Dodd-Frank: Trump says roll-back, consumers map fight back

Kevin McCoy and Roger Yu , USA TODAY Published 7:02 a.m. ET June 14, 2017 |

Newly announced Trump administration plans to weaken or eliminate many financial-industry regulations enacted after the 2008 financial crisis mark the opening shot in what consumer groups predict will be a long Washington siege.

On Tuesday, the day after the Department of the Treasury issued the most detailed blueprint yet of proposed changes to the Dodd-Frank Wall Street Reform and Consumer Protection Act, banking and other financial groups celebrated Trump’s backing of changes they’ve sought for years. The list ranged from restructuring and weakening the Consumer Financial Protection Bureau to reexamining Wall Street trading and mortgage rules.

“The Treasury Department’s report is an important first step in recognizing how a duplicative and onerous regulatory environment harms banks, the economy, and, more importantly, consumers,” said Richard Hunt, the CEO of the Consumer Bankers Association, a trade association for retail banks.

Consumer advocates argue that the proposals represent an unwarranted weakening of rules that reined in banks and Wall Street after their excesses contributed to the nation’s worst economic crisis in generations. But major changes won’t come soon, if at all, because eliminating federal laws or Washington agency rules can take years, the advocates say.

“The prospects for preventing the rollback of many of these rules are actually quite good in terms of delay, and probably not bad in terms of preventing,” said Dennis Kelleher, the president and CEO of Better Markets, a Washington, D.C.-based nonprofit group that promotes the U.S. public’s interests in financial markets. “Enacting the administration’s regulatory agenda can be as difficult as enacting its legislative agenda if there is effective opposition.”

File photo taken in 2015 shows Richard Cordray, director of the Consumer Financial Protection Bureau, at a hearing in Denver, Colorado.(Photo: Brennan Linsley, AP)

Lobbying will likely spread across multiple fronts. But perhaps nowhere are the disagreements hotter than over the Consumer Financial Protection Bureau. Echoing complaints from Congressional Republicans, the Treasury report said the CFPB’s leadership — a lone director only loosely accountable to the president and wielding authority to enforce 18 federal financial laws — has made the agency “unaccountable to the American people.”

In response, the Treasury report recommended:

Authorizing the president to remove the CFPB’s director at will, rather than only when he or she is found to have done something improper.

Considering an alternative leadership structure of an “independent, multi-member commission or board.”

Changing the agency’s funding procedure to require oversight by the U.S. Office of Management and Budget, as well as congressional review.

Switching enforcement actions to federal courts, rather than administrative proceedings handled internally at the agency.

Eliminating public access to underlying data in the agency’s consumer complaint database by restricting that material to federal and state agencies.

Stripping the agency’s supervisory authority over banking and other areas covered by other regulators.

Paul Merski, a Community Bankers of America vice president, applauded yet another proposal, one that would exempt banks with assets of $10 billion or less from complying with CFPB rules that remove some risk features from mortgage loans. That list includes an “interest-only” repayment period, balloon payments required at the end of some mortgages, loan terms longer than 30 years, and excessive upfront fees charged to consumers.

“The main reason for community bank relief is so that they can support growth and jobs,” Merski said.

The CFPB maintained an official silence on the Treasury proposals. Instead, the regulator announced that its director, Richard Cordray, would hold a Thursday public event in Raleigh, N.C. to discuss student loan servicing issues, an area of continuing concern for students who say some loan servicers have not helped the get into income-based repayment plans.

However, Alys Cohen, a staff attorney for the National Consumer Law Center, said the proposals would “kick the legs out from under the CFPB,” which reported it had provided nearly $12 billion in relief and assistance to more than 29 million consumers from its 2011 opening through the end of February 2017.

A random sampling of consumers referred by advocacy groups readily agreed.

In Minnesota, John Lukach said he filed a complaint with the CFPB after Navient, the servicer for his nearly $60,000 in private student loans, did not respond to his requests for more affordable repayment options that would cut his monthly bill. Within two days, a Navient representative contacted him to discuss available alternatives, “something that probably wouldn’t have happened” without the CFPB, Lukach said.

In Arkansas, Myra Brewer, 71, said a debt collector called her and tried to force her to repay a roughly $3,000 credit card debt the company said was owed by her late daughter. She refused, even as the company called multiple times a day for weeks, Brewer said. Ultimately, she obtained the name of the bank that had put the purported loan out for collection and then filed a complaint with the CFPB. “That got action,” she said.

In Florida, a mortgage loan originator Pamela Marron noticed that many former homeowners who’d been caught in a wave of financial crisis short sales — selling their houses for less than the mortgage total — had trouble reentering the housing market. The reason, she determined, was that the nation’s three major credit reporting agencies coded the short sales as foreclosures. That meant the consumers could not qualify for conventional, federal government-backed mortgages for seven years.

After Marron filed complaints with the CFPB, banks re-coded the consumers’ mortgage applications and started processing them. “The CFPB people were very helpful because they understood the data we were looking at,” she said.

Armed with similar consumer experiences, advocacy groups are already discussing efforts to block Washington’s efforts to weaken the CFPB.

Kelleher, the Better Markets CEO, likened the efforts to the recent consumer drive that stopped the administration from derailing an Obama-era rule that now requires financial advisers to put consumers’ interests above their own. The regulation went into partial effect last week, but enforcement isn’t set to start until January.

“Big parts of that coalition will also work against deregulation” elsewhere in the financial industry, Kelleher said.

Follow USA TODAY reporter Kevin McCoy on Twitter: @kmccoynyc


In USA Today. Help that CFPB provided for short sale code problem noted. CFPB “Submit a Complaint” worked when other fixes did not. Directions:

© 2017 USA TODAY, a division of Gannett Satellite Information Network, LLC.

Dodd-Frank: Trump says roll-back, consumers map fight back

Call to weaken post-crisis financial safeguards could face long battle

Erroneous Foreclosure Code still results in Loan Denial for Past Short Sellers in Freddie Mac Loan Prospector(LP) for Conventional Loans

Loan originator is asking your assistance to share LP conventional mortgage “Caution” files of past short sellers that have passed the 4-year mark.

