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Positive out look that the economy is in repair by the numbers revealed in Equifax’s latest monthly National Consumer Credit Trends Report. Overall, the report shows that between July 2011 and July 2012 there were year over year dollar base declines.
“Consumers continue to improve their credit management, through higher monthly payments on card accounts, refinancing of existing mortgage debt at lower rates, and lower delinquency ratespretty much across the board,” said Equifax Chief Economist Amy Crews Cutts. “Growth in total credit is consistent with the overall improvement in the economy – slow, but steady – with the exception of mortgage debt which is declining overall.”
Sixty day plus delinquency rates down 35% for Auto Loans, 23% Consumer finance, 21% Bank credit cards. First mortgage severe derogatory moving to REO is declined 17% , first mortgage 30 day plus delinquency declined 15% with home equity revolving 30 day plus delinquency declined 7%
“The decline in mortgage debt is due to loans converting to real estate owned at the end of the foreclosure process, homeowners paying down debt faster through cash-in refinancing, or shortening of the mortgage term as well as borrowers curtailing the debt by adding a bit extra to their payment each month, Crews Cutts added.
In addition to improving delinquency rate is the rise of new credit which increased 13% to $348 billion in May 2012 from $305 billion a year earlier. New bank credit card increased 21% to $72.9 billion through May 2012 from a May 2011.
“Student loans is one area of lending not affected by tighter underwriting standards since the start of the recession,” said Crews Cutts. “The investment in higher education pays off over a person’s lifetime, while the tuition cost has to be paid up-front, leading to big demand for student loans.
But if the graduate does not find a job right away there will be much difficulty when the first installment payment is due once they graduate.
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A video testimony from senior Samsung executives made it “absolutely” clear to the jury that the infringement was on purpose said the Jury Foreman on the Apple vs Samsung case, Velvin Hogan, 67. He said Apple was very persuading that they needed to protect their innovation.
“We didn’t want to give carte blanche to a company, by any name, to infringe someone else’s intellectual property,” Hogan told Reuters a day after the verdict. Yet, at the same time he explain the jury did not agree with the damages that Apple was asking for which was $2.5 billion to $2.75 billion.
“We wanted to make sure the message we sent was not just a slap on the wrist,” Hogan said. “We wanted to make sure it was sufficiently high to be painful, but not unreasonable.”
Hogan an engineer, and a patent holder, explained that deliberations were done in less time than was expected including answering 600 questions as required because of the engineering and legal experiences of the jurors which helped with the complex issues. And they had a system and only reviewed what was relevant. Once they determined which patents were valid they went through each product one by one .
“This is a huge victory for Apple,” Mark Lemley, a Stanford Law School professor, said in an e-mail. “The verdict is just large enough to be the largest surviving patent verdict in history.”
“Even more important is the injunction Judge Koh is likely to issue,” Lemley said after yesterday’s verdict. “The real question is whether this is enough to derail the momentum the Android ecosystem has gained in the marketplace.”
“All of us feel we were fair, that we can stand by our verdict and that we have a clear conscience in that we were totally not biased one way or another,” Hogan said.
The new Shortsale guidelines from Fannie Mae and Freddie Mac will make it easier for sellers who previously did not qualify and eliminate previous problems in the past including remedy for the 2nd lienholder and not having to prove hardships.
“Short sales have become an increasingly important tool in preventing foreclosures and stabilizing communities,” said Leslie Peeler, senior vice president, National Servicing Organization, Fannie Mae. “We want to help as many homeowners avoid foreclosure as possible. It is vital that servicers, junior lien holders and mortgage insurers step up to the plate with us. These new guidelines will open doors to help more homeowners qualify for short sales, remove barriers to completing short sales, and make the process more efficient for homeowners and servicers.”
Shortsale process is now open to non default borrowers who may face hardship death of a borrower or co-borrower, divorce or legal separation, illness or disability or a distant employment transfer starting November 1, 2012 when the new short sale guidelines making it easier for eligibility.
“The streamlined short sales process will definitely help homeowners,” says David Liniger, Re/Max International chairman and co-founder.
