Why must we end foreclosures?

Looking deeply we can see that the borrower is the victim. It is naive to say that the lender foreclosed on the loan because the borrower defaulted. According to my teacher, Thich Nhat Hanh, "The manifestation of something or someone does not rely on one condition alone; it relies on many conditions. So, the idea that one cause can bring about the effect is not correct. One cause is never enough to help something manifest." So we must look further to see what else contributes to bring about a foreclosure. Perhaps then we will understand why I say that the borrower is the victim.

The valuation of the property is a very important factor along with financial hardship. In fact sometimes borrowers just stop repayments because it just doesn't make sense to pay an inflated price for a property when they can buy a better home for less. Even then the borrower is not at fault.

Lenders hire qualified individuals as underwriters and property appraisers who make the all-important decision of how much can be advanced to a borrower. It is the underwriter who assesses the financial qualifications of the borrower. Mind you, the lenders don't really look for poor, homeless, jobless individuals as customers. They look for individuals and families who can save enough every month to repay an amount that will be advanced to them which is determined by the lender. The amount of money that can be advanced to the borrower is capped at a certain percentage of the value of the property that will serve as the collateral. It is the lender, through its chosen property appraiser who determines the value of the property.

So we can see that the lender is not really providing housing to the homeless, jobless who really need financial assistance to buy a home more than anyone else but in fact are selling a product to those who they think can afford it. They are looking to profit. It is important to keep this in mind. They determine what you can borrow and they determine what the collateral is worth and they are looking to profit. You, as a borrower, are just participating in good faith, buying a shelter for your family. So your child can have his own room.

A few years later the old appraisal report is replaced with a new one and it is determined that your property is now worth much lesser than what it was initially appraised at. In fact, the outstanding balance on the mortgage is more than what the property is  worth. Your mortgage is now what is known as an "underwater" mortgage. Enter Ocwen, very eager to buy such loans.

In case, the borrower continues with repayments as usual, not only does the borrower end up paying a lot more for the house than what it is worth but also has to deal with Ocwen every month to make sure she is getting her statements on time and that her payments are being applied appropriately and on time. She may also find that her monthly mortgage repayments are now higher thanks to Ocwen adding expensive insurance or other fees. The borrower is the victim. The borrower ended up paying much more for property than what it was worth because of the lender's inability to value the property accurately.

Either due to reduced monthly savings generally caused by reduction in income or increase in expenses (many times due to medical reasons) or simply because the property is worth much less, the borrower who wishes to keep her home asks the loan servicer, Ocwen, to consider reducing the outstanding principal in line with the reduction in home value. Ocwen will advise the borrower that they consider loan modification requests only on delinquent accounts, pushing the borrower into defaulting. Once the borrower has defaulted, Ocwen add up enough on to the statement like late fees and property inspection fees etc. to ensure that the borrower cannot catch up any more. They simultaneously begin foreclosure proceedings. In the event that the property is located in nonjudicial foreclosure state like California the borrower faces a race against time to keep her home.

The common ownership of Ocwen and Altisource have little to gain from a loan mod or a short sale but have lot to gain from foreclosure. Altisource stand to earn Buyer's Premium, Listing commissions, Web Technology Fee, Title and Escrow fees, Property Preservation Fees, Closing Coordination Fees and more! They also earn fees to process foreclosures on behalf of Ocwen in states like California. They also earn property inspection fees and may source appraisal reports through their own unit Springhouse AMC.

Looking deeper we can also see that companies like Altisource Residential buy loans for much lower than what the underlying security is worth. So if they foreclose and sell the home, apart from Altisource earning these fees, they would also make a "tax free" profit! Its much like buying and selling homes for profit, only it is tax free. Foreclosure wipes out junior liens and judgments from title and also either completely wipes out or reduces the HOA dues. This makes it even more profitable to foreclose.

With rising "REO to Rental" activity we can see that it acts as a strong motivation to foreclose. With buying a house becoming almost unaffordable in places like San Fransisco demand for rental properties is rising and it provides better return than a loan modification.

If we are mindful we can see that there is no reason to reject a short sale and foreclose unless Ocwen are working to benefit Altisource. As a part of the Ocwen's Assisted Short Sale Program properties are listed on HUBZU.com. So all they need to do is go with the best offer. However, we can see that foreclosing and selling the property will make more money for Altisource. So we can see why they will reject the short sale and foreclose instead.

The borrower has the odds stacked against her in all scenarios. Even in the case where the borrower just walks away, it is the loan servicer at fault for failing to counsel the borrower appropriately. For failing to highlight the alternatives to the borrower.

