...Foreclosure Crisis in Florida and Beyond: Suggested Conflict Resolution Framework For Resolving this Crisis American Dream (or) American Nightmare [pic] [pic] David W. Puckett Email: dpuckett@dvergence.com Skype: david.w.puckett Twitter: davepuckett@twitter.com Phone: 813.727.3583 Introduction Each day there are stories reported in the news about mortgage foreclosures, detailing the single biggest financial crisis to hit the nation that is creating a strangle-hold on our economy and preventing economic recovery. While the entire nation has been stunned, the crisis has disproportionately affected the states of Florida, Nevada, Arizona, California and Georgia; these states were hit with an unprecedented loss of value in residential real estate. According to the leading provider of real estate industry statistics, Realtytrac.com (2011), one in every 611 United States housing units had a foreclosure filing during the month of July 2011 and it appears that the foreclosure processing delays, combined with the smorgasbord of national and state-level foreclosure prevention efforts such as loan modifications, lender-borrower mediations and mortgage payment assistance for the unemployed may be allowing more distressed homeowners to stave off foreclosure.. A CNBC report said that the falloff in foreclosures is not based on a “robust recovery in the housing market but on short-term interventions and delays that will extend the current housing market...
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...THE FUTURE OF FORECLOSURE LAW IN THE WAKE OF THE GREAT HOUSING CRISIS OF 2007-2014 Clinical Professor of Law Notre Dame Law School Judith Fox 54 WASHBURN L. J. (forthcoming, 2015) Notre Dame Law School Legal Studies Research Paper No. 1504 A complete list of Research Papers in this Series can be found at: http://www.ssrn.com/link/notre-dame-legal-studies.html This paper can be downloaded without charge from the Social Science Research Network electronic library at http://ssrn.com/abstract=2573203 Electronic copy available at: http://ssrn.com/abstract=2573203 The Future of Foreclosure Law in the Wake of the Great Housing Crisis of 2007-2014 Judith Fox* ABSTRACT As 2014 came to an end so, perhaps, did the worst foreclosure crisis in U.S. history. On January 15, 2015, RealityTrac, one of the nation’s leading reporters of housing data, declared the foreclosure crisis had ended. Whether or not their declaration proves true, the aftermath of the crisis will be felt for years to come. During the crisis it is estimated more than five million families lost their homes to foreclosure. Federal, state and local responses to the crisis changed laws and perceptions regarding foreclosure. Despite these changes, we end the crisis much the way we began---with a nationwide foreclosure system mistrusted and disliked by lenders and consumers alike. This paper examines the responses to the crisis in an effort to determine what worked, what did not, and where foreclosure law should...
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...How Business Ethics Relates to Subprime Mortgage Market By Wanda Thibodeaux, eHow Contributor Many people have lost their homes as a result of unethical suprime mortgage practices. The ability to have a home of your own in the United States typically depends on your ability to repay a mortgage, since most Americans don't purchase their homes outright. Because not everyone has perfect credit, a section of the mortgage industry involves subprime loans. In the wake of the mortgage and foreclosure crisis that began in 2007, the ethics of those in the industry is under scrutiny. Other People Are Reading How Do Subprime Loans Affect Business Growth? Code of Ethics for Business in the Philippines Print this article Subprime Mortgage Definition A definition of subprime mortgage is necessary to understand the relationship between the industry and ethics. Subprime mortgages are mortgage loans lenders provide only to those whose credit disqualifies them from receiving the best (prime) interest rates a lender can offer. A subprime mortgage by definition means that lenders work with those with a lesser ability to pay. Roughly 25 percent of all mortgages are subprime, according to Thomas Kostigen of the Wall Street Journal's MarketWatch website. Fiduciary Duties and Ethical Problems Businesses typically operate under fiduciary duties, or obligations. These fall into two broad categories of loyalty and care. These duties essentially stipulate that a businessperson should...
