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Loan Modification - How A Nearly Broke Man Saved All 5 of His Homes From Foreclosure
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Loan Modification - Foreclosures Down Slightly In September, Loan Modification Process To Be Streamlined

noreply@blogger.com (Rick Zepeda) — Thu, 15 Oct 2009 18:12:00 +0000

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The rate of foreclosures finally appears to be moderating slightly. While the third quarter numbers were the highest on record, totaling 1 of every 136 houses in some level of the foreclosure process, September numbers finally showed a slight drop.

According to Realty trac, the rate of foreclosure filings dropped 4% in September, from the high numbers shown in August. This is not reason to celebrate yet. September numbers were still the third highest on record, but a 4% drop is significant, indicating that perhaps lenders are starting to work through inventories, and per haps also finally starting to modify more loans as opposed to foreclosing.

Nevada still leads the country with 1 out of every 24 homes in default. California, Florida, Arizona, Nevada, Illinois and Michigan accounted for 62% of U.S. foreclosure activity in the third quarter, with a total of 580,000 properties subject to foreclosure filings.
On the upside, we are hearing that the report card issued by the US Treasury department, regarding bank modifications was not good.

Lenders did reach the 500,000 number of loans in the three month HAMP trial modification process that the Treasury department was striving for. However, only a very disappointing 17,000 of those modifications have been made permanent.

Apparently the issue with getting trial modifications converted to permanent is that most home owners do not realize they must submit more paperwork to get this accomplished.

Laurie Maggiano, policy director at the U.S. Treasury Department’s Office of Homeownership Protection, said the government is introducing a new, streamlined application with just two documents to be signed, acknowledging the original paperwork was onerous.

Speaking at a session of the conference in San Diego, Maggiano said the government also intends to have the Internal Revenue Service use its formidable computer system to process these applications and get a "yes" or "no" answer back to servicers in two days.

Perhaps if lenders do finally get their acts together regarding modifications, we will actually start to see the number of foreclosure filings drop. There are still issues to be worked through, such as unemployment, but news is that the administration is working on that.

Problematic Mortgage Servicers Slow Loan Modifications

noreply@blogger.com (Rick Zepeda) — Tue, 25 Aug 2009 22:01:00 +0000

Does your lender have your best interest? Find out which loan modification companies can steer you wrong while others have success rates of 97% and above. Get the details in the FREE loan modification help and strategy Ebook.

Billions of dollars the government is spending to help financially pressed homeowners avert foreclosure are passing through — and enriching — companies accused of preying on the people they’re supposed to help, an Associated Press investigation has found.

The companies, known as mortgage servicers, are middlemen who collect monthly payments from homeowners and funnel the money to the banks or investors who hold the loans. As the only link between borrowers and lenders, they’re in the best position to rework the terms of loans under the government’s $50-billion mortgage-modification program. The servicers are paid by the government if the changes keep homeowners from falling behind on payments for at least three months.

But the industry has a checkered history. The AP found that at least 30 servicers have been accused in lawsuits of harassing borrowers, imposing illegal fees and charging for unnecessary insurance policies. More recently, the companies also have been criticized for not helping homeowners quickly enough — delays that lead to more fees for homeowners and profits for servicers.

The biggest players in the servicing industry — Bank of America, Wells Fargo & Co., JPMorgan Chase & Co. and Citigroup Inc. — all face litigation, some of which has led to settlements with homeowners. All will receive federal money to modify loans.

But the industry’s smaller players, which specialize in servicing riskier subprime loans and loans already in default, face harsher accusations that they systematically abused borrowers.

“The irony is, in essence, the government is paying servicers to do their job, which is to do loan modifications where appropriate,” said Kurt Eggert, a law professor at Chapman University in Orange, Calif. “And that’s not a part of their job they were ever especially good at.”

Jerry Turner is among the victims. He made payments to Select Portfolio for a Charleston, W.Va., house he no longer owned.

Homeowners stuck with firms that got them into the mess

When President Barack Obama announced the Home Affordable Modification Program in March, he said it would help up to 4 million homeowners avoid foreclosure. But only about 200,000 loan modifications are under way.

In late July, 25 mortgage-servicing executives were summoned to the Treasury Department for meetings at which they promised to deliver 300,000 more loan modifications by Nov. 1.

Under the loan-modification program, 38 servicers -- which collect monthly payments from homeowners and funnel the money to the banks or investors who hold the loans -- earn fees to help reduce the monthly payments of homeowners facing foreclosure. The goal is to modify mortgages so homeowners' payments don't exceed 38% of their gross monthly income.

In the past, loan servicers did little more than open envelopes containing mortgage payments and forward money to investors.

But the business has become far more profitable during the housing boom. The proliferation of mortgages sold to risky, or subprime, borrowers created an opening for the servicing business. They specialized in collecting from people less likely to make timely payments, and profited as late fees mounted.

Without government aid, servicers don't have enough financial incentive to modify mortgages. Each year, they earn about one-quarter to one-half percent of the value of the loans they service, so the larger the mortgage, the more they make. They earn less if the loan is modified, usually by lowering the interest rate or principal or adjusting the term.

The servicers also make money through late fees, or by foreclosing. The paperwork necessary to execute a foreclosure can generate hundreds of dollars in fees for some servicers.

Incentive to modify

Under the Treasury program, the servicers could pocket more than $5,500 for each loan they modify. But they won't be paid until the homeowners have made timely payments for three months. The servicers will also get government money to give to mortgage investors to compensate them for reducing the loans. How much will depend on what it costs the investors to modify the loan.

The largest mortgage-servicing abuse lawsuit was brought against Select Portfolio Servicing, which was accused of imposing illegal fees and charging borrowers for insurance they did not need.

The company paid $55 million in 2003 to settle charges. But it is eligible for up to $660 million under the Obama plan -- some to keep and some to pass on to investors and homeowners.

Most complaints against servicers allege similar abuses. Servicers often dispose of the harshest charges by settling without admitting guilt, as Select Portfolio did in 2003.

Treasury says it has no choice but to work with all servicers. Refusing to work with a particularly bad player would "deprive homeowners who have mortgages with that servicer from getting modifications," Treasury spokeswoman Jenni Engebretsen said in a statement.

An AP analysis of the 38 servicers the government is paying to help vulnerable homeowners found that:

• At least 30 face lawsuits from homeowners and advocates claiming they charged illegally high fees, prematurely foreclosed on homes and engaged in illegal collection practices. Most of the suits allege violations of laws that protect homeowners in foreclosure and prevent debt-collection abuse.

• At least 14 have been accused of misleading customers before the program began about whether they would qualify for loan modifications or how low their new payments might be. In many such cases, servicers are accused of telling borrowers not to make payments because their applications for modifications were pending -- and moving to foreclose anyway.

• At least three of the companies settled federal predatory collection allegations by pledging to correct their behavior. They have since been sued hundreds of times by homeowners who allege the same illegal practices.

Servicers want business so much that they sometimes bid more than they could reasonably expect to make back for handling a pool of loans, said Daniel Hedges, an attorney with Mountain State Justice Inc., a nonprofit West Virginia law office that represents homeowners facing foreclosure. As a result, some servicers began adding fees that weren't due or otherwise overcharging borrowers, he said.

Homeowners lose out

In February 2005, Janet Simmons was more than $30,000 behind on her mortgage. Bayview Loan Servicing began foreclosure proceedings on her home, located on 3.1 acres in rural Rockingham County, Va., between Washington and Charlottesville.

But Bayview -- which stands to receive up to $44.3 million from Treasury's loan-modification program -- foreclosed without providing required written notice, the Virginia State Supreme Court found. Bayview never sent Simmons a letter by certified mail, as required under her loan.

Unbeknownst to Simmons, the home was sold at auction in July 2005. She didn't find out she had lost the house until the new buyer asked why she was doing yard work on a home she no longer owned, said her lawyer, Kevin Rose.

The courts awarded Simmons $156,809 -- the difference between what her home was worth and what it had received in a foreclosure sale.

Simmons could not be reached for comment. A spokesman for Bayview did not return repeated phone calls requesting comment.

For six years, Jerry Turner made payments to Select Portfolio for a Charleston, W.Va., house he no longer owned.

In 2000, Turner was promised a loan modification in a court settlement. His mortgage belonged to a bank-owned pool of loans eventually serviced by Select Portfolio. Instead of lowering Turner's payments as the court had ordered, the bank foreclosed on Turner's home, court documents show. The bank then took the house back at auction.

Select Portfolio never told Turner his house had been sold. Instead, it continued sending him monthly invoices and cashing his checks. He didn't find out he had lost the house until it was sold a second time, at auction -- because Select Portfolio hadn't paid property taxes on the home.

"I had excellent credit at one time," Turner said. "Now, I can't borrow money on the house, I can't leave it, and it's been tied up so much I don't know what to do."

Turner's case against Select Portfolio is pending in West Virginia state court.

source: Freep.com

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Loan Modification - Obama Launches Mortgage Loan Modification Rescue Plan

noreply@blogger.com (Rick Zepeda) — Sun, 19 Apr 2009 20:17:00 +0000

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Source: NEW YORK (CNNMoney.com) -- The Obama administration's loan modification program is finally underway.

The Treasury Department announced Wednesday the first six participants to sign up for President Obama's plan. They include three of the nation's largest banks: JPMorgan Chase (JPM, Fortune 500), which will get up to $3.6 billion in subsidy and incentive payments; Wells Fargo (WFC, Fortune 500), $2.9 billion; and Citigroup (C, Fortune 500), $2 billion. The others are GMAC Mortgage, $633 million; Saxon Mortgage Services, $407 million; and Select Portfolio Servicing, $376 million.

Additional loan servicers will be added to the list over time, a Treasury spokesman said.

Several major servicers, including JPMorgan Chase and Wells Fargo, said they began modifying loans under the government initiative earlier this month. CitiMortgage signed up for the program on Monday and will start processing applications soon.

"We view this loan modification program as yet another incremental opportunity for thousands of homeowners to preserve and maintain the dream of homeownership," Wells Fargo said in a statement.

Distressed homeowners and housing counselors have been eagerly awaiting the program's launch since Obama first announced it on Feb. 18. However, it took weeks for the government to clarify the terms and for the financial institutions to update their systems and start accepting applications, frustrating many of those in trouble.

Billed as helping up to 9 million borrowers stay in their homes, the two-part plan calls for servicers to reduce monthly payments to no more than 31% of eligible borrowers' pre-tax income or to refinance eligible mortgages even if the homeowner has little or no equity. The government is allocating $75 billion to subsidize part of payment reduction, as well as provide thousands of dollars in incentives for servicers and borrowers to participate.

The Treasury Department said Wednesday it is capping the payments to servicers to allow more companies to participate. It is allocating $50 billion to the program, with Fannie Mae (FNM, Fortune 500), Freddie Mac (FRE, Fortune 500) and the Department of Housing and Urban Development providing the rest.

