Notice of Default, Foreclosures, and Loan Mod Progress.

I always read on a daily basis about Loan Modifications, Short Sales, Foreclosures, and the like. I read alot of information and from what I am seeing, as general consensus, Lenders have been helping alot of people with whatever mortgage relief that is deemed necessary by the lender. According to what http://www.dsnews.com says, in the month of May, there were 63,000 permanent solutions for homeowners in default. Of that 63,000, there were 17,590 of those homeowners that were made complete by President Obama's HAMP program. By all means, these numbers are great. When Wells Fargo accounts for 11,000 of those modifications  alone, it seems to be looking up for the homeowner. My problem with this is that I speak to alot of people throughout the day,  and I am wondering why the majority of these people have not been helped. see the majority of my clients, or potential clients have been trying to get loan modifications, even for the trial period for 7-12 months. Those that are longer than that have flat out been denied and the lender is speaking of private investors not willing to budge. In some cases this may be true, but I will bet my last dollar that 90% of those cases are not. See the problem is very simple. People need help. Homeowners are defaulting on loans that they couldn't afford in the first place and they become complacent once they hit a certain time frame that they have defaulted and the bank as not acted. There is approximately 2.53 million homeowners in default currently and that has been close to the same number  since 2009. So while the lenders are supposedly "helping", there are just as many people that are looking for answers at the same time.  Foreclosures are still up. According to HOPE NOW, there was a rise in forecloses from the month of April (60,000) to May (65,000). what this tells me, is that lenders are willing to put more people on the street than they are looking to help. I say this ignorant to the individual situations, however I speak with or meet hundreds of people a day that are in dire straits and need help so I think that I can speak for the majority of folks when I say that it isn't enough.

Bi- Partisan settlement that has come into play leaves the Big 5 having to give out 125 Billion in relief in a matter of 3 years. This is a large amount of relief. My issue with this is that the big 5 are going to hold out as long as they can to offer this assistance and the foreclosure rate is going to continue to go up unless the state officials do what California did and make it a law that lenders may not foreclose while in some sort of relief program. This is a great law for those that will be approved for the relief program, but what about the ones that are "not qualified", I see these lenders denying any relief after going through the motions, and escalating foreclosure. Believe you me, these machines are debt collectors and I think we homeowners are thinking incorrectly if we think that they are out for our best interest. they may offer some form of relief to some of us in this 3 years, but it is going to be on their terms, which can increase your payments, balloon the payments for any relief that they are putting on paper and still put you in a bind, and ultimately line their pockets with money of the struggling. Look at it this way, marketwatch.com expresses that 56% of people that get their loan modified permanently, a going back into default in an 8 month time period.

I know that this is a personal rant of mine and i apologize if you feel it too "opinionated". However I am writing on behalf of the clients that I deal with on a daily basis and offering this opinion based on what I have to do to keep people in their homes on terms that are beneficial to them and not the lender.

Please comment or email me if you have questions, or concerns.

California Foreclosure Prevention

With the bi-partisan settlement that occurred in February, and while the California Board of Realtors hard at work, the California Bill of Rights has introduced a bill that will no longer allow banks to foreclose on homeowners who are actively trying to modify their home loans. According to http://www.scpr.org/news/2012/07/02/33069/california-lawmakers-ban-banks-from-foreclosing-on/, Attny Gen. Kamala Harris is trying to do more for homeowners that have fallen prey to lenders who are taking homes when attempting to get a loan modification. Hopefully this will set things into motion for other states as well as this is known in the industry as a "bait and switch", a practice that mortgage lenders use to make as much money as possible by agreeing to modify the loan, but foreclosing on the property before the modification is complete. With the foreclosure rates being higher in the first quarter of 2012 than the first quarter of 2011, and with California being the state with the 2nd highest rate of foreclosure in the U.S. at this time, this should turn the cards more favorably in homeowners favor. Way to go California!