By Pam Marron   July 28, 2016
In August of 2014, Fannie Mae successfully implemented an automated system workaround that enabled lenders to correct conventional loan Refer/Ineligible findings when past short sale credit shows up as a foreclosure in the Desktop Underwriter or Originator. Freddie Mac’s Loan Prospector automated underwriting system never implemented a correction, and past short sale credit still results in a Loan Prospector “Caution”, or loan denial, for those trying to obtain a new conventional mortgage after a shortsale. The problem does not occur for government FHA and VA loans. Freddie Mac’s Caution findings commonly lists in the reasons for denial under Credit Risk Comments: “13. Recent foreclosure/signif derog appears on credit report”.
A Freddie Mac “Caution” denial requires a manual underwrite to overcome this error.  Lenders that will do a manual underwrite on either Freddie Mac or Fannie Mae conventional loan files are rare to find. The good news is that the credit repository(s) reporting the foreclosure is now able to be found and seen in raw data through credit reporting agencies.
This would not be of such great concern if the mortgage industry was not approaching the rollout of the new “Trended Credit Data” that will work with the Fannie Desktop automated system in Version 10.0 set to be implemented on September 24, 2016.
If there are any glitches in the DU 10.0 format, lenders will likely put their loans through the Freddie Mac Loan Prospector automated underwriting system. Because a work around was never implemented for Freddie Mac, past short sellers eligible for a new mortgage will receive an automated “Caution”, or a denial for a new mortgage.
When the problem of the “Caution” in Freddie Mac’s automated system is brought up, the response from Freddie Mac has been that their system has been corrected and problems are with individual files. This article was written to alert Freddie Mac that as more past short sellers become eligible to purchase a home again, we as lenders are experiencing the problem of the “Caution” denial of new conventional mortgages on all files that are conventional, and more often.
This is what we are finding. All files currently being entered into Loan Prospector for a conventional mortgage purchase where a past short sale exists in credit are receiving a “Caution”, even when the past short sale is past the four-year mark, the wait time required after a short sale for a new Freddie Mac conventional mortgage.
A few lenders have stated they have received an “Accept” for a past short seller on a conventional mortgage, but we have found that only loans submitted for an FHA or VA loan appear to receive an “Accept”. This is believed to be due to the fact that Total Scorecard, an additional credit mechanism found in both Fannie Mae and Freddie Mac, allows the loan to receive an Approve or Accept respectively through both systems but verification of the short sale account must be backed up with documentation proving a short sale rather than a foreclosure. Additionally, it was checked to see if the problem was due to specific credit reporting agencies. Thus far, multiple credit agency reports for the same borrower have resulted in the same denial.
Unfortunately, Freddie Mac Loan Prospector does not designate which account it is classified as a foreclosure. However, the repository(s) that reports the short sale as a foreclosure can be visually found in raw data of the three repositories, Experian, Trans Union and Equifax in the credit report. Lenders who want to specifically see this to distinguish the problem need to make sure they contact their credit reporting agency and ask for the MOP (method of payment) and a horizontal payment history grid to be available on their report. A screen shot of raw data may ultimately be needed if where the foreclosure code exists is not evident on the visual credit report.
Because of the concern that mortgage traffic will increase in Freddie Mac Loan Prospector if a problem arises in Version 10.0 of the Fannie Mae Desktop Underwriter with the introduction of Trended Data Credit, we are proactively and respectfully bringing this known problem of short sale credit that shows up as a foreclosure on conventional loans only again to Freddie Mac’s attention. If you are a loan originator or lender that encounters a “Caution” denial in the Freddie Mac Loan Prospector automated underwriting system for past short sellers trying to obtain a conventional mortgage, please contact Pam Marron at 727-375-8986 or email
To best prepare, make sure that you run past short seller files through both Fannie Mae Desktop Underwriter/Originator and Freddie Mac’s Loan Prospector automated underwriting systems upfront. Don’t wait until the final submission to underwriting.
Stay tuned!

Post-Foreclosure Consumers Are Ready to Rejoin Economy

From Bloomberg News, July 7, 2016

Millions of Americans lost their homes to foreclosures or short sales during the housing crisis. Fortunately for the economy, time heals most wounds — and credit reports.

The number of people joining the rolls of those knocked from homeownership peaked seven years ago, so those blotches to their histories are starting to roll off the books right about now. The resulting improvement in credit scores means more Americans will find themselves with the ability and means to once again apply for loans, and not just for home purchases.

“Improving credit scores might entice households to start borrowing more in general,” said Ralph McLaughlin, chief economist at real estate search engine Trulia. And what better time than now, when interest rates are so low.

That, combined with sustained gains in employment and bigger increases in pay, could give consumer spending, which accounts for almost 70% of the U.S. economy, an added lift over the next couple of years. The impact, though, is hard to quantify because it’s difficult to estimate how many people will once again be emboldened to borrow after experiencing such a shock, said Jacob Oubina, a senior U.S. economist at RBC Capital Markets in New York.

read more…

Credit is Central to WHY Help Network Started

History: WHY Help Network Started

The housing recession since 2007 has resulted in real estate and mortgage problems never experienced before in U.S. history. One of those newer problems was a massive number of short sales, where homes are sold for less than the mortgage balance on the loan.

In order to short sale, a common practice of nearly every lender in the U.S. was to require that the distressed homeowner go delinquent on their mortgage before the short sale approval could be given. The short sale process was lengthy and the required delinquency almost always exceeded 4 months. After 120 days of mortgage delinquency, a foreclosure code was placed on the credit of unsuspecting short sellers. The foreclosure code was not apparent to those of us in the mortgage industry until years later when the past short seller, eligible for a new conventional mortgage, received a “Refer with Caution” denial for a new loan. Lender underwriters unaware of the erroneous credit code would tell past short sellers to go back to their short sale lender and get the problem fixed. The short sale lenders would claim they had coded the short sale correctly, and point to credit reporting agencies to make the fix. The credit reporting agencies, now seeing this problem throughout the U.S., started drilling down to where the problem was in the code. This is when it was discovered that there was multiple credit code being used for a short sale, but borrowed from the Metro 2 foreclosure code. Additionally, foreclosure payment history codes of “8”(repossession) and “9”(collection) were adding to the mix. And when fixes were applied, “dates reported” were pulling forward, suggesting the credit problem was more recent than the short sale closing.

