WARNING: THERE ARE FIRMS CLAIMING TO OFFER THE REST REPORT THAT ARE NOT AUTHORIZED TO DO SO. CHECK MANDELMAN MATTERS BEFORE YOU BUY A REST REPORT, I WILL BE POSTING A LIST NEXT WEEK OF THE FIRMS AUTHORIZED TO OFFER THE REPORT.

IF YOU’RE UNSURE ABOUT WHETHER THE FIRM YOU ARE TALKING TO IS AUTHORIZED TO OFFER THE REPORT, PLEASE EMAIL ME AT MANDELMAN@MAC.COM SO I CAN VERIFY WHETHER YOU ARE BEING OFFERED A REAL REST REPORT.

Okay, a lot of people want me to write about the outcomes we’ve seen when homeowners use the REST Report when applying for a loan modification or to negotiate a short sale. And I suppose they’re right to want such an article to be written, because it’s undeniable that the REST Report is effective. Moreover, assuming the REST Report shows a positive NPV result, it is the only single thing I’ve ever seen make a significant difference, so for that reason alone, its track record should be more widely known by those trying to get their loan modified.

At the same time, it’s not an easy thing for me to write for a number of reasons.

For one thing, even though I’ve received numerous emails and phone calls telling me about the successes that homeowners have achieved after using the REST Report, what that means to the next homeowner that uses it… is absolutely nothing. Every single loan modification application received by a lender or servicer is unique… no two are alike, and no two are judged exactly the same way. For another, I have no idea that want happened yesterday will happen again tomorrow.

I know better than anyone, that there are no patterns when it comes to loan modifications being approved, and its worth noting that the report by itself does nothing… homeowners still have to comply with all of the other requirements and document their income, etc. etc. Even so, one day I hear from homeowners that Indymac is “the worst,” and the next it’s Chase that is modifying nothing. Litton sucks all the time, as I hear it told, but other that that, it seems that it’s anyone’s guess what will happen tomorrow or the day after that.

I was about to tear into GMAC, but now I hear that they’re not foreclosing on anything at the moment, so maybe they knew they were about to be shredded by bloggers everywhere, who really knows. And a new player on the loan modification front, RCS, seems to have bought the loans they now own for the sole purpose of foreclosing… they don’t even seem to like the HAMP guidelines.

Still, if there’s been a constant in the loan modification game, it’s been the REST Report. Homeowners who submit a REST Report to their lender or servicer do in fact get a positive outcome most, if not all of the time. And when they don’t get a positive result initially, they have a basis for appeal and escalation and from that process they emerge victorious far more often than not. Truth be told, I have only heard of a handful of cases that don’t end happily, although there are certainly many in progress at this time. Each of those are quite the statement, I realize.

But, there are those… including me… that don’t think that what passes for a loan modification today is in the best interests of many or even most homeowners, and I would be remiss if I didn’t come out and say it loud and clear. Modifying your predatory loan by bringing down the interest rate and extending the term in order to provide a more affordable payment still leaves far too many homeowners so far underwater that it’s probably a better option to simply walk away. Home values aren’t coming back any time soon, and by that I mean… well, perhaps not in my lifetime… and I’m 49 years old.

At the same time, I fully realize that there are those that have their own reasons to want to stay in their homes, and if they could get a modification that they could live with they’d want to accept it and move on. Sometimes it has to do with kids in the home, other times it’s just that people are reluctant to let go… and I do understand and accept the reasons I hear from homeowners no matter whether I personally agree with them or not. If it’s important to you, then although I may still try to talk you out of it, it’s still important enough for me to try to help you in any way I can.

And in that regard, the REST Report works far better than anything I’ve ever seen or heard about, and that’s after hearing about hundreds of “answers” and ideas that were intended to drive servicers to be responsive to homeowners.

Consider the couple who I heard from a couple of weeks ago:

According to their attorney, when they ordered the REST Report they already had a sale date. The servicer was Chase who had denied their loan modification saying only that they had failed the NPV, nothing more. Frankly, they didn’t have much hope, but had read about the report so decided to give it a try. Not only did Chase cancel the sale date, but they approved a permanent modification in 13 days!

Or consider the story of the 60 year-old Southern Californian who I interviewed and who explained that he’d endured the personal hell of going through 13 sale dates in a 14-month period with Litton. He was offered the REST Report and within three weeks was granted a trial modification a few months ago. Last week Litton granted him a permanent modification.