The modification plan calls for the servicer to reduce interest rates so that the monthly obligation is no more than 38% of a borrower's pre-tax income, and then the government would kick in money to bring payments down to 31% of income. Servicers can also reduce the loan balance to achieve these affordability levels. The government will share in the cost, up to the amount the servicer would have received if it had reduced the interest rates.

Only loans where the cost of the foreclosure would be higher than the cost of modification would qualify. Also, Treasury will not provide subsidies to reduce rates to levels below 2%.

It was not immediately clear whether the servicers must pay the incentives to homeowners and investors out of their funding share.

In addition to subsidizing the interest rates, servicers will use the Treasury funding to pay for incentives for themselves, homeowners and investors. The program gives servicers $1,000 for each modification and another $1,000 a year for three years if the borrower stays current. It will also give $500 to servicers and $1,500 to mortgage holders if they modify at-risk loans before the borrower falls behind.

Homeowners, meanwhile, will get up to $1,000 a year for five years if they keep up with payments. The funds will be used to reduce their loan principals.

The Treasury Department set the caps based on public data about the mortgages the servicers handle. Though the program mandates that servicers modify all loans that meet the requirements, the department feels the servicers will have sufficient funds to cover all troubled borrowers' applications.

"We're confident we'll have enough money," said Treasury spokesman Andrew Williams.

Separately, major servicers also recently started accepting applications under the refinance portion of the program.

Obama's Loan Modification Plan: 7 Things You Need to Know

noreply@blogger.com (Rick Zepeda) — Thu, 05 Mar 2009 02:25:00 +0000

Does your lender have your best interest? Find out which loan modification companies can steer you wrong while others have success rates of 97% and above. Get the details in the FREE loan modification help and strategy Ebook.

At the heart of the President Barack Obama's ambitious plan to rescue the housing market is the conviction that restructuring distressed mortgages will keep struggling borrowers in their homes and help insert a floor beneath plummeting property values. With $75 billion dedicated to reworking troubled loans, that's a big bet—especially considering that a top banking regulator said last December that almost 53 percent of loans modified in the first quarter of 2008 went bad again within six months. But supporters argue that mortgage modifications need to be properly engineered to work—and many early ones weren't. To that end, the Obama administration on Wednesday unveiled fresh details on its plan to restructure at-risk loans and help as many as four million home owners avoid foreclosure. Here are seven things you need to know about Obama's loan modification program.

1. Payments, not prices: The plan centers on the belief that struggling borrowers will stay in their homes—even as values decline sharply—as long as they can make their monthly payments. Although not everyone agrees with this, billionaire investor Warren Buffett endorsed the philosophy in his most recent letter to shareholders. "Commentary about the current housing crisis often ignores the crucial fact that most foreclosures do not occur because a house is worth less than its mortgage (so-called “upside-down” loans)," Buffett wrote. "Rather, foreclosures take place because borrowers can’t pay the monthly payment that they agreed to pay."

2. Thirty-one percent: To that end, the administration's plan requires participating loan servicers to reduce monthly payments to no more than 38 percent of the borrower's gross monthly income. The government would then chip in to bring payments down further, to no more than 31 percent of the borrower's monthly income. In lowering the payment, the servicer would first reduce the interest rate to as low as 2 percent. If that's not enough to hit the 31 percent threshold, they would then extend the terms of the loan to up to 40 years. If that's still not enough, the servicer would forebear loan principal at no interest. The plan does not, however, require servicers to reduce mortgage principal, which Richard Green, the director of the Lusk Center for Real Estate at USC, considers a shortcoming. "For underwater loans, if you don't write down the balance to be less than the value of the house, people still have an incentive to default," Green says. "Writing down the principal first instead of last—which is what [the Obama administration is] proposing—makes sense to me."

3. Cash incentives: To encourage participation, servicers will be paid $1,000 for each modification and will get an additional $1,000 payout each year for as many as three years, as long as the borrower continues making payments. Borrowers, meanwhile, can get up to $1,000 knocked off the principal of their loan each year for as many as five years if they make their payments on time. Neither party can receive the cash incentives until the modified loan payments have been made for at least three months.

4. Financial hardship: The Obama administration is pitching its plan as an effort to help responsible homeowners ensnared in the historic housing slump and painful recession—not speculators. As such, only owner-occupied, primary residences with outstanding principal balances of up to $729,750 are eligible. Occupancy status will be verified through documents, such as the borrower's credit report. In addition, the program is designed to target homeowners who are undergoing "serious hardships"—such as a loss of income—which have put them at risk of default. To participate, borrowers will have to sign an affidavit of financial hardship and verify their income with documents. "If we would have had such stringent verification over the last four or five years, we probably wouldn't be in as bad a position as we are in," says Richard Moody, the chief economist at Mission Residential. But while Moody has no objection to such verification, obtaining documents from so many homeowners could be an onerous effort. "It's going to be a very time-consuming process," he says. Only loans originated on or before Jan. 1, 2009, are eligible, and modified payments will remain in place for five years. Now that the administration's plan is out, lenders are free to begin modifying loans.

5. Net present value: To determine if a particular mortgage will be modified, the servicer will perform a so-called net present value test. The test compares the expected cash flow that the loan would generate if it is modified with the expected cash flow it would generate if it isn't. If the modified loan is expected to produce more cash flow for the mortgage holder, the servicer is to restructure the loan. Howard Glaser, a mortgage industry consultant and a U.S. Department of Housing and Urban Development official during the Clinton administration, called this component of the plan "clever," arguing that it would work to ensure broad participation. "When you apply the formula, the loans that are modified are the ones that are in the best economic interest of the investors to modify," Glaser says. "The federal subsidy for the payment on the modification…tips the scale toward modification as a better deal for the investor."

6. Second liens: The Obama plan also addresses the issue of second liens—such as home equity loans or home equity lines of credit—by offering incentives to extinguish them. But key details on this component of the plan remained unclear. "Distinguishing the second lien is really important," Green says. "[But] exactly how they are going to convince the second lien holder to do this is not clear to me at all."

7. Will it work? Moody argues that while the plan may reduce foreclosures for primary residences, it could lead to a spike in defaults for another group of homeowners. Although he supports the administration's efforts to focus the initiative on primary residences, Moody notes that "it could be the case that a lot of [real estate speculators] have been just hanging on waiting to see exactly what the details are of this [plan]," Moody says. Now that it's clear the Obama plan leaves speculators out, "we could actually see a spike in foreclosures or at least mortgage defaults among this group."

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Lenders - Loan Modifications and Coming Cram Downs

noreply@blogger.com (Rick Zepeda) — Tue, 06 Jan 2009 23:24:00 +0000

Does your lender have your best interest? Find out which loan modification companies can steer you wrong while others have success rates of 97% and above. Get the details in the FREE loan modification help and strategy Ebook.

The debate over how to stop foreclosures rages on. The FDIC’s Sheila Bair is at the forefront of the crusade to modify mortgage loans to help stem foreclosures. There have even been reports that the regulator will be forced out of office because she has been fighting with other government entities to have loan modifications implemented more aggressively.

Bair doesn’t focus on the lenders, she just wants loans modified and says the government programs in place have not been effective. She’s been trying to push forward the FDIC model of dealing with failed IndyMac Bank’s loan portfolio as a prototype for all government efforts.

Tom Brown has been critical of Bair’s efforts to have loans modified and says the market must return to equilibrium without her economy-defeating ideas. He says loan modifications will only delay the inevitable cleaning out of the market. Besides, regulators reported recently that the majority of loans that have been modified often default anyway.

Lenders have been considered the bad guys, showing a lack of effort to modify loans. Bloomberg reports that many of the piggyback loans that were popular during the housing boom have been stymieing mortgage modification efforts—meaning that in many cases the lender simply couldn’t change such a complicated mortgage scheme. Or that when one part of a mortgage is modified, the other part of it may kill the whole thing anyway. Homebuilder Lennar shows on its Q408 conference call that it is often a simple matter of communication.

Traditional sellers, that is, homeowners and homebuilders, are not able to sell homes unless they offer even greater discounts and keep up with liquidation values. The movement to keep people in their homes and to rework defaulted loans is frankly frustrated, by the inability of banks and servicers to actually communicate with their borrowers, and reworked loans are defaulting at an alarming reported 50% to 60% rate in the first three to six months.

Offering lenders the option of modification, but not forcing them, is just one of the reasons numerous well-meaning government programs to stop defaults have failed. Efforts to force lenders to modify loans were stopped short when the $700 billion bailout bill passed in October. Now the movement to allow judges to modify loans is gaining ground again. This “cram-down” concept may yet take hold and then lenders will have no choice.

Modifying a Loan May Not Help

noreply@blogger.com (Rick Zepeda) — Mon, 05 Jan 2009 18:06:00 +0000

As lawmakers and housing advocates push the federal government to help cut the foreclosure rate, Comptroller of the Currency John Dugan offers this sobering statistic: More than half of loans modified in the first quarter of 2008 still fell delinquent within six months.

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As lawmakers and housing advocates push the federal government to help cut the foreclosure rate, Comptroller of the Currency John Dugan offers this sobering statistic:

More than half of loans modified in the first quarter of 2008 still fell delinquent within six months.

Dugan based his statement on data collected in a survey of institutions that service more than 60 percent of all first mortgages, or 35 million loans worth $6 trillion.

Experts say one possibility is that the modifications might not have lowered monthly payments enough to be truly affordable.

"The loan modifications I have seen demonstrate that the lenders are only agreeing to the smallest-possible changes that have provided only temporary relief for the borrowers," said Bruce Sattin, a lawyer in Lawrenceville, N.J., who handles foreclosure cases.

Sattin said most modifications required borrowers to continue their normal monthly payments and pay additional amounts each month to make up payments missed before the loan was altered.

"There are individuals for whom any loan modification would result in a mortgage payment they can't afford, because they couldn't really afford the original mortgage in the first place," said Farah Jiminez, executive director of Mt. Airy USA, a community-development corporation.

"Trying to save the homes of those in such arrangements may only be prolonging the pain — especially for the homeowner," she said.

RealtyTrac chief economist Rick Sharga has heard of instances where payments actually rose after modification.

"The loans need to be structurally changed in order for the problem to be resolved," Sharga said.

Ocwen Financial, a West Palm Beach, Fla., servicer of mainly subprime loans, took issue with Dugan's estimate, saying it has "kept 60,000 troubled mortgages performing and the borrowers in their homes" this year. Its data show just 24.5 percent of these loans were delinquent after six months.

A major roadblock to reducing the foreclosure rate is that homeowners had to be 60 to 90 days late on their mortgage before they were eligible for modification.

Fannie Mae recently announced, however, that it would permit loan modifications for struggling homeowners who pay mortgages on time.

"All prior government efforts to help homeowners have been completely flawed because they have forced homeowners to be 60 or 90 days late on their payments in order to qualify for relief," said Gibran Nicholas, of the CMPS Institute, which certifies mortgage bankers and brokers.

Nicholas said he believed that the high rate of delinquencies from modified loans was due to their not involving principal reductions, a point also made by other experts.