Why was this a problem for the mortgage and housing industry? A foreclosure code meant a 7 year wait to get a new mortgage, rather than the 2 year wait after a short sale in effect at the time. At that point, there were over 9 million past short sellers. That equated to over 16% of total U.S. mortgages! The slowdown of the housing comeback was critical, and stalling the reentry of 9 million past homeowners back into the housing market would affect the housing market. It was imperative for this problem to be solved.

The road to a solution started with a loan officer in Florida and a credit reporting agency, Acranet Credit, in California. The loan officer saw the seller credit was being coded as a foreclosure over and over again in the Fannie Mae and Freddie Mac automated systems and went to Acranet credit reporting agency. The Acranet credit manager was a board member of the National Consumer Reporting Association ( and brought the problem to the NCRA. The Florida loan officer attended the 2012 NCRA Conference with proof and met a representative with the Consumer Financial Protection Bureau (CFPB) at the conference.

In April of 2013, the Florida Loan officer and the executive director of the NCRA went to Washington, D.C. and, thanks to U.S Congressman Gus Bilirakis’s office, met with staff of the Senate Banking and Finance Committee. On this first meeting, multiple problems were presented and it was quickly determined that pinpointing the critical credit code problem was paramount. Offices of representatives for “Hardest Hit” states, where it was thought that the credit code problem would be most apparent, were visited. The offices of the U.S. Treasury, the Consumer Financial Protection Bureau and U.S. Senator Bill Nelson’s (D-FL) office were also visited.

U.S. Senator Nelson’s office took a special interest in this problem along with the CFPB. Senator Nelson is from Florida, a state that was 3rd from the top where housing had been hit hardest. In 2012, Florida’s average of homes sold as short sales was tipping 30%, and 48% of homes owned in the state had negative equity. This problem threatened a real housing recovery for Florida.

On May 7, 2013, U.S. Senator Bill Nelson required that the CFPB and the FTC get a solution to the credit code problem within 90 days. There was much talk about a “specific, universal short sale credit code” just like there was for a foreclosure or repossession, or judgment.

In June 2013, the Florida loan Officer, the NCRA executive director and 30 NCRA board members met in Washington, D.C. again and met with CFPB Director Richard Cordray and 4 CFPB directors.

Later that afternoon, the Florida loan officer and the Acranet credit agency manager met again with the CFPB and were stunned to learn that, though affected consumers were consistently stating they were told by their short sale lender that a delinquency of their mortgage was a requirement to get the short sale approved, in fact the lenders were telling another story…. that underwater homeowners were ceasing to make payments, waiting to be served foreclosure by their short sale lender.

To hear this was shocking. All of the press seemed to be about strategic defaulters, who are able to make mortgage payments but chose not to. Yet, we were finding little evidence of underwater homeowners who wanted to stop paying their mortgage. Instead, homeowners who called for help were bewildered that they had to destroy their credit to exit an underwater home. They wanted to make their payments but were told no help was available until they went delinquent!

While in Washington, D.C., it was also learned that the credit code change all of us were fighting for would not happen. Instead, lenders would be allowed to make a change in the Fannie Mae system when the erroneous foreclosure code showed up on past short seller credit. This would take effect on Nov. 16, 2013.

The Nov. 16, 2013 change did not work…. but 2 fixes found by accident were working! The CFPB Complaint Letter worked the most and seemed to trigger an immediate “change” in the credit that resulted in an “Approve” upon a new credit pull and resubmission to Fannie Mae. The same change occurred if a Lender Letter could be obtained from the lender stating the loan closed as a short sale and not as a foreclosure. The critical key here was that lenders were able to make a change of the code internally.

And, on August 16, 2014, Fannie Mae again made a change to their automated systems Desktop Underwriter/Originator that finally allowed lenders to go into the system and make a change when a foreclosure showed up on credit code for a past short seller.

So WHY Help Network?

Because so many lenders, loan originators, credit reporting agencies and governmental agencies are now aware of the credit code problem of past short sellers, it was decided to switch gears. Instead of using efforts to find more solutions (though this is an ongoing process!), emphasis is now on the network of help available to past short sellers.

The Help Network is a growing resource center that includes lenders, loan officers, realtors, credit reporting agencies, HUD Approved Counseling Agencies and governmental agencies and representative offices that are aware of this problem and can help.

And if you are not sure who can help in your state, email Pam Marron at and ask for help with resources.



Back from the Housing Brink

Back from the Brink logo



Sponsored by the Gulf Coast Chapter of the Florida Association of Mortgage Professionals, a member of the Pinellas Realtor Affiliate Business Partners Program


“Back from the Housing Brink” defines 3 different client types that have developed from the housing crisis and where opportunity exists for loan originators and realtors to assist these clients.

GulfCoast Chapter of the Florida Association of Mortgage Professionals wishes to thank the Pinellas REALTOR Organization for joining with us to support this program!

