About the Independent Foreclosure Review Settlement
Just about a month ago, 4.2 million formerly distressed borrowers received small postcards in the mail stating that their settlement check would be coming soon. That’s the settlement coming from the Attorney General (by means of its paying agent, Rust Consulting) as part of the Independent Foreclosure Review.
Postcards from Rust Consulting have created a national frenzy as 4.2 million borrowers clamor to find out when they will be getting their checks and how much they will receive. Just last week, the breakdown information became available, and it appears that approximately 2.4 million formerly distressed borrowers will probably not be able to buy more than a steak dinner with their new found fortune.
What Is Independent Foreclosure Review?
In April of 2011, the Federal Reserve Board issued enforcement actions against four large mortgage servicers (GMAC Mortgage, HSBC Finance Corporation, SunTrust Mortgage, and EMC Mortgage Corporation). Because of this, these four servicers were required to hire independent consultants to review foreclosures that were initiated, pending, or completed during 2009 or 2010. The reason for this review was to determine whether borrowers suffered any financial harm directly resulting from errors, misrepresentations, or other anomalies that may have occurred during the foreclosure process. In addition to these four servicers, a number of other servicers supervised by the Office of the Comptroller of the Currency (OCC) were also required to conduct independent reviews.
In order to initiate the review process, a total of 13 mortgage servicers sent solicitation letters to 4.2 million potential victims of robo-signing and other foreclosure-related (and potentially fraudulent) matters. These letters provided homeowners with the opportunity to request an independent review of their foreclosure process (a.k.a. Independent Foreclosure Review). If the review found that financial injury occurred as a result of errors, misrepresentations, or other deficiencies in the servicer’s foreclosure process, the customer might receive compensation or another remedy.
The deadline to request the independent review was December 31, 2012.
Payments to Eligible Borrowers Began April 12, 2013
According to information available on both the Federal Reserve Board and the Office of the Comptroller of Currency websites, some payments went out in the mail as early as April 12, 2013.
In an announcement on the OCC website that came on April 9, 2013, the following disbursement information is provided:
Checks will be sent in several waves beginning with 1.4 million checks on April 12. The final wave is expected in mid-July 2013. More than 90 percent of the total payments to borrowers at those 11 servicers are expected to have been sent by the end of April. Information about payments to borrowers whose mortgages were serviced by Morgan Stanley and Goldman Sachs will be published by the Federal Reserve Board soon.
In most cases, borrowers will receive a letter with an enclosed check sent by the Paying Agent—Rust Consulting, Inc. Some borrowers may receive letters from Rust requesting additional information needed to process their payments.
How Much Will Your Independent Foreclosure Review Check Be?
Borrowers will receive anywhere from $300 all the way up to $125,000 depending upon their perceived financial harm by the events surrounding their foreclosure activity. The Independent Foreclosure Review Disbursement Breakdown shows that 2.4 million borrowers will receive $300 and approximately 1300 borrowers will receive $125,000—the bulk of borrowers will receive $500 to $600 dollars.
How Were the Disbursements Determined?
The Independent Foreclosure Review Disbursement Breakdown has the lists of categories used to determine the remuneration. The categories vary greatly and include wrongdoing to servicemembers, wrongful foreclosures on borrowers not even in default, foreclosures during a forbearance period, and even successful completion of a loan modifications.
There seems to be a great deal of concern, and perhaps confusion, with respect to how the disbursement funds has been allocated. As pointed out by Paul Kiel of ProPublica, it’s a little hard to understand the differences in rationale between some of the payment types. The categories are broken down into types of servicer error and some servicer errors are more grievous than others. For example, if a borrower is denied a loan modification and lost his or her home to foreclosure (about 370,000 borrowers), this individual will receive $3,000 or $6,000, depending upon whether the borrower submitted a complaint. On the other hand, if a borrower applied for a modification, and the servicer made no decision and then foreclosed (about 196,000 borrowers), the payment would be between $400 and $800.
4.2 million wronged borrowers may be hoping for $125,000, yet it seems that borrowers waiting for disbursement checks better hope that they were victims of the “right” servicer error. Very few folks will be able to hang their hat on the opportunity to buy a new home with their Independent Foreclosure Review check.
