In the past I have interviewed and spent many tedious hours talking to different Loan Modification company's. Either under the DRE model or the attorney model. At one point I saw that even I can fall victim to being 'Sold' on a company. Some Loan Modification places offer money back, other's offer attorney protection with fancy forensic loan analysis. Either way I am continuing to research for consumers and came across some very interesting facts.
The State Bar of California, alarmed by the number of lawyers preying on vulnerable homeowners, today identified 16 attorneys who are under investigation for misconduct related to loan modification.
“In my 21 years in attorney discipline, I have not seen a crisis of this magnitude. It is truly unprecedented,” said Interim Chief Trial Counsel Russell Weiner, who is waiving investigation confidentiality in favor of public protection. The waiver, allowed by law, is used only occasionally, but Weiner said the seriousness of the problem demanded a strong reaction by the bar in order to protect consumers. This is the first time the names of more than a few lawyers being investigated have been made public.
“The number of attorneys using their law licenses to essentially take money from unwary but trusting consumers is astounding,” Weiner added. “There are literally thousands of victims who have lost money they could not afford to lose. Under the circumstances, the need for public information and protection is paramount.”
Those attorneys being named by the State Bar have allegedly taken fees for promised services and then failed to perform those services, communicate with their clients or return the unearned fees, Weiner said. Some attorneys misrepresented the services they could provide. “It appears these attorneys may have significantly harmed their clients who were already facing great financial pressure and the possible loss of their homes.”
About one-quarter – almost 800 cases – of the active investigations in the Office of Chief Trial Counsel (OTC) are related to foreclosure complaints. The office has experienced a 58 percent increase in active investigations over 2008 due in large part to the huge increase in complaints against attorneys offering loan modification services. “Our office is aggressively investigating these cases and is working proactively with law enforcement,” said Weiner.
In March of 2009, the State Bar created a special team of investigators and lawyers to handle the growing number of complaints received about attorneys offering loan modification services. OTC found that many of the offending attorneys are associated with firms that use telemarketers or phone banks to sign up clients without regard to the facts of the individual case or whether or not the client can be helped, Weiner said.
In many cases, the attorneys work with untrained non-attorney staff engaging in the unlawful practice of law by offering legal advice to prospective clients. OTC also is investigating the non-attorney staff for possible referral to law enforcement.
In recent months, OTC has obtained the resignation of three attorneys who were offering loan modification services. Those attorneys chose to give up their licenses to practice law rather than face disciplinary charges and possible disbarment. In addition, OTC lawyers are preparing to put some attorneys on inactive status pending the filing of formal disciplinary charges
Weiner warned consumers to take special caution when seeking legal representation related to loan modification. “Consumers should not be comforted by advertisements that claim the attorney is a member of the State Bar of California,” he said, noting that all attorneys practicing in California on a regular basis are members. “Such membership does not mean the attorney has any special knowledge, experience or expertise in the area of loan modification. In fact, it appears that many of the attorneys offering these services have little or no prior experience in the area of loan modification.”
The following attorneys have received a significant number of complaints related to the loan modification services they were hired to perform. They are entitled to a full and fair hearing on any charges that may be filed in the future. No discipline may be imposed unless and until the State Bar proves allegations of misconduct by clear and convincing evidence.
▪ David Arase, Bar No. 233705, Arase Law Firm and National Housing Assistance
▪ Stephen Burns, Bar No. 113371, Legal Group Network
▪ Robert Buscho, Bar No. 122556, United Law Group
▪ Nicholas Chavarela, Bar No. 251632, Rodis Law Group and America’s Law Group
▪ Steven Feldman, Bar No. 103676, Feldman Law Center
▪ Eric Johnson, Bar No. 224065, Avantgarde Group
▪ Paul Lucas, Bar No. 163076, Lucas Law Center
▪ Brandon Moreno, Bar No. 233750, U. S. Foreclosure
▪ Jeffrey Nemerofsky, Bar No. 213014, U.S. Advocacy Law Group and U.S. Financial Products
▪ Gregory Paiva, Bar No. 207218, Law Offices of Gregory Paiva
▪ Adrian Pomery, Bar No. 249664, U.S. Foreclosure
▪ Ronald Rodis, Bar No. 181873, Rodis Law Group and America’s Law Group
▪ Mark Shoemaker, Bar No. 134828, Advocates for Fair Lending
▪ Marc Tow, Bar No. 78429, Marc Tow and Associates
▪ Michael Yellin, Bar No. 255050, A Fresh Start Loan Modification
▪ Sean Rutledge, Bar No. 255938, United Law Group
The State Bar suggests that consumers be wary of attorneys offering loan modification services under any of the following circumstances:
Advertisements of the office do not expressly identify by name the attorney who is responsible for the business.