"Homeowners are still left with debt burdens that exceed the value of their homes," Nicholas said.

Sharga said he believed that real loan modifications could work, but that these require the lender — and the investors who bought the notes — to take a significant write-down in principal.

"But many loan services don't have the contractual right to lower the terms that dramatically, and many of the investors who hold the notes are reluctant to discount the assets that much," he said.

Loan Modification - Next $350 billion in rescue plan aren't available without loan modification

noreply@blogger.com (Rick Zepeda) — Sun, 14 Dec 2008 19:26:00 +0000

A key lawmaker on Friday said that Congress would be unlikely to approve any request from the Treasury for an additional $350 billion in bank bailout funds unless there was an agreement to have some of the money be used to modify mortgages.

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"If they were to seek $350 billion, there would be members of Congress that would insist on a vote and I don't think there is any way Congress would approve it without a resolution of the mortgage-modification issue," said Senate Banking Committee Chairman Christopher Dodd, D-Conn.

Treasury Secretary Henry Paulson has publicly opposed using money from the bank bailout fund to employ a proposal introduced by Federal Deposit Insurance Corp. Chairwoman Sheila Bair.

Dodd has joined many Democrats in Congress along with Bair in seeking $24.4 billion or more in bailout funds for a mortgage modification program that they believe would help avoid 1.5 million foreclosures.

Rep. Maxine Waters, D-Calif. on Thursday introduced legislation with eight co-sponsors including Rep. Carolyn Maloney, D-NY, that mirrors Bair's proposal.
So far, the Treasury Department has already committed $330 billion of the $700 billion bank bailout package.

Treasury has allocated $125 billion to buy minority stakes in nine large banks and another $25 billion to dozens of smaller banks. It has also committed another $100 billion to invest in additional financial institutions as well as a separate $20 billion infusion into Citigroup Inc.

Loan Modification Programs Ready To Go

noreply@blogger.com (Rick Zepeda) — Fri, 12 Dec 2008 21:37:00 +0000

You may have seen headlines about the latest public and private efforts to help financially distressed homeowners cope with their mortgage payments. But you might not have caught key details that could have personal impact on you or people you know - now or in the recession months ahead.

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One of the most ambitious mass-market “loan modification” programs was outlined Nov. 11 by the Federal Housing Finance Agency - overseer of Fannie Mae and Freddie Mac.

The program, which is set to start Dec. 15, aims to help homeowners who are three months or more behind on mortgage bills.

Borrowers can qualify for sharply reduced interest rates, deferred principal payments, extended loan terms - whatever it takes to make their mortgages affordable.

However, homeowners must show that a hardship made them fall behind on their loans.

Borrowers must also prove that they didn’t intentionally go into default just to get better loan terms.

Lastly, participants must document that they can handle mortgage payments of up to 38 percent of monthly gross income.

Participating lenders say they want to hear as early as possible from homeowners interested in the new program.

Borrowers can work through the Hope Now Alliance (HopeNow.com) or the U.S. Department of Housing and Urban Development (HUD.gov/foreclosure). Hope Now also has its own toll-free hotline (888-995-HOPE).

The same day that FHFA unveiled its mass loan modifications effort, Citicorp - one of the nation’s largest mortgage lenders - unveiled a separate program designed to proactively help at-risk homeowners.

Citicorp plans to reach out to an estimated 500,000 mortgage customers who aren’t currently delinquent, but who appear to be at risk.

These clients either have credit files that show telltale signs of financial stress, or own homes located in markets that Citicorp thinks will face serious economic strains soon.

The bank plans to offer some $20 billion in “pre-emptive” mortgage modifications to such customers, handing out rate cuts, loan-term extensions and even - a rarity in the banking world - principal reductions.

Citicorp also intends to halt foreclosure actions against any homeowner who works in good faith with the bank and has sufficient income to handle modified monthly mortgage payments.

Both the FHFA and Citicorp programs make use of a “mass-market” loan-modification approach championed by FDIC Chairman Sheila Bair.

Bair made headlines in recent months when the Federal Deposit Insurance Corp. - the government agency that takes over failing banks - offered consumers across-the-board help to avoid foreclosures.

After the FDIC seized IndyMac earlier this year, the agency unilaterally offered many of the institutions’ delinquent mortgage customers loans with 3 percent interest rates.

Most experts believe that only such wholesale approaches can prevent a continued wave of mass foreclosures.

However, not everyone agrees with the latest proposals on mass loan modifications.

For instance, some experts criticize the fact that the FHFA plan requires homeowners to be three months behind on mortgage payments to qualify.

“All I have to do is stop making mortgage payments and I can get a 3 percent rate? Sweet!” asked Rob Chrisman of California-based Residential Pacific Mortgage.

Other critics argue that mass modifications will produce high rates of “recidivism” - scads of future foreclosures as homeowners find they can’t afford even new, cheaper loans.

“If you’re doing mass loan modifications without careful, individual re-underwriting, you’re just going to end up having to do the same thing again (in a few years),” said Joseph Smith of Kentucky-based Default Mitigation Management LLC.

FDIC's Chairman Sheila Bair Defends Community Reinvestment, Supports Loan Modification

noreply@blogger.com (Rick Zepeda) — Thu, 11 Dec 2008 00:27:00 +0000

FDIC chairman Sheila Bair said the U.S. government has been behind the curve when it comes to preventing foreclosures, and called for regulators to use their authority in creating flexible rules for making free loan modifications a top priority.

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She also defended the Community Reinvestment Act, a program that critics say was instrumental in creating the subprime crisis.

"I'm fully aware that the subprime debacle has shaken confidence in our ability to protect consumers. This is why bank regulators need to be smarter in using all of our supervisory tools to nip harmful practices in the bud, before they take on the scope and scale we've witnessed with the subprime debacle," she said in prepared remarks before the Consumer Federation of America on Thursday.

Bair said regulators need fast-track, broader-based efforts to help homeowners stay in their homes. She also reiterated that the IndyMac program developed by the FDIC could be a model for such efforts.

Under the plan, people who took out fixed-rate mortgages from IndyMac Federal would be able to seek lower priced loans if they were in, or near, default. The FDIC authorized IndyMac to modify loans that were 60 days or more delinquent, allowing monthly payments to be reduced to a level no greater than 38% of monthly household income.

Bair, a Republican, has said before that the IndyMac protocol could become a template for a nationwide program that she estimates would cost $24 billion. The idea has received broad support from House Democrats, but Treasury Secretary Henry Paulson has been reluctant to support the idea with TARP funds, and others aren't convinced the program would cost so little.

Statistics Show Loan Modification Not a Panacea - Loan modification not best use of government money, OTS director said

noreply@blogger.com (Rick Zepeda) — Tue, 09 Dec 2008 04:52:00 +0000

Reacting to news that over half of borrowers have failed to keep up with their mortgage payments even after the terms of their loans have been modified, Office of Thrift Supervision director John Reich on Monday said that focusing on job creation might be a better use of federal dollars.

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"I do have a concern about money for loan modifications, particularly with such a high range of re-default," Reich told participants at a conference in Washington organized by the Office of Thrift Supervision. "Focusing on job creation is a better way to focus federal dollars than on a loan modification process may be only partially effective."

Reich's statement clashed with Federal Deposit Insurance Corporation chairwoman Sheila Bair over the best way to use government funds to end the financial crisis.
Reich's comments were focused, in part, on Bair's controversial proposal that would use $24.4 billion of a $700 billion government bank bailout program to modify loans. Bair argues that her proposal, which isn't supported by outgoing Treasury Secretary Henry Paulson, could avert 1.5 million foreclosures. Reich also referred to a job creation stimulus proposal put forward by President-elect Barack Obama.

Reich told MarketWatch that use of government capital to buy large minority stakes in U.S. savings and loan banks is working, but that it is too early to get a sense of how much lending participating institutions are doing.

To back his argument, Reich pointed to statistics released Monday by the Office of Comptroller of the Currency director John Dugan showing a high re-default rate on mortgages that have been modified in the first two quarters of 2008. "The results were surprising, and not in a good way," Dugan told a gathering in Washington at the Office of Thrift Supervision's annual conference.

According to the OCC statistics, which looked at loans modified in the first quarter and second quarter of 2008, 36% of borrowers had re-defaulted by being more than 30 days past due and after six months, the rate was roughly 56%. After eight months, 58% of borrowers had re-defaulted.

The OCC tracked the number of borrowers that re-defaulted on their mortgages after the modification was completed. Dugan acknowledged that not all re-defaulted mortgages go to foreclosure, but he argued that the number was very high. Dugan said he was not sure why there was such a high level of re-default, pointing out that it may be because the loan modifications were not low enough to be affordable.

Bair contended that the statistics provided by Dugan did not provide enough details about the circumstances surrounding mortgage re-defaults such as whether a borrower's income has been verified or not. She argued that even with the statistics, a large number of modified mortgages have not led to foreclosure.

"Without more data about whether it was a meaningful reduction in the rate, it's not clear how successful the modification is," Bair said. "We do need more detailed reports and more granulated reporting."

Other bank regulators argued that the government should employ an all encompassing approach that includes a jobs stimulus package, a capital purchase plan for financial institutions and mortgage modification. "I suspect there isn't any one approach that is clearly superior to any other approach," said Federal Reserve vice chairman Donald Kohn. "These problems are pervasive enough that we need to focus on a number of different fronts."

President-elect Barack Obama said on Saturday that he wants to create millions of jobs by investing in a huge new national program to rebuild the nation's infrastructure.
Dugan agreed that across the board approach should be used. He added that Blair and others should use the statistics the OCC produces to develop a successful loan modification program for 2009.

House Financial Services Committee Chairman Barney Frank reiterated Monday that he wants part of the $360 billion left in the $700 billion Troubled Asset Relief Program to be used to help modify loans.

"The singular latest failure of public policy is to do significant foreclosure relief," said Frank. "Principle reduction has got to be one of the things we do. There still is money left in the TARP."

Home Foreclosure Crisis Demands Action at All Levels

noreply@blogger.com (Rick Zepeda) — Thu, 04 Dec 2008 17:21:00 +0000

Does your lender have your best interest? Find out which loan modification companies can steer you wrong while others have success rates of 97% and above. Get the details in the FREE loan modification help and strategy Ebook.

For the past two months, Americans have watched the federal government give nearly $350 billion of taxpayer money to the country's largest banks, while doing little to tackle the foreclosures that are driving down property values and destroying family wealth.

Last week, the Case-Schiller Home Price index revealed a nationwide drop in housing values of 17 percent over the last year alone — the largest annual drop in 50 years. Some of California's largest cities including San Diego, Los Angeles, and San Francisco topped the list, with annual declines of over 26 percent.

Foreclosures are central to the housing value problem. Here in San Jose, third-quarter foreclosures are up more than 400 percent over last year. But this is not just a financial crisis. It is a social crisis. Families are displaced from homes, children are displaced from schools, and neighborhoods are watching for-sale signs and foreclosure notices go up on more windows.