Pro member

nonPro member


Special Guest Daren Blomquist, Vice President of RealtyTrac

RT.Daren lg
Status of Distressed Homeowners and Boomerang Buyers
  • Defined, statistics, where these homeowners are at and where they are moving to in the U.S. and specifically Florida.
Assist 7.1 million Distressed Homeowners (still in underwater homes) to stay put
  • PURE HARP refinancing, shorter term
  • Hardest Hit Funds available for principal reduction through Florida
Assist 7.3 million Boomerang Buyers (had past short sale or foreclosure) eligible to re-enter housing market over next 8 years
  • wait timeframes for all mortgage types
  • Shorter wait time frame underwriting criteria for FHA “Back to Work” and conventional mortgage “Extenuating Circumstances”
Assist real estate agents to sell damaged housing by providing repair list with costs and renovation loan financing at listing upfront
  • Retrieve “feasibility report” commonly done by FHA Inspectors and useful to attract buyers and for mortgage financing. Report cost: $200-$250.
  • Provide financing option upfront for either FHA 203K (owner occupied loan) or conventional Homestyle renovation loan (owner occupied, 2nd home, investor)

Challenge to mortgage and real estate industries:
Need for refinance option of non-Fannie Mae, non-Freddie Mac 1st mortgage and 2nd mortgages and HELOCS for 7.1 million homeowners still underwater! Only option currently is modification that requires delinquency.

Realtor/Loan Originator resources:
  • Specialized lists from RealtyTrac
  • Free promotion of industry professionals who would like to assist these clients at HELP Network on *

* is set up to provide buyer and loan originator assistance to prepare cases for underwriting FHA “Back To Work” and where “Extenuating Circumstances” may exist for a conventional mortgage. Lenders who provide FHA Back to Work, allow Extenuating Circumstances and provide pure HARP 2 will be promoted.

Homebuyers/Homeowners resources:
  • Downpayment assistance: Hillsborough, Pinellas, Pasco, Hernando, Citrus counties, state of Florida
  • “Fix It” programs for those with no equity: Pasco County
  • Student Loan consolidation/refinance program


Prevent the next Housing Crisis

7.4 MILLION STILL Underwater in U.S. Q2/2015

Overall Seriously Underwater Share Edges Higher For Second Straight Quarter;
Number of Equity Rich Homeowners with a Mortgage Increases by 1 Million From Year Ago, But Down 300,000 in First Six Months of 2015

IRVINE, Calif. — July 30, 2015 —

RealtyTrac® (, the nation’s leading source for comprehensive housing data, today released its Q2 2015 U.S. Home Equity & Underwater Report, which shows that as of the end of the second quarter there were 7,443,580 U.S. residential properties that were seriously underwater — where the combined loan amount secured by the property is at least 25 percent higher than the property’s estimated market value — representing 13.3 percent of all properties with a mortgage.

The second quarter underwater numbers were up from 7,341,922 seriously underwater homes representing 13.2 percent of all homes with a mortgage in the previous quarter — making Q2 the second consecutive quarter with a slight increase in both the number and share of seriously underwater properties — but were down from 9,074,449 seriously underwater properties representing 17.2 percent of all homes with a mortgage in the second quarter of 2014. The number and share of seriously underwater homes peaked in the second quarter of 2012 at 12,824,729 seriously homes representing 28.6 percent of all homes with a mortgage.

“Slowing home price appreciation in 2015 has resulted in the share of seriously underwater properties plateauing at about 13 percent of all properties with a mortgage,” said Daren Blomquist, vice president at RealtyTrac. “However, the share of homeowners with the double-whammy of seriously underwater properties that are also in foreclosure is continuing to decrease and is now at the lowest level we’ve seen since we began tracking that metric in the first quarter of 2012.”

The share of distressed properties — those in some stage of the foreclosure process — that were seriously underwater at the end of the second quarter was 34.4 percent, down from 35.1 percent in the first quarter of 2015 and down from 43.6 percent in the second quarter of 2014 to the lowest level since tracking began in the first quarter of 2012. Conversely, the share of foreclosures with positive equity increased to 42.4 percent in the second quarter, up slightly from 42.1 percent in the first quarter and up from 34.1 percent in the second quarter of 2014.


Historical U.S. Underwater Trends 

Qtr-Yr Percent of All Loans Seriously Underwater QoQ Pct Change Percent of Loans in Foreclosure Seriously Underwater QoQ Pct Change
Q1 2012 27.8% 59.1%
Q2 2012 28.6% 0.8% 62.0% 2.9%
Q3 2012 27.6% -1.0% 60.0% -1.9%
Q1 2013 25.8% -1.7% 58.2% -1.8%
Q2 2013 25.7% -0.1% 57.5% -0.8%
Q3 2013 23.2% -2.5% 56.3% -1.2%
Q4 2013 18.8% -4.4% 47.5% -8.8%
Q1 2014 17.5% -1.4% 45.0% -2.5%
Q2 2014 17.2% -0.2% 43.6% -1.4%
Q3 2014 15.0% -2.2% 38.9% -4.7%
Q4 2014 12.7% -2.3% 34.6% -4.2%
Q1 2015 13.2% 0.4% 35.1% 0.4%
Q2 2015 13.3% 0.1% 34.4%

Share of equity rich mortgaged properties up 1 million from year ago, down 300K YTD

The universe of equity-rich mortgaged properties — those with at least 50 percent equity — decreased on a quarter-over-quarter basis for the second straight quarter, down to 10.9 million representing 19.6 percent of all properties with a mortgage at the end of the second quarter. That was down from 11.1 million representing 19.8 percent at the end of the first quarter and down from 11.3 million representing 20.3 percent at the end of the fourth quarter, but still up from 9.9 million representing 18.9 percent at the end of the second quarter of 2014.

“Although the number of equity rich homeowners with a mortgage has increased by 1 million compared to a year ago, that number dropped by nearly 300,000 between the end of 2014 and the middle of 2015,” Blomquist added. “The number of homeowners with a mortgage who have at least 20 percent equity has dropped by more than 900,000 during the past six months, indicating that homeowners who have gained substantial equity thanks to the housing price recovery over the past three years are taking advantage of that newfound equity. Some are leveraging that equity into a higher LTV refinance or a move-up purchase, some may be downsizing into an all-cash purchase and some may be cashing out of homeownership altogether. Those homeowners cashing out of homeownership altogether would explain why the nation’s overall homeownership rate continued to decline in the second quarter even as homeownership rates among millennials increased.”

