Is Fannie Mae pitting taxpayers against distressed homeowners?
'It's scary. It really is,' says MI woman who thought feds' program would save her home
As seen in our preceding installment, "National bankruptcy association calls for disaster prevention rather than disaster relief, NACBA objects to the idea of selling off Fannie Mae-, Freddie Mac- and FHA-mortgaged homes as rental properties.
What's wrong with prevention?
In essence, William Brewer, president of the National Association of Consumer Bankruptcy Attorneys, is championing the message, "Why not focus on preventing widespread foreclosure-disaster instead of being willing to accept some sort of half-spirited mop-up of the foreclosure wreckage?"
It's a fair question, very much on point in this ravaged economy.
And the SPEs like Fannie Mae need to be held as accountable as the big banks currently in negotiations with the less-than-unified Attorneys General of the 50 states (about which, more to come).
Did Fannie Mae flip-flop?
For instance, take this Aug. 22 news story originated by Jennifer Dixon of the Detroit Free Press, re-posted at The Sacramento Bee under the headline: "Fannie Mae promises to keep families in homes, but instead pressures banks to foreclose":
In early December, a senior executive at Fannie Mae assured members of the Senate Banking Committee in Washington that the mortgage giant was doing everything possible to address the foreclosure crisis.
"Preventing foreclosures is a top priority for Fannie Mae," Terence Edwards, an executive vice president, told the panel. "Foreclosures hurt families and destabilize communities."
But confidential documents obtained by the Detroit Free Press show that Fannie Mae has pushed an agenda at odds with those public assurances.
The records cover Fannie Mae's foreclosure decisions on more than 2,300 properties, a snapshot from among the millions of mortgages Fannie handles nationally. The documents show Fannie Mae has told banks to foreclose on some delinquent homeowners - those more than a year behind - even as the banks were trying to help borrowers save their houses, a violation of Fannie's own policy.
Fannie Mae has publicly maintained that homeowners would not lose their houses while negotiating changes to mortgages under the federal Home Affordable Modification Program, or HAMP.
An 'unprecedented window' into Fannie Mae operations
DFP also reports obtaining documents that show Fannie Mae communicating to banks that it expected quotas of foreclosure sales, running anywhere from 10 to 12 percent, and in Dixon's words, the internal records "offer an unprecedented window into how Fannie decides whether to allow borrowers to exhaust all options to keep their homes."
It's scary when you think you're safe, but you're not
If you're in a similar quandary, you may feel something like this lady quoted in the story, a dispossessed homeowner in Michigan:
"It's scary. It really is," said Leisa Fenton of Clarkston, Mich., who is among an untold number of people whose homes were sold in foreclosure even though they had been assured their homes were safe while they sought mortgage relief from Washington.
Her family's home was sold at auction in October. "We just keep praying the Lord is going to work it out," she said.
Where's the damn cavalry?
Not to be snide, snarky or any kind of mean-spirited, but I think it's naive to believe that the executive branch working in disconcert with this dysfunctional legislative branch is going to be able to come to grips with the National Foreclosure Scandal in a timeframe that's meaningful to most U.S. citizen--and certainly not those staring down the double-barrel menace of unemployment + highly questionable foreclosure tactics.
Chapter 13 a reliable alternative
Further, I hope everyone gets rewarded for hewing to a benevolent belief system, but I suggest, along the lines of "helping thyself," that Ms. Fenton's family would have been better off by filing for Chapter 13 bankruptcy protection. Bottom line? If any given household does not bring in enough income to service a Chapter 13 action, it's highly unlikely they could service a modified mortgage.
In some extreme cases, even Chapter 7 is viable
That being said, it's also possible--in rare cases--that a Chapter 7 proceeding will allow a mortgagee to save the home. I can't explain the ins-n'-outs of that, but then that's why you consult with a trained, experienced bankruptcy attorney.
The 'Big Settlement': Do your homework
OK, as promised, the other boogeyman on the home-foreclosure front is the long-running, barely-concealed split in the ranks among the 50 states' Attorneys General who have been trying to corral the big banksters mainly responsible for the foreclosure scandal and attendant meltdown of the economy. Those splits and fundamental disagreements are now coming into public awareness, via one AG's getting kicked out of the exec committee and another AG's response that the kicker-outer should himself take a hike.
It all revolves around either: letting the banksters off easy, with a fine that sounds like big money to the public but then no more inquiry into their secret financial-engineering practices; or, fine them and settle with them over one specific class of acts (basically, "Robo-signing"), yet keeping open the avenues of individual states to continue the investigation into all potentially damaging--even criminal--actions the banks may have perpetrated.
So, for next time, here's some "homework assignments":
- BofA Paybacks Pose Risks;
- Foreclosure Settlement: Spat Among the States;
- N.Y. Bumped from 50-State Foreclosure Committee;
- Analysis: Mortgage Probe Split puts Banks in a Tactical Bind.
As I read those articles? I must say, I'm not encouraged. I don't see any political leadership emerging that would right this ship anytime soon. And, of course, for hard-pressed homeowners, "soon" is already too late--in far, far, too many cases.
Consumer bankruptcy for yourself
If you're considering filing for consumer-level bankruptcy protection, be aware that legally you can file the petition yourself. You can also hire "advocates" who can point you toward the correct forms and provide a minimal amount of information--although they can not offer legal advice. That being said, bankruptcy experts and legal authorities recommend hiring a trained, experienced attorney who keeps up with changes to the code and is familiar with all the principals in your area's bankruptcy court.
Consider free case evaluation
If you're interested in learning more about the power of bankruptcy protection, please, browse our site for more information; if you need help filing for bankruptcy protection for yourself, consider signing up for a free case evaluation.
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