Religious congregations across the country are dealing with these on-the-ground realities. Earlier this month, members of PACT San Jose — a multi-faith community organization working with 21 congregations across the South Bay — joined faith leaders from across the PICO National Network in Washington, D.C., to call for a more systematic solution.

Standing in front of the stone pillars of the Treasury Building, more than 150 clergy and lay leaders called on Secretary Henry Paulson
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to wake up to the devastation occurring in communities across the country. In meetings with Congress, the Obama transition team, and the Treasury, our message was clear: If the bailout is about keeping our financial system afloat, then we need to get serious about addressing the foreclosure crisis. And we need to act quickly.

The good thing is that Congress now has an opportunity to rein in Secretary Paulson when he returns to Capitol Hill to seek authorization for the remaining $350 billion in bailout money. Congress should deny access to the remaining funds unless Treasury embraces a systematic loan-modification plan put forth by the Federal Deposit Insurance Corp. that would give bailout money to banks for modifying home loans.

FDIC's plan would guarantee these loans, as an extra incentive for banks, and would prevent future defaults by getting monthly payments down to an affordable 31 percent of income. Using just $24 billion to do this — for comparison, taxpayers have given $150 billion to AIG alone — could prevent as many as 2 million families from losing their homes.

And lawmakers in Sacramento, who are devising state-level strategies to encourage banks to work with homeowners to modify loans, should be adopting similar strategies, as well as pushing the federal government to take the lead on this issue.

In fact, every level of government can act on this crisis. San Jose should provide more funding for the stretched-thin foreclosure counseling program at Neighborhood Housing Services, a local HUD-sponsored nonprofit that provides free services to families at risk of foreclosure and assists them with loan modifications, social services and other needs. Funds for proactive, door-to-door outreach in the hardest-hit neighborhoods can help educate those at risk of foreclosure about their options. Local leaders should also look for models around the country, such as Philadelphia, where mandatory lender counseling averted almost 80 percent of foreclosures.

Keeping families in their homes is critical to the social and economic health of our area. Many foreclosures are preventable, especially if lenders will agree to standardized loan-modification protocols. And preventing foreclosure is good business for the owners of those loans as well. We need leadership at all levels of government to provide incentives and directives to move everyone in the right direction: keeping people in their homes.

Fannie and Freddie Work on Mass Loan Modification Plan

noreply@blogger.com (Rick Zepeda) — Tue, 11 Nov 2008 17:42:00 +0000

Fannie Mae, Freddie Mac and U.S. officials are expected to announce plans Tuesday to speed up the modification of hundreds of thousands of loans held by the housing finance giants, marking the latest effort to try and prevent more foreclosures, people familiar with the matter said.

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The announcement could mark the government's most assertive use of Fannie Mae and Freddie Mac to help homeowners since the companies were taken over in September.

The streamlined effort will target certain loans that are 90 days or more past due, these people said. The program will aim to bring the ratio of mortgage payments for these homeowners to 38% of their income by modifying interest rates and in some cases forgiving portions of principal debt, these people said.

Borrowers would have to provide a statement or affidavit showing that they have encountered some sort of hardship that has impacted their ability to pay their mortgage. It would only apply to loans made on or before Jan. 1, 2008, and borrowers will be disqualified if they file for bankruptcy. The homes must be owner-occupied and escrows for real estate taxes and insurance must already be set up.

U.S. government officials plan to encourage big banks that hold loans in their portfolios to take similar streamlined modification measures.

The announcement is expected to come at a press conference at 2 p.m. at the Federal Housing Finance Agency, which temporarily has Fannie Mae and Freddie Mac in conservatorship because of their shaky financial condition.

Spokespeople for the companies, the Treasury Department and the Federal Housing Finance Agency weren't immediately available for comment.

Servicers are expected to be paid $800 for a successful modification and loan investors are expected to reimburse servicers for certain fees associated with the modification. There will be a 90-day trial period, and if borrowers successfully make payments for those 90 days the modification will be formally approved.

The program is expected to be an extension of the Hope Now alliance announced last year that aimed to help people avert foreclosure by reworking the terms of their mortgages. Several large banks, including Bank of America Corp., Citigroup Inc., and J.P. Morgan Chase & Co., have announced their own foreclosure prevention plans. Some bankers have complained that Fannie Mae and Freddie Mac weren't being flexible enough in discussions over loan modifications.

Countrywide Settles Predatory Lending Lawsuit- Settlement Establishes First Mandatory Loan Modification Program In The Country

noreply@blogger.com (Rick Zepeda) — Wed, 15 Oct 2008 21:08:00 +0000

This settlement establishes the first mandatory loan modification program in the country and will serve as a model for other lenders and the federal government for how to help homeowners on the verge of foreclosure.

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Attorney General Lisa Madigan has announced a ground-breaking $8.7 billion settlement in her predatory lending lawsuit against Countrywide home loans, the nation’s largest mortgage lender and servicer. Madigan led the national settlement with California Attorney General Jerry Brown. Nine other states joined the settlement.

“The primary goal of this lawsuit was to keep as many Illinois homeowners in their homes,” Madigan said. “As a result of this settlement, thousands of Countrywide borrowers in Illinois, and hundreds of thousands nationwide, now will be able to modify their loans and remain in their homes.”

Madigan negotiated the settlement with Bank of America, which acquired Countrywide shortly after she filed suit in June 2008. Madigan’s lawsuit alleged that Countrywide engaged in unfair and deceptive conduct by marketing and originating unnecessarily risky and costly mortgage loans for Illinois homeowners.

Under the settlement, which is the largest predatory lending settlement in history, the mandatory loan modification program will provide immediate relief to homeowners who were put into the riskiest types of loans. Nationwide, approximately 400,000 borrowers are expected to receive modifications of their loan at a total cost of $8.4 billion. Approximately 10,750 Illinois borrowers are expected to receive a loan adjustment, representing nearly $185 million in modifications. This is the first mandatory initiative of its kind, contrasting drastically with the voluntary “Hope Now” program operated by the federal government.

“This program will serve as a model for other lenders and the federal government because of its immediate and far-ranging impact,” Madigan said. “Not only will thousands of Illinois borrowers be able to stay in their homes, but our communities and local governments will benefit by reducing the devastating impact that foreclosures have on local real estate values and taxes.”

The Countrywide program will cover borrowers with subprime loans, including hybrid loans with teaser interest rates, and the toxic prime loan product known as the pay-option ARM. For eligible borrowers, the interest rates on the loan modifications could go as low as low as 2.5 percent for five years. Pay-option ARM loans will no longer contain the negative amortization feature and their principal and interest rates will be reduced.

As part of this landmark agreement, Countrywide agreed to implement a range of homeowner relief programs and to drastically modify its future lending practices. Specifically, Countrywide agreed to:

Suspend foreclosures on the riskiest loans to determine if borrowers qualify for modification.

Establish a Foreclosure Relief Fund of $8.5 million for borrowers in subprime and pay option ARM loans who lost their homes due to early payment default or default at the time the interest rate reset. Early payment default is a strong indication that the loan was not underwritten properly and that the homeowner couldn’t afford the loan from the beginning.

Help homeowners through a $1 million relocation assistance program, which will provide payments to homeowners who cannot qualify for a loan modification. The funds will help borrowers relocate if necessary.

Waive loan modification fees and late fees.

Waive prepayment penalties on subprime and pay option arm loans owned by Countrywide.

Waive $1.7 million for the costs incurred in Madigan’s investigation, eliminating taxpayer expense.

The settlement comes in the midst of the unprecedented economic crisis caused by the collapse of the housing market. In July 2008, there were 8,915 foreclosure filings reported in Illinois, up 61 percent from July 2007. The delinquency rates on Countrywide loans in Illinois from 2005 through the first half of 2007 are even higher than Countrywide’s national rates.

Countrywide’s delinquency rates have been devastating for Illinois homeowners and across the country because of the company’s massive presence in the market:

By 2007, Countrywide was both the nation’s largest originator of prime and subprime mortgage loans.

In the first quarter of 2008, Countrywide originated $73 billion in mortgage loans nationally.

At its peak, Countrywide operated approximately 100 retail branches in Illinois and was the largest mortgage lender in the state from 2004-2006, selling approximately 94,000 loans to Illinois consumers in that period.

Countrywide also was the largest seller of high-cost, or subprime, home loans in the Chicago area in 2006, according to a 2007 Chicago Reporter study.

“This settlement holds the number-one mortgage lender in the country accountable for deceptively putting borrowers into loans they didn’t understand, couldn’t afford and couldn’t get out of. These are the very practices that have created the economic crisis we’re currently experiencing,” Madigan said. “I am pleased that Bank of America has worked with us to reach this important settlement. It is incumbent upon all lenders and servicers to continue to look for ways to help homeowners in trouble. At the same time, we must demand that Congress put tighter rules and regulations into place to prevent future crises.”

FAQ: Do I need a a loan modification attorney?

Lenders Mostly Resisted Calls From Government Urging Loan Modification To Stop Foreclosures

noreply@blogger.com (Rick Zepeda) — Mon, 13 Oct 2008 21:45:00 +0000

Lenders have mostly resisted calls from housing advocates, legislators and government legislation urging them to help stem the foreclosure tide by remodifying loans to include lower interest rates and monthly payments. And borrowers have fared no better, with many delinquent homeowners on Long Island unable on their own to break through to communicate with lenders and loan-servicing companies. Some lenders and servicers are so swamped with calls from distressed homeowners that it can take weeks to return calls.

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After she was laid off two years ago, Rosemarie Cino tried talking to her mortgage lender when she fell $8,000 behind on her mortgage despite her jobs walking dogs, cleaning swimming pools and driving for Federal Express.

"They didn't even want to talk to me," said the Islip resident, who has two dogs. "They were like, 'Pay or we're taking your house.' They asked about what I spend on food. When I said I had to buy dog food, they suggested I get rid of my dogs."

A year after the subprime mortgage collapse, millions of homes have fallen into foreclosure as the economy has soured and struggling homeowners buckle under the weight of higher payments on escalating adjustable rates and mortgage balances far in excess of their home's value.

Lenders have mostly resisted calls from housing advocates, legislators and government legislation urging them to help stem the foreclosure tide by remodifying loans to include lower interest rates and monthly payments. And borrowers have fared no better, with many delinquent homeowners on Long Island unable on their own to break through to communicate with lenders and loan-servicing companies. Some lenders and servicers are so swamped with calls from distressed homeowners that it can take weeks to return calls.

Notable deaths Inching closer to foreclosure, desperate homeowners are seeking out nonprofits and a growing number of for-hire negotiators. Housing advocates and loan modification or loss mitigation firms advise clients on required paperwork and steps that show how they can get back on the payment track -- all before negotiating with the lenders or servicers.

But after the explosion in the number of mortgages for people who didn't qualify, nonprofits and other industry veterans call for caution over this latest wave of sales pitches to needy homeowners, which also includes those who are behind on payments but don't have subprime loans.