"According to Vijñaptimatra Buddhism, there are two minds and three natures of reality. The deluded mind is the cause of all sufferings - the first link of the twelve links in the cycle of Interdependent Co-arising. This cycle is know as the cycle of birth and death and the nature of reality perceived under the influence of the deluded mind is known as parikalpit svabhav - Samsara. In Samsara there is parting, dissatisfaction and misunderstanding.

The other mind, the true mind, creates a world of suchness. There is no birth and death. No coming, no going. No after, no before. No one, no many. No existence, no non existence. It is complete, lacking nothing. This nature of reality is known as nishpanna svabhav - Nirvana. In Nirvana, there is no parting. There is satisfaction and understanding.

Deluded mind creates suffering. True mind creates happiness. The link between the two is paratantra svabhav - interdependence. So in order to reach the shores of nishpanna svabhav, we must go through the world of interdependence. We must constantly learn to see everything in the light of interdependence. We develop our mindfulness to enable us to constantly see the interdependent nature of things."

Vijñaptimatra Buddhism For Dummies

When we see the borrower's plight in the light of such conditions as highlighted above, we are already in the realm of paratantra svabhav. We can clearly see that the borrower is the victim and it is unethical to foreclose. When we look at things like this we are only a step away from ending foreclosures and what a relief that will be for homeowners! They only thing that stands in our way is the greed of individuals and corporations like William Erbey and Altisource. So they must be dealt with.

Let us work together, mindfully, towards the goal of ending foreclosures. Mindfulness will always keep us on the right track.

(The author, Saurabh Singh, is a student of the Buddhist monk Thich Nhat Hanh. He is a Foreclosure Prevention Activist and a vegan. He is also a member of People for Ethical Treatment of Animals(India), Consumer Advocates in American Real Estate, UNITES Professionals and supports various charitable causes and crowdfunding.)

Bill Erbey's Grand Designs

He sets up his companies at locations like Luxembourg, US Virgin Islands and Bermuda so they can save on taxes. He sets up companies like Altisource whose fortune depends on others' misfortune. Ocwen and Altisource Chairman, William Erbey, represents everything that is bad about our society today.

At a time when his country was struggling to deal with a recession that was brought about by a subprime mortgage crisis, Erbey found ways to contribute as little as possible to the government. Not only did he set up his companies at tax havens, he, in fact designed lines of businesses that seek to profit from his countrymen's misfortunes. Erbey champions a society that's driven by greed.

Twenty-six of the most powerful American corporations – such as Boeing, General Electric, and Verizon – paid no federal income tax from 2008 to 2012, according to a new report, conducted by public advocacy group Citizens for Tax Justice (CTJ), detailing how Fortune 500 companies exploit tax breaks and loopholes.

According to Cahir O'Doherty, " Everything connects: the bonanza being enjoyed by America’s super-rich is directly related to the drop in their tax rates - and as they prosper the public purse empties, so the nation faces devastating budget squeezes and the slashing of vital public services for the middle class and the poor.

Of course money doesn't grow on trees, but nor does it trickle down from rich men's pockets. But paying taxes is an obligation of citizenship, or it once was. If the rich want to escape their obligations to this nation or take their money abroad the better to hide it they should also lose their right to call themselves American citizens."

Bill Erbey's companies, Ocwen Financial Corporation (OCN) and Altisource Portfolio Solutions (ASPS), first induce default and push borrowers towards foreclosure then sell these foreclosed homes through their website HUBZU.com to earn Buyer's Premium, Listing Commissions, Title and Escrow Fees, Property Preservation Fees, Web Technology Fees, Closing Coordination Fees and more! In what is a direct conflict of interest between Ocwen's investors and Altisource, Altisource execute real estate purchase contracts on behalf of Ocwen paying themselves Title insurance and related search fees (to Premium Title, an Altisource company), Property Preservation Fees, Closing Coordination Fees etc.

Altisource Residential (RESI) intend to acquire single family residential homes, renovate them and rent them out. Only they don't buy any properties. They buy non-performing loans. Altisource Asset Management Company (AAMC) acquires and manages nonperforming loans on behalf of Altisource Residential (RESI). A majority of these will end up being foreclosed so they can be rented out or sold through HUBZU.com for a profit! Add to that the fees they will earn... more money! They clearly have vested interests in foreclosing homes!

Real estate agents are losing their inventory to Altisource who also function as a listing agency through their unit Real Home Servicing and Solutions. Title insurance revenues are being driven to NewSource, a company which has no employees! AAMC own 100% of shares with voting rights of NewSource and RESI own 100% of non-voting right shares. NewSource pay Altisource (ASPS) a performance fee of 90% of the net income after paying out a preferred dividend of 12% to RESI.

