Although a decline in foreclosure filings combined with a marked rise in foreclosure judgments in the courts this year suggest a logjam of defaulted loans is clearing in Westchester, the mortgage crisis is not near an end in the county, according to professionals working with homeowners and lenders here.
“It really is the same,” said Geoffrey Anderson, executive director at Westchester Residential Opportunities Inc., a nonprofit housing agency in White Plains that provides counseling and other services to potential buyers and homeowners, most of whom have household income ranging from 50 percent to 80 percent of the area”™s median income. “We”™re still seeing a lot of clients coming in.”
Anderson said the WRO office is averaging three to four calls a day from new clients calling about mortgage defaults. “One of the saddest parts of this is we”™re getting calls from individuals who have court appearances within 48 hours,” he said.
Veronica Raphael, mortgage default prevention director at WRO, said the agency also gets calls from homeowners summoned to pre-foreclosure settlement conferences. Supported by funds from New York”™s $130 million share of a national mortgage settlement with the five largest mortgage servicers that were allocated to the state attorney general”™s 2-year-old Homeownership Protection Program, WRO housing counselors represent clients at the conferences to try to work out loan modifications to avoid the loss of their homes. “That has been saving a lot of homeowners from foreclosures,” she said.
“There”™s still a substantial amount of foreclosures being filed and there”™s still a substantial backlog in the courts,” said Peter Spino Jr., a White Plains real estate attorney representing clients in foreclosure defense, loan modifications and short sales of properties at prices less than their owners”™ outstanding mortgages.
Although low-income and middle-class homeowners in the county have borne the brunt of the collapse of house market values and job losses since 2007, mortgage defaults “definitely run the gamut of income ranges,” Spino said. “Over the last year or so we might have seen some people at the higher end of wealth” who have tapped out assets that had staved off default on their mortgages, he said.
At Keller Williams Realty in Bedford, “We”™re still seeing a fair amount of luxury properties (with mortgages of more than $1 million) that are in distress,” associate broker Mark Boyland said. A certified distressed property expert, Boyland offers advice on alternatives to foreclosure and markets his short sales realty team at his website, dontforeclosesellinstead.com.
His short sale business, though, “is not as strong as it”™s been in the previous years” of the national mortgage crisis, he said. Boyland a year ago said short sales made up more than half of his firm”™s business.
Westchester County Clerk Timothy C. Idoni recently reported that 1,738 foreclosure actions by lenders or mortgage servicers were started in the county through the first three quarters of this year. That is a 15 percent decrease from the same period in 2013, which ended with 2,697 foreclosure filings for the year, the highest in the county since the depths of the recession in 2009.
While new filings have slowed, 560 foreclosure judgments by the courts against defaulting homeowners were issued through the first three quarters this year, a 140 percent increase from the same period in 2013. Judgments to date this year already are up 51 percent from the 371 judgments recorded for all of last year.
“While a drop in new actions is a hopeful sign that the Westchester foreclosure crisis is slowing, far too many foreclosure actions still end in a judgment of foreclosure,” Idoni said in his report.
In his law practice, “I definitely have seen a lot more judgments,” Spino said. “I think it”™s just a byproduct of foreclosures finally getting to the end of the road.” Foreclosures in Westchester often take two to three years, both Spino and WRO officials said.
Boyland said the spike in foreclosure filings in 2013 led to the spike in judgments this year. Yet many of those defaulted homeowners will not lose their homes, he said.
“I would say the majority of judgments will go short sale or final (loan) modification before foreclosure” and the sale of the properties at auction, he said. A court judgment against them “is what some people actually need to do the right thing.”
Spino said he tries to arrange short sales for clients before a foreclosure sale is scheduled, although the risk of losing one”™s home is high. “You”™re in a very dangerous situation after the judgment where it”™s very difficult to save the house,” he said.
Boyland said lending banks “are very focused on other parts of the country” with more mortgage defaults and faster processing of foreclosures than in New York, which requires lenders and borrowers to appear before a court-appointed referee at a settlement conference after a foreclosure action is filed.
“New York got backlogged and they”™re still backlogged,” he said. But banks have become more aggressive here against defaulted homeowners, some of whom have not made a mortgage payment in a few years, Boyland said. “I”™d say the bulk of them are in the (foreclosure) process now.”
Despite federal and state programs to prevent defaulted borrowers from losing their homes, some do not qualify for modifications. At Westchester Residential Opportunities, about 30 percent of clients in default are not eligible for modifications because they lack sufficient income to repay the loans and catch up on arrears, Raphael said.
“We”™re still seeing homeowners that are unemployed more than a year and at a serious stage” in foreclosure, she said. Other clients in default own multifamily homes and lack adequate income because their tenants are unable to make rent payments. Others can”™t pay their mortgage because they are underemployed.
Spino has had clients whose mortgage payments do not exceed 31 percent of their gross income, which disqualifies them from the modification program. “I”™ve had three people recently who actually made too much money to get a loan modification,” he said.
At WRO, Anderson said that some loan modifications have higher adjusted interest rates that are coming due and which some homeowners cannot afford.
Raphael added, “We”™re seeing the loan modifications would be affordable if the (property) taxes weren”™t so high” along with property insurance. “That makes it unaffordable for some homeowners.”
Raphael said two major mortgage lenders, Bank of America and Chase, have sold servicing rights on defaulted loans to small servicers. The White Plains agency had approximately 40 Bank of America loans it was handling for clients at the start of 2014, she said. By spring, after the bank”™s sale of mortgages to other servicers bound by fewer regulations, WRO had only about eight Bank of America loans in its pipeline, she said.
“We”™re still at that forced enforcement stage” for loan modifications by banks and servicers, Raphael said. “They”™re not cooperating. They must be forced to do modifications.”
Spino said though there”™s “still a tremendous amount of short sales out there” by homeowners in default, the banks have been moving more quickly to get them approved. Lenders are also doing loan modifications “in a more timely manner,” he said.
But Spino is not hopeful that an end to the county”™s mortgage crisis is near.
“Two years ago I thought we were halfway there,” he said. “We still have years ahead of us. Obviously we”™re at the back end, but it”™s nowhere near over.”
There are another 10 MILLION foreclosures yet to occur. The national and foreign national banks must be stopped from their continuing racketeering enterprises. They will stop at nothing to force defaults and then foreclose.
Had more people stood up and fought this from the beginning (fake securitizations and faux foreclosure plaintiffs) it could have been exposed. Now we’re ten years into this fraudulent mortgage “servicing into foreclosure”. Thank your local judges for letting the fraud continue unabated.