Major metro areas with the highest percentage of equity rich properties reflect areas of continued growth in home prices: San Jose, California (43.8 percent), San Francisco, California (38.3 percent), Honolulu, Hawaii (36.7 percent), Los Angeles, California (32 percent), New York (30.7 percent), Pittsburgh, Pennsylvania (29.4 percent), Poughkeepsie, New York (28.0 percent), Oxnard, California (27.5 percent) and San Diego, California (26.9 percent).

“Over the past two years, the Seattle region has seen the percentage of homeowners who are seriously underwater drop by over 56 percent, one of the fastest and most impressive drops in the country,” said Matthew Gardner, chief economist at Windermere Real Estate, covering the Seattle market. “Usually a decline of this magnitude would suggest an uptick in the number of homes for sale, but unfortunately for Seattle, I don’t see this taking place. Many of these homeowners are simply too apprehensive or don’t have the financial capacity to move. But what we lose in new listings, we gain in overall market stability.”

Historical U.S. Home Equity Rich Trends 

Qtr-Yr Percent of Equity Rich Mortgaged Homes QoQ Pct Change
Q4 2013 18.5%
Q1 2014 19.1% 0.7%
Q2 2014 18.9% -0.3%
Q3 2014 20.1% 1.2%
Q4 2014 20.3% 0.2%
Q1 2015 19.8% -0.5%
Q2 2015 19.6% -0.2%


Markets with the most seriously underwater properties

Markets with a population greater than 500,000 with the highest percentage of seriously underwater properties in Q2 2015 were Lakeland, Florida, (28.5 percent), Cleveland, Ohio (28.2 percent), Las Vegas, Nevada (27.9 percent), Akron, Ohio (27.3 percent), Orlando, Florida (26.1 percent), Tampa, Florida (24.8 percent), Chicago, Illinois (24.8 percent), Palm Bay, Florida (24.4 percent) and Toledo, Ohio (24.3 percent).

Markets where the share of distressed properties —  those in some stage of foreclosure —  that were  seriously underwater exceeded 50 percent in the second quarter of 2015 included Las Vegas, Nevada (57.7 percent), Lakeland, Florida (54.8 percent), Cleveland, Ohio (52.9 percent), Chicago, Illinois (52.5 percent), Tampa, Florida (51.7 percent ), Palm Bay, Florida (51.5 percent), and Orlando, Florida (51.2 percent).

“Many consumers in foreclosure don’t understand the positive effects of the increased equity we are seeing across the Ohio markets, and the opportunities that this might bring in assisting them to avoid foreclosure,” said Michael Mahon, president at HER Realtors, covering the Cincinnati, Dayton and Columbus markets in Ohio. “Across much of Ohio, housing demand is driving increased prices and lower days on the market, contributing to positive equity growth. For homeowners facing troubled financial circumstances due to job loss, divorce, death in the family, or health concerns, the best advice would be to consult with a real estate agent early in the process.”

Markets with the highest share of positive equity foreclosures

Those states with the highest percent of distressed properties with positive equity included Colorado (72.0 percent), Alaska (69.8 percent), Texas (66.4 percent), Oklahoma (65.2 percent), and Nebraska (64.4 percent).

Major markets where the share of distressed properties with positive equity exceeded 60 percent included Denver, Colorado (83.7 percent), Austin, Texas (83.1percent), Honolulu, Hawaii (77.5 percent), San Jose, California (77 percent), Pittsburgh, Pennsylvania (75.9 percent), Jackson Mississippi (75 percent), Nashville, Tennessee (69.3 percent) and Houston, Texas (69 percent).

“The strong South Florida price increases over the past few years have moved many homeowners from negative to positive equity. We would encourage the remaining distressed homeowners to ask for a Broker Price Opinion (BPO) regarding the value of their property — many may be surprised at their improving value,” said Mike Pappas, CEO and president of Keyes Company, covering the South Florida market.

“Many homeowners that found themselves upside down in their homes just a few years ago are finding that they are now in a much better position with equity to spare, based on the strong appreciation we have experienced over the last few years,” said Greg Smith, owner/broker at RE/MAX Alliance, covering the Denver market in Colorado.  “When we look at other areas, such as Las Vegas, where homes seriously underwater have dropped by close to 50 percent, we see the strengthening of the economy as a whole provided by housing.”

Homes owned seven to 11 years account for 38 percent of all seriously underwater homes

Residential properties owned between seven years and 11 years accounted for 38 percent of all seriously underwater homes as of the end of the second quarter. The highest seriously underwater rate is for homes owned for nine years, 21.6 percent of which are seriously underwater, followed by those owned for 10 years, 19.8 percent of which are seriously underwater, and those owned for eight years, 19.0 percent of which are seriously underwater.

Report methodology
The RealtyTrac U.S. Home Equity & Underwater report provides counts of residential properties based on several categories of equity — or loan to value (LTV) — at the state, metro and county level, along with the percentage of total residential properties with a mortgage that each equity category represents. The equity/LTV calculation is derived from a combination of record-level open loan data and record-level estimated property value data, and is also matched against record-level foreclosure data to determine foreclosure status for each equity/LTV category.


Seriously underwater: Loan to value ratio of 125 percent or above, meaning the homeowner owed at least 25 percent more than the estimated market value of the property.

Equity rich: Loan to value ratio of 50 percent or lower, meaning the homeowner had at least 50 percent equity.

Foreclosures w/equity: Properties in some stage of the foreclosure process (default or scheduled for auction, not including bank-owned) where the loan to value ratio was 100 percent or lower.

Report License

The RealtyTrac U.S. Foreclosure Market Report is the result of a proprietary evaluation of information compiled by RealtyTrac; the report and any of the information in whole or in part can only be quoted, copied, published, re-published, distributed and/or re-distributed or used in any manner if the user specifically references RealtyTrac as the source for said report and/or any of the information set forth within the report.