The job of the loan modifier and housing advocate is to persuade the lender or servicer to rework terms into payments that the homeowners can afford. They try to lower rates, reduce monthly payments by extending the mortgage term, get cuts in the principal owed, switch adjustable rates to fixed, and make other changes.

Some firms and advocates succeed by emphasizing hardships, such as layoffs or accidents that led to hospitalization. Some pore over clients' mortgage papers for law violations as bargaining chips. Those who once worked in the mortgage world say they use their connections to lenders.

"There really wasn't a need for this until about a year ago, if that, because you could get a mortgage in a heartbeat," said Michael Attina, a former mortgage bank manager who founded Manhattan Mitigation in April and last month opened a South Huntington office. "That's what we're cleaning up right now."

Lately, with Wall Street giants dying and asking for a government rescue, the increasingly unstable economy has led to more lenders and servicers being amenable to loan "workouts," some nonprofits and loan modification companies said.

Hurried, last-minute conference calls are becoming something like performance art these days. But recent hastily announced earnings calls from Lehman Brothers Holdings and Morgan Stanley met their match in the conference call to discuss Jamie Dimon J.P. Morgan Chase’s $1.9 billion acquisition of Washington Mutual’s deposits after the largest bank failure in U.S. history. The news came out at around 7 p.m. Thursday and the conference call was held at 9:15 p.m. Deal Journal brings you the high points of what Thomson StreetEvents trillingly labels the “J.P. Morgan Chase & Co. Acquires the Deposits, Assets and Certain Liabilities of Washington Mutual’s Banking Operations.

FAQ: Do I need a a loan modification attorney?

Fannie and Freddie Loan Modifications Well Up Since Government Takeover

noreply@blogger.com (Rick Zepeda) — Wed, 08 Oct 2008 21:03:00 +0000

Since being placed in conservatorship, Fannie Mae and Freddie Mac have greatly ramped up their loan modification efforts, observers said.

Making before-and-after comparisons is difficult since many of the programs were started before Fannie and Freddie were taken over on Sept. 7 by the Federal Housing Finance Agency. But market watchers said the efforts have gained new momentum since the takeover, which essentially freed both government-sponsored enterprises to focus on delinquent borrowers rather than capital raising.

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"Because of the government takeover, they're getting all the money they need, so they're increasing loan modifications and recasting mortgages based on what the borrower can pay," said Terry Couto, a partner in the Tampa office of Newbold Advisors LLC of Bethesda, Md.

Jeffrey Garfinkle, a partner at the Irvine, Calif., law firm Buchalter Nemer who represents several companies that service loans for the GSEs, agreed that there has been "a change in terms of how aggressive they've become at saving borrowers."

"They are going to extraordinary lengths, spending a lot of time, effort, and money to make loans current and performing, and to avoid foreclosure - even if it's at extremely low rates and converting balloon rates," Mr. Garfinkle said.

Brian Faith, a spokesman for Fannie, said that in the past five weeks it has kept 3,100 borrowers from being foreclosed on, or roughly 40% of its foreclosed loans that were under review. Another 13,847 delinquent at-risk borrowers have received loan modifications and were kept out of foreclosure, or roughly 80% of at-risk loans that were reviewed, he said.

According to a report released by the FHFA last week, Fannie and Freddie combined offered an average of 12,193 workouts a month (including payment plans and loan modifications) in the first quarter, 54% more than the monthly average for all of last year.

Fannie and Freddie initiated 36,173 foreclosures a month in the first quarter, 60% more than last year, the report found.

Mr. Faith said Fannie is reviewing another 27,000 foreclosures that have been referred by seller-servicers. In some instances it is pulling back cases from foreclosure attorneys and returning the loans to servicers for review, he said. Depending on the circumstances, Fannie servicers "will lower the interest rate below market for a period of time to let a borrower get back on their feet," and "will extend the term to 40 years in some cases to help lower the monthly payment."

Brad German, a spokesman for Freddie, said it had completed 48,000 loan modifications or workouts by mid-September as part of a program it started in April. Freddie is on track to modify a total of 82,000 delinquent loans this year that had been headed into foreclosure, he said. Its mass modification pilot program lowers interest rates by 2 percentage points below a borrower's current rate and extends the term to 40 years.

"It is showing an increase in momentum, month to month, as it becomes more embedded within servicer shops," Mr. German said.

Gibran Nicholas, the chairman of the CMPS Institute of Ann Arbor, Mich., which offers professional certifications for mortgage bankers and brokers, said that a continued drop in housing prices could make many modifications moot.

"If you just modify the interest rates ... but don't write down the principal, then if the market doesn't recover the borrower will still owe more than the value of their home," Mr. Nicholas said. "If housing values continue to decline and there's no recovery over the next five years, then perhaps everyone would have been better off foreclosing. That's the big unknown."

Originally published by American Banker.

FAQ: Do I need a a loan modification attorney?

Loan Modification- Foreclosure Prevention Looking Brighter

noreply@blogger.com (Rick Zepeda) — Sun, 28 Sep 2008 03:02:00 +0000

There's no guarantee that Joe of Ripon will be able to save his home of 21 years. But at least he walked away from Friday's Foreclosure Prevention Workshop at the Manteca Senior Center with some optimism.

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"It's like having this tremendous load taken off my shoulders," said Joe, who opted to withhold his last name for confidentiality reasons.

He met with Countrywide, one of six banks on hand with representatives authorized to make loan modifications if provided with all of the appropriate information from the borrower. The others were Indy Mac, Chase, Wells Fargo, Washington Mutual and Bank of America.

Ana Rocha, for one, a Manteca Redevelopment Agency representative, was surprised to see Bank of America show up.

"But it was a very welcome surprise," she said.

Joe, meanwhile, found out about the event via the Manteca Bulletin. For some time, he's been burning up the phone line just trying to talk to a bank representative in an effort to save his home, getting no luck at all.

"It was like trying to get to first base without a bat in your hand," Joe said.

His representative thoroughly explained the options, and Joe came away feeling positive after finally talking to a person, face to face, about his situation.

The event was part of the grassroots effort by No Homeowner Left Behind. Over 200 people were expected to speak with bank representatives or housing counseling organizations that work directly with bank foreclosure departments.

The non-profit organization, in the past year, had conducted nine similar sessions throughout northern San Joaquin Valley, helping hundreds of families save their homes.

Some folks received word of the Manteca workshop by none other than the Federal Reserve, which sent notices back on June 1 to those who got foreclosure notices in San Joaquin County.

Included was Geremias Romero, who took time off from his job at a furniture store to try to save his Los Banos home of three years.

He brought along the necessary paper work, consisting of his loan information and documents, pay stubs from the past month, and current mortgage payment, with hopes of getting a loan modification in order to reduce his losses upfront.

"I'll have to wait two weeks to get an answer," said Romero, who was among those not in a position to be helped that day based on the bank's determination.

In addition, those attending had a chance to meet with a HUD-certified counseling services about free advice about resolving their mortgage problem.

Ron Paul on CNBC's Kudlow Company- The Financial Bailout Questions and Answers

noreply@blogger.com (Rick Zepeda) — Sat, 27 Sep 2008 17:13:00 +0000

Ron Paul on CNBC's Kudlow Company- The Financial Bailout Questions and Answers

Find out which loan modification companies can steer you wrong while others have success rates of 97% and above. Get the details in the free loan modification help and strategy Ebook.

http://loanmodificationhelp.blogspot.com/

The financial bailout: questions and answers

Source:

hattiesburgamerican

Lawmakers are working on a $700 billion rescue plan designed to prevent a severe recession.

Q. Do we need a bailout package?

A. Most economists say yes. The massive number of mortgage defaults have left many banks without cash, and the flow of credit has slowed drastically.

Advocates of the bailout say it would help restore liquidity, accelerating the flow of credit and boosting spending by consumers and businesses.

Critics of a bailout say Wall Street should have to clean up its own mess, and rescuing firms that overextended themselves sends the wrong message. That may be true, but doing nothing could cause a financial free fall that hurts everyone.

Q. Were there other options besides bailout legislation?

A. Yes, but for every solution there's a downside. Examples of other options include: A ban on short selling (which rewards investors who bet on a down market). Many economists say that wouldn't be enough in the long term. Printing more money, but that would devalue the dollar and lead to inflation.

Sending individual homeowners a check to help them pay off their mortgages, but there's no way to know what their homes are worth now, and there are questions about whether it's fair to bail out homebuyers who may have acted irresponsibly.

Q. What will a bailout mean for taxpayers?

A. Bailout legislation will increase the federal deficit. That will stick the federal government with bigger interest payments that eventually will require either higher taxes or cuts in government services.

In the short term, a bailout will almost certainly mean the next president will have to put his fiscal priorities on hold - whether it's tax cuts or more domestic spending.

Q. Could the government recoup any of the $700 billion?

A. Economists say taxpayers should be able to recoup most of the money when the government-backed loans are sold on the market.

Q. What if nothing is done?

A. Federal Reserve Chairman Ben Bernanke says that would spell grave danger. Businesses unable to get credit would close. Unemployment would rise. Additional homes would fall into foreclosure. Consumer spending would shrink, hurting the service and manufacturing industries. And the stock market would plummet, shrinking the value of stock portfolios and 401(k) retirement accounts.

Q. Are there parallels to the Great Depression?

A. Yes, in terms of the short-term panic and the potential loss of market value. But much has happened since 1929.

The government now insures bank deposits, and federal regulators have more power to step in to block a run on banks or other financial havoc.

Washington Mutual Closed By U.S. Government

noreply@blogger.com (Rick Zepeda) — Fri, 26 Sep 2008 05:15:00 +0000

Washington Mutual Inc was closed by the U.S. government in by far the largest failure of a U.S. bank, and its banking assets were sold to JPMorgan Chase & Co for $1.9 billion.

Just when I thought okay things are starting to smooth out I came home and went on the computer and saw something I could not believe. Washington Mutual which is the largest U.S. savings and loan was seized by the FDIC.

This is very surprising but also reassuring because the FDIC is informed and responsible. The FDIC was created in 1933 to maintain public confidence and encourage stability in the financial system through the promotion of sound banking practices. As found on FDIC, The Federal Deposit Insurance Corporation (FDIC) preserves and promotes public confidence in the U.S. financial system by insuring deposits in banks and thrift institutions for at least $100,000; by identifying, monitoring and addressing risks to the deposit insurance funds; and by limiting the effecto on the economy and the financial system when a bank or thrift institution fails.

The good news is that JP Morgan Chase & Co. Inc. came to the rescue in conjuction with the seizure to take over the banks daily business. All Washington Mutual customers can rest assured that their interests are protected. JP Morgan Chase & Co. Inc. will pay 1.9 Billion and is expected to write down WaMu's loan portfolio by $31 Billion. On MSNBC, JPMorgan Chase said the acquisition will give it 5,400 branches in 23 states. JPMorgan Chase said it plans to close less than 10 percent of the two companies' branches; the bank has not yet decided which to close.