Or what about a Northern California family who I also interviewed and who, after more than a year trying to get Wells Fargo to modify their loan, received a trial modification just four business days after sending in the REST Report… from $3800 to $2200! Three months later, just last week as a matter of fact, Wells approved their permanent modification.

And there are literally dozens, or perhaps hundreds of others who can tell similar stories. It’s truly remarkable.

Will any of that happen tomorrow? I have no idea, and I’m not prone to guessing what our “friends” the bankers are planning for our future. The only thing I’ve learned about banks these last two years is that I will never trust them for anything again. If Bank of America someday tells me the sky is blue, I won’t be making picnic plans without looking at the sky myself, and even then I’ll be bringing an umbrella and make sure the car’s parked near by.

And then there’s the issue I’m about to start writing about: Do these banks have the right to foreclose at all? And I think as you will see, the answer in hundreds of thousands of cases is no, they do not. It’s now been written about in the mainstream press that the banks have been hiring lawyers who have been forging documents in order to foreclose, and even the Florida Attorney General has said that it appears that many thousands of foreclosures were approved by the courts based on these forged documents.

So, if you’re of a mind to invest the time and money suing your bank, I’m on your side 100% of the way. But, make no mistake about it… there are no guarantees found down that path either, and not everyone is cut out for such litigation against a major financial institution, especially those who reside in a non-judicial foreclosure state where it’s that much harder to file such an action. Not impossible, by any means, and I’m looking to report on every single success, but it’s no bed of roses no matter how you slice it.

So, that’s what I can say about the REST Report and getting a loan modification. If it’s something you want to do… get your loan modified, that is… my advice is not to try it without running a REST Report. You can run a REST Report anytime, even if you’ve already been turned down because they say you’ve failed the mysterious NPV. You’ll know for sure once you’ve run your own REST Report, and you’ll have the detailed numbers you need to push back and appeal the decision.

If you have a REST Report, you have the data you need to push back and take it to the highest level of appeal… including the courts where the report has been used successfully several times over this past summer. In point of fact, even if you were to suing your lender over a breach of the HAMP contract, for example, the REST Report, according to several trial attorneys, would be a very important piece of evidence used to establish your qualification for the program to the judge.

Why Does it Work?

You might want to read an article I wrote recently titled: Inside Chase and the Perfect Foreclosure. Besides it being interesting as all get-out, it also showed me and others why the REST Report has been so effective. The ex-Chase employee I interviewed in the article spoke about how he was awarded a big portion of his bonus based on documenting everything that came in as part of the borrower’s file. He also talked about how servicers like Chase are concerned about investors coming in to audit their files.

So, it would seem that if your REST Report shows the investor would come out ahead by modifying, it would make it that much harder for the servicer to turn down such a modification, as making a decision not in the best interests of the investors would violate the Pooling and Servicing Agreement, and could therefore become the basis for a law suit against the servicer. Just something to consider…

The Cost Involved…

Different firms do have different prices for the REST Report, and there’s good reason for this. For one thing, some firms choose to offer the REST Report on a stand alone basis, and others offer various levels of ancillary expert support services packaged with the report. But regardless of which firm you choose, it’s not cheap… about $795, give or take, seems to be about the average advertised price for the report alone.

The reason is two-fold. For one thing, the REST platform is part of a multi-million dollar software platform, it’s not generated using something off the shelf, like Microsoft Excel. It’s a “loan disposition analysis” system that knows the thousands of variables needed to make the sophisticated calculations required to generate an accurate report that can withstand any level of scrutiny. Secondly, it doesn’t happen when someone snaps their fingers. Law firms report that it takes at least 3-4 man-hours to run a report and review it thoroughly with a borrower, and that time costs the firms money, in addition to the dollars spent marketing and training a staff knowledgeable enough to run REST Reports and advise homeowners on how they can be sued in various situations.

BUT PLEASE BE CAREFUL WHO YOU PAY TO RUN A REST REPORT. THERE ARE ALREADY PEOPLE ONLINE WHO CLAIM TO HAVE ACCESS TO THE SYSTEM BUT DO NOT. AS I FIND THEM I WILL MAKE SURE THEY ARE CLOSED DOWN.

MEANWHILE, CHECK WITH MANDELMAN MATTERS WHERE I WILL BE POSTING A LIST OF THE FIRMS AUTHORIZED TO OFFER THE REPORT.