Data Licensing and Custom Report Order
Investors, businesses and government institutions can contact RealtyTrac to license bulk foreclosure and neighborhood data or purchase customized reports. For more information contact our Data Licensing Department at 800.462.5193 or

About RealtyTrac
RealtyTrac is a leading provider of comprehensive U.S. housing and property data, including nationwide parcel-level records for more than 130 million U.S. properties. Detailed data attributes include property characteristics, tax assessor data, sales and mortgage deed records, distressed data, including default, foreclosure and auctions status, and Automated Valuation Models (AVMs). Sourced from RealtyTrac subsidiary, the company’s proprietary national neighborhood-level database includes more than 50 key local and neighborhood level dynamics for residential properties, providing unrivaled pre-diligence capabilities and a parcel risk database for portfolio analysis. RealtyTrac’s data is widely viewed as the industry standard and, as such, is relied upon by real estate professionals and service providers, marketers and financial institutions, as well as the Federal Reserve, U.S. Treasury Department, HUD, state housing and banking departments, investment funds and tens of millions of consumers.

Media Contacts:
Jennifer von Pohlmann
949.502.8300, ext. 139

Ginny Walker
949.502.8300, ext. 268

Data and Report Licensing:


HELOC Shock Heat Map

April 8, 2015 | Daren Blomquist, RealtyTrac

A RealtyTrac analysis of open Home Equity Lines of Credit originated during the housing bubble years of 2005 to 2008 shows that there are nearly 3.3 million HELOCs scheduled to reset at fully amortizing monthly mortgage payments between 2015 and 2018 after a 10-year period with interest-only payments. The average increase in monthly payments when these HELOCs reset will range from $138 for those resetting in 2016 to $161 for those resetting in 2018.

More than 1.8 million of the resetting HELOCs (56 percent) are on homes that are seriously underwater, with a combined loan to value ratio of 125 percent or more, and the percentage of underwater homes with resetting HELOCs is much higher in some markets such as Las Vegas (89 percent), Inland California (80 percent or more in many markets), Orlando (79 percent), Reno, Nevada (78 percent), and Phoenix (76 percent).

The heat map below shows markets with the most resetting HELOC shock over the next few years, both by sheer number of HELOCs scheduled to reset (size of the bubble) and by the percentage of resetting HELOCs that are on homes seriously underwater (color of bubble). This heat map displays metropolitan statistical areas with a population of 200,000 or more.


How to Make a Niche Market out of 7.3 Million Boomerang Buyers

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In January 2015, RealtyTrac reported that there are approximately 7.3 million Boomerang Buyers that will have the ability to re-enter the housing market over the next 8 years. Boomerang Buyers are those who had a short sale or foreclosure in the past and are eligible to obtain a new mortgage again. A new website,, was created to assist Boomerang Buyers back into the housing market, with direction for loan originators that can provide them with a new mortgage. The site also provides assistance for more than 7 million distressed homeowners who are still in underwater (negative equity) homes.

In this instant webinar:

▪ RealtyTrac Vice President Daren Blomquist will explain where the Boomerang Buyers are located, and how they can be found.

▪ Terry Clemans, Executive Director of the National Consumer Reporting Association, will tell you about the QMCR (Qualified Mortgage Credit Report), a novel credit idea that can help with persistent credit errors that hamper these folks and many others from getting a new mortgage.

▪ There’s even a HELP Network, where lenders, loan originators, credit reporting agencies, HUD approved counselors, PMI companies and government agencies that can assist Boomerang Buyers and Distressed Homeowners will be promoted for free.

▪ Jim McMahan NMLS#218164, a loan originator from Georgia, will explain the benefits of assisting these borrowers.

▪ Pam Marron NMLS#246438, a loan originator from Florida, will explain how the website helps these borrowers and loan originators, and invites those who want to assist these clients to be part of a national HELP Network.

Click here to view this FREE Webinar!


Past Short Sales Are Like a Bad Divorce

Helping Borrowers with Extenuating Circumstances Through the Mortgage Process

By Pam Marron April 1, 2015

Explaining a past short sale is a harder task than most think, and it re-opens a period of time that many who have had the experience don’t want to go through again. Loan originators should not be surprised when past short sellers show anger, reluctance and may even opt out of re-purchasing a home upon learning what they must do.

Part of the problem is that guidelines, especially those surrounding explanation of extenuating circumstance, are vague. And detail needed is not always easily accessible. Quietly, more than one lender has told me that documentation received is not enough to prove extenuating circumstances, which results in a new mortgage denial for those who may be eligible to re-enter the housing market. Though lenders offer the FHA “Back to Work” program, a low percentage of these loans have been approved.

Extracting and clearly defining the detail of extenuating circumstances to show how past sellers ended up with a short sale or foreclosure falls upon loan originators. So, what is the extra work and detail needed for these loans?

At,  there are 3 worksheets for the borrower and loan originator to prepare a case for an underwriter.

  1. Borrower Makes Case:  extensive list of questions for the borrower to detail. Items needed are included on this list.
  2. LO: Economic Event Worksheet:  loan originator uses “Borrower Makes Case” and provided documentation to complete.
  3. LO: Reduced Income and Increased Debt Table: made to show percentage of reduced income for FHA Back to Work and increased expenses needed for Fannie Mae, Freddie Mac and USDA(medical). Also, lower table shows how “Un-anticipated Additional Debt” can be substantial, showing the REAL hardship.

