Paper Avalanche Buries Plan to Stem Foreclosures

Paper Avalanche Buries Plan to Stem Foreclosures
New York Times

 Somewhere on earth, there must be a more difficult task than this: persuading American mortgage companies to lower payments for homeowners who can no longer afford their loans. But as Karina Montenegro struggles to accomplish this feat for a troubled borrower, she strains to imagine a more futile pursuit. Ms. Montenegro, an intern at a local company that seeks loan modifications, dials Washington Mutual to check on the status of an application for a homeowner whose income has plummeted. She endures a Muzak-scored purgatory while on hold. Syrupy-voiced customer service representatives chide her for landing in the wrong department. She learns that the documents her company sent in have simply vanished — for the third time since November. “I don’t know what happened,” says a customer service officer who identifies himself as Chris. “I don’t know if there was a glitch in the system, whether it was transferred from one call center to the other.” Think of the documents as being part of a pile massing inside the bank, Chris suggests. “This pile is not going to be moved forward at any point in time.”

Unemployment Vexes Foreclosure Plan
Wall Street Journal
 

Rising unemployment is complicating the Obama administration's effort to reduce foreclosures and stabilize the housing market. The first wave of mortgage delinquencies was sparked by borrowers who took out subprime mortgages and other risky loans that became unaffordable, causing them to fall behind on their monthly payments. But the current wave is increasingly driven by unemployment or underemployment, economists and housing counselors say. The Obama foreclosure-prevention plan was "built around the subprime crisis model, not the unemployment crisis model," said Michael van Zalingen, director of homeownership services for the nonprofit Neighborhood Housing Services of Chicago.
 

Regulators Close Five More Banks
Wall Street Journal

Federal and state regulators Friday closed five banks in California, Georgia and Minnesota, bringing the number of failures nationwide this year to 45. The California Department of Financial Institutions shut down two banks in the state, Los Angeles-based Mirae Bank and MetroPacific Bank of Irvine. Six banks have failed this year in California, which has been among the hardest hit by the housing crunch. But two more bank closures in Georgia kept that state well out in front, registering nine failures this year despite being home to just 4% of the country's banks.

Nevada Foreclosure Law Takes Effect Wednesday
The Associated Press

 More than 180 new laws take effect in Nevada on July 1, including several measures aimed at curbing a crisis that put the state at the top of a national list for home foreclosures. Other new laws that emerged from the 2009 Legislature include one to protect restaurants, hotel-casinos and other businesses that give away perishable foods to the needy; and others encouraging renewable energy development and requiring state buildings to adopt energy and water efficiency standards. The foreclosure-related laws include AB149, which requires lenders to meet with homeowners in danger of foreclosure. Under the law, a homeowner who gets a foreclosure notice can request a meeting with lenders and a trained mediator in efforts to reach a mutually acceptable resolution. A related law, AB140, makes it mandatory to notify renters that a property is in foreclosure, and to give renters 60 days notice to move out. The law also requires that a notice be served to the state Board of Health if a licensed health facility faces foreclosure. Also, SB128 requires that a foreclosure sale must be recorded with the county recorder in a timely manner, to help keep track of the owner of a foreclosed home.