The bailout also fulfills JPMorgan Chief Executive Jamie Dimon's long-held goal of becoming a retail bank force in the western United States. It comes four months after JPMorgan acquired the failing investment bank Bear Stearns Cos at a fire-sale price through a government-financed transaction.

When the FDIC seized IndyMac they streamlined loan modifications and worked with borrowers that were in high interest loans and adjustable loans. For WaMu customers this similar situation can be expected based on what FDIC Chairman Sheila Bair enforced previously.

Washington Mutual has about $307 billion of assets and $188 billion of deposits, regulators said. The largest previous U.S. banking failure was Continental Illinois National Bank & Trust, which had $40 billion of assets when it collapsed in 1984.

Loan Modifications Senate Bill 1137

noreply@blogger.com (Rick Zepeda) — Mon, 22 Sep 2008 22:44:00 +0000

Many homeowners got a bad loan and are having trouble making payments on their mortgage. You can learn what to do with a FREE loan modification strategy EBook to avoid or stop foreclosure by modifing the loan terms even if you have negative equity. Does your lender have your best interest? Find out which loan modification companies can steer you wrong while others have success rates of 97% and above. Get the details in the free loan modification help and strategy Ebook.

Loan Modifications Senate Bill 1137

This bill is the Senate's response to the foreclosure
crisis that has gripped California and the nation over the last
year and a half. It is made up of several provisions to
address key issues that have been identified as most problematic
concerning the foreclosure process. It is important to note
that this bill, as currently drafted, represents a compromise
that was reached between industry, consumers, and the author.

A major problem facing both borrowers and servicers is the lack
of communication between parties concerning the inability to
make a mortgage payment, or the possibility of impending
financial difficulties. Government officials, lenders and
community organizations have all pleaded with borrowers to
communicate as soon as possible if they are in trouble of
missing a mortgage payment. Most data reflects that the earlier
a borrower communicates with their lender, the easier it can be
to find a solution. Going beyond the public pledges of
increased contact, this bill requires that the mortgagee or
trustee contact the borrower, or attempt to make contact, at
least 30 days prior to mailing a NOD.

Another indirect consequence of the foreclosure crisis are the
numerous renters who made their rental payments on time and
remained in good standing only to find themselves evicted due to
the legal owner of the property failing to pay their mortgage on
the property. During the housing boom many buyers purchased
properties with non-traditional financing in order to acquire
rental properties. This arrangement began to turn south last
year with the collapsing mortgage market. Some renters found

notices attached to their door addressed to the owners. Often,
these notices were overlooked because they were addressed to
someone other than the renter, and then the occupants found
themselves days away from being on the street. This bill
provides additional time to the current law timeframe of 30 days
for eviction to a total of 60 days subsequent to the foreclosure
sale to give renters in a foreclosed home sufficient time to
make other housing arrangements.

The glut of abandoned foreclosed properties has led to distress
in local communities as cash-strapped local governments deal
with blighted property. These properties, in some cases, are
magnets for criminal activity such as vandalism and theft.
Additionally, vacant properties with swimming pools can become a
health hazard due to standing water becoming a breeding ground
for mosquitoes that may carry the West Nile virus. Empty rooms
lure squatters and vandals and brown lawns and dead vegetation
are creating eyesores in well-tended neighborhoods. The Los
Angeles Times wrote an article in 2007 titled, "Untended
properties become eyesores. Then there are the uninvited
guests: mosquitoes, vandals and squatters." The City of Los
Angeles (LA) is increasing the number of inspectors in the LA
vacant-building program from 15 to 27 trying to stay current
with the number of vacant homes they have to deal with.

Neglected foreclosed properties subject the neighborhood and
municipality to drug crimes, prostitution, vagrants living in
the foreclosed property, vandalism and a host of other social
ills. As the foreclosed property falls deeper into disrepair
the values of the surrounding homes and business also
deteriorate alarmingly, further adding to the 'foreclosure
blight' and destruction of whole neighborhoods.

This bill responds to the vacant property issue by requiring
that the owner maintain a vacant property or face $1,000 per day
fine. It also provides the owner 30 days to correct a violation
once notification has been received from the local government.

Finally, this bill makes legislative findings and declarations
concerning the suitability and fiscal necessity of loan
modifications. Specifically, the findings declare that
servicers act in the best interests of all parties when they
agree to implement loan modifications or workout plans where
long term performance of the loan exceeds recovery through the

foreclosure process. This section is a welcome explanation of
the Legislature's policy and direction concerning what is
expected of loan servicers in California related to trouble
borrowers. The reviews are mixed, as far as the actual results
of loan modifications and borrower outreach. It is clear that
very few loan servicers have had the necessary infrastructure to
meet the surge in borrower demand. Recently, counseling
agencies and servicers have staffed up their operations to
increase outreach and response to customer inquires concerning
loan modifications.

Recently the Hope Now Coalition (Hope Now), a coalition of
mortgage industry participants, that have come together to
streamline loan modifications and workout plans released their
data for the first quarter of 2008. From July 2007 to the end
of the first quarter of 2008, lenders have helped 1.2 million
borrowers. The vast majority, 848,000, were repayment plans,
which are generally not as helpful to borrowers. A study by the
Federal Home Loan Mortgage Corporation, Interventions in
Mortgage Default: Policies and Practices to Prevent Home Loss
and Lower Costs, found that the cure rate among loans that are
only 30 days delinquent is just under 60%, but that rate falls
to less than 30% if the borrower is three or more payments
behind at the onset of the plan. In 2008, nearly 37% of the
workouts, reported by Hope Now, were classified as
modifications. Most troubling, 40% of the subprime, adjustable
rate mortgage borrowers who went into foreclosure in the three
months ended September 30, the most recent figures available,
had already gone through a workout with their lenders, according
to a study from the Mortgage Bankers Association.

Find out which loan modification companies can steer you wrong while others have success rates of 97% and above. Get the details in the free loan modification help and strategy Ebook.

http://loanmodificationhelp.blogspot.com/

Did Your Mortgage Lender Mislead You?

noreply@blogger.com (Rick Zepeda) — Thu, 18 Sep 2008 18:02:00 +0000

During the mortgage boom, mortgage brokers and lenders were in a big hurry to get loans done fast. Also, some mortgage brokers and lenders did not have your best interest (and still don't) and wanted to sell you a high priced loan you couldn't afford. They did this by violating some or all of these laws below. Many brokers and lenders put people in adjustable rate mortgages without caring about the clients future payments schedule.

Do you think your mortgage broker or lender mislead you?

1. RESPA
2. REG Z
3. GFE
4. Reverse Engineering
5. Misleading Disclosures
6. Over Stated Values
7. Over Stated Income
8. Misrepresentation
9. Inaccurate Arm Adjustments
10. Usury Violations
11. Lis Pendens
12. Short Sale
13. Deed-In-Lieu
14. Due-On-Sale Provision
15. Discount Points
16. Loan Rescission
17. Loss Mitigation
18. Packing
19. Forbearance Agreement
20. Get a loan modification attorney

RESPA- "Real Estate Settlement And Procedures Act" is a consumer protection statute, first passed in 1974. One of its purposes is to help consumers become better shoppers for settlement services. Another purpose is to eliminate kickbacks and referral fees that increase unnecessarily the costs of certain settlement services. RESPA requires that borrowers receive disclosures at various times. Some disclosures spell out the costs associated with the settlement, outline lender servicing and escrow account practices and describe business relationships between settlement service providers. RESPA also prohibits certain practices that increase the cost of settlement services. Section 8 of RESPA prohibits a person from giving or accepting any thing of value for referrals of settlement service business related to a federally related mortgage loan. It also prohibits a person from giving or accepting any part of a charge for services that are not performed. Section 9 of RESPA prohibits home sellers from requiring home buyers to purchase title insurance from a particular company. Generally, RESPA covers loans secured with a mortgage placed on a one-to-four family residential property. These include most purchase loans, assumptions, refinances, property improvement loans, and equity lines of credit. HUD's Office of Consumer and Regulatory Affairs, Interstate Land Sales/RESPA Division is responsible for enforcing RESPA.

Regulation Z (TILA)- "The Truth in Lending Act" , also known as Title I of the Consumer Credit Protection Act, was enacted to assist consumers in shopping for credit. The purpose of TILA is to promote the informed use of consumer credit by requiring disclosures about its terms and cost. TILA also gives consumers the right to cancel certain credit transactions that involve a lien on a consumer's principal dwelling, regulates certain credit card practices, and provides a means for fair and timely resolution of credit billing disputes. With the exception of certain high-cost mortgage loans, TILA does not regulate the charges that may be imposed for consumer credit. Rather, it requires a maximum interest rate to be stated in variable-rate contracts secured by the consumer's dwelling. It also imposes limitations on home equity plans that are subject to the requirements of Sec. 226.5b and mortgages that are subject to the requirements of Sec. 226.32. The regulation prohibits certain acts or practices in connection with credit secured by a consumer's principal dwelling.

GFE- "Good Faith Estimate" A good faith estimate must be provided by a mortgage lender or broker in the United States to a customer, as required by the Real Estate Settlement Procedures Act (RESPA). The estimate must include an itemized list of fees and costs associated with your loan and must be provided within three business days of applying for a loan. These mortgage fees, also called settlement costs or closing costs, cover every expense associated with a home loan, including inspections, title insurance, taxes and other charges. A good faith estimate is a standard form which is intended to be used to compare different offers (or quotes) from different lenders or brokers. The good faith estimate is only an estimate. The final closing costs may be different - sometimes very different.

Reverse Engineering- The act of computer alterations of a document or documents after the documents have been executed by the parties to a contract. Example: Your loan originator has you sign the final loan documents bearing terms and conditions you have agreed to. After funding, the originator sells that loan to a wholesale pool who alters the terms and conditions to increase the Note's value then sells it on the secondary market for a higher premium. This could go unnoticed by the borrower for years if not forever. On an adjustable rate mortgage, a simple change in the rate's margin would reap a substantial profit when the note is sold to a secondary market investor.

Misleading Disclosures- The act of creating a disclosure document in such a language as to intentionally confuse the client in regards to the terms and conditions of a contract when more concise language is an option as in layman terms. Example: Borrower A thought he was getting a 30 year fixed rate mortgage. The language on the loan documents read this; "this loan is to amortized over a 360 month period at the rate of 6.5% subject to the index published in the Wall Street Journal in the 13th month following the first year in which hence the margin of 2.25% shall apply to said index" In other words, Borrower A was duped into signing loan documents agreeing to a 2 year fixed rate mortgage at 6.5%. It took 2 years for this borrower to find out that he didn't have a 30 year fixed rate mortgage. Clear and comprehensible language was clearly not the intent of the documents originator in this example. Plain and simple: "this loan is a 24 month fixed rate at 6.5% and the rate thereafter shall be adjusted annually based on the margin of 2.25% plus the Index as published in the Wall Street Journal on the date of the adjustment for a period of 336 months."