AND UNTIL THE LIST IS UP, EMAIL ME AT MANDELMAN@MAC.COM IF YOU’RE UNSURE ABOUT THE FIRM OFFERING YOU THE REST REPORT.

So, all in all, I couldn’t be more pleased at how the REST Report has performed and more than 1300 reports have now been run. But, please understand… the REST Report is only a report that shows whether the investor who owns your loan will make more money by modifying your loan as compared with foreclosing on your property. Because if that’s not the case, there’s nothing you can do… banks and investors are only concerned with money. And nothing is going to change that.

But, it’s a lot better to know what’s coming than to find out after paying trial payments for God-only-knows how many months before learning you don’t qualify.

I’m sure you have questions about the REST Report and if you would like to discuss the topic further with me, you can always feel free to reach me at mandelman@mac.com. My readers always get preferential treatment… wink, wink.

I’m truly happy to help, and again, as I’ve disclosed in the past, Mandelman Matters does receive a small percentage of each report run… a very small percentage, however, and nowhere near an amount that would lead me to recommend something I wouldn’t use myself without hesitation. In point of fact, I wouldn’t even consider applying for a loan modification without having run my own REST Report. And you… pun intended… can take that to the bank. (Sorry, I couldn’t help that.)

Some people get a trial mortgage modification, but 90 days later they’re told they don’t qualify for a permanent one. If they can’t come up with all back payments within 21 days, they’re foreclosed on. Then they lose their home anyway.

Its also reported that “One way to find out if you should try to get a mortgage modification is to get a REST report online.”  REST is a new software system that shows your lender what the best financial outcome is for the investor: a modification under the government Home Affordable Modification Program (HAMP), an in-house modification program or no modification at all.  If REST shows a modification is the best outcome, you or your lawyer can present the report to the bank.

It’s concluded that, ”People wait too long,” says Lee Jones, a spokesman for the U.S. Department of Housing and Urban Development. “They say, ‘The sheriff is coming in four days, what should I do?’ ”

The earlier you seek help when you know you’re having trouble paying your mortgage, the more options you have and the better your chances of working something out in your favor.

Read the complete article on Interest.com and learn more about the REST Report.

New HAMP NPV 4.0 Coming Soon.

On Friday, October 1, 2010, Fannie Mae, as program administrator for the Home Affordable Modification Program (HAMP), plans to release the base Net Present Value (NPV) model v4.0 spreadsheet tool, which will include new input fields, changes to existing input fields, and new output fields. As stated in the HAMP Guidelines:

A standard NPV Test will be required on each loan that is in Imminent Default or is at least 60 days delinquent under the MBA delinquency calculation. This NPV Test will compare the net present value (“NPV”) of cash flows expected from a modification to the net present value of cash flows expected in the absence of modification. If the NPV of the modification scenario is greater, the NPV result is deemed positive. If the NPV Test generates a positive result when applying the Standard Waterfall , the servicer is required to offer a Home Affordable Modification to the borrower.

The REST Report

Mortgage servicers work under a contract known as Pooling and Servicing Agreements (PSAs) which require the servicer to make decisions in the best interest of the investors who own the loans. The REST loan disposition analysis system runs proprietary algorithms, NPV analytics, accesses numerous property valuation databases, and produces a Report that shows your lender or servicer the best financial outcome for the investor. This could be a modification under the government’s HAMP program or conventional in house modification program, or it could be that you don’t qualify for a modification at all.

Will you pass the NPV?

The REST Report will tell you whether it is in your lender’s financial interest to modify your loan by calculating the Net Present Value of a modification as compared to other foreclosure options. You will then be able to make a more informed decision about the best course of action for you and your family.

If the NPV Test generates a negative result, modification is optional, unless prohibited under contract.
The U.S. Treasury Department’s most recent HAMP NPV Model (V 3.1) is currently only available to participating HAMP servicers. For this reason the model used by the REST Report, has certain variations. Although the REST Report is a proprietary model, based on version 3.0 and the input provided by the borrower, the loan modification terms proposed in the REST Report should fall within the allowable tolerances of the HAMP eligibility guidelines.

Learn More about the REST Report at HAMP REST Report.

The California Department of Real Estate says it has noticed an alarming escalation of short sale fraud and will step up education and enforcement efforts to combat it.