Trial Modifications

When getting a Loan Mod, it's now a policy that your lender, either through HAMP or trough an internal modification, take you through a trial period with a modified loan. In most cases, this lasts anywhere between 3 to 6 months. Now what bothers me about this the most is that the holder, in many cases, is giving out these trial periods without you filling anything out. Now nothing in this world is for free, so people are jumping on any kind of relief that they can get. The lender simply sends out the paper work for you to fill out. What they have told many of my clients is that if they qualify they will send out more paperwork for them to fill out. Here is what I am noticing. The homeowner is pre-approved for the trial modification, and all is thrown in the air. All one can do is cross their fingers and hope that they qualify.

What the lender is not telling you is where your Trial Mod money is going. If you look at your statement that is sent, you will notice that it is not going towards your mortgage. What I have found from speaking to a few different people in the mortgage business is that the lender will put it towards escrow, maybe interest only, or my personal belief, the sock drawer. You will notice the difference between the trial payments and the original payment will be added to what you are behind. sometimes the lender will even want that in a balloon payment and the whole while you haven't been approved for the loan mod. If in fact you are denied, your statement will reflect that 3-6 months as being default, as if you haven't even made a payment, or that it is an incomplete payment.

The trial period is very clear, they want to see if you will be able to maintain the mortgage payments if they were to modify it. What you need to do is to make sure tat you send your paperwork in first and not accept the pre-approved trial mod. The reason why is because there will be too much confusion in the end. If you have already filled out the paperwork and are about to submit, make sure that you are getting it in writing that once the trial period is over, that it becomes permanent immediately. If you have to fill out more paperwork,  pack a lunch, cause you are pretty much starting over and have a pretty decent wait time in most cases. If you were late or missed the trial payment do NOT listen to what the lender says about forgiveness, YOU WILL BE DENIED!

If you guys have any questions or comments please let me know.

The Short Sale

One of the many questions I get is as follows: What if the lender says no to any kind of loan modification?Well, if you have exhausted all other options, Then you should really consider a short sale. Though most of might know what a short sale is, this blog is for the people that need to have these things broken down simply. A short sale is where the lender agrees to allow the sale of the property to be less than what is owed on it. You still have to be able to prove hardship for them to allow such a sale, but it is better than a foreclosure. Alright, admittedly, I don't know as much about a short sale as I do about loan modifications. what I do know is that a short sale should be your last resort. If by chance you are declined or you are reaching a breaking point, this is a better option than just walking away. Yes, you will take a hit on your credit, and no it will not be as bad as the foreclosure. What your main concern is, or should be, is the deficiency. If you already have an agent to list your home, you will need to make sure that you stay on top of them about what is going to happen with that deficiency. If you owe $250,000 on the house but it sells for $150,000, you may still have to pay that $100,000 that makes up the difference. There is paperwork and negotiating that needs to be done so that you may walk out of this with as little owed (if any) as possible.

Short sales are on the rise. In fact, according to www.realtytrac.com, short sales in the first quarter are the highest that tey have been since 2009. What this tells you is that while you may not get approved for a loan modification, that doesn't mean that you have to walk away. With the new guidelines that have been set recently, lenders and homeowners alike are having to take an action, so there is less of a chance for the foreclosure to take the house out from under you. These guidelines are in place for that reason. Again I don't know as much about this process but here is what I do know:

1. The lender MUST review and respond to any requests for short sale within 30 days form the time that they receive it, and send out the borrower response package.
2. If it is still under review after that 30 days, that have to keep you updated every week.
3. They only have 60 total days to make a decision and send you out the response package.

With that, when you receive that borrower response package, you need to hurry because you only have about 30 days yourself to fill it out and return it. So make sure that your agent or whoever you have helping is on top of that. We homeowners have to do our part as well. If we don't, we look at the lender as being unfair and we want to push the blame on them.

In any short sale situation you will receive a 1099 from your lender. If you work on a 1099, you know that you usually set aside 30% of your gross for taxes. What you don't want is to have to pay anywhere up to 30% of that $100,000 that we were speaking of before. You need to make sure that your agent or whoever is helping you is filing for a 1099-C, which is a cancellation of debt. This way, you don't owe the IRS another $30,000.

If you have an FHA loan you may even get relocation assistance. Ask your Realtor about this.

All of these things are the small intricacies that are going to help you get a positive response from your situation. Take control of it the best you can. Let me know if you have any questions or concerns.