“A lot of sellers and their Realtors have not been able to sort out the problems with short sales and have given up on the process because, even after sending in the correct paperwork, they have sometimes waited three or four months for their lender to respond,” Liniger says.
Servicemembers who need to relocate qualify for a shortsale. They no longer have to pay remaining deficiency after a short sale and will automatically be qualified for short sale even if they are current in payments. Provisions were also created for military personnel with Permanent Change of Station (PCS) orders.
One major barrier that is also being addressed is the issue with second lien holders. The second lien holder have caused a substantial percentage of short sales failures. To prevent second lien holders from stalling the short sale process, the GSEs will offer up to $6,000.
In addition, all servicers will have the authority to approve and complete short sales that follow the requirements without first going to the GSEs for approval. And the GSEs will also waive their right to pursue deficiency judgments.
“These new guidelines demonstrate FHFA’s and Fannie Mae’s and Freddie Mac’s commitment to enhancing and streamlining processes to avoid foreclosure and stabilize communities,” said FHFA Acting Director Edward J. DeMarco in a statement. “The new standard short sale program will also provide relief to those underwater borrowers who need to relocate more than 50 miles for a job.”
Additional Relating Reading:
Switzerland’s Finance Minister Eveline Widmer-Schlumpf
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Swiss banks for years have avoided U.S. regulators in regards to helping wealthy Americans commit tax evasion. But in a world where banks are under major global scrutiny and investigation because of the Libor manipulation scandal, massive derivative trading losses, money laundering allegations and admissions, and banks participation in the crash of the credit and mortgage markets; U.S. regulators are taking action and banks are now having to answer for their violations.
Swiss banks are sacrificing their employees past and present by giving names to the U.S. authorities in connection alleged employee’s connection with setting up American accounts for tax evasion. Thousands of names are being given to federal regulators according to Douglas Hornung, a Geneva- based lawyer representing 40 current and former employees of HSBC Holdings Plc (HSBA)’s Swiss unit.
“The Federal Council had no right to grant permission for banks to send any information to a foreign authority,” said Marcel Niggli, a professor of law at the University of Fribourg.
“The companies know the risk of penalties in Switzerland is insignificant compared with the business risk in the U.S. It’s a cold-blooded action by the banks.”
The legality of this action is questionable and would violate rules of privacy although the risk of privacy violation consequences may worth the risk as compared loss of U.S. business for some banks.
“The tax dispute with the U.S. can only be settled without further escalation if the bank cooperates with the U.S. authorities,” said Igor Moser, a spokesman for Zuercher Kantonalbank.
“The respect for the rule of law has declined in a way I simply thought unimaginable a few years ago,” Moser said. “The government treats these business interests of the banks as if they were the business interests of Switzerland because the U.S. market is so enormously important.”
Switzerland’s Finance Minister Eveline Widmer-Schlumpf is attempting to make a deal with the U.S. regulators for the Swiss banks but with elections coming up in November there is a limited window of time as as Secretary of State Hillary Clinton and Secretary of Treasury Timothy Geithner are both leaving their positions.
“We are prepared to sign a settlement with the U.S. for the Swiss banks today. We feel we have made a constructive proposal to the U.S. but it is up to them to accept it or not,” said Widmer-Schlumpf.
FHA loan foreclosure “starts” increased for the second quarter 2012. The older foreclosures have been processed through the market but now because of the mortgage settlement, mortgages that were late some time ago are only now starting the foreclosure process.
To move through the new foreclosure short sale offers policies enacted this summer by Fannie Mae and Freddie reduces the short-sale timeline process to expedite the pre-foreclosure sale process to include short sale offers. Servicers are “encouraged” to follow these requirements with respect to mortgage loans sold to either Fannie or Freddie, including FHA, VA and USDA loans they may have purchased.
Last month another bill was introduced to assist with the short sale process. The bill addresses one of the major road blocks to closing short sale offers and that is the problem with non cooperating secondary lien holder.
Rep. Jerry McNerney (D-Stockton) introduced a bill to speed up the short sale process by requiring subordinate mortgage lien holders to make a decision on a short sale within 45 days.