A short sale is an agreement between a homeowner and a mortgage holder to sell a home for less than the borrower owes on the loan. When a property has declined significantly in value, banks and real estate investors are sometimes willing to accept less than they are owed.

Because the vast majority of real estate in California is worth far less than it was four years ago, a significant number of sales transactions these days are short sales.

The state issued six “desist and refrain” orders last month against real estate professionals it says are exploiting that situation.

“It’s just starting to take shape,” said Department of Real Estate spokesman Tom Pool. “I kind of equate it with the loan modification fraud, where we started out with just a few complaints and saw a swelling of it over time.

“The fraud has shifted over to the short sales.”

This market is getting renewed interest since the federal government announced its new Home Affordable Foreclosure Alternatives program.

Under HAFA, borrowers receive preapproved short sale terms from lenders before putting houses on the market. The streamlined process includes incentives for borrowers and lenders to avoid foreclosure.

A variety of deals have come up since then that cross legal or ethical lines, Pool said. That’s why this week, California Real Estate Commissioner Jeff Davi sent letters to lenders warning them to be on guard.

For one thing, a growing number of short sale negotiators are demanding upfront payments to work out an agreement with a lender on a borrower’s behalf, then failing to do anything in return for that fee.

Upfront payments are illegal without prior approval from the state, which mandates that money is held in escrow until after services are rendered and there’s a full accounting of how the money was spent.

Some short sale negotiators also are compelling buyers to pay their fee and failing to disclose that payment to lenders.

A more costly form of fraud is short sale flipping. That’s when a lender is told of a short sale purchase offer that is described as reflective of a property’s fair market value, when in fact the offer is much too low.

The lender accepts the offer, believing it’s the most it can get, and after the deal closes the house is immediately resold for its true, higher value. The perpetrators of the fraud, who could be agents, brokers, appraisers or straw buyers, then pocket the difference between the two sale prices.

That’s problematic for many reasons.

“That first lower offer affects the comps for later sales in the area, so it drives down property values,” Pool said. “And because a lot of these transactions involve incentives paid for with federal money, when banks don’t get full value, it just adds to the bailout burden we all have to shoulder as taxpayers.”

It’s harder for banks to catch this type of fraud since reforms introduced last year put appraisal management company middlemen between appraisers and lenders, said Bakersfield appraiser Eric Bonilla, who says about half of the transactions he’s involved in are short sales.

The reform was aimed at preventing people with a financial interest in higher appraisals from pressuring evaluators to fudge their reports, but as a result of the firewall, “We really don’t talk to each other anymore. We assume the offers they’re being presented are fair market, but we don’t always know,” Bonilla said.

The California Mortgage Bankers Association says it has definitely seen an increase in short sale fraud, and appreciates Davi’s effort to call attention to the problem.

“It affects everyone,” said spokesman Dustin Hobbs. “It disrupts the market and takes business away from honest brokers and agents, because the majority of the perpetrators in these cases are unlicensed people who really shouldn’t be operating in the first place.”

http://www.bakersfield.com/news/local/x649814781/Real-Estate-Department-warns-of-rise-in-short-sale-fraud

SPECIAL AGENT DARIN LEE MCALLISTER INDICTED FOR FRAUD

CHATTANOOGA, Tenn – Darin Lee McAllister, a Special Agent employed by the Federal Bureau of Investigation in Nashville, Tennessee, was indicted yesterday by a grand jury sitting in Nashville, Tennessee. This indictment was announced by United States AttorneyJames R. Dedrick, United States Attorney for the Eastern District of Tennessee, who is sitting by designation in the Middle District of Tennessee

The 19 count indictment charges McAllister, 44, of Brentwood, Tennessee, with wire fraud in violation of Title 18, United States Code, Section 1343, bank fraud in violation of Title 18, United States Code, Section 1344 and swearing a false oath in bankruptcy in violation of Title 18, United States Code, Section 152(3). The indictment alleges the defendant devised a wire fraud scheme to defraud SunTrust Mortgage Co., Inc., in connection with the purchase of rental properties totaling $1.25 million in May and July 2006. In addition, the indictment charges the defendant with devising a scheme to defraud the SunTrust Bank in connection with a $100,000 line of credit and making three false statements in connection with his subsequent bankruptcy petition in July 2009

If convicted on all counts, McAllister faces a total of 345 years in prison and $6.5 million in fines. The maximum penalty for each violation of the wire fraud statute is 20 years in prison and a $250,00 fine. The maximum penalty for each count of bank fraud is 30 years in prison and a $1million fine. The maximum penalty for each count of swearing a false oath is 5 years in prison and a $250,000 fine. Each count also carries a mandatory $100 special assessment. The court may also order restitution to any victims of the fraud.