Office staff will not readily identify by name the attorney responsible for oversight of the business.
The attorney in charge of the office is too busy or not willing to meet personally with prospective clients.
The firm advises a consumer to stop paying the existing mortgage.
The business, through its advertisements or claims of its representatives, makes claims that sound too good to be true, such as claims of a 90 or 100 percent rate of success in obtaining loan modifications, or claims that a reduction in the mortgage principal is likely to be achieved.
The business demands payment of a large fee, even before obtaining a prospective client’s basic income and expense information, and information about the existing mortgage and present home value.
The attorney responsible for the business is not licensed to practice law in the state where the consumer resides.
There are legitimate loan modification services and ethical attorneys that are providing the promised services for their clients. Two places to start in the search for loan modification assistance are: HUD Housing Counselors, 800-569-4287, http://www.hud.gov/counseling; and HOPE NOW, 888-995-HOPE, http://www.hopenow.com.
Consumers can also find qualified attorneys through a State Bar-certified lawyer referral service that can be found on the State Bar’s Web site (www.calbar.ca.gov), or by calling the State Bar’s Lawyer Referral Services Directory at 1-866-442-2529 (toll free in California) or 415-538-2250 (from outside California).
Consumers having a problem with the attorney handling their loan modification may contact the State Bar at 1-800-843-9053 or visit the State Bar’s Web site at www.calbar.ca.gov to find a complaint form.
I am still certainly promoting our new friends at www.loanlifesavers.org. the two key components they offer that I am attracted to are their presence in the non-profit sector and the fact that (For Free) consumers have to apply to be accepted into their program of which they have a high turn down rate.
-Christopher Rockey
Wednesday, September 30, 2009
Tuesday, September 29, 2009
Auto Reply
Dear Mr. Rockey:
Thank you for contacting me to express your support for expanding the first-time homebuyer tax credit. I appreciate the time you took to write and welcome the opportunity to respond.
In July 2008, the Housing and Economic Recovery Act of 2008 (Public Law 110-289) provided first-time homebuyers with a tax credit, equivalent to an interest-free loan, worth up to $7,500. The tax credit applied to homes purchased between April 9, 2009 and July 1, 2009. As the housing situation worsened in the fall of 2008, additional action was taken to prevent further declines in home values. Congress included in the American Recovery and Reinvestment Act of 2009 (Public Law 111-5), a more robust first-time homebuyer tax credit. Specifically, the tax credit was increased to $8,000 for homes purchased in 2009 and will not have to be repaid.
I understand your belief that the first-time homebuyer tax credit should be increased and expanded further. As you know, on June 10, 2009, Senator Johnny Isakson (R-GA) introduced the "Home Buyer Tax Credit Act of 2009" (S. 1230), which would increase the credit to up to $15,000, remove income eligibility limits, and expand it to include homebuyers purchasing homes other than their first. S. 1230 has been referred to the Senate Finance Committee, of which I am not a member. Please know that I will keep your support for this legislation in mind should it come before the full Senate.
Once again, thank you for writing. If you have any additional questions or concerns, please do not hesitate to contact my Washington, D.C. office at (202) 224-3841. Best regards.
Sincerely yours,
Dianne Feinstein
United States Senator
Thank you for contacting me to express your support for expanding the first-time homebuyer tax credit. I appreciate the time you took to write and welcome the opportunity to respond.