Loan Originators

  1. Be attentive to your borrowers’ entire story. Question needed details.
  2. Be prepared to document income 1 year prior to the event and over multiple years. Many affected saw trouble coming and tried to prepare. However, the process of going through a short sale or foreclosure with a lender is often drawn out and some take years. During this time, assets are depleted, income fluctuates and credit becomes worse.
  3. Do not be surprised when the borrower is reluctant to detail this timeframe. Many try to forget, and having to dig up paperwork or discuss the event again can be highly emotional.
  4. Loan originators must go the extra mile to prove all remedies tried. WHY? Even when jobs were lost or incomes reduced, when rental income did not cover the mortgage payment on an underwater property, when divorce or a death occurred, a great majority of these homeowners whittled away at savings and retirement funds trying to stay afloat. For many, there is often a final problem  after the economic event where there was no choice left but to sell the home.
  5. It is very common to see an alarmingly high BACK debt to income (DTI) ratio (Reduced Income and Increased Debt Table) even when the mortgage payment is made. This worksheet is intended to show that reduction in income is not always the primary reason to sell.
  6. On short sales, retrieve the HUD-1, the final lender short sale approval letter on 1st and 2nd mortgages and proof of the wire sent from the closing of the property. Why? It is common for the date of payoff on a credit report to be a different date than the actual closing date.
  7. Borrowers that had a deficiency payment may have a “Satisfaction of Mortgage” that shows a release of lien/mortgage but “does not constitute a satisfaction of debt”, so check documents received.  Retrieve the letter to the borrower stating when the deficiency is satisfied the 1099 that often states “forgiveness of debt”. (Documents noted above can be retrieved from the title company noted on the HUD-1 or listing agent.)
  8. Preferably, run file through Fannie Mae’s automated system upfront, which specifies which account and what date causes a Refer. If the short sale shows up as a foreclosure or findings note an incorrect  disbursement, contact your [1]credit reporting agency to correct the date and repository comment.
  9. For an FHA mortgage, make sure the homeowner goes to a HUD Approved counselor at least 30 days before a contract is written or an application taken.

Bonus: the gratitude of these clients will remind you of why you are in the mortgage business.

Pam Marron (NMLS#246438) is senior loan originator with Innovative Mortgage Services Inc. (NMLS#250769) in Tampa Bay, Florida. She may be reached by phone at (727) 375-8986 or e-mail Websites:,,

[1] National Consumer Reporting Association ( is aware of the erroneous foreclosure code on short sale credit and error in dates. Go to to find credit reporting agencies in your state.


Where Boomerang Buyers will move in the next 8 Years | RealtyTrac

Jan 24, 2015

RealtyTrac analyzed foreclosure, affordability and demographic data to provide predictions of when and where these boomerang buyers are most likely to materialize. Nearly 7.3 million potential boomerang buyers nationwide will be in a position to buy again from a credit repair perspective over the next eight years.


Loan Originators: “DIG” and Document


Boomerang Buyers, (those who have had a past short sale or foreclosure) are coming back into the housing market and loan originators who assist these folks with a new mortgage are going to need to hone up on research skills.

Even though there had to be a valid hardship to get be approved for the actual short sale, the hardship and circumstances surrounding a short sale will be looked upon differently when applying for a new mortgage afterwards. Those who have been in the mortgage industry for any length of time probably remember the days of the RMCR where supplements needed to be added to correct credit errors. Today, lightning speed for credit reports done in seconds is required by the industry. But with the unprecedented events that have occurred in the last 7-8 years, the need for loan originators to slow down and “get the story and credit” right is more important now than ever before.

Lenders are starting to see an increase of mortgage files for boomerang buyers, but they caution us that loan originators need to thoroughly review documents to make sure that what is necessary to approve these clients is there upon submission. United Mortgage Corp. Sales Director Jason Frangoulis states, “it’s got to make sense. Hardship had to be apparent and it’s got to be documented.” And even though more lenders are underwriting those with a short sale or foreclosure in the past, these same lenders are reluctant to promote this as a service. “Some of the files we are getting are sloppy and not well documented. We look like the bad guy when we have to turn down one of these loans because it was not well put together,” claims an anonymous lender.

So we decided that has to be more than just a place where Boomerang Buyers and Distressed Homeowners get assistance. We also need to assist loan originators with what  documentation is needed. Letters of explanation need to be backed up with any matching documentation available, and credit MUST be correctly represented on the mortgage credit report. Yes, you may need credit supplements for accurate dates and you might have to submit to Fannie Mae or Freddie Mac’s automated system more than once. Your borrower may need to go back to the short sale lender for missing documentation. There is no doubt this is not an easy job.

If it doesn’t make sense to you, it won’t to an underwriter. DIG DEEP. Get the details. Ask questions. Let there be no doubt your client had a hardship. And in the end, if the story does not make sense and can’t be proven, give your client future options.

The hope is that the Help Network on can grow with industry professionals that learn how to assist the 7.3 million projected consumers who will be eligible to  re-enter the housing market within the next 8 years.

Underwater and Home Equity Report, 4th Quarter 2014 | RealtyTrac | Jan. 14, 2015

4th Quarter 2014 Underwater and Home Equity Report | RealtyTrac Report | Jan. 14, 2015
SUPERB data collection for Distressed Homeowners and Boomerang Buyers.

NREP: What has credit got to do with Boomerang Buyers? EVERYTHING!

National Real Estate Post explains credit scores and 7.3 million Boomerang Buyers who may be getting back into housing.

Why we created

Why did we create

We created this site to help the sheer number of those affected by Short Sale and Foreclosure issues.

8 to 9.1 million still underwater in July 2014 per RealtyTrac. This appears to have come down to 5 million per Corelogic, Dec. 2014.

That’s still a lot of underwater homeowners we want to help.

Confusion about Short Sale: LENDERS require delinquency, but CREDIT IS IMPORTANT to homeowners!

“One time life event mortgage defaulters are vastly different than chronic mortgage defaulters,” states the May, 2011 Financial Summit/TransUnion/Life after Foreclosure and Hidden Opportunities article.  

Judgment en-masse… how could people undergoing such hardship  have credit that seemed to be intact? And if credit was intact, these homeowners must really be strategic defaulters.

The reality was that short sale lender policy required mortgage delinquency in order to get short sale approval… then… and most still require delinquency now. And homeowners were wiping themselves out financially and feeling humiliated that they had not seen this coming. 

 The common thread in hundreds of cases we have worked on can prove that homeowners did everything that they could to stay afloat and hang on – until they could not any longer. Credit was of utmost importance to the overwhelming majority of the homeowners who were affected by short sale.

Real Hardship: Be Grateful That You don’t Have It

By Pam Marron

Troubled by negative comments directed at Senators Warren, Menendez and Merkley about their questioning of Federal Housing Finance Agency director Mel Watts’ reluctance to allow principal reduction for underwater homeowners, I had to write.