McAllister will appear in United States District Court in Nashville, Tennessee, on June 9, 2010. He will be permitted to surrender himself to the United States Marshals.

This investigation was conducted by Office of the Inspector General, United States Department of Justice, with the assistance of the United States Bankruptcy Trustee’s Offices in Chattanooga and Nashville. Assistant U.S. Attorney Gary S. Humble represents the United States.

The public is reminded that an indictment is a form of accusation and is not evidence of guilt. The defendant is presumed innocent until and unless proven guilty beyond a reasonable doubt.

CALIFORNIA ASSOCIATION OF REALTORS^® Issues Alert to Warn Consumers About Liability Associated With Refinanced Mortgages

Loophole in State Law Allows Banks to Sue Foreclosed Borrowers for the Difference Between the Mortgage and the Property Value

LOS ANGELES, CA–(Marketwire – May 18, 2010) –  Facing the possibility of foreclosure, California homeowners may be hit with more than just losing their homes. Due to a loophole in state law, they also can be sued by their lender. For people who have refinanced a property, even if the money is used for home improvements, there is no protection should the borrower default on a mortgage that’s greater than the property’s value. Called a “deficiency” liability, under current California law, the lender can sue the former homeowner for the amount of the deficiency even after taking back the property.

THE CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) is alerting consumers and has sponsored legislation — Senate Bill 1178 by State Sen. Ellen Corbett (D-San Leandro) — to close this loophole.

“Most homeowners have no idea they are personally liable,” said C.A.R. President Steve Goddard. “Foreclosure is difficult enough on a family. Getting sued for tens of thousands of dollars after losing your home is much worse.

“During times when Californians are struggling to protect their homes, state government should enact reasonable protections to help people get through what is a very difficult situation,” he said. “Senate Bill 1178 strengthens the lending process and protects Californians. Borrowers will be protected from fundamentally unfair lending practices and lenders will be accountable for the quality of loans they refinance.”

California has protected borrowers from so-called “deficiency” liability on their home mortgages since the 1930s, but the evolution of mortgage finance requires that the statute be updated. Essentially, it says that if a homeowner defaults on a mortgage used to purchase his or her home, the homeowner’s liability on the mortgage is limited to the property itself. The law has worked well since the 1930s to protect borrowers, ensure the quality of loan underwriting, and allow borrowers brought down by financial crisis to get back on their feet.

Unfortunately, the original law does not extend the protection to loans that refinance the original purchase debt, even if the refinance only was to gain a lower interest rate. Recent years of low interest rates and aggressive marketing campaigns by lenders have induced tens of thousands to refinance mortgages. Few homeowners realized that by refinancing their mortgage, they were forfeiting their protections and now are personally liable.

“Lenders have a responsibility to ensure that borrowers understand loan terms and can meet them,” Goddard said. “SB 1178 puts in place much-needed consumer protections and deserves swift passage by the California legislature next week.”

Leading the way…^® in California real estate for more than 100 years, the CALIFORNIA ASSOCIATION OF REALTORS® (www.car.org) is one of the largest state trade organizations in the United States with nearly 160,000 members dedicated to the advancement of professionalism in real estate. C.A.R. is headquartered in Los Angeles.

Source: www.car.org

Four Arrested, Five Wanted for Fleecing Hundreds of Homeowners Seeking Foreclosure Relief

**NOTE: Contact information for victims willing to speak with the press is available upon request**

LOS ANGELES – Attorney General Edmund G. Brown Jr. today announced that nine men engaged in a Southern California boiler room, tricked out in high-roller style with a roulette wheel and other casino equipment, have been charged with 97 criminal counts for stealing at least $2.3 million from more than 1,500 desperate homeowners who were promised loan modifications but received no relief.

Arrested Tuesday and Wednesday night were Gregg Scott Quinn, 37, of Camarillo and Juan Pierre Washington, 40, of Winnetka, who worked as company sales managers and supervisors. They are being held at Los Angeles County Jail.