People have been pushed into defaulting by Ocwen who put unauthorized insurance fees and other charges depleting ordinary, unsuspecting people's escrow balance and making their monthly mortgage repayments unaffordable. Ocwen are notorious for not applying payments on time and then asking for late fees.  According to the data made available by the Departments of Treasury and Housing and Urban Development, Ocwen approved 23% of the modifications they processed under HAMP since the program's inception. Compare this with Bank of America's 44%, CitiMortgage's 43% and Wells Fargo's 35%. So they are not exactly pushing loan mods, neither are they pushing short sales. They are just looking to foreclose so Altisource can profit! Borrowers are being subjected to a nightmare.

How will we heal the wounds of the people who have suffered at the hands of Bill Erbey and his companies?

(The author, Saurabh Singh, is a student of the Buddhist monk Thich Nhat Hanh. He is a Foreclosure Prevention Activist and a vegan. He is also a member of People for Ethical Treatment of Animals(India), Consumer Advocates in American Real Estate, UNITES Professionals and supports various charitable causes and crowdfunding.)

Ocwen playing mind games?

I couldn't help but notice Ocwen's hopelessly poor attempt at mind games via the article titled "A House With a Modified Loan Is a Symbol of Servicers’ Tug of War With Investors", yesterday, on the New York Times website. Ocwen, through its PR firm, Sommerfield Communications, attempted to convey to the reporter an image of Ocwen as a loan servicer who are desperately trying to help homeowners keep their home but are under pressure from investors to foreclose. Nothing could be further from the truth!

Let's begin with Ocwen's claim that they do a very good job of helping homeowners. Let's do our own research to see if that is true. According to the data made available by the Departments of Treasury and Housing and Urban Development, Ocwen approved 23% of the modifications they processed under HAMP since the program's inception. Compare this with Bank of America's 44%, CitiMortgage's 43% and Wells Fargo's 35%. When you see this you realize why regulators, borrowers, investors and foreclosure prevention activists are worried when a large loan servicing portfolio moves from a Wells Fargo to an Ocwen.

To put it very simply - Ocwen and Altisource's common shareholders like William Erbey stand to gain from Altisource's growth. The more the properties foreclosed by Ocwen, the more the properties they can sell on HUBZU.com and earn real estate listing commissions, Buyer's Premium, Web Technology Fee, Escrow and Title Fees, Property Preservation Fee, Closing Coordination Fees and more!

Investors have very little information about Ocwen and Altisource's dealings and must rely on information supplied by Ocwen. Investors naturally would like to avoid foreclosures because Altisource sell foreclosed properties at very low prices through their website HUBZU.com. The only beneficiary from foreclosure are Altisource, its subsidiaries and certain firms who regularly buy properties through Altisource with the intention of selling them.

Concerns have been raised that due to the fact that Altisource sell properties on HUBZU through their own listing agency, Real Home Services and Solutions, they fetch lower values compared to properties sold by local real estate agents. RHSS agents are located miles away from the properties they sell and are unable to provide much information to homebuyers about the condition of the property. It has been claimed that their inability to turn on utilities, in many cases, makes it impossible for buyers to obtain loan approvals to buy the homes.  It has been claimed that the Buyer's Premium charged by HUBZU forces many potential buyers to look elsewhere. Some homebuyers have claimed that their lender did not allow Buyer's Premium on the HUD forcing them to back out. It has been reported that some lenders refused to finance homes if the title company were Premium Title (an Altisource unit). Many homebuyers have complained that Altisource take too long to fix title issues and that the slow functioning of Premium Title leads to loan lock expirations and additional costs to the buyer, which at times are credited back to the buyer leading to lower net to the investor.

Ocwen, according to their Purchase and Sale Agreement, pay for the title insurance and related search fees should the buyer agree to use Premium Title as escrow and title company. This is a direct conflict of interest between the investors and Altisource. Investors see lower net due to the title insurance fees being slapped on them, while Altisource benefit from the same. Were Ocwen not acting in a manner that helps Altisource profit, they would provide the same terms to all title companies. Ocwen also pay out Property Preservation Fees and Closing Coordination fees to Altisource units on behalf of the investors.

Altisource also coordinate foreclosures, evictions and cash for relocation program on behalf of Ocwen. They carry out foreclosures in states like California through their subsidiary Western Progressive. Altisource employees execute Purchase and Sales Agreements and HUDs on behalf of Ocwen and its investors. Altisource make the all-important decisions that impact Ocwen and its investors. From accepting or rejecting offers to determining if repairs are to be carried out to approving HOA, utility and other payments, they pretty much determine the investor's net. Altisource also own Springhouse AMC, a company that provides property appraisal reports.