Austin tops the list of best places to buy a home
When looking to buy a home, taking the long view is important before making such a huge investment – where are the best places to make that commitment?
Looking at the bigger picture
(REALUOSO.COM) – Let us first express that although we are completely biased about Texas (we’re headquartered here, I personally grew up here), the data is not – Texas is the best. That’s a scientific fact. There’s a running joke in Austin that if there is a list of “best places to [anything],” we’re on it, and the joke causes eye rolls instead of humility (we’re sore winners and sore losers in this town).
That said, SelfStorage.com dug into the data and determined that the top 12 places to buy a home are currently Texas and North Carolina (and Portland, I guess you’re okay too or whatever).
They examined the nerdiest of numbers from the compound annual growth rate in inflation-adjusted GDP to cost premium, affordability, taxes, job growth, and housing availability.
“Buying a house is a big decision and a big commitment,” the company notes. “Although U.S. home prices have risen in the long term, the last decade has shown that path is sometimes full of twists, turns, dizzying heights and steep, abrupt falls. Today, home prices are stabilizing and increasing in most areas of the U.S.”
Average age of houses on the rise, so is it now better or worse to buy new?
With aging housing in America, are first-time buyers better off buying new or existing homes? The average age of a home is rising, as is the price of new housing, so a shift could be upon us.
The average home age is higher than ever
(REALUOSO.COM) – In a survey from the Department of Housing and Urban Development American Housing Survey (AHS), the median age of homes in the United States was 35 years old. In Texas, homes are a bit younger with the median age between 19 – 29 years. The northeast has the oldest homes, with the median age between 50 – 61 years. In 1985, the median age of a home was only 23 years.
With more houses around 40 years old, the National Association of Realtors asserts that homeowners will have to undertake remodeling and renovation projects before selling unless the home is sold as-is, in which case the buyer will be responsible to update their new residence. Even homeowners who aren’t selling will need to consider remodeling for structural and aesthetic reasons.
Prices of new homes on the rise
Newer homes cost more than they used to. The price differential between new homes and older homes has increased from 10 percent traditionally to around 37 percent in 2014. This is due to rising construction costs, scarcity of lots, and a low inventory of new homes that doesn’t meet the demand.
Are Realtors the real loser in the fight between Zillow Group and Move, Inc.?
The last year has been one of dramatic and rapid change in the real estate tech sector, but Realtors are vulnerable, and we’re worried.
Why Realtors are vulnerable to these rapid changes
(REALUOSO.COM) – Corporate warfare demands headlines in every industry, but in the real estate tech sector, a storm has been brewing for years, which in the last year has come to a head. Zillow Group and Move, Inc. (which is owned by News Corp. and operates ListHub, Realtor.com, TopProducer, and other brands) have been competing for a decade now, and the race has appeared to be an aggressive yet polite boxing match. Last year, the gloves came off, and now, they’ve drawn swords and appear to want blood.
Note: We’ll let you decide which company plays which role in the image above.
So how then, does any of this make Realtors the victims of this sword fight? Let’s get everyone up to speed, and then we’ll discuss.
1. Zillow poaches top talent, Move/NAR sues
It all started last year when the gloves came off – Move’s Chief Strategy Officer (who was also Realtor.com’s President), Errol Samuelson jumped ship and joined Zillow on the same day he phoned in his resignation without notice. He left under questionable circumstances, which has led to a lengthy legal battle (wherein Move and NAR have sued Zillow and Samuelson over allegations of breach of contract, breach of fiduciary duty, and misappropriation of trade secrets), with the most recent motion being for contempt, which a judge granted to Move/NAR after the mysterious “Samuelson Memo” surfaced.
Salt was added to the wound when Move awarded Samuelson’s job to Move veteran, Curt Beardsley, who days after Samuelson left, also defected to Zillow. This too led to a lawsuit, with allegations including breach of contract, violation of corporations code, illegal dumping of stocks, and Move has sought restitution. These charges are extremely serious, but demanded slightly less attention than the ongoing lawsuit against Samuelson.
2. Two major media brands emerge
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Ladies and gentlemen, the U.S. National Anthem
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