Gary Arnold Eisenberg, 71, of Westwood, a top telemarketer with the company, and Ira Itskowitz, 58, a sales manager, each spent more than five years in federal prison for previous fraud convictions and are already in federal custody for violating parole in connection with their participation in the scheme.

The four principal owners of the business, Niv Iskin, 30, of Reseda, Reviv Karpman, 38, of Tarzana, Tomer Kogman, 29, of Receda and Avraham Yechizkia, 34, of Encino; and a sales manager, Barel Iskin, 23, of Woodland Hills, are still being pursued by law enforcement.

“This company was just a boiler room, long on promises and upfront fees but short on foreclosure relief,” Brown said. “Its operators cruelly defrauded citizens trying valiantly to hang on to their homes.”

Brown’s office initiated its investigation in March 2009 in response to numerous consumer complaints against the defendants’ Canoga Park-based loan modification business, which operated as Mason Capital Group, LLC and Gretchen Fox and Associates.

When agents executed a search warrant at the office, they found a Las Vegas casino-themed sales floor complete with craps, poker and black jack tables fashioned as workstations, and a roulette wheel that top-selling telemarketers spun for cash bonuses.

Between January 2008 and June 2009, the four owners took in at least $2.3 million in up-front fees, which ranged from $1,000 to $5,000, from more than 1,500 homeowners throughout the country. In almost every case, no loan modifications were completed, as promised. Financial records indicate that the four owners spent hundreds of thousands on private school tuition, travel, entertainment, shopping and other personal expenses while running Mason Capital Group, LLC and Gretchen Fox and Associates.

To corral sales, the four owners used a telemarketing operation that targeted homeowners facing mortgage payment increases or foreclosure. During an initial call, the telemarketers touted the company’s team of “attorneys, forensic accounting personnel, and loan negotiators” available to negotiate reductions in interest rates, monthly payments and principal balances; their supposed 90% to 100% loan modification success rate and refund guarantee. The telemarketers then collected financial information from homeowners to determine if they “qualified” for the company’s services.

Soon after the initial call, homeowners received a follow-up call to inform them that their case had been “reviewed” and “approved.” Telemarketers closed sales by insisting the approval would expire unless homeowners acted quickly, while reminding them about the refund guarantee if promised results were not achieved.

In fact, the company completed very few loan modifications, rarely contacted lenders, failed to honor the refund guarantee, employed unlicensed “loan processors” and had no legal staff negotiating with lenders.

While homeowners waited, they were told their loan modifications, or refunds, would be voided if they tried independently to contact their lender. Many lost their homes to foreclosure as a result.

To skirt the state’s foreclosure laws, avoid paying refunds and conceal profits, the owners changed company names, claimed bankruptcy and shifted loan modification files to another business they created called, American Financial Group, LLC.

Investigators located victims in dozens of California cities, including: American Canyon, Anaheim, Antioch, Artesia, Atwater, Bakersfield, Ceres, Chico, Cotati, Cloverdale, Crestline, Delano, Elk Grove, Encino, Fountain Valley, Fremont, Fresno, Guerneville, Hanford, Hayward, Hercules, Hood, Indio, La Jolla, Lancaster, Laguna Hills, Lodi, Long Beach, Los Angeles, Manteca, Modesto, Montclair, N. Hollywood, Newhall, Newman, North Highlands, Oakdale, Oakland, Ontario, Palmdale, Pittsburg, Pleasanton, Poplar, Porterville, Redding, Richmond, Riverbank, Rodeo, Sacramento, San Jose, San Pablo, Santa Clara, Santa Rosa, Sebastopol, Stanton, Stockton, Tracy, Tulare, Turlock, Union City, Upland, Valley Village, Van Nuys, Visalia, W. Sacramento and Yuba City.

Brown’s office will seek restitution for victims of this scam.

By law, all individuals and businesses offering mortgage foreclosure consulting or loan modification and foreclosure assistance services must register with Brown’s office and post a $100,000 bond. It is also illegal for loan modification consultants to charge up-front fees for their services.

Non-profit housing counselors certified by the U.S. Department of Housing and Urban Development provide free help to homeowners. To find a counselor in your area, call 1-800-569-4287.

If you are a homeowner who has been scammed, contact Brown’s office at 1-800-952-5225 or file a complaint online at: www.ag.ca.gov/consumers/general.php.