The bill called “Fast Help For Homeowners (FHFH) Act” has full support from the National Association of Realtor. The NAR stated that its members continue to report delays in completing short sale transactions due to drawn out response times for whether or not an offer was accepted by the secondary lien holder.
“Second mortgage lien holders frequently hold up and cancel the short sale transaction while trying to collect the largest possible payout in exchange for releasing the homeowner’s lien, even though the secondary lien holder often gets nothing if the home ends up going into foreclosure,” said NAR President Moe Veissi, in a statement. “While efforts have been made to improve primary lien holders’ response times, issues still abound with second and subsequent lien holders, and this legislation is a step in the right direction.”
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“The dam may not burst in the next 30 to 45 days, but it will eventually burst, and everyone downstream should be prepared for that to happen — both in terms of new foreclosure activity and new short sale activity,”Brandon Moore, RealtyTrac’s CEO.said in a statement.
The dam that will burst because of the postponed foreclosures that banks were hesitant to proceed with during the robo-signing investigation on fradulent foreclosure documentation. Lenders hit the pause button on foreclosures because they “were afraid that anything they did would be under a microscope,” said Eric Higgins, a professor of business at Kansas State University.
The majority of the delayed foreclosure processing were in the states that have “judicial foreclosures”. The bankers with mortgages in these states bank stopped filing foreclosure if they were not 100% sure the documents were correct and could stand up in court.
Some homeowners who were in default but did not receive their foreclosure notices were stuck in limbo during the robo banking investigations. They like many in Las Vegas abandoned their homes when there was no bank communication and they were not able to get answers and only reached the automated voicemail endless loop at their banks.
Many others stopped paying their mortgage and remained in their home especially when the banks could not provide any further status of their foreclosures or when their mortgage was sold from one bank to another and their accounts were lost in the shuffle.
Others just squatted and did not pay for many months and years. In Florida, the average time was 861 days, and in New York it was 1,056 days — close to three years.
But now the regulators have come to a $26 billion settlement with the banks to include Bank of America, JPMorgan Chase, Citibank and Wells Fargo . which means that inventory which has been lacking in the market have been showing up in the market now as potential short sales and foreclosure properties and the flow of foreclosures will continue back into the market now that the settlement is in place.
Already for the month of August new foreclosure “starts” has been up and hit a record highs according to the Mortgage Bankers Association.
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The Consumer Financial Protection Bureau last week proposed rules to protect homeowners and to avoid problems suffered by many borrowers during the housing crisis.
“These rules are about putting the service back in mortgage servicing,” said CFPB Director Richard Cordray, on a conference call with reporters. “The bottom line is to treat consumers fairly by preventing surprises and run-arounds.” The rules provide basic protections, he added.
For instance requiring that the mortgage servicing company provide monthly statements which seems so simple but is not standard; breaking down all the numbers such as deposits, principals, interest rates, fees, due dates and warnings about new or increased fees including ARMs adjustable-rate mortgage reminders in advance.
“A lot of this stuff is common sense,” said Keith Gumbinger, vice president of HSH Associates, a publisher of consumer loan information, of the proposed rules. “You shouldn’t have to codify proper business practices. That’s not to say everyone is a bad actor. But the ones who did it wrong did it so badly, they forced the regulators’ hands on the rest of the industry.”
One of the major surprises occurs when the borrower no longer maintains property insurance and the mortgage servicer has the right to force a policy. The new law requires that forced policy process be transparent and borrower of policy payments to avoid borrower not being ready to pay the cost.
Policies and procedures will be required to be in place so borrowers are able to navigate and find assistance when they need including correcting payment issues and receiving timely payment receipt and corrected documents.
Systems will be required so that the homeowner borrower is able to easily obtain assistance and options to avoid foreclosure when they are in default. The new rules also requires review of file for loan modification and other payment plans application and response in a timely fashion restricting ability to proceed with foreclosure unless these options are applied for first.
“The inadequate performance of many mortgage servicers has helped widen the misery for many Americans,” said Richard Cordray, director of the consumer agency, in remarks to reporters announcing the proposed rules. The rules will take effect next year after a public comment period. “Right now, people have too little protection under federal law if their mortgage servicer surprises them with costly fees or gives them the runaround.”