It was a legal bailout of the banks, reducing their liability. But the also the funds didn’t go to homeowners, it went to the states.
States Divert Nearly Half of Settlement Money Earmarked for Housing
10/18/2012 By: Carrie Bay
Less than half of the states’ $2.5 billion from the national mortgage servicing settlement is being used for housing initiatives as intended, according to a study released Thursday by Enterprise Community Partners, Inc., a nonprofit group that supports affordable housing programs and spearheads community revitalization projects.
It’s been just over six months since a federal judge approved the agreement reached between the nation’s five largest mortgage servicers and officials from 49 states, the District of Columbia, and the U.S. government. Enterprise observed the six-month mark with a report on the states’ allocation of their share of the funds.
The five servicers–-Ally/GMAC, Bank of America, Citi, JPMorgan Chase, and Wells Fargo—agreed to a $25 billion penalty as part of the settlement. Of that total, $2.5 billion was paid directly to the participating states (all but Oklahoma signed on to the national settlement).
These direct payments were intended to help prevent foreclosures, stabilize communities, and prevent and prosecute financial fraud.
To date, states have announced plans to spend $966 million of the settlement money on housing- and foreclosure-related activities, according to Enterprise’s study. The nonprofit group found state governments have diverted $988 million, funneling the money instead to their own general funds or toward non-housing ventures.
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Proprietary OC Housing News home purchase analysis
4901 MYRA Ave Cypress, CA 90630
$579,995 …….. Asking Price
$342,000 ………. Purchase Price
4/18/2012 ………. Purchase Date
$237,995 ………. Gross Gain (Loss)
($27,360) ………… Commissions and Costs at 8%
============================================
$210,635 ………. Net Gain (Loss)
============================================
69.6% ………. Gross Percent Change
61.6% ………. Net Percent Change
110.4% ………… Annual Appreciation
Cost of Home Ownership
——————————————————————————
$579,995 …….. Asking Price
$115,999 ………… 20% Down Conventional
3.50% …………. Mortgage Interest Rate
30 ……………… Number of Years
$463,996 …….. Mortgage
$105,724 ………. Income Requirement
$2,084 ………… Monthly Mortgage Payment
$503 ………… Property Tax at 1.04%
$0 ………… Mello Roos & Special Taxes
$145 ………… Homeowners Insurance at 0.3%
$0 ………… Private Mortgage Insurance
$0 ………… Homeowners Association Fees
============================================
$2,731 ………. Monthly Cash Outlays
($325) ………. Tax Savings
($730) ………. Equity Hidden in Payment
$129 ………….. Lost Income to Down Payment
$165 ………….. Maintenance and Replacement Reserves
============================================
$1,970 ………. Monthly Cost of Ownership
Cash Acquisition Demands
——————————————————————————
$7,300 ………… Furnishing and Move In at 1% + $1,500
$7,300 ………… Closing Costs at 1% + $1,500
$4,640 ………… Interest Points
$115,999 ………… Down Payment
============================================
$135,239 ………. Total Cash Costs
$30,100 ………. Emergency Cash Reserves
============================================
$165,339 ………. Total Savings Needed
The property above is available for sale on the MLS.
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Guess what? If banks stop foreclosing on people, they default in large numbers to get free housing.
LPS: Delinquency Rate Suddenly Spikes in September
Foreclosure inventory continued to diminish in September, but the delinquency rate saw a sudden month-over-month surge, according to the “first look” mortgage report from Lender Processing Servicers (LPS), which has a loan-level database covering about 70 percent of the market.
The delinquency rate, which stood at 7.40 percent in September, hiked up 7.72 percent from August, but is still down by 4.19 percent from a year ago. The delinquency rate includes loans 30 days or more past due, but not in foreclosure. The rate actually increased in April, May, and June before falling in July and August.
The foreclosure inventory rate dropped further, falling to 3.87 percent, the first time in nearly two years the rate was below 4 percent. The foreclosure inventory rate was down from the previous month by 4.05 percent and down from a year ago by 7.37 percent.
As of September, there are 5.64 million properties that are 30 days or more past due or in foreclosure.
Loans that were 30 days or past due but not in foreclosure totaled 3.7 million; in that group, 1.53 million were 90 days or more past due, or on the verge of going into foreclosure. Foreclosure inventory numbered 1.94 million.
The states with the highest percentage of past due loans were Florida, Mississippi, New Jersey, Nevada, and Louisiana.
The states with the smallest percentage of loans still unpaid were Montana, Alaska, South Dakota, Wyoming, and North Dakota.