANK FOR FRAUD

This recent California appeals court ruling has established precedent that needs to be watched and followed. This is very important to all homeowners out there in trouble with their lender. A California appeals court ruled that a former homeowner's lawsuit against U.S. Bank (USB: 27.52 -0.61%) for fraud may continue after the bank allegedly reneged on a promise to negotiate a mortgage modification, opening the door for claims from potentially thousands of similarly situated troubled borrowers in the Golden State.

While the court ruled that a case for fraud–which includes claims for damages–could proceed, it also ruled that the homeowner, Claudia Jacqueline Aceves, lacked sufficient cause to get her home back after the foreclosure sale.

What could become a landmark foreclosure ruling appears to be both a win and a loss, for mortgage servicers and foreclosure defense attorneys alike. Mortgage servicers prevailed on issues of alleged defects in the foreclosure process, with the court ruling that none of the Aceves allegations of irregularities "would permit the trial court to void the deed of sale or otherwise invalidate the foreclosure." Aceves had claimed, for example, that the notice of default was defective and therefore void, a claim the court rejected outright. "Absent prejudice, the error does not warrant relief," according to the ruling.

The court spent most of its 15-page ruling, however, discussing how U.S. Bank had purportedly promised to negotiate a potential loan modification if the homeowner agreed to allow the bank to lift a bankruptcy stay, which had protected the home from seizure. Yet, when the homeowner agreed and attempted to begin negotiation on a loan modification, the bank allegedly opted to foreclose without negotiating.

"We conclude plaintiff could have reasonably relied on the bank’s promise to work on a loan reinstatement and modification if she did not seek relief under Ch. 13; the promise was sufficiently concrete to be enforceable; and plaintiff’s decision to forgo Ch. 13 relief was detrimental because it allowed the bank to foreclose on the property," according to the ruling, filed Jan. 27, in the Court of Appeal of the State of California’s second appellate district.

In April 2006, Aceves took out a 30-year, $845,000 loan at a rate of 6.35% with original payments about $4,860 per month. After two years, the rate became adjustable. In January 2008, Aceves could no longer make her payments, and a notice of default was filed in March of that year. Shortly thereafter, Aceves filed for Chapter 7 bankruptcy protection, which automatically stops foreclosure proceedings.

Aceves contacted U.S. Bank, which told her it "would work with her on a mortgage reinstatement and loan modification" as soon as the loan was out of bankruptcy, according to the ruling. Aceves said her intention was to convert the Chapter 7 case to Chapter 13, which allows a homeowner in default to reinstate original loan payments, pay the arrears over time and avoid foreclosure. U.S. Bank, meanwhile, filed a motion to lift the bankruptcy stay.

In November 2008, Aceves’ bankruptcy attorney received a letter from the attorney for the loan's servicer, American Home Mortgage Servicing. The letter asked for an agreement in writing to allow American Home to contact Aceves to "explore loss mitigation possibilities." When Aceves contacted the servicer, she was told American Home would not speak to her before the motion to lift the bankruptcy stay was granted. Aceves decided not to pursue Chapter 13 bankruptcy protection based on U.S. Bank’s promise to reinstate and modify the loan, according to the appellate court.

On Dec. 4, 2008, the bankruptcy stay was lifted. Five days later, without contacting Aceves, U.S. Bank scheduled the home for a Jan. 9, 2009, foreclosure sale. Aceves sent documents to American Home on Dec. 10 and was told on Dec. 23 that a negotiator would contact her on or before Jan. 13 (four days after the scheduled auction.). On Dec. 29, a negotiator called and said to forget about the foreclosure because the "file" had been "discharged" in bankruptcy. On Jan. 2, the negotiator called again and said American Home was incorrect and that it would reconsider.

On Jan. 8, the day before the scheduled sale, the negotiator said the loan's new balance was $965,926, the new monthly payments would be $7,200 and a $6,500 deposit was due immediately. The negotiator refused to put the terms in writing, according to the appellate court's finding. Aceves did not accept the offer, and the house was subsequently sold back to U.S. Bank the next day.

"U.S. Bank never intended to work with Aceves to reinstate and modify the loan," the latest ruling said. "The bank so promised only to convince Aceves to forgo further bankruptcy proceedings, thereby permitting the bank to lift the automatic stay and foreclose on the property."

During an original lower court case, U.S. Bank had prevailed with the court, which ruled there was no promissory fraud involved. Aceves filed the appeal spanning issues of standing as well as reiterating a claim for promissory fraud, on which the appellate court based its ruling.

For its part, U.S. Bank alleged that Aceves' bankruptcy case was filed in "bad faith."

U.S. Bank referred comments to the servicer, American Home Mortgage Servicing. A spokeswoman for American Home Mortgage Servicing said the company is still reviewing the court case and has no comment at this time.

Write to Kerry Curry.