In July 2008, the Housing and Economic Recovery Act of 2008 (Public Law 110-289) provided first-time homebuyers with a tax credit, equivalent to an interest-free loan, worth up to $7,500. The tax credit applied to homes purchased between April 9, 2009 and July 1, 2009. As the housing situation worsened in the fall of 2008, additional action was taken to prevent further declines in home values. Congress included in the American Recovery and Reinvestment Act of 2009 (Public Law 111-5), a more robust first-time homebuyer tax credit. Specifically, the tax credit was increased to $8,000 for homes purchased in 2009 and will not have to be repaid.
I understand your belief that the first-time homebuyer tax credit should be increased and expanded further. As you know, on June 10, 2009, Senator Johnny Isakson (R-GA) introduced the "Home Buyer Tax Credit Act of 2009" (S. 1230), which would increase the credit to up to $15,000, remove income eligibility limits, and expand it to include homebuyers purchasing homes other than their first. S. 1230 has been referred to the Senate Finance Committee, of which I am not a member. Please know that I will keep your support for this legislation in mind should it come before the full Senate.
Once again, thank you for writing. If you have any additional questions or concerns, please do not hesitate to contact my Washington, D.C. office at (202) 224-3841. Best regards.
Sincerely yours,
Dianne Feinstein
United States Senator
Friday, September 25, 2009
Race to the Moon
In the late sixties we witnessed a global race by all nation's to be responsible for the first man on the moon. Unless your a conspiracy theorist living in a trailer in the desert with sixty cats you believe the US one that race. We again now have a new race, national and international company's are participating to end recession. It is still a race for technology but we have the first place company's trying to be heard. When I call this the race to end recession we know from historical data that although these 'Company's' are not saying that's what this is about, there are several media whispers that will give the originating company this prestigious title. The plan is to have a single electronic platform that 'Learns' the lenders specific software. One of the biggest failures in Short Sale's is the lack of communication. We have tried to get lenders to use our Transaction Point software but all lenders have already invested millions in their own software which is not compatible with any other. The invention of an electronic platform that would be compatible to every lenders software would essentially wipe out Loss Mitigation and it's current horrible lack of participation in communication. Service Link is an FNF owned company and has it's 'Vision Sale' product and in second place -
Foreclosure.com Founder, President and CEO, Brad Geisen, announced today that he has built the first-ever short sales offer management system that handles marketing, processing, negotiating and closing services all in one central location.
QuickSale(SM) (www.QuickSale.com) is an easy-to-use platform that simplifies an often long and complicated process, bringing together all parties -- distressed homeowners, lenders, investors, buyers and agents -- who all share one common interest: Moving real estate inventory as fast as possible under the best terms.
"Short sales are the ultimate solution when it comes to solving the national foreclosure crisis now and in the future," said Geisen.
In short sales situations, banks or mortgage lenders agree to discount home loan balances prior to selling because of economic (local home values have plummeted) or financial (unemployment) hardship on the part of homeowners.
Geisen states that QuickSale.com helps cash-strapped homeowners avoid foreclosure and minimize the negative impact on their personal credit, allowing them to pursue alternative housing options worry-free when the time is right.
On the lender side, banks ensure instant liquidity for the defaulted loans on their books, maximizing the amount (often 80 to 90 percent of market value) that they can get out of distressed properties in a much shorter timeframe (30 to 90 days).
QuickSale.com closes the loop by bringing in agents and buyers located throughout the United States and beyond who purchase the distressed properties at negotiated prices before the banks repossess them. Agents who coordinate short sales from start to finish through the QuickSale(SM) system earn commissions.
"Banks lend money, they're not in the business of marketing and selling real estate -- certainly not on today's current scale," said Geisen. "And their loss mitigation departments are just too overwhelmed at this point. QuickSale.com is a structured tool that provides much-needed support and relief. It short circuits the entire foreclosure process to ensure the best possible outcome for all parties involved . . . quickly."
I have heard of several other software platforms but none so advanced they are actually meeting with the GSE's about enforcing servicers to use them.
-Christopher Rockey
Foreclosure.com Founder, President and CEO, Brad Geisen, announced today that he has built the first-ever short sales offer management system that handles marketing, processing, negotiating and closing services all in one central location.