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...people to achieve that dream in the early 2000s, mortgage interest rates were low, which allow you to borrow more money with a lower monthly payment. In addition, home prices increased dramatically, so buying a home seemed like a sure bet. Lenders understood that homes make good collateral, so they were willing to participate. In 2007, the US economy entered a mortgage crisis that caused panic and financial turmoil around the world. The mortgage crisis was a result of too much borrowing and flawed financial modeling, largely based on the assumption that home prices only go up. Greed and fraud also played important parts. Banks offered easy access to money before the mortgage crisis emerged. Borrowers got into high risk mortgages such as option-ARMs, and they qualified for mortgages with little or no documentation. Even people with bad credit could qualify as subprime borrowers. Fraud on the part of homebuyers and mortgage brokers helped make the mortgage crisis more serious. Mortgage applications were not checked for accuracy as well as they should have been. This is what started the subprime mortgage crisis, popularly known as the “mortgage mess” or “mortgage meltdown,” came to the public’s attention when a steep rise in home foreclosures in 2006 spiraled seemingly out of control in 2007, triggering a national financial crisis that went global within the year. Consumer spending is down, the housing market has plummeted, foreclosure numbers continue to rise and the stock market...
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...Subprime Mortgage crisis ECO 2072 Principles of Macroeconomics In the beginning One of the first indications of the late 2000 financial crisis that led to downward spiral known as the “Recession” was the subprime mortgages; known as the “mortgage mess”. A few years earlier the substantial boom of the housing market led to the uprising of mortgage loans. Because interest rates were low, investors took advantage of the low rates to buy homes that they could in return ‘flip’ (reselling) and homeowners bought homes that they typically wouldn’t have been able to afford. High interest rates usually keep people from borrowing money because it limits the amount available to use for an investment. But the creation of the subprime mortgage opened a new door for those looking to accomplish the “American dream”. “Since, 1998 more than 7 million borrowers bought homes with Sub-prime loans. One million of those homeowners have already defaulted on their loans (Atlas , 2007). The of Rise Subprime Lending There are two types of mortgages in the U.S.: fixed-rate mortgages (FRMs), which allow a fixed amount of interest for the duration of the loan, and the adjustable-rate mortgages (ARMs) are loans with variable interest rates. Subprime mortgages are a combination of both FRMs and ARMs, because they provide for a fixed rate for the first 2-3 years as “teaser-rate”, following this period the interest rate becomes adjustable semi-annually (Kirk). Subprime mortgage is a type of mortgage that...
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...United States Economics The Mortgage Industry Introduction In the United States, the mortgage market has successfully and efficiently extended home buyer credit for generations. This business has enabled millions of families to achieve the American dream of owning their own home. The use of subprime mortgages contributed to record numbers of individuals or families with different levels of income, who were previously less than credit worthy now gained greater opportunities to buy a home. Unfortunately, the use of subprime mortgages, however well intentioned, went horribly wrong by practices of poor risk management, lax government oversight, and many assets that are funded by too low equity contributed by owners. The recent financial crisis and the role of mortgage backed securities including allegations of fraudulent activities continue to threaten the company’s financial health through sub-prime related losses. “We believe that these lawsuits further increase the company’s litigation risk and also represent a threat to scathe the company’s financial health to some extent. However, if proved or settled, the investors can breathe some relief” Market Analysis The markets have been in decline for 3 years and there is a very significant challenge that the housing market is presenting to us. We may be on the verge of a double dip recession, the economy is weakening both here and abroad...
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...Ms. Silver-Greenberg, in her article entitled “As Foreclosure Problems Persist, Fed Seeks More Fines”, noted three key points, 1) the Federal Reserve is interceding with regards to the foreclosure dilemma, 2) there are flaws in the foreclosure process and 3) consumer’s may quality to request an “Independent Foreclosure Review”. Ms. Silver-Greenberg states the Fed is interceding in the foreclosure dilemma. After an extensive investigation, extending over 2 years according to Silver-Greenberg, by the Federal Reserve resulted in a report entitled “ Interagency Review of Foreclosure Policies and Practices” (2011). The Fed’s have imposed a guideline for the mortgage institutions to follow and if they choose not to, there are talks of imposing stiff fines. The actions of these lenders have affected not only the borrowers, but also the mortgage industry, investors, and the economy itself. I feel that it is a shame lenders were able to get away with their procedural defects as long as they were. This resulted in more consumers being affected and as an end result exacerbated the decline in the economy. According to not only Ms. Silver-Greenberg, but also the report submitted by the Federal Reserve, (2011), there are flaws in the foreclosure process. These flaws are not only inappropriate signatures of bank officials, but also issues with organization of paperwork, customer service, lack of quality control, just to name a few. After reviewing this report, which until now...