Brown has sought court orders to shut down more than 30 fraudulent foreclosure relief companies and has brought criminal charges and obtained lengthy prison sentences for dozens of other deceptive loan modification consultants. For more information on Brown’s action against loan modification fraud visit: http://ag.ca.gov/loanmod.

The 97 criminal counts filed against the nine defendants, include 63 counts of grand theft, 26 counts of unlawful foreclosure consulting, 7 counts of tax evasion and 1 count of conspiracy.

The United States Postal Inspection Service assisted in the investigation.

Copies of the complaint, filed in Los Angeles County Superior Court, and the Arrest Warrant are attached.

U.S. housing starts touched a 1-1/2 year high in April, but a drop in permits to a six-month low suggested housing market recovery will remain slow.

Housing starts rose 5.8% to a seasonally adjusted annual rate of 672,000 units, the Commerce Department said on Tuesday, likely supported by the looming expiry of a home buyer tax credit. March’s housing starts were revised to show a 5% increase, instead of a 1.6% gain.

Markets had expected housing starts to rise to 650,000 units. Compared to April last year, starts were up 40.9%, the largest increase since March 1994.

“It is still a very moderate recovery in housing, it is not a V-recovery. But it is supporting growth now, which is good news,” said Kurt Karl, chief U.S. economist at Swiss Re, in New York.

Separately, prices paid by farms and factories dipped 0.1% last month following a 0.7% rise in March, the Labor Department said. That compared to market expectations for a 0.1% gain.

U.S. stock index futures held gains after the data, while Treasury debt prices remained flat. The U.S. dollar stayed lower against euro.

Groundbreaking for single-family homes rose 10.2% last month to an annual rate of 593,000 units after a 2.1% increase in March. Starts for the volatile multifamily segment tumbled 18.6% to a 79,000-unit annual pace, partially reversing the prior month’s 24.4% surge.

A National Association of Home Builders survey on Monday showed home-builder sentiment rose to its highest level in more than 2-1/2 years in May, encouraged by the strengthening economic recovery, which builders hope will support home construction when the incentives end.

Investment in new home construction contracted in the first quarter after two straight quarters of growth. A flood of foreclosed properties is hampering the housing sector’s recovery from a three year slump.

New building permits, which give a sense of future home construction, dropped 11.5% to a 606,000-unit pace last month, the lowest level since October 2009 the Commerce Department said.

With the housing market still shaky, inflation subdued and worries over the debt outlook in Europe, the Federal Reserve has room to extend its ultra low interest rate policy.

Core prices, which exclude food and energy goods, climbed 0.2% from the prior month, and were up just 1% compared to a year earlier, at the bottom of the Fed’s presumed comfort range between 1% and 2%.

Source: http://www.foxbusiness.com

Homeowners in distress are losing time, money and peace of mind as they get trapped in a bureaucratic nightmare

Requests to modify home loans and reduce mortgage payments, relatively uncommon a few years ago, have surged as borrowers struggle to avoid foreclosure. Many people requesting changes in their home loans say they’re getting the runaround from loan servicers — often national banks, who make the day-to-day decisions about modifying loans.

“Most housing counselors and advocates for borrowers will tell you they are submitting documents three, four, five, six, seven, eight, nine, ten times, and they’re getting lost,” said Diane Thompson, an attorney with the National Consumer Law Center, a national consumer group.

The slipshod handling of loan modification requests by loan servicers is “endemic across the country,” Thompson said.

An adjustable rate mortgage combined with a layoff has put Joanne Smith at risk of losing her home in West Salem. It took nearly a month and a half of repeated phone calls, and long waits on hold, to get a person on the phone to discuss a loan modification, she said.

Smith asserts that the delays seem like a tactic to discourage borrowers and expedite foreclosures.

“They are just ready to pounce,” Smith said. Unless a deal can be worked out, her home could got into a foreclosure sale within weeks.

Friction between borrowers and loan servicers has increased as foreclosure fillings reach astonishing levels. RealtyTrac, a property and foreclosure listing firm, says that 2009 foreclosure filings in the United States rocketed past 2.8 million.

At the same time, the Obama administration $75 billion “Making Home Affordable” loan modification program, known as HAMP, is supposed to spur loan modifications and prevent foreclosures. In November, a government report recapping the program’s progress reported that only 31,382 HAMP loans had been made permanent.