QuickSale(SM) (www.QuickSale.com) is an easy-to-use platform that simplifies an often long and complicated process, bringing together all parties -- distressed homeowners, lenders, investors, buyers and agents -- who all share one common interest: Moving real estate inventory as fast as possible under the best terms.
"Short sales are the ultimate solution when it comes to solving the national foreclosure crisis now and in the future," said Geisen.
In short sales situations, banks or mortgage lenders agree to discount home loan balances prior to selling because of economic (local home values have plummeted) or financial (unemployment) hardship on the part of homeowners.
Geisen states that QuickSale.com helps cash-strapped homeowners avoid foreclosure and minimize the negative impact on their personal credit, allowing them to pursue alternative housing options worry-free when the time is right.
On the lender side, banks ensure instant liquidity for the defaulted loans on their books, maximizing the amount (often 80 to 90 percent of market value) that they can get out of distressed properties in a much shorter timeframe (30 to 90 days).
QuickSale.com closes the loop by bringing in agents and buyers located throughout the United States and beyond who purchase the distressed properties at negotiated prices before the banks repossess them. Agents who coordinate short sales from start to finish through the QuickSale(SM) system earn commissions.
"Banks lend money, they're not in the business of marketing and selling real estate -- certainly not on today's current scale," said Geisen. "And their loss mitigation departments are just too overwhelmed at this point. QuickSale.com is a structured tool that provides much-needed support and relief. It short circuits the entire foreclosure process to ensure the best possible outcome for all parties involved . . . quickly."
I have heard of several other software platforms but none so advanced they are actually meeting with the GSE's about enforcing servicers to use them.
-Christopher Rockey
Friday, September 18, 2009
Foreclosure Prevention Politically Popular?
The Federal Deposit Insurance Corporation (FDIC) today announced that it is releasing a free tool kit of information that will help borrowers, community stakeholders and the banking industry avoid unnecessary foreclosures and stop foreclosure "rescue" scams that promise false hope to consumers at risk of losing their homes.
The tool kit includes critical information to help borrowers know who to contact and what documents they need to have available to apply for a loan modification that could save their home from foreclosure. This tool kit also describes the warning signs of potential foreclosure "rescue" scams and how consumers, community stakeholders, and bankers can report scammers and prevent fraud. The public can access the free tool kit at http://www.FDIC.gov/foreclosureprevention. To ensure this information is widely available, the FDIC is conducting outreach to community-based organizations and the banking industry, and furnishing a referral service to help consumers identify sources of legitimate help and report fraud to the appropriate law enforcement agencies.
"It is vitally important that consumers and bankers know all of the resources available to help prevent unnecessary foreclosures. The tool kit released today, along with our outreach, should help consumers know how to get a loan modification when they need one. While reaching out a helping hand, we must also be on guard for those who would prey on consumers who are facing foreclosure," said FDIC Chairman Sheila C. Bair. "Everyone with a stake in this issue – from community leaders to those with a neighbor, friend or family member facing hardship – must take responsibility for reporting questionable activity and directing consumers to legitimate sources for assistance." Raising consumers' awareness of foreclosure "rescue" scams will give borrowers more confidence in knowing they are working with legitimate counselors and servicers to obtain a loan modification that could help them avoid foreclosure.
The FDIC's foreclosure prevention tool kit includes:
Is Foreclosure Knocking at Your Door? brochure (available online and in print), which encourages consumers facing financing difficulties to contact their servicer, apply for a loan modification, and talk to a counselor.
Beware of Foreclosure Rescue Scams brochure (available online and in print), which provides information on common scams, tips for detecting fraudulent deals, and resources for reporting criminal activity.
Spring 2009 edition of FDIC Consumer News, which features advice for consumers on avoiding foreclosure rescue and loan modification schemes.
Your Own Home module of the FDIC's Money Smart curriculum, which offers tips and advice on avoiding foreclosure with a loan modification, preventing foreclosure "rescue" scams and providing legitimate sources of foreclosure prevention assistance.
The tool kit and other helpful resources are available on the FDIC's foreclosure prevention Web page at www.fdic.gov/foreclosureprevention.
