Foreclosure Summit Toledo OH November 14
The Foreclosure Summit was held November 13-14 in Toledo OH. The main themes of the conference were rising foreclosure statistics, predatory lending, pre-foreclosure counseling, debt and financial management and policy- regulation/legislation. Each session was a series of presentations followed by a Q&A segment when time allowed.
The conference was attended by approximately 200-250 people including representatives from HUD, Fannie Mae and Freddie Mac. A number of lending institutions/servicers were present including:
- JP Morgan Chase
- National City Bank
- New Century Mortgage Corp.
- Option One Mortgage Corp.
- Homecomings Financial Network
- Countrywide Home Loans
- Huntington Bank
- Key Bank
- Fifth Third Bank
- Charter One Mortgage
- TCF Bank
Opening remarks were provided by Lisa Rice, VP at national Fair Housing Alliance who discussed the rising rate of foreclosures. Ms. Rice emphasized that this conference (final one out of 6 in Ohio) should be a catalyst to reverse the numbers. The committee wanted to hear from all parties specifically on the following issues and how they can impact the statistics.
- property maintenance
- economic issues
- effective loss mitigation
- rescue programs
- social issues
Lisa Rice Power Point Presentation
Ruth Clevenger, VP Federal Reserve Bank of Cleveland re-iterated Lisa’s sentiments and reviewed the Fed’s role in establishing adequate regulations and policy.
Uncovering and Preventing Predatory Lending Practices
Jeffrey Dillman from the Housing and Research Center defined a predatory loan as “any loan that is inappropriate for the borrower”.
Kimberly Kilby from the Miami Valley Fair Housing Center (Dayton) reviewed some of the primary indicators which would indicate predatory practices;
- borrower in foreclosure due to high monthly payments
- borrower has an Adjustable-Rate-Mortgage and does not anticipate getting a raise
- false information provided to the borrower
- borrower loaned more than the value of the house
- borrower charged excessive closing costs
- borrower not provided with all disclosures at origination.
Ms. Kilby suggested when discussing a loan modification to look at the market value of the home as opposed to an amount the borrower may qualify for.
Kimberly Kilby Power Point Presentation
Stephen Adamo, President and CEO of Charter One Mortgage gave an overview of CCO (Citizens Financial and Charter One) and reviewed their practices and quality controls in place during underwriting.
Debra Brown and Denise Jernigan from Fannie Mae discussed some of the initiatives undertaken at Fannie Mae to eliminate predatory practices. Fannie Mae statistics do not show Ohio in the “top-ten” of states with predatory lending violations, however their statistics indicate that there are four times as many misrepresentations on mortgage documents in Ohio as there are nationwide.
Fannie Mae Power Point Presentation
Lewis Allen VP of Real Estate Valuations at Option One discussed some of the issues surrounding accurate appraisals in light of an increase in identity theft. Some of the suggestions he provided were to:
- require a resume and verify license
- appraisals should be provided in a PDF format
- appraisers should sign exactly how their name appears in the ASC National Registry.
- require interior property photos
- enhance QC procedures
- be aware of zoning issues
- require review of the complete MLS history of a property
- expand the ASC Registry to include appraisals so all all appraisals will be available for each property.
Lewis Allen Power Point Presentation
Senate Bill 185
Wendy Patton from Policy Matters Ohio reviewed some additional foreclosure statistics.
Wendy Patton Power Point Presentation
Thomas McGuire, Assistant District Attorney discussed the insufficient staffing in place to follow-up and prosecute violators of the bill. The current plan is to have the state file civil suits while leaving criminal charges to local municipalities.
Luther Liggett, an attorney representing the banking industry, discussed a possible consequence of this bill will be the secondary market not securitizing loans issued from a broker (as opposed to national banks) due to an recent alert from Standard and Poors. Per Mr Liggett this will result in the cessation of independent brokers practicing in Ohio. In addition, input into the Bill was not received from the banking industry. In fact, the one member of the Legislature with prior banking experience was barred from the discussion on the creation of the bill.
Rachel Robinson, consumer advocate and staff attorney for the Equal Justice Foundation downplayed the concerns and focused on the benefits of the bill. A great deal of discussion revolved around the language in the bill that referred to “unconscionable” acts by the lender.
It was agreed that there are discernable differences between national banks who are regulated and audited versus non-national entities.
Foreclosure Prevention Counseling and Education Efforts
Foreclosure Prevention Program representatives from Columbus (Paul Haggard), Cuyahoga County (Mark Wiseman) and Toledo (Michael King) all reviewed their efforts to address the foreclosure problem along with emerging trends they have seen.
Michael King Power Point Presentation
Mark Wiseman Power Point Presentation
Marketing efforts continue and are expanding as local programs try to reach borrowers at the earliest time of distress. Additional initiatives underway include pre-purchase training.
Jayna Bower with Neighborworks discussed national initiatives. A current issue being addressed is training as there is a high turnover ratio in the non-profit arena.
Jayna Bower Power Point Presentation
Improving Communications and Getting Results
Deb Oakley presented a list of “Best Practices” for all involved parties. To achieve success, all parties must recognize, admit to, and work to resolve their deficiencies. Deb has presented this to 20 servicers and has received some commitments to “the Pledge” and continues to press remaining servicers to commit. Consumer best practices were received from counseling agencies. The goal is to “keep the eye on the prize” which is homeowner retention
Deb Oakley Power Point Presentation
Donna Sheline from Chase discussed some of Chase’s initiatives including their “REO Gifting Program” where select REO properties are gifted back to the community through non-profits. In addition, Chase offers free Loss Mitigation training to counselors to assist in ensuring borrowers receive accurate and valuable information as they attempt to resolve their issues. Donna discussed escalating all the way to her if issues are not resolved.
Robin Stout Magala from Freddie Mac stated that Freddie Mac compensates servicers who complete workouts and penalize those that don’t. Freddie Mac also requires servicers cross train their staff between collections and loss mitigation, possibly eliminating issues of borrower complaints stemming from aggressive collection activity at a time of financial distress. Freddie Mac also pro-actively mails notices directly to non-responsive borrowers. Freddie Mac servicers must advise borrowers if their loan is a Freddie Mac loan if requested.
Terry Theologides from New Century stated that his entity has primarily sub-prime loans securitized primarily outside the GSE’s (Fannie Mae and Freddie Mac). Even in this realm of numerous investors, servicers have the necessary flexibility to perform loss mitigation.One initiative undertaken at New Century is the establishment of a customer advocate/ ombudsmen position to review and assist borrowers. Institutional investors typically do not allow disclosure to the borrowers if they request information on the investor.
Terry Theologides Power Point Presentation
There is an effort underway to establish a website with toll-free numbers for the Loss Mitigation departments at the various servicers. This will provide non-profit counselors with access to the proper entity at the servicers.
Deb Oakley discussed a working group that is being developed to address code enforcement issues including servicers , code enforcement officials and field service providers. One concept involved the creation of a website with contact information with the correct individuals at the servicers that would be accessible to code enforcement individuals nationwide. As an example of efforts servicers take to be good corporate partners, Deb Oakley stated servicers have paid Safeguard Properties (alone) $82,000,000 YTD nationwide to address vacant and blighted homes.
The Foreclosure Summit was held November 13-14 in Toledo OH. The main themes of the conference were rising foreclosure statistics, predatory lending, pre-foreclosure counseling, debt and financial management and policy- regulation/legislation. Each session was a series of presentations followed by a Q&A segment when time allowed.