Keller Williams Realty Announces Numbers for 2010, Continued Growth During Real Estate Downturn

Company Launches eEdge Industry’s First Lead-To-Close Business Solution Today

AUSTIN, TEXAS (February 21, 2011)–Keller Williams Realty reported today at its national convention that it ended 2010 with 79,315 associates, 701 market centers (offices), and associate profit share up 7.2 percent, with its agents receiving $34.6 million dollars back. Since the inception of the profit sharing program, the company has given back over $304 million in earnings to its agents. Additionally, CEO Mark Willis shared in his annual State of the Company address to more than 8,000 convention attendees that, since the real estate market’s sharp downturn in 2005, the company has grown 30 percent in agents, 40 percent in market centers, 21 percent in closed units and 11 percent in closed GCI.

“Keller Williams agents have outpaced the market in every way, through productivity and profit share. As a company, we are better off now than we were before the shift–and we have our associates to thank for that," said Willis.

The growth of the company can be attributed to the growth of its agents. Agent productivity continued to rise with units closed up 6 percent from December 2009 to 2010, while comparably, the NAR membership as a whole went down in closed units 4.8 percent. Overall the company’s associates saw productivity year on year percentage increases across the board in listings taken (up 13 percent), contracts closed volume (up 9 percent) and contracts closed units (6 percent).

“These numbers are the most important to us because they are proof that our agents are succeeding, making more money and growing their businesses. They are truly breaking through," Willis added.

Willis also did the honors of “turning on" the industry’s firstcomplete lead-to-close business solution, eEdge, during his address. This unique tool is now available to every Keller Williams associate at a fraction of the cost they would normally pay with functionality to build their leads, database and sales. Additionally, with the company-wide paperless transaction system, consumers can expect a faster, more seamless closing process.

“We want to thank our associates and their unwavering commitment to the growth of their businesses and leading the way in the industry in technology," said Mary Tennant, president and COO of Keller Williams Realty. “Keller Williams Realty wouldn’t be forging ahead with such an important product like eEdge without the support of our agents and their vote!"

In addition to reporting positive growth and technological advancement, the company received many accolades in 2010 including:
· Entrepreneur magazine, No. 1 ranked real estate franchise on the 31st Annual Franchise 500 list
· J.D. Power and Associates, highest in overall satisfaction ratings from home buyers among the largest full-service real estate firms for the third year in a row
· Inman News, Co-Founder and Chairman of the Board Gary Keller named one of the 100 Most Influential Leaders in Real Estate
· Training Magazine, highest ranking real estate franchise on the annual Training Top 125, #47 Overall


About Keller Williams Realty, Inc.:
Founded in 1983, Keller Williams Realty Inc. is the third-largest real estate franchise operation in the United States, with 690 offices and almost 80,000 associates in the United States and Canada. The company, which began franchising in 1990, has an agent-centric culture that emphasizes access to leading-edge education and promotes an economic model that rewards associates as stakeholders and partners. The company also provides specialized agents in luxury homes and commercial real estate properties. For more information, or to search for homes for sale visit Keller Williams Realty online at (www.kw.com).

CALHFA ANNOUNCES FULL IMPLEMENTATION OF $2 BILLION EFFORT TO ASSIST HOMEOWNERS STRUGGLING TO REMAIN IN HOMES

SACRAMENTO – The California Housing Finance Agency today announced the full
implementation of four programs to fight the ongoing foreclosure crisis in California, with the primary goal to help families remain in their homes.
The programs, under the umbrella title of Keep Your Home California, are federally funded as part of the U.S. Treasury Department’s Hardest Hit fund, and are aimed at helping low and moderate income homeowners struggling to pay their mortgages amid the worst real estate crisis in decades.

“Our goal is to get the very most out of these federal dollars to assist California families,” said Steven Spears, Executive Director of CalHFA. “With families struggling through a number of financial hardships and the disruption in the real estate market, these programs will help those in need while stabilizing neighborhoods and communities severely impacted by foreclosures.”

California received a total of nearly $2 billion through the Hardest Hit fund. After consulting with community leaders throughout the state, four programs were created to assist California families. Mr. Spears said that all four programs are intended to help avoid foreclosure: three offer several forms of mortgage assistance, as well as a separate program that will provide transition assistance to borrowers who execute a short sale or deed in lieu transaction.

All of the programs are designed specifically for low or moderate income homeowners who are either unemployed or are facing another financial hardship, have fallen behind on their mortgages and owe significantly more than the value of their homes.
“In partnership with the federal government, Keep Your Home California is one more step we are taking to help low and moderate income California families who are struggling to remain in their homes,” said Assemblymember Norma Torres, Chair of Assembly Committee on Housing and Community Development. “No one program will solve the foreclosure crisis affecting our state, but together we hope to make a difference for as many families as possible.” "The foreclosure crisis continues to hinder our potential for economic recovery, and strips stability from our communities,” said Assemblymember Mike Eng, Chair of the Assembly Committee on Banking and Finance. “I'm pleased that the Keep Home California program is
ramping up to address these challenges and, as the program moves forward, I will continue to monitor its progress to ensure that it's an all around success at assisting California borrowers."

