REPORT: D.O.J. - Supports Mediation

Written by DSNews: Carrie Bay | January 11, 2012

The U.S. Department of Justice released a 69-page report Tuesday on a foreclosure intervention method that is becoming increasingly popular across the country – mediation.

The paper, titled Foreclosure Mediation: Emerging Research and Evaluation Practices, draws from a March 7, 2011 workshop put on by the Justice Department’s Access to Justice Initiative, a panel established in 2010 which works to ensure the U.S. justice system remains accessible and fair to all, irrespective of wealth and status.

The workshop was attended by dozens of foreclosure mediation program stakeholders and researchers. Tuesday’s report summarizes the workshop proceedings and shares recent research and resources for foreclosure mediation.

“The loss of a home to foreclosure can be devastating to a family,” said Mark Childress, who heads the Access to Justice Initiative as senior counselor.

“The report released today compiles the best available research on foreclosure mediation programs and serves as an important resource for existing programs around the country as well as for jurisdictions attempting to establish foreclosure mediation programs,” Childress said. “Well-structured foreclosure mediation programs may offer the millions of families at risk of foreclosure a way to stay in their homes.” Foreclosure mediation programs are viewed by policymakers and consumer advocates as a means to bring borrowers and their lenders together to work out an alternative to foreclosure. But some industry participants contend that mandated mediation programs only delay the inevitable.

Florida’s Supreme Court terminated its state-wide mediation program last month, citing the program’s lack of success in resolving foreclosure disputes between lenders and borrowers. The court-run mediation program had been operational for two years, but the Supreme Court said after reviewing the files, it “determined it cannot justify continuation of the program.”

As the Justice Department suggests, there has not been a lot of research or analysis conducted to assess the effectiveness of foreclosure mediation. Officials say the department’s March 2011 workshop was designed to define best practices for evaluating foreclosure mediation programs and to strengthen relationships among program administrators, the lending community, and government agencies.

One of the key findings that emerged from the workshop is that the “federal government should take an active role, both in helping to develop program and evaluation guidelines and in providing resources for mediation programs and research,” according to DOJ officials.

The full report, Foreclosure Mediation: Emerging Research and Evaluation Practices, is available for download at justice.gov/atj/foreclosure-mediation.pdf.

ALERT: Fannie Mae CEO to Resign

Written by SwingSign Corporation | January 10, 2012

ALERT: Unemployment Falls to 8.5%

Written by SwingSign Corporation | January 06, 2012

The nation's unemployment rate continues to trend down. It slipped to 8.5 percent during the month of December as the economy added 200,000 new jobs, the U.S. Department of Labor said Friday morning. December marks the sixth consecutive month of 100,000-plus job gains and the first such stretch employers have been able to string together since 2006. Over the 2011 calendar year, nonfarm payroll employment rose by 1.6 million.

FHA OK's 'Flipping' Through 2012

Written by DSNews: Carrie Bay | January 05, 2012

The Federal Housing Administration (FHA) is extending the temporary waiver of its property anti-flipping rule through the end of 2012.

FHA rules typically prohibit insuring a mortgage on a home owned by the seller for less than 90 days. In 2010, however, the agency waived this regulation, and later extended the waiver through 2011.

The new extension announced late last week will permit buyers to continue to use FHA-insured financing to purchase HUD-owned and bank-owned properties, no matter how long the homeowner has held the title, through December 31, 2012. FHA says the waiver will allow homes to resell as quickly as possible, helping to stabilize real estate prices and revitalize communities experiencing high foreclosure activity.

“This extension is intended to accelerate the resale of foreclosed properties in neighborhoods struggling to overcome the possible effects of abandonment and blight,” said Carol Galante, FHA’s Acting Commissioner. “FHA remains a critical source of mortgage financing and stability and we must make every effort that to promote recovery in every responsible way we can.” According to FHA, the waiver contains strict conditions and guidelines to prevent the predatory practice of property flipping, in which properties are quickly resold at inflated prices to unsuspecting borrowers.

Among these conditions, all transactions must be arms-length, with no link between the buying and selling parties.

In addition, in cases in which the sales price of the property is 20 percent or more above the seller’s acquisition cost, the waiver will apply only if the lender meets specific conditions, and documents the justification for the increase in value.

FHA’s property-flipping waiver is limited to forward mortgages, and does not apply to the agency’s Home Equity Conversion Mortgage (HECM) for purchase program.

Since the original waiver went into effect on February 1, 2010, FHA has insured nearly 42,000 mortgages worth more than $7 billion on properties resold within 90 days of acquisition.

The agency says its own research has found that in today’s market, acquiring, rehabilitating, and reselling foreclosed properties to prospective homeowners often takes less than 90 days.

As a result, FHA says prohibiting the use of its mortgage insurance for a subsequent resale within 90 days would adversely impact the willingness of sellers to consider offers from potential FHA buyers, namely because they would be required to cover holding costs and the risk of vandalism that comes with allowing a property to sit vacant over a 90-day period of time.