Statistics aren’t complete, but complaints about trouble in modifications are growing:

-Oregon’s Department of Consumer and Business Service keeps a tally on loan modification complaints reported by borrowers. DCBS does not have authority to regulate national banks and forwards those complaints to the Office of the Comptroller of the Currency, a federal agency. In 2007, DCBS took just nine complaints related to loan modifications. By 2009, the number of complaints rose to 66.

-Likewise, the Oregon Attorney General Office records complaints about banks when someone files a report and passes them on to a federal agency. The state attorney general also is constrained from taking action against a federally-chartered bank. In 2009, however, the attorney general took 108 complaints related to real estate credit and foreclosure. Countrywide Home Loans Inc., with 37 complaints, was the entity with the highest number of complaints (Countrywide has been absorbed by Bank of America). Few complaints were apparently taken prior to last year, although a state spokeswoman advises that a new method for coding these types of complaints was implemented in 2008.

Hurry up and wait

In the best case, applying for a loan modification is a complicated process. Loan servicers can’t help everyone in financial straits, and borrowers need to follow through by submitting detailed information.

“It’s a process of hurry-up and get the paperwork in — and then wait,” said Kim Beesley, a community outreach director for Consumer Credit Counseling Service of the Mid-Willamette Valley Inc. The nonprofit provides free counseling to home owners seeking loan modifications.

Loan servicers are overwhelmed with requests for loan modifications and the process can be daunting for borrowers, Beesley said, but she hasn’t seen examples of banks acting in bad faith or treating customers unfairly.

Tom Goyda, a spokesman for Wells Fargo, said the bank has doubled the size of staff devoted to home retention. The company has about 15,000 employees who work with homeowners seeking to modify home loans, he said.

“There were circumstances, certainly, where we didn’t reach the customer service levels that we would want to have in place,” Goyda said. Well Fargo has resolved many of the issue raised by the sudden increase in customers wanting loan modifications, he said.

The last resort?

Banks say foreclosure is the last resort. Investors in mortgages stand to lose much more money on a foreclosure than on a loan modification.

Others say the relationship between loan servicers, investors and homeowners is more complicated.

Critics maintain that loan servicers, who administer loans on a day-to-day basis, may or may not lose money when the investor loses money.

In written testimony submitted to a U.S. Senate subcommittee, an attorney with the National Consumer Law Center stated that servicers have cut costs “by relying more on voicemail systems and less on people to assist homeowners, by refusing to respond to homeowners’ inquiries, and by failing to resolve borrower disputes.”

The Oregon State Public Interest Research Group, another consumer advocacy group, asked its members to submit stories about their experiences when attempting to modify loans and has so far received about 20 responses.

All of the respondents have similar complaints, said Jon Bartholomew, an OSPIRG policy advocate. The typical story: borrowers will send in their paperwork as directed by the bank, but the bank says it never arrived.

From homeowner to renter

Karyn Williamson made a failed attempt to keep her family’s home in southeast Salem. When her husband’s employer warned that layoffs were imminent, Williamson went to Bank of America and asked for a loan modification.

Bank of America initially turned her down. The bank later seemed to reconsider, said Williamson, who had a steady job and thought her income was sufficient to make mortgage payments.

In May, Williamson sent the paperwork to the bank and waited. She was told to expect a response by June. A bank representative admonished her not to call and check on the progress. June came and went with no e-mails, phone calls or letters from the bank, she said.

Nothing apparently was done with her request until September, Williamson said. By then, she had given up on keeping the home.

“It was a quirky, old beautiful building that I put my soul into. I loved that home, ” she said.

To lighten the family’s debts, Williamson decided to do a short-sale on the Salem property. Bank of America lost documents multiple times before the company approved the plan for the short-sale, she said.

“Working with them is like pounding my head against a concrete wall,” Williamson said.

Delays by Bank of America have also hindered Williamson’s attempt to sell the property and get free of the debt. The bank’s slow response to offers on the property has resulted in two lost sales, said real estate agent Kathleen Dewoina, who represents Williamson.

In the meantime, the vacant house in Salem suffered a catastrophe when waterpipes burst during this winter’s cold snap. Williamson had winterized the home and it’s unknown who turned the water back on, Dewoina said.

The water damage, which Dewoina described as serious, hasn’t been repaired.

Bank of America’s media representative did not return a call seeking a comment on its procedures.

Williamson’s husband has found a new job at a trucking company in Southern Oregon, but now she is unemployed. They live in a rented double-wide trailer in Gold Hill.

Source statesmanjournal.com