Have fun kids!

HAMP Program: Let me get this straight...

I have noticed here lately that when I am speaking to potential clients for loan modifications, that they have been having difficulties with their eligibility for the HAMP Program. In these particular situations, I don’t know if the client is misunderstanding or in their lender is just being facetious. They are being told that do not qualify to receive a mortgage rate reduction because they are paying more than 31% of their monthly income towards their mortgage. Or that they don't qualify because they are behind If your lender is telling you this, you need to straighten them out.

 According to http://www.makinghomeaffordable.gov/programs/lower-payments/Pages/hamp.aspx, you are eligible for the HAMP Program if you are paying more that 31%. This being from the actual site, I tend to believe that a little more than someone representing the lender that just happened to get a job in customer service.

There are several different facets that Making Homes Affordable has in place. There is not only the reduced interest, but there is Principal Reduction Alternative.

 

 Your mortgage cannot  be owned or guaranteed by Fannie Mae or Freddie Mac.You must owe more than your home is worth.You  have to occupy the house as your primary residence. If you obtained your mortgage on or before January 1, 2009, and your mortgage payment is more than 31 % of your gross monthly income. You must owe up to $729,750 on your 1st mortgage, and have a financial hardship that has lead you to be either delinquent or in danger of falling behind.You have to have sufficient, documented income to support the modified payment, you must not have been convicted within the last 10 years of felony larceny, theft, fraud or forgery, money laundering or tax evasion, in connection with a mortgage or real estate transaction.--- http://www.makinghomeaffordable.gov/programs/lower-payments/Pages/pra.aspx



There is also Home Affordable Unemployment Program. You may be eligible if:

You are unemployed and eligible for unemployment benefits.You have to occupy the house as your primary residence.You have not previously received a HAMP  modification, and you obtained your mortgage on or before January 1, 2009.You have to owe up to $729,750 on your home.-- http://www.makinghomeaffordable.gov/programs/unemployed-

Keep in mind however that you may be required to make a partial payment not exceeding 31%.  I don’t know if those partial payments will actually be going to the mortgage or not, you may want to check your statements to see if it reflects that. Find out if it is going into an escrow account; just make sure that you know where your money is going. This program is NOT available if your mortgage is held by Fannie Mae or Freddie Mac, so if yours Is, you will need to contact them about the forbearance programs they have available.

Furthermore, if you are behind, that means that you have hit a hardship and were unable or are unable to afford your payments. That is the reason why you need a modification. No need to go too deep on that one. You should just talk to them like they are idiots if they tell you that you don't qualify because you are behind.

At the end of the day you just have to know what and who you are dealing with. You CAN do this by yourself but your lender may be telling you that it is unable to be done. If you are having problems, you may need to get in contact with someone that has the know how to deal with the lender. If you fall under these criteria listed above, you shouldn’t have a problem obtain a HAMP modification. Remember, modifications are about numbers and ratios. If you can prove hardship you are eligible.

Let me know if you have any questions or concerns or if you just want to talk about it. 

Mortgage Reduction: Real or Fake?

 When I am speaking to potential clients, one of the biggest questions that I get is “how do I know that you aren’t just a scam artist?”  As a person that genuinely likes to help people I feel the need to separate myself from the “law groups” or the “specialists”. Forgive me if I am adding a personal tone to this post, as this is my business, therefore my lively hood, I take this personally.

Signs of a Loan Modification Scam:

1.       Guarantees- No one can guarantee anything. It does not matter what the situation holds, your lender can do whatever they want. Many of these companies call you to sell you a dream. Don’t deal with these kinds of companies.
2.  Upfront Fees-No company is allowed to charge an fee up front for a loan modification. Period. The Federal Trade Commission http://www.ftc.gov/opa/2010/11/mortgage.shtm posts that it has been cracking down on these guys for years. Charging an upfront fee to modify your loan is illegal. They charge outrageous prices from $1500 - $3000 and even break them down to monthly payments. When you see prices like this RUN! Lawyers are calling these retainer fees, but at the end of the day, you still wait an average of 6-8 months and the bank can still deny you. Then what do you do? You have just lost a significant amount of money and the lawyer is going to suggest bankruptcy in which they will receive another payment from you. Even wen companies charge you after the work is done, you can expect words like percentage, which is probably going to wind up being more money  than what you are prepared to pay. 
   *note* if you are purchasing an actual product that you can use, it is legal, and the company  must give you term of an agreement and have you sign off that you know that you are purchasing a product and not a service.
3. Trade Secrets- there are no trade secrets. If a sales person tells you that they are not allowed to give out the trade secrets, hang up, or walk out. Mortgage modifications deal with Debt to Income ratios and you must fall under qualifying guidelines. If they can’t express how they can help you or how their product can help you, they are probably not going to help you.