Every discussion about how to help millions of homeowners that are STILL  underwater (in a negative equity position) starts like this: “If they hadn’t taken out a second mortgage to buy all of those toys” or “bought more house than they could afford”, they would not be in this position.

Here’s the reality of the majority of these cases. Divorce happened. Families grew or kids moved out, resulting in need of a move for growth or downsizing. Jobs were cut and folks had to move to regain employment, or couldn’t afford their existing mortgage with a new job obtained. All of these reasons are why folks have to move. But, when an underwater homeowner must move and a short sale is contemplated, there is harsh judgment for how they got underwater, even when the need for a move is from real hardship.

The problem worsens when lenders require mortgage delinquency first to approve the short sale. This is still required today and I have seen very few exceptions where short sellers were allowed to make payments to the closing date. Little attention is given to the lender servicing practice that requires the delinquency. Instead, loads of press has reported on the “strategic defaulters”, those who can make their mortgage payment but choose not to. There has been virtually no press that many so-called strategic defaulters weren’t making their payment because it was the only option they were given to get short sale approval and exit their home…. advice given to them by their lender.

I am a mortgage broker in Florida, where 28% of home mortgages are still underwater. Three years ago, the percentage was around 62%. My sites were set on helping folks back into the real estate market when they could re-enter. During these years, a pattern became evident. Underwater homeowners were being told by their lenders that the only way they could get approved for a short sale was to go delinquent. These homeowners were bewildered that their credit had to be stellar to get the mortgage initially, and now they were being told that to exit the home the credit had to be delinquent.

Not believing this, desperate homeowners allowed me to be on calls with their lender to confirm what they were telling me. It was clear, and with multiple lenders and homeowners. The requirement to be delinquent on mortgage payments in order to get short sale approval was told directly to affected consumers by their mortgage lenders, and on recorded calls.

The reality was that many underwater homeowners were willing to make mortgage payments during the short sale process, but mortgage lender servicing rules required these homeowners to be delinquent.

Underwater homeowners face a lose-lose proposition. If the homeowner must sell but does not have the funds to pay the difference needed between the mortgage balance and the lower house value, a short sale, foreclosure or renting out the home are their only options.

Loss on Three Options

1. Short sell: the homeowner works with the lender on a lengthy process that, to this day, requires delinquency of the mortgage. Hardship must be explained by the homeowner and acknowledgment is part of the approval process for the lender short sale. Credit is incorrectly coded as a foreclosure after 120 days of delinquency which results in a new mortgage denial years later when past short sellers are eligible for a new conventional loan. And, a foreclosure requires a 7 year wait rather than the 2 year wait after a short sale, per Fannie Mae and Freddie Mac [1]Seller Guides. And recently, we are seeing [2]Fannie Mae and [3]Freddie Mac coming back after past short sellers for deficiencies, per 9/24/2013 FHFA Recovery Reports.

2. Foreclosure:  the homeowner ceases to make payments or is turned down for a short sale. Credit is coded as a foreclosure which results in a 7 year wait for a new conventional mortgage.

3. Renting Out Underwater Home: many did this years ago when a move from the home had to be done. However, many who rented are now preparing for a short sale, financially wiped out after years of making up the difference between rent received and the mortgage payment.  Many tried this option hoping to eventually have enough equity to sell the home without a loss. However, the rate of appreciation has not happened quick enough, and those who are still trying to dig out of these properties often have little or no choice but to short sale.

And for those underwater homeowners trying to stay in their home, a refinance available called HARP 2.0 has had limited success because many lenders cap the amount of negative equity… for a program that has no cap on negative equity! And, if you have a conventional mortgage that is not owned by Fannie Mae or Freddie Mac, there is no refinance for you.

So how do you answer the common perception that “those who are underwater got there on their own accord” and “what will be done for all who are NOT underwater?”

Here’s the answers:

  • Be grateful that you are not in the shoes of those still underwater, that your credit is not wrecked, and that you can get on with your life.
  • U.S. Housing: Seriously work on and get implemented HARP 3.0, or an alternative refinance plan that allows unlimited loan to value (like it is supposed to!) for all conventional mortgages including Fannie Mae and Freddie Mac. Give a pricing incentive to lenders who apply REAL written guidelines to these loans, instead of so many overlays and limits that fewer homeowners can get any benefit. This is not a handout. These are performing loans and banks will make a profit while building goodwill.
  • Don’t take advantage of these folks, who are either locked out or still having trouble getting a conforming mortgage, even though Fannie Mae and Freddie Mac have specific rules that allow these mortgages. Non-QM mortgages at higher rates have come into the mortgage marketplace and qualified consumers must often settle for a higher rate with non-QM lenders even though they meet criteria for a new mortgage with Fannie Mae and Freddie Mac.
  • Pay attention to the credit of these consumers that is being destroyed! There seems to be little regard for credit that continues to be screwed up for folks who have gone through a short sale. Credit is the key to the growth of our country. New credit products promising better service continue to be pushed, while consumers with credit problems who have proof of the real credit have to pay enormous amounts of money just to get corrections.
  • Stop ignoring the underwater mortgage problem and judging those affected as “strategic defaulters en masse”. The majority of those affected are trying to get on with their lives and want to contribute. There will always be takers, but [4]reporting of strategic default has been over stated.
  • Ask these folks what REALLY happened, and you will hear unbelievable stories of hardship where great thought went into how to dig themselves out.
  • States that have Hardest Hit Funds available for underwater homeowners need to promote this.

For all homeowners who are not underwater, be damn glad you are not in their shoes.



[1] Requirements for an FHA, VA and USDA mortgage are different.
[2] FHFA Can Improve Its Oversight of Fannie Mae’s Recoveries from Borrowers Who Possess the Ability to Repay Deficiencies
[3] FHFA Can Improve Its Oversight of Freddie Mac’s Recoveries from Borrowers Who Possess the Ability to Repay Deficiencies
[4] Unemployment, Negative Equity, and Strategic Default/Federal Reserve Bank of Atlanta/August 2013