Also as part of this initiative, the FDIC is continuing to work with banks and community-based and consumer organizations to avoid foreclosure and stop foreclosure "rescue" scams, particularly in underserved communities. Consumers are encouraged to report questionable activities, including solicitations or offers, to their servicer and appropriate state and federal authorities, which may include the Federal Trade Commission and the appropriate state attorney general. Consumers who have difficulty finding contact information for these officials or their servicer may receive a referral by calling the FDIC Call Center at 1-877-ASK-FDIC (1-877-275-3342) or visiting www.fdic.gov.
The tool kit includes critical information to help borrowers know who to contact and what documents they need to have available to apply for a loan modification that could save their home from foreclosure. This tool kit also describes the warning signs of potential foreclosure "rescue" scams and how consumers, community stakeholders, and bankers can report scammers and prevent fraud. The public can access the free tool kit at http://www.FDIC.gov/foreclosureprevention. To ensure this information is widely available, the FDIC is conducting outreach to community-based organizations and the banking industry, and furnishing a referral service to help consumers identify sources of legitimate help and report fraud to the appropriate law enforcement agencies.
"It is vitally important that consumers and bankers know all of the resources available to help prevent unnecessary foreclosures. The tool kit released today, along with our outreach, should help consumers know how to get a loan modification when they need one. While reaching out a helping hand, we must also be on guard for those who would prey on consumers who are facing foreclosure," said FDIC Chairman Sheila C. Bair. "Everyone with a stake in this issue – from community leaders to those with a neighbor, friend or family member facing hardship – must take responsibility for reporting questionable activity and directing consumers to legitimate sources for assistance." Raising consumers' awareness of foreclosure "rescue" scams will give borrowers more confidence in knowing they are working with legitimate counselors and servicers to obtain a loan modification that could help them avoid foreclosure.
The FDIC's foreclosure prevention tool kit includes:
Is Foreclosure Knocking at Your Door? brochure (available online and in print), which encourages consumers facing financing difficulties to contact their servicer, apply for a loan modification, and talk to a counselor.
Beware of Foreclosure Rescue Scams brochure (available online and in print), which provides information on common scams, tips for detecting fraudulent deals, and resources for reporting criminal activity.
Spring 2009 edition of FDIC Consumer News, which features advice for consumers on avoiding foreclosure rescue and loan modification schemes.
Your Own Home module of the FDIC's Money Smart curriculum, which offers tips and advice on avoiding foreclosure with a loan modification, preventing foreclosure "rescue" scams and providing legitimate sources of foreclosure prevention assistance.
The tool kit and other helpful resources are available on the FDIC's foreclosure prevention Web page at www.fdic.gov/foreclosureprevention.
Also as part of this initiative, the FDIC is continuing to work with banks and community-based and consumer organizations to avoid foreclosure and stop foreclosure "rescue" scams, particularly in underserved communities. Consumers are encouraged to report questionable activities, including solicitations or offers, to their servicer and appropriate state and federal authorities, which may include the Federal Trade Commission and the appropriate state attorney general. Consumers who have difficulty finding contact information for these officials or their servicer may receive a referral by calling the FDIC Call Center at 1-877-ASK-FDIC (1-877-275-3342) or visiting www.fdic.gov.
Tuesday, September 15, 2009
Top 10 Seller Mistakes
10. Waiting until spring to sell. People buy homes all year, so play up the home's seasonal amenities and take advantage of serious buyers looking in the off-season.
9. Not understanding the real estate contract. Go over the fine print of the agreement with your real-estate agent or attorney before signing to make sure you understand your responsibilities as well as any demands the buyer has made.
8. Going it alone without researching first. Selling a home for-sale-by-owner take time, and requires you to do paperwork, marketing and showings. Make sure you're up for the work involved in return for saving on the real-estate agent commission fee.
7. Ignoring lowball offers. If buyers submit a low offer, don't reject it completely. Counteroffer to see if they are willing to negotiate.
6. Wasting time on an unqualified buyer. Make sure a potential buyer is prequalified for a loan before accepting an offer.
5. Skimping on marketing. Mix traditional advertising, including a sign in the yard and an ad in a homes magazine, with Web techniques, including online photos and video.