Over Stated Values- The over evaluation of a property's true market value by an appraiser who is an employee of the lender, or is a fee appraiser influenced by future business from a lender. Appraisers who uses unrealistic comparable sales when exact model matches were available, or nonexistent amenities to justify a value has essentially "over stated the value." This action could cause you to pay much more for a home in the beginning than what it was actually worth. Thus, you were backwards in value before the receding market began. Because the appraiser was influenced by his/her employer, or by the needs of a listing agent or lender from whom they get business, you paid much more for the house than you should have. Nobody can say it's your fault because nobody offered you an option to choose your own appraiser.

Over Stated Income- The over stating of income on a "Stated Income" loan that grossly exceeds the reasonable income of the applicant's job description as posted on Salaries.com. Often times the income as stated on the original loan application that the borrower signs is within reasonable limits. Then, when the borrower signs the final loan documents, a revised loan application with unreasonable income is presented for the applicant's signature. This is evidence that the applicant could not afford any future mortgage payments when the loan recasts because the reasonable income could not be used for qualifying debt to income ratios. In other words, you obviously couldn't afford that particular mortgage product from the get go and yet the lender put you into it anyway for the likely purpose of a higher commission.

Misrepresentation- The revision of any terms of agreement on a contract without your consent. Example: Your original Purchase agreement states that "Buyer shall apply and qualify for a 30 year fixed rate mortgage bearing interest at 6.00%" You have determined that under those terms, the payments would be affordable. You then apply for a loan under those terms and your initial loan application reflects these terms accordingly. You then receive all the compliance disclosures in the mail which appears to be a little different then what you applied for. You are told that you do not need to sign those disclosures because they are simply "Compliance Disclosures." As time goes on, the lender modifies the loan terms even more and fails to notify you in writing, or require you to execute (sign) a modification agreement. Then at closing, you are presented with a "take it or leave it" set of loan documents that grossly changes your original intent. All the while, you have paid for an appraisal, an earnest money deposit, given a 30 day notice to your landlord, did your packing, and made utility arrangements for your new home. Simply put, you were taken advantage of and put into a loan that sounded good and were told that it was the only loan you could get.

Inaccurate Arm Adjustments- Exceeding the Promissory Note's maximum adjustment cap on an adjustable rate mortgage. The maximum adjustment cap as set by the Promissory Note is often times violated with out the borrower's knowledge thereby causing the payment to be higher than expected. In addition, periodic adjustments seem to always go up when indeed the index has dropped. Your Note should explain that the adjustment shall be based on a certain margin which is fixed plus an index which is not fixed. Index's go up and down daily. Usually the Index plus the fixed margin as of the day of the scheduled adjustment is the bases used to determine your new interest rate. Example: You are currently paying 6% interest because the fixed margin according to your Note is 2.25%. The Index on the day of your last adjustment was 3.75% (2.25% + 3.75% = 6%) Now, you receive notice that your new interest rate will be 7% because the Index, they claim, is 4.75% (4.75% + 2.25% = 7%). Now, who ever validates the accuracy of that? Hardly anyone does and the lenders know that. What if the Index had actually dropped? Lets say the real index on that day was 3.375%. Your new interest rate should be 5.625%. We love to catch lenders pulling this one.

Usury Violations Of Prepayment Penalty- California's Usury Laws dictate a formula to govern just how much interest a lender can lawfully charge on their loans. Though the Usury Laws might have exceptions, exclusions, or specific rules for various types of loans and various categories of lenders. One type of loan that receives special, attention under the Usury Laws is a loan secured by real property. It is possible that the Prepayment Penalty combined with the interest rate can exceed the maximum amount as set by California's Usury Limit. Since Prepayment Penalty laws differ in each State, it's not uncommon to find a Prepayment Rider attached to a Promissory Note that incorporates the laws of the state in which the lender is located. East coast States for example have a totally different formula for calculating a Prepayment Penalty that grossly exceeds that of California. Although no serious lender will ever intentionally violate the usury laws, a violation none the less, intentional or otherwise could entitle the borrower to avoid paying any interest at all on the loan, and indeed receive a refund of all interest paid. An attorney would need to be retained to determine if there was a Usury violation in the Note. We can only examine for evidence.

Lis Pendens - "Lis pendens" is a document filed in the public records that notifies any prospective purchaser of property that there is litigation pending that could effect title to the property. They are most often seen in mortgage foreclosures, but are used in other actions such as boundary disputes, eminent domain matters, and easement litigation. If sufficient evidence of fraud or "Predatory Lending," is discovered in your documents, a Lis Pendens may be filed by an attorney to stop the foreclosure action until the suit can be settled in court.

Short Sale - Short Sale is when a bank or mortgage lender agrees to discount a loan balance due to an economic hardship on the part of the mortgagor. The home owner/debtor sells the mortgaged property for less than the outstanding balance of the loan, and turns over the proceeds of the sale to the lender in full satisfaction of the debt. In such instances, the lender would have the right to approve or disapprove of a proposed sale. The consequences however are not usually discussed with the homeowner by the agents conducting the sale. For example, the bank will likely report the short sale to the IRS by sending you and them a 1099. That is considered income by the amount you were forgiven. Plus, if you have cash assets, the lender might try to tap those accounts. Doing a short sale is not for the faint of heart. As for your credit history, the effect of a short sale on a seller's credit report is identical to that of a foreclosure.

Deed-In-Lieu - "Deed In Lieu of Foreclosure," this conveys title to the lender when the borrower is in default and wants to avoid foreclosure. The lender may or may not cease foreclosure activities if a borrower asks to provide a deed-in-lieu. Regardless of whether the lender accepts the deed-in-lieu, the avoidance and non-repayment of debt will most likely show on a credit history just like a foreclosure. And, you may still have the same tax liability as you would in a short sale.

Due-On-Sale Provision - A provision in a mortgage that allows the lender to demand repayment in full if the borrower sells the property that serves as security for the mortgage. This is were many stressed homeowners fall prey to scammers that trick them into conveying title to the property over to them then renting it back with a promise to sell it back to them at a later date.

Discount Points - Discount points are paid by the borrower for the purpose of buying down the interest rate of a loan. One discount point equals one percent of the loan amount. Originating lenders will often times charge discount points when indeed the rate the borrower is getting is actually at par pricing. Meaning, the lender does not have to pay any points to get the rate that they charged you for. Failure to disclose these profits could lead to a law suit in favor of the borrower.

Loan Rescission - A court action that orders the lender to cancel a bad loan. A Loan Rescission basically allows the borrower to cancel the bad loan and replace it with a loan the borrower can actually afford. It may also order the lender to remove all negative credit information that the lender has entered on the borrowers credit report in respect to the bad loan.

Loss Mitigation - A negotiation between the lender and the borrower, usually conducted by a third party intermediary, to arrive at a work out alternative to a foreclosure. The process includes the same principle as a loan pre-qualification where as the borrower's income, assets, credit, and employment documents are presented to the lender to exhibit just how much the borrower can afford. Often times, the lender will restructure the loan accordingly by reducing the interest rate and apply the arrears to the end of the loan.

Packing - The lender adds credit life insurance or credit accident or disability insurance to your loan, which you may not need. Such insurance premiums may cost thousands of dollars and you may be charged interest if they are added to the amount of your loan. The lender may tell you that this insurance comes with the loan, making you think you aren't paying for it or that you have to buy it. This insurance often has limitations and time restrictions but is still sold to people who can qualify for the coverage because lenders make a lot of money on the policies.

Forbearance Agreement - An agreement made between a mortgage lender and delinquent borrower in which the lender agrees not to exercise its legal right to foreclose on a mortgage and the borrower agrees to a mortgage plan that will, over a certain time period, bring the borrower current on his or her payments. A forbearance agreement is not a long-term solution for delinquent borrowers; it is designed for borrowers who have temporary financial problems caused by unforeseen problems such as temporary unemployment or health problems

Loan Modification Attorney- Attorney based loan modifications are by far and away the most beneficial to the homeowner. The major difference is that the attorney will find predatory lending violations in your loan documents and threaten a lawsuit if they do not comply with our modification. The attorney will demand a balance reduction if you are upside down, an interest rate reduction, fixing the rate, first payment deferment for a few months, and, if requested, a change in the terms of the loan (i.e. stretching out the repayment period to further lower the payment). When the attorney finds a violation that is a fine plus attorney fees they break down what it is going to cost the bank over the cost of the lawsuit versus our modification proposal. The numbers work so heavily in your favor.

Are you having trouble making your payments? Get the free loan modification help and strategy Ebook!

Home Loan Modification Video

noreply@blogger.com (Rick Zepeda) — Mon, 08 Sep 2008 21:15:00 +0000

Loan Modification Real Life Experience

noreply@blogger.com (Rick Zepeda) — Sat, 06 Sep 2008 00:58:00 +0000

A Homeowner's Real Life Experience- Loan Modification With Lender

Many homeowners got a bad loan and are having trouble making payments on their mortgage. You can learn what to do with a FREE loan modification strategy EBook to avoid or stop foreclosure by modifing the loan terms even if you have negative equity.

Homeowners are facing challenges when they cannot make payments on their mortgage and looking to restructure their loan with their lender called a loan modification. The whole purpose of the federal government bailout is to help homeowners from foreclosure and to provide alternatives with lenders when a loan has adjusted, as one example, and payments cannot be made. Most people are left confused, worried, and in many cases without a home. They don't really know their rights and don't have all the information at hand due to the fact that the mortgage crisis avalanche has left banks, mortgage bankers, and investors waiting for monthly payments they will not see. Who's fault is it? Pushy Realtors? Ambitious mortgage brokers? Easy money? Make a fast buck in America and now we are paying the consequences. Get a copy of a free loan modification strategy EBook to help you learn what to do. Most people that deal with their lender directly get the runaround. Who has your best interest? Who is on your side? See the real live example below. Notes from a homeowner looking for answers...

FDIC Website (Chairman Shelia Blair)

"seek to work with others who are unable to pay their mortgages due to payment resets or changes in the borrowers’ repayment capacities."

"IndyMac Federal will work to expedite approvals for modifications to help eligible homeowners keep their homes."

"Modifications would be designed to achieve sustainable payments at a 38 percent debt-to-income (DTI) ratio of principal, interest, taxes and insurance."

''Our goal is to get the greatest recovery possible on loans in default or in danger of default, while helping troubled borrowers remain in their homes,''

SB 1137 (July 8, 2008)

1) A mortgagee, trustee, beneficiary, or authorized agent may not file a notice of default pursuant to Section 2924 until 30 days after contact is made as required by paragraph (2) or 30 days after satisfying the due diligence requirements as described in subdivision (g).

A mortgagee, trustee, beneficiary, or authorized agent shall contact the borrower in person or by telephone in order to assess the borrower's financial situation and explore options for the borrower to avoid foreclosure. During the initial contact, the mortgagee, trustee, beneficiary, or authorized agent shall advise the borrower that he or she has the right to request a subsequent meeting, which shall be scheduled to occur within 14 days.

I was not contacted within 30 days after my first contact, nor was I was not contacted within 30 days after IndyMac had obviously had plentiful time to do due diligence on file. My financial situation was not discussed or "assessed" with me during the call, nor was I advised I had the right to a subsequent meeting within 14 days.