I don't see how the investors benefit from foreclosure. The only one winner is Altisource and in turn its shareholders like William Erbey, who also happens to be an Ocwen shareholder. What a coincidence!

Investors are naturally hurt and probably feel that they did not get a fair deal. I sympathize with them. It is my belief that Ocwen-Altisource are driven by greed. Those who are driven by greed are never fair to others. They deprive investors of the returns they deserve. They deprive real estate agents of the commissions they deserve. They deprive borrowers of the home they deserve and homebuyers of the service they deserve. What about employees? One employee termed his work experience with Altisource "an epic swindle".

(The author, Saurabh Singh, is a student of the Buddhist monk Thich Nhat Hanh. He is a Foreclosure Prevention Activist and a vegan. He is also a member of People for Ethical Treatment of Animals(India), Consumer Advocates in American Real Estate, UNITES Professionals and supports various charitable causes and crowdfunding.)

The Most Viable Foreclosure Alternatives

We don't want anyone to lose their home. We don't want anyone to be forcibly displaced. There is no place for foreclosures and evictions in an intelligent society. They are symbols of moral, economic and social corruption. Unfortunately, they are of our own making. Our own craving for materialistic pleasures leads to consumerism and a system of governance that is more concerned about the health of its financial institutions than the health of its citizens.

In order to help home owners facing foreclosure,  the government of United States introduced HAMP. As of 04/30/2013, 18% of the home owners offered permanent modifications under this program had redefaulted and many were on the brink of default. The program itself is only available until 2015, so it does not really provide us a viable long term alternative to foreclose.

Some market partipants have, however, come up with some options that look like viable long term alternatives to foreclosure. I would like to discuss three of them.

The first one is an Assisted Short Sale program offered by Ocwen Loan Servicing in association with Altisource. The purpose of this program is to help fetch the best price for the property while ensuring that only minimum costs are incurred, encouraging the first mortgagee to approve the short sale instead of foreclosing on the loan. As a part of this program Altisource work on reducing costs by negotiating liens, judgements, HOA dues and other encumbrances and let the seller list the property on their online platform HUBZU.COM. This program is viable long term alternative to foreclosure because it addresses three major concerns of associated with a short sale - time, financial viability and finding a buyer. A short sale can be completed, in most cases, in less than two months from the date the seller opts for this program. Many short sales fail because the costs associated with them are high compared to a foreclosure (particularly in non-judicial foreclosure states). This generaly happens due to junior liens, HOA dues, judgements etc. The major strength of this program lies in the way it is able to deal with these issues. Finally,  HUBZU tries to find buyers. In case the seller already has offers, this a good opportunity to see if it is possible to find better offers. Overall, this looks promising and has folks at Altisource very excited about it. I hope firms other than Ocwen also get together with Altisource to design similar programs.

The second viable long term alternative comes courtesy real estate agents. Wherever and whenever possible a realtor may get an investor to buy the home through a short sale and rent it out to the seller with an option to buy. This would have to be disclosed to the lender at the very beginning. I understand that some lenders may not allow this. However,  wherever possible, this is a great way of letting the distressed home owner continue living in his home. This prevents foreclosure and displacement.

The third option is what can roughly be termed as "a deed in lieu of foreclosure in exchange for contract to rent". The first and the second options are great if you can find a buyer. However, there may be properties which may not find a buyer but have a home owner not wanting to be displaced. In such cases, wherever and whenever feasible, the home owners should have the option of offering the property via a deed in lieu of foreclosure to the lender or an REIT/investor (through the lender) in exchange for being allowed to rent the home.

The only fool-proof way to avoid losing material possessions is to not have them in the first place. Its not the loss of possessions that causes stress but our attachment to them. However, since we all have material desires ourselves, we can understand the stress others undergo when they are on the verge of losing material possessions. It is with this understanding that we must help others. Let us get together and end foreclosures. Let us say no to forced displacement. Let us push for viable alternatives to foreclosure.

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Saurabh Singh is a student of the Vietnamese monk Thich Nhat Hanh and is currently employed with Altisource. All views expressed here are his personal views and are not necessarily  endorsed by his employer. The author does not guarantee the accuracy of any information contained in this post. Real Estate, finance, banking and online transactions are complicated and governed by various regulations and readers are advised to consult with certified professionals before making any decision.