4. Sabotaging the showing. Leave the home when it is being shown to prospective buyers so they can more easily focus, and make sure the home is accessible with convenient showing hours and a lockbox for agents.
3. Not prepping for the sale. Visit open houses in the neighborhood to get a sense of what the competition offers, then make fixes and updates, declutter and clean to outshine them.
2. Overimproving. Don't make so many upgrades that you price your home out of the appropriate range for the area and fail to recoup your investment.
And the number one biggest mistake homeowners are making right now is the following and after you read it I will tell you why:
1. Overpricing. Your home should be priced in line with homes in the area that are of similar age, style and size.
Many homeowners hold out for the 'Miracle Sale' they are not realistic about the price. My favorite homeowner is the guy who is holding a new appraisal on the home complaining that it came in way to low, I need to sell his house for 50-100K more and by the way, when it does sale I need to find them a house 200K under priced.
Sellers need to be realistic! If they aren't they are going to cause themselves horrible damage long term. In some cases we have seen in this declining market, when homeowners want to list their home well above fair market value. They blame the Realtor for not getting an offer then fire them. Then the new Realtor lists it more realistic but not quite what the homeowner in there delusions of grander may like. Next thing you know the homeowner is stuck in a Short Sale and back to the original agent who they should have listened to in the first place.
these steps help homeowners avoid foreclosure, Deed in lieu and even Short Sale.
-Christopher Rockey
rockey@mresolution.com
9. Not understanding the real estate contract. Go over the fine print of the agreement with your real-estate agent or attorney before signing to make sure you understand your responsibilities as well as any demands the buyer has made.
8. Going it alone without researching first. Selling a home for-sale-by-owner take time, and requires you to do paperwork, marketing and showings. Make sure you're up for the work involved in return for saving on the real-estate agent commission fee.
7. Ignoring lowball offers. If buyers submit a low offer, don't reject it completely. Counteroffer to see if they are willing to negotiate.
6. Wasting time on an unqualified buyer. Make sure a potential buyer is prequalified for a loan before accepting an offer.
5. Skimping on marketing. Mix traditional advertising, including a sign in the yard and an ad in a homes magazine, with Web techniques, including online photos and video.
4. Sabotaging the showing. Leave the home when it is being shown to prospective buyers so they can more easily focus, and make sure the home is accessible with convenient showing hours and a lockbox for agents.
3. Not prepping for the sale. Visit open houses in the neighborhood to get a sense of what the competition offers, then make fixes and updates, declutter and clean to outshine them.
2. Overimproving. Don't make so many upgrades that you price your home out of the appropriate range for the area and fail to recoup your investment.
And the number one biggest mistake homeowners are making right now is the following and after you read it I will tell you why:
1. Overpricing. Your home should be priced in line with homes in the area that are of similar age, style and size.
Many homeowners hold out for the 'Miracle Sale' they are not realistic about the price. My favorite homeowner is the guy who is holding a new appraisal on the home complaining that it came in way to low, I need to sell his house for 50-100K more and by the way, when it does sale I need to find them a house 200K under priced.
Sellers need to be realistic! If they aren't they are going to cause themselves horrible damage long term. In some cases we have seen in this declining market, when homeowners want to list their home well above fair market value. They blame the Realtor for not getting an offer then fire them. Then the new Realtor lists it more realistic but not quite what the homeowner in there delusions of grander may like. Next thing you know the homeowner is stuck in a Short Sale and back to the original agent who they should have listened to in the first place.
these steps help homeowners avoid foreclosure, Deed in lieu and even Short Sale.
-Christopher Rockey
rockey@mresolution.com
Monday, September 14, 2009
Finally a Positive Sign for Short Sales
A report from Amherst Securities Group indicates programs that support short sales could be the most effective loss mitigation approach, as they minimize loss severity.
Amherst researchers also said the Hope-for-Homeowners (H4H) program is a “powerful alternative” to the Home Affordable Modification Program (HAMP).
Amherst researchers point to H4H’s ability to mimic the impact of short sales, such as a one-time loss on the loan, which provides a softer loss severity than foreclosure sales.