2) "…the borrower shall be provided the toll-free phone number made available by the United States Department of Housing and Urban Development (HUD) to find a HUD-certified housing counseling agency."

A mortgagee, trustee, beneficiary, or authorized agent shall first attempt to contact a borrower by sending a first-class letter that includes the toll-free number for HUD-certified housing
counseling agencies

I knew nothing about the HUD offering counseling and IndyMac did not send me a letter or provide me with this number when I spoke to them.

3) Under specified circumstances, mortgage lenders and servicers are authorized under their pooling and servicing agreements to modify mortgage loans when the modification maximizes
the net present value of recoveries to the securitization trust and is in the best interest of investors.

"Loan modification" was not discussed with me. No options were discussed with me for that matter.

4) "…explore options that could avoid foreclosure and by facilitating the modification or restructuring of loans."

I was not offered any loan modification or restructuring option.

5) "…servicer acts in the best interests of all parties if it agrees to or implements a loan modification or workout plan for which both of the following apply:
(1) The loan is in payment default, or payment default is reasonably foreseeable…"

1137 says to work in the "best interest of all parties." IndyMac is presently giving preference to homeowners already in default.

1137 also states, …"or payment default is reasonably foreseeable." IndyMac is aware of my financial situation and I explicitly explained my situation via a hardship letter and supplemented that with a personal financial statement that IndyMac asked for. It is very reasonable to conclude in my situation that, "default is reasonably foreseeable."

Get a copy of a free loan modification strategy Ebook to learn what to do and learn what not to do. Good people need not to worry. Lenders are shaking in their boots because they know changes have to be made on loans that are adjustable, have negative equity, high amount of errors on loan documents, fraud, and more.

Do I Need A Loan Modification Attorney?

noreply@blogger.com (Rick Zepeda) — Sat, 23 Aug 2008 01:48:00 +0000

What is a Loan Modification? Do I Need An Attorney?

Request a free loan modification strategy eBook.
Loan modifications are the altering of the characteristics of a loan without refinancing or in order to prevent foreclosure. In recent years our economy has witnessed the biggest real estate boom in history. Interest rates were at an all time low, property values were skyrocketing, the economy was thriving and investor guidelines we so loose that anyone, even those who obviously could not afford it, were given loans. Most of these loans were two, three or five year interest only arms with the borrower putting little or no money down and having bad credit.Now that the real estate boom is in the midst of its inevitable correction, many borrowers find themselves in extreme financial distress due to the purchase of the American Dream: their own home. There are many different dispositions that are causing millions of Americans sleepless night in fear of foreclosure.

The most common problems that borrowers are facing are adjusting arms and declining values. These are the people that a loan modification program will help stop foreclosure and keep you in your home. The banks are the financial analysts that allowed you to put yourself in this predicament and the right loan modification attorney will prove it to them.An attorney based loan modification program will force the banks loss mitigation department to analyze your situation in order to modify your loan into something that the bank and yourself can agree upon.

This might be lowering and freezing your interest for the life of the loan. This might be lowering the balance to the current market value so that you are not paying on a property that you are way upside down on. This also might include deferring the payments and interest to the back side of the loan so that you are no longer months behind. No matter what situation you are in, an attorney based loan modification program can help you tremendously!If you would like to know the secrets to successful loan modification help and strategy, please request free loan modification strategy eBook This is a really great way to learn your options and decide if this is right for you, but do not take your banks offer until you read it.

Do Not Take Your Banks Modification Offer!
If you are behind on your mortgage your bank might call and discuss your situation with you. If they feel that you will be able to make your payments in the future they are going to offer you a short term modification solution. DO NOT TAKE IT!!! Do you really think that your bank is going to offer you something that is designed with your best interest in mind? Of course not! They are going to design a modification so that they can get every penny out of you in the short and long run while still enabling the homeowner to barely survive. Let's face it; no bank is going to volunteer a balance reduction on a property. They are taking immediate losses and having to report them to upper management. If you owe more than your home is worth there is a good chance that attorney based loan modification specialists, will be able to force them into lowering your principal balance as well as your interest rate. What most banks and lenders will offer is to defer your past due balance, temporarily reduce your interest rate and give you a few months off of making payments. That is not enough. You need your interest rate lowered permanently, your terms lengthened and YOUR PRINCIPAL BALANCE REDUCED!! If they are guilty of predatory lending, which around 80% of loans closed from 2001 – 2008 are guilty of, the banks are deathly afraid of civil lawsuits.

An Loan modification attorney will analyze your loan documents and your financial situation. If they find a violation you will be saving hundreds of thousands of dollars over the life of your loan. Do not take their miniature offer until you have spoken to professionals. An attorney will fight for you against your lender. They knew that the loan that they gave you was going to cripple your financial future when they wrote it, now lets make them pay; not you! Get our free eBook before you accept any deal from your lender. Our attorney’s are trained to find violations of your rights quickly and accurately minimizing their fees resulting in drastically reduced overall costs. There is no obligation.

Loan Modification Avenues
There are basically three ways you can address your loan modification needs: Yourself, thru a civilian modification service and thru an attorney based service. The differences are simple. Most people contact their bank immediately when they start falling behind and getting notice after notice from the bank. Even though the bank is so quick to try to collect your money they are very difficult to get in touch with when it comes to your needs. All your cries seem to fall on deaf ears. A small percentage of borrowers have the ability to successfully modify their loan to the best outcome possible. If the bank does decide to help you it will be very minimal and probably end up causing the same problem to reoccur down the road.

The next step is either losing your home or calling a loan modification company. The first type of loan modification strategy is a company that does not include an attorney. These companies are out there offering you the same results that you could get yourself. Without the clout of an attorney on your side the loss mitigation department of your lender will bully you around. They are going to help the problem in the short term but not fix it. Their results include lowering and fixing your interest rate for a short period of time and often adding an interest only option or stretching your amortization to 40 or 50 years. While they will be able to get results better than you could yourself the benefits they produce are drastically less than what an attorney can get done.

Get A Loan Modification Attorney
Attorney based loan modifications are by far and away the most beneficial to the homeowner. The major difference is that the attorney will find predatory lending violations in your loan documents and threaten a lawsuit if they do not comply with our modification. The attorney will demand a balance reduction if you are upside down, an interest rate reduction, fixing the rate, first payment deferment for a few months, and, if requested, a change in the terms of the loan (i.e. stretching out the repayment period to further lower the payment). When the attorney finds a violation that is a fine plus attorney fees they break down what it is going to cost the bank over the cost of the lawsuit versus our modification proposal. The numbers work so heavily in your favor.

Who Qualifies for an Attorney Based Loan Modification?
There is a very wide variety of homeowners qualify for loan modification. With so many questionable loans being sold over the past few years, homeowners have more causes than ever for foreclosing. First off, you have Adjustable Rate Mortgages (ARMs) where the fixed term is up and the rate increases. The payment now becomes too much to afford. Many of these borrowers used stated income documentation to qualify, meaning that they could not truly qualify for the loan under normal guidelines. Once the rate adjusted upward homeowners who barely squeaked by in the past now have no chance at making their mortgage payments. Others candidates for attorney based loan modification are victims of decreasing home values and now have no or negative equity. Property values are dropping at a record pace in many areas, especially those who saw extreme appreciation over the past few years. Many homeowners just see no benefit in trying to pay a huge mortgage payment when they are upside down tens of thousands of dollars and property values are still decreasing. In many cases the same house down the street is renting for half of a homeowners current mortgage. These borrowers might be eligible for a note reduction to market value. If you get the right attorney who knows how to handle this situation, you can have your balance reduced substantially which also lowers the monthly payment. Why pay thousands and thousands of extra dollars just to save your credit?

Behind on Your Payments?
If you are near or at foreclosure you have no option but to turn to an attorney based program. So many people facing foreclosure or NOD think that if they cannot afford their mortgage, how can they afford an attorney? The answer is simple: our attorneys can stop your foreclosure process and freeze payments. That means that you will not have to make payments during this ‘investigation into the problem’ while your foreclosure does not progress. Most people with no housing expense are going to have extra disposable cash to help them save their house. Besides, even if you can qualify for a refinance, the loan modification process is cheaper and more sensitive to the homeowner. As long as you do not want cash out, you should consider a loan mod before a traditional refinance.

Loan Modification Specialists to Help You Avoid Foreclosure
Don't try this at home. A loan modification is an experienced professional using a plethora of techniques and negotiation skills to make sure that you get best possible outcome with Loan Modification to Avoid Foreclosure. Modifications often consist of lowering interest rates, fixing interest rates, preventing ARMs from adjusting, lowering your principal balance and/or lengthening your term. You do not have to be behind to get help. Banks do not want your property back just as much as you don’t want to give it back to them.

Loss Mitigation Department
The loss mitigation department of any bank is among the biggest nightmare for almost anyone to deal with. Every banks loss mitigation department is swamped because any bank that took part in residential real estate over the past six years is taking major losses. One in four loans originated between 2005 and 2007 is predicted to default. This means that your countless calls with no little to no leeway are not personal, just not feasible to handle. Loss mitigation departments are forced to prioritize those who are easy cases that fit their given rules. All that changes when you are represented by a professional and/or an attorney. When they see that your situation is broken down in an accurate and thorough analysis including a solution that the bank will agree upon you will move to the top of their list. The proposed solution will be designed to fit the individual investor’s requirements while highly benefiting you. This will put your loan modification process is in hyper drive. Loss mitigation departments will listen and act when properly approached. The only way to do this is thru an experienced loan modification team.

The Free Loan Modification EBook You Must Read
If you would like to know the secrets to successful loan modification help and strategy, please request free loan modification strategy eBook This is a really great way to learn your options and decide if this is right for you.

Loan Modification Web Portal

noreply@blogger.com (Rick Zepeda) — Thu, 21 Aug 2008 17:24:00 +0000

This is a good loan modification web portal with articles, videos, blogs, and more.

Loan Modification Help Search Phrases

noreply@blogger.com (Rick Zepeda) — Thu, 21 Aug 2008 04:43:00 +0000

I promised some people I would put together a list of search terms for their loan modification education. These are some useful search phrases that many people are using to learn about mortgage modifications and how they work, what to look for etc.

When doing a search on Yahoo, Google, or MSN, you have to know what phrases to type in order to get the results you are looking for. Many times when we search, we don't know exactly what were looking for until it's too late.

If you are going into foreclosure, that means time is of the essence. So here is the most popular search phrases for loan modification. Also, remember to request the free loan modification eBook. If you would like to know the secrets to successful loan modification help and strategy, please request free loan modification strategy eBook This is a really great way to learn your options and decide if this is right for you.

Here are the keyword phrases. Yes it's a long list but it beats finding what your looking for through plain old luck. On that note, GOOD LUCK!

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If you would like to know the secrets to successful loan modification help and strategy, please request free loan modification strategy eBook This is a really great way to learn your options and decide if this is right for you.