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...is being less than ideal. Subprime lending is a general term that refers to the practice of making loans to borrowers who do not qualify for the best market interest rates because of their deficient credit history. According to the U.S. Department of Treasury guidelines issued in 2001, "Subprime borrowers typically have weakened credit histories that include payment delinquencies i.e. non-payment of the mortgage, and possibly more severe problems such as charge-offs, judgments, and bankruptcies. They may also display reduced repayment capacity as measured by credit scores, debt-to-income ratios, or other criteria that may encompass borrowers with incomplete credit histories." This is when the borrowers have a poor credit history that is they are bad borrowers. Subprime lending is also called B-Paper, near-prime, or second chance lending, as the borrowing is done to customers with a poor credit history or no credit history without any security in return of the money lending. Subprime lending encompasses a variety of credit instruments, including subprime mortgages, subprime car loans, and subprime credit cards, among others. A subprime loan is offered at a rate higher than A-paper loans due to the increased risk. Subprime lenders To access this increasing market, lenders often take on risks associated with lending to people with poor credit ratings or limited credit histories. Subprime loans are considered to carry a far greater risk for the lender due to the aforementioned...
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...rise in mortgage delinquencies and foreclosures, leaving repercussions for banks and financial markets globally. The subprime mortgage crises started to become apparent in 2007 resulting in a weakening global financial system. An estimated 80% of US mortgages held by the subprime borrowers were adjustable rate mortgages. Once housing prices reached their peak during the middle of 2006, the steep decline that followed made refinancing difficult. Adjustable rate mortgages began to reset at higher rates resulting in increasing mortgage defaults. Financial firms which held most of the securities backed with subprime mortgages were left with securities with no value. Ultimately, credit around the world tightened as the capital in many banks and US government sponsored enterprises were losing value. What caused the crises can be attributed to a number of factors; the failure of homeowners to meet their mortgage payments, the adjustable rate mortgages resetting along with the extensive lending. In 2008 the mortgage industry played a crucial role in the recession when an estimated 1.5 million homeowners defaulted on payments lending to foreclosure by 2009. As a result, the mortgage industry has restructured limiting individuals to purchase homes. From 2000-2006, home foreclosures began to rise. Thus the government began to investigate the practices of subprime lenders in response to the number of studies revealing a strong correlation between the rise in foreclosures and the...
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...risk and returns. Third is an apparent lack of appreciation for the principles of supply and demand. The principle states that excessive supply will reduce the price and demand for a product to the advantage of the buyer, while a lack of supply will increase demand and price of a product to the advantage of the seller. Causes Economists stress the importance of tracing the root causes of the financial crisis in order to provide a systemic solution to the present financial crisis. Most references present the cause of the financial crisis to be the “subprime mortgages.” However, subprime mortgages by itself did not cause the housing bubble to implode; many other factors contributed to the implosion. Traditionally, a lending institution, such as bank, would grant a loan based on the capability of the borrower to pay and on his/her ability to guarantee the loan with a fixed asset or collateral. The borrower mortgages the fixed asset to the lending entity, who in turn gains the right to “foreclose” a mortgaged asset and to...
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...Abstract In history in 1929, there was a Great Depression where the stock market had crash. Wall Street has lost millions of investors it cause for unemployment, layoffs, and there were number foreclosure. Millions American were out of work. It nearly 10 years for America to regain from Depression after World War II brought jobs with industry regain recover. In 2007, there were loans were introduce it was part of economic factor. It had been 70 years since the last depression until the Second Depression (The Great Recession) hit for America in 2007 from a mortgage loan called subprime. The following will explain the background of the subprime loans. How the government had to intervene with subprime loan. Lastly, the policies taken place with primes and different programs. The Subprime loans beginnings started in 1992, where Congress wanted to affordable housing, work on plan with Fannie and Freddie. Congress wanted the Department of Housing and Urban Development to look at their regulations. The chairperson for Fannie had a trillion dollar commenting to finance affordable homes. Homeownership had become an economic factor over the years in the mortgage market. Majority of home have loan through financial institutes. Yet, these subprime mortgage loans were given to individuals who barley sustained income and had failed credit. The purpose of the loan was suppose have a better opportunity of have homeownership. It was unfortunate subprime loans were aim toward minorities...