Realtors entering the path of Enlightened activities

Helping a home owner prevent foreclosure is a noble cause. Those realtors who wish to commit themselves to this cause are entering the path of Enlightened activities. However,  not everyone will be a success. It is more profitable to flip homes than work on a short sale for months only to see your efforts fail.

There are many challenges like negotiating liens, voluminous documentation, high wait time and an aggressive first mortgagee trying to foreclose the property. Such challenges do not exist on a normal real estate transaction. A reator entering this path will need to not only familiarize themselves with the technical aspects but also train their mind to develop certain special qualities.

Many websites do a good job of helping realtors with the technical aspects through courses and forums. When like minded people get together, they can encourage each other. However, I want to talk about training the mind to develop special qualities so we don't abandon our cause.

First,  we must try to remember that many people have helped us when we have been in distress and the high esteem in which we hold such individuals. Compare them with selfish individuals you have come across. You can then see clearly that you'd rather be the former than the latter. This is the first training.

Second, we develop the understanding that this could happen to anyone. Many people experience financial difficulties due to poor economy or not being able to work due to illness etc. Loss of job or reduction in income are the most common reasons due to which  people are unable to make  their mortgage repayments. This can happen to anyone. We must develop the understanding that this can easily happen to us.

Third, we develop a commitment to the cause. We must not look at a short sale transaction as just another transaction. We do not want to just go through the motions. Having realized that we want to help others and having understood that this could happen to us, we must seize the opportunity to rescue the home owners from their plight. This happens when we have committed ourselves to the cause. Every morning when you wake up tell yourself that today you will save homes from being foreclosed. You will save a family from the social and financial trauma brought about by a foreclosure.

Fourth, is awareness. Aware of the stress that such transactions can cause we can be better prepared. We have all experienced stress and if we did not like the experience chances are that somebody else will not like it either. By offering our presence to our clients we put them at ease by bringing them in contact  with our solidity.

Fifth, we must be vigilant. Many things can go wrong. By being vigilant we can prevent that from happening. Always keep an eye on the foreclosure clock. Check if you have standard documents like hardship letter, pay stubs etc. Some lenders frequently lose items or may deny having ever receiving them. Know where you are with each transaction at all times.

Sixth is developing the very valuable quality of patience. We have to tell ourselves that this will take time. You can negotiate a lien for 30% quicker than for 10% but that can kill the short sale. Be patient and help others do the same.

Seventh is perseverance. Perseverance is the ability to overcome difficulties that come our way. No agreement between the first and second lien holder. Unrealistic timelines set by the first mortgagee. Non responsiveness. These are commonly encountered challenges that we must overcome.

Eight is meditation. Take a glass of water. Add a few spoons of sand in it and stir it. That is the state of our mind. Now wait for the water to be still. The sand settles at the bottom and you can see clear water. This is a mind post meditation. By meditating we create conditions for wisdom to arise. We stop negative seeds like selfish desires, greed and frustration from germinating and we remind ourselves of these nine qualities and improve every day.

Finally, the ninth quality is wisdom. The understanding that we are all connected to each other and no one can do anything arbitrarily. While one idiot with poor knowledge can ruin it for others, this also means that we can make it a success. Make sure that you drive the transaction. Be clever. This realization will help you take almost every transaction to the desired conclusion.

Helping others is an activity of the Enlightened. Welcome to the path of Enlightened activities!

Don't worry. I will be there.

The most valuable gift you can give others is your presence. This is the perfection of giving. When we are present we are practicing the perfection of giving. When we are present and mindful we can touch life. We can truly be of service to others.

Working for a real estate service provider I come across many people experiencing great anxiety and stress. Some buying a home for the first time. Some desperate to save their homes. Some trying to prevent a foreclosure.

People rely on real estate professionals to help them through what can easily turn into a nightmare. Most real estate agents are quick to highlight their acheivements, their qualifications,  the number of deals they have completed etc. Only a few say, "Don't worry. I will be there. It can get complicated and frustrating but I'll help you cope with it."

Being there we can do more. We do not have to be Governors or Presidents to make a difference. We don't have to be the CEO to bring about transformation. We just need to be present and mindful. When we are present and mindful we can penetrate the moment. We can heal. We can transform.

Your presence reassures a first time home buyer. Your presence gives confidence to someone trying to prevent a foreclosure. Offer your presence, your serenity, your freshness. These are more valuable than you can imagine.

I am happy to be with you. Lets see what comes along. When we are present, we are aware. We can experience. The food, the music, the love. We can experience life. We can touch happiness.

“The most precious gift we can offer others is our presence. When mindfulness embraces those we love, they will bloom like flowers.”