I personally believe that transparency is the key to any business relationship. If you are speaking with a company, group, or person about helping you with your mortgage crisis, they need to be a wealth of info. If they are unable to answer any questions or they give you a one off answer and get back to what they want to talk about (90% of the time it’s about your payment), you probably need not do business with them.

Trust and comfort are the key words in this kind of relationship. Should you speak with one of these kind of companies and you feel that you need someone to help, make damn sure that they are willing to bend over backwards to not only earn your trust but your money as well. If you ask for an email and they say that they don’t or won’t do that, they don’t want to earn your trust or money. Also ask them how you are protected if they are a scam. A scam artist won’t tell you how to put them in jail.

I know that this is a personal rant, but I deal with this question all of the time so I find it necessary to address the question publically. Let me know what you think.

Big 5 to Modify Mortgage Rates in Settlement

Hey guys. So I have heard the rumors, honestly I dismissed them as being untrue, but I heard from a client today about the Dept. of Justice and the Secretary of State in 49 states sending out letters about refinancing your loan, loan modifications, and foreclosure. This apparently is a pretty big thing, and I honestly think that a little auditing is needed in situations like these. When you have banks that are being sued, or are in court for fraudulent underwriting, answers need to be had. So I did a little reading up on the issue and there is a joint state-federal settlement. This settlement is involving the big 5: Ally/GMAC, Bank of America, Citi Mortgage, Chase, and Wells Fargo. This is the absolute largest consumer protection settlement that the United States has ever seen. In laymen terms, all of the robo signing, the underwriting fraud, and not really running a checks and balances, has now back fired. We are looking at a $25 billion settlement here.  You can get more info at http://www.justice.gov/opa/pr/2012/February/12-ag-186.html.

Loan Modifications:

If you are behind on either the first or second lien, you may be receiving a letter from The Department of Justice. It is going to explain to you that you are going to be able to get a loan modification. Here is what it is not going to explain. The time line that you are used to seeing still remains. You are still going to pull your hair out and send in the same paperwork over and over again, every 30 days. That is not going to change. If you feel like it will, I want to burst your bubble. For these banks to refinance, modify, or even write checks for foreclosure reimbursement a total of $25 billion. How fast would you come off of that kind of money? The fact does remain, that it WILL be easier. Your chances do increase. It still is going to take some time, and it still is going to go against your credit. So make sure that you are taking names, taking notes, and speaking with the proper departments.

Refinance:

If you are current on your payments, but your mortgage exceeds your home’s value, you will be able to refinance through this settlement. Refinancing is always going to be a hassle.  The credit checks and closing costs are always going to be the same.  These banks are being forced to provide $3 billion in refinancing relief across the nation. So if your mortgage is upside down, I would suggest you try to take care of this as soon as possible. There is probably a long line.

Foreclosure:

If you lost your home after defaulting under any of these faulty loans, or if you were a victim of robo signing, you can receive a check immediately. There will be about 750,000 borrowers  receiving these checks and it will add up to about $1.5 billion nationwide.

According to http://www.nationalmortgagesettlement.com, the banks “are still accountable for other claims not covered by this settlement”.  You can go to their website to get more information on that.  This settlement deals with the basic immoral principles that have hurt people the most. Foreclosure, servicing, and the underwriting will all be covered. Anything else you will need to seek an attorney.

Well that’s it guys. I hope you enjoy. I just read a few things about it and wanted to relay it to you on terms that we understand. So let me know if you have any questions or if I can help in any way.