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...Burning Down the House: Mortgage Fraud and the Destruction of Residential Neighborhoods Ann Fulmer March 2010 Burning Down the House: Mortgage Fraud and the Destruction of Residential Neighborhoods Mortgage fraud is bank robbery without a gun. 1 It is a high-yield, 2 low risk enterprise that has been reported in all 50 states, Puerto Rico, Guam, American Samoa, 3 Canada, 4 New Zealand, 5 Australia, 6 and England. 7 In the United States, it is committed by organized international and domestic rings, 8 street gangs, 9 terrorists, 10 drug traffickers, 11 real estate agents, 12 closing attorneys, 13 appraisers, 14 mortgage brokers, 15 The targeted victims distinguish mortgage fraud from predatory lending. In predatory lending cases the borrower is victimized by the illegal practices of the lender or its agents with respect to fees and disclosures relating to the cost of the loan. It is unfortunate that the media, consumer activists, legislators and law enforcement personnel frequently conflate mortgage fraud with predatory lending since it adds unnecessary confusion to an already complex issue and diverts attention and badly needed resources from the fight against true mortgage fraud. 2 The average “take” on a bank robbery is approximately $3,000.00. By contrast, the average straw borrower receives a “cut” of at least $10,000 and the orchestrator’s “take” in a mortgage fraud transaction frequently exceeds $100,000. In a few cases the orchestrator’s take was in excess of $1...
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...United States Mortgage Crisis After rising at an annual rate of nearly 9 percent from 2000 through 2005, house prices have decelerated, even falling in some markets. At the same time, interest rates on both fixed- and adjustable-rate mortgage loans moved upward, reaching multi-year highs in mid-2006. Some subprime borrowers with ARMs, who may have counted on refinancing before their payments rose, may not have had enough home equity to qualify for a new loan given the sluggishness in house prices. In addition, some owners with little equity may have walked away from their properties, especially owner-investors who do not occupy the home and thus have little attachment to it beyond purely financial considerations. Regional economic problems have played a role as well; for example, some of the states with the highest delinquency and foreclosure rates are among those most hard-hit by job cuts in the auto industry. The rate of serious delinquencies--corresponding to mortgages in foreclosure or with payments ninety days or more overdue--rose sharply during 2006 and recently stood at about 11 percent, about double the recent low seen in mid-2005.3 The rate of serious delinquencies has also risen somewhat among some types of near-prime mortgages, although the rate in that category remains much lower than the rate in the subprime market. The rise in delinquencies has begun to show through to foreclosures. In the fourth quarter of 2006, about 310,000 foreclosure proceedings were...
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...Competitive Strategies and Government Policies Paper Maryna Lambropoulos, Trenton Acrey, Jose Esquivel & Jorge Benitez ECO/365 January 7, 2015 Matthew Mulyanto Competitive Strategies and Government Strategies Paper Wells Fargo & Company (NYSE: WFC) is a nationwide, diversified financial services company with $1.6 trillion in assets. Founded in 1852, Wells Fargo provides banking, insurance, investments, mortgage, and consumer and commercial finance through more than 8,700 locations, approx. 12,500 ATMs, online banking and asset management at wellsfargo.com, and mobile apps for mobile devices so you can access your accounts on the go. With headquarters located in San Francisco, Wells Fargo has more than 265,000 team members in 36 countries across our approximately 90 businesses. At the end of the third quarter 2014, Wells Fargo ranked fourth in assets among United States banks and was the world’s most valuable bank by market capitalization. In 2013, Euromoney named Wells Fargo “Best Bank” in its Global Awards for Excellence, the first time a United States based bank has won the top award. Wells Fargo Bank is one of the largest banks in the United States. Prior to 2008 through 2010, WFB had many United States based competitors, but that number has decreased due to bank failures and mergers. The number of United States Banks fell by 12% between December 2006 and December 2010. During that same period, U.S. deposits held by the 10 largest banks rose from...
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...capital injection. Shortly after, Washington Mutual (WM) went under; however, J P Morgan Chase (JPM) agreed to purchase the assets of WM resulting in the largest bank failure in the history of the United States. Due to the failures stated above it brings me to realize why banks are so hesitant to lend money between themselves or to anyone. The crisis began in the real estate market and the subprime lending crisis. As long as we can remember, the values in commercial and residential properties have been exponentially increasing and were not interrupted for nearly a decade. With housing prices increasing it lead to banks lowering lending standards allowing unqualified buyers to take out mortgages while at the same time deregulation blended lines between traditional investment banks and mortgage lenders. However, when housing prices failed to rise and homeowners were not able to keep up with their payments, banks were obligated to recognize write offs and write downs on these assets causing many institutions to become insolvent and having to either raise capital or go bankrupt. The above paragraphs are a brief introduction about what my paper will consist of and will go farther in depth on the subject matter. The contents of my paper will consist...
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