In an article (blog) by Teresa at MSN Real estate on April 9, 2013, shocking statistics were revealed about how banks (who were bailed out by US taxpayers) have wrongly foreclosed on many different classes of people who could not have been foreclosed under the law.
The most shocking groups that were wrongly foreclosed on were US military members. 1,082 US military members had their homes taken from them while in the service. The law provides in most mortgages that a moratorium occurs while the military member serves. Thus, none of these mortgages were in foreclosure yet and the bank started foreclosure proceedings and took the homes. A settlement has been reached with the banks and they are required to pay $9.3 billion on wrongfully foreclosed homeowners. Now this sounds like a lot of money however, when you distribute the net settlement (after attorney fees and expenses) a military member gets $15,000.00. The bank who wrongfully foreclosed on a military member’s home (worth $100-200,000), by the settlement, the individual doesn’t get enough money to be applied as a down payment on a new home. These homes were and will eventually be resold for a lot more than $15,000. The banks make the profit. This is an outrage on military members. They are in the Middle East fighting for our freedom and they lose their homes wrongfully and end up with $15,000.
According to the MSN Real Estate Article, 5,838 homeowners lost their homes to foreclosure and they had filed for bankruptcy proceedings. By law, when one files for bankruptcy, the proceedings stay all actions against you including foreclosure. Yet, the banks ignored and wrongfully took their homes in foreclosure when the Bankruptcy Law forbids it. These homeowners have ruined their credit by filing for bankruptcy to save their homes, still lost their homes and by the $9.3 billion settlement, each homeowner gets $25,000. Some of these people were even making modified payments on their mortgages and they still lost their homes and will receive $25,000.
The third class of borrowers are the ones who asked for modifications and were wrongfully denied or never got a decision from the bank and these homeowners lost their homes to foreclosure. The 872,546 homeowners get from the settlement $1,000 each for wrongful denial of modification. In this group, the homeowner who never got an answer about modification gets $400 back.
The real question is what happened to all these foreclosed homes? Most of which made up real estate inventory since the meltdown of 2007 & 2008. The homes were sold or are still being sold for a lot more than $15,000 or $25,000 each. Further, they are holding onto these foreclosed homes until the market returned in 2012-2013. A newspaper article in the Journal News of April 23, 2013, states that as a result of these foreclosed homes, they are being resold and the real estate inventory for sale is the lowest since 2006. This leads one to believe most of the foreclosed homes have been resold by the banks and any foreclosed inventory of the bank are now going up in value since housing prices are rebounding due to the lack of inventory.
In the first quarter of 2013, a 4% growth occurred in median price of homes in New York State.
Closings were up 8% during the first three months of 2013 and in Putnam, Rockland and Westchester counties, prices are up between 2 & 4%.
With record low mortgage rate (under 3%) and home prices on the rise (even modestly); it is time for those homebuyers that have been waiting for the bottom of real estate prices to get back into the market. This is why the prediction of a good real estate market continues. We can only hope that the bank continues to approve mortgages even for those who had their homes wrongfully foreclosed.
If you, or someone you know, are looking to sell or purchase a home, we request that you contact our office so that we can help take you through all of the necessary steps required to buy/sell your home. You can reach us at (914) 288-0800.