Specifically, the Keep Your Home California programs provide:
• Mortgage assistance of up to $3,000 per month for unemployed homeowners who are in
imminent danger of defaulting on their home loans.
• Funds to help homeowners who have fallen behind on their mortgage payments due to a
temporary change in a household circumstance. The program will provide up to $15,000
per household to reinstate mortgages to prevent foreclosures.
• Money to reduce the principal owed on a mortgage for a home where the low or
moderate income homeowner is facing a serious financial hardship and owes
significantly more than the home is worth. The program requires lenders to match any
assistance provided by the Keep Your Home California program.

A full description of the programs can be found at www.KeepYourHomeCalifornia.org
How to Apply: The programs will be limited to homeowners who meet a number of criteria, including owning and occupying the home as their primary residence, meeting income limits and facing a financial hardship. Homeowners who consummated a “cash-out” refinance are not eligible for Keep Your Home California programs.

To apply for the assistance, a homeowner should contact the Keep Your Home California call center toll-free at 888.954.KEEP(5337) or their mortgage servicer – the company to which the borrower sends monthly mortgage payments. Each of the mortgage assistance programs requires the participation of the mortgage servicer.
As of February 9, the following servicers are participating in all four Keep Your Home California programs:
 GMAC
 Guild Mortgage
 California Housing Finance Agency
 California Department of Veterans Affairs

Other servicers, including Bank of America, JPMorgan Chase, CitiMortgage and Wells Fargo are currently participating in some, but not all programs at this time. The list of participating servicers is expected to expand in the coming weeks. Full details regarding servicer participation can be found at www.KeepYourHomeCalifornia.org.

“The problems of unemployment and the unprecedented disruption in our real estate markets have impacted so many families,” Mr. Spears said. “These programs are designed to move homeowners who have been told ‘no’ into the ‘yes’ category and qualify them for a mortgage they can afford over the long term." Borrowers with questions about the program may call Keep Your Home California toll-free at
888-954-KEEP(5337).

THE END OF FANNIE AND FREDDIE

The White House outlined last Friday its plans to begin shrinking their support of both of the government sponsored entities (GSEs) Fannie Mae and Freddie Mac. While the process could take several years, the effects will be felt in coming months.

The government took over both GSEs in September of 2008 when the financial crisis took place. Both agencies have been in receivership which has cost tax payers an estimated $134 billion so far. If the housing market was not so fragile the timeframes would be much quicker to dissolve the two agencies.

Last year, Fannie, Freddie and FHA guaranteed 95% of all home loans. The role these government agencies have played has been crucial to the lender markets over the last 40 years. There would not have been a housing market the last two years had these agencies been dissolved as is the plan going forward. The goal is to have the private sector originate mortgages and securitize them without any government backing.

The proposed plan by the administration is to allow the maximum loan limits to fall to $625,500 from $729,750 beginning October 1st, 2011. The plan is to increase minimum down payments to 10% on all loans eligible for purchase by Fannie and Freddie. In addition, insurance premiums charged on new loans backed by the Federal Housing Administration (FHA) will also go up.

Waiting Period Requirements To Purchase A Home Again...

With all of the craziness in the real estate market, one question that continually arises is; "if I do this ... how long until I can purchase another home". Here are the current answers to this question based upon the type of loan you have/had.

The waiting periods in order to qualify for a home loan after a foreclosure, deed-in-lieu, short sale and bankruptcy varies both by the government agency purchasing or insuring the loan as well as the dollar amount of the loan.

Federal Housing Administration (FHA)

1) Foreclosure is 3 years
2) Deed-in Lieu is 3 years
3) Short Sale is 3 years
4) Bankruptcy is 2 years

Veterans Administration (VA)

1) Foreclosure is 2 years
2) Deed-in Lieu is 2 years
3) Short Sale is 2 years
4) Bankruptcy is 2 years

Conventional Conforming (FNMA/FHLMC)

1) Foreclosure is 7 years
2) Deed-in-Lieu is 4 years < 80% LTV and 5 years > 80% LTV for primary residences. 7 years for second homes and investment properties regardless of LTV.
3) Short Sales is 2 years < 80% LTV and 5 years > 80% LTV and 7 years > 90% LTV
4) Bankruptcy is 4 years

Conventional Non-Conforming (JUMBO)

1) Foreclosure is 7 years
2) Deed-in-Lieu is 7 years
3) Short Sale is 7 years
4) Bankruptcy is 7 years

Hope this information helps. Call me with any questions...