“In all cases, the loss severity on the short sale is 15-20% less than on the foreclosure sale,” Amherst researchers reported.
Borrowers completing the H4H program become re-equified and refinanced into a new Federal Housing Administration-insured mortgage, while HAMP provides capped incentives to servicers to modify mortgages in danger of foreclosure. The US Treasury Department then adjusts the HAMP incentive caps based on the level of actual participation.
Plans for the “new and improved” H4H program could be released within the next two months, resolving enough issues to maximize the net present value of loans in bank portfolios but “unlikely” to be used for loans in private label securitizations, according to the report.
“This is a superior alternative to either the HAMP modification or foreclosure,” Amherst researchers reported.
Even though borrowers would make the same payment under the two programs, 31% of their income, Amherst expects higher success rates with H4H because the borrower is re-equified and re-underwritten to make sure he or she qualifies for the loan, and H4H extinguishes the second mortgage.
Servicers and investors agree that HAMP is particularly less useful to pay-option adjustable-rate mortgages (ARMs) borrowers because of the difficulty to reduce payments from their current levels. HAMP’s 40-year term extension doesn’t help many of the option ARM mortgages that are already at a 40-year term. Also, these borrowers have mortgages that are less affordable, on average, than any other product type, according to the report.
“Once the new H4H program is implemented, we expect portfolio lenders to make considerable use of the program,” Amherst researchers reported.
Treasury and housing officials are in the process of finalizing a federal incentive program that will encourage servicers to pursue short sales and deeds-in-lieu of foreclosure. Details may arrive within weeks, spurring servicer participation in short sales, according to Treasury sources.
Short Sale can often be viewed by a homeowner as 'Still loosing their Home' it is a valuable tool in avoiding foreclosure that the American consumer must realize. Many consumers think they can sit and wait in their house for a year why bother with a Short Sale? How about 'Full Settlement Language' against recourse debt? How about the potential for less tax exposure with a 1099C rather than a 1099A received in foreclosure? How about being able to repurchase again sooner? How about walking away with a little bit of dignity from the transaction!!
-Christopher Rockey
rockey@mresolution.com
Amherst researchers also said the Hope-for-Homeowners (H4H) program is a “powerful alternative” to the Home Affordable Modification Program (HAMP).
Amherst researchers point to H4H’s ability to mimic the impact of short sales, such as a one-time loss on the loan, which provides a softer loss severity than foreclosure sales.
“In all cases, the loss severity on the short sale is 15-20% less than on the foreclosure sale,” Amherst researchers reported.
Borrowers completing the H4H program become re-equified and refinanced into a new Federal Housing Administration-insured mortgage, while HAMP provides capped incentives to servicers to modify mortgages in danger of foreclosure. The US Treasury Department then adjusts the HAMP incentive caps based on the level of actual participation.
Plans for the “new and improved” H4H program could be released within the next two months, resolving enough issues to maximize the net present value of loans in bank portfolios but “unlikely” to be used for loans in private label securitizations, according to the report.
“This is a superior alternative to either the HAMP modification or foreclosure,” Amherst researchers reported.
Even though borrowers would make the same payment under the two programs, 31% of their income, Amherst expects higher success rates with H4H because the borrower is re-equified and re-underwritten to make sure he or she qualifies for the loan, and H4H extinguishes the second mortgage.
Servicers and investors agree that HAMP is particularly less useful to pay-option adjustable-rate mortgages (ARMs) borrowers because of the difficulty to reduce payments from their current levels. HAMP’s 40-year term extension doesn’t help many of the option ARM mortgages that are already at a 40-year term. Also, these borrowers have mortgages that are less affordable, on average, than any other product type, according to the report.
“Once the new H4H program is implemented, we expect portfolio lenders to make considerable use of the program,” Amherst researchers reported.
Treasury and housing officials are in the process of finalizing a federal incentive program that will encourage servicers to pursue short sales and deeds-in-lieu of foreclosure. Details may arrive within weeks, spurring servicer participation in short sales, according to Treasury sources.
Short Sale can often be viewed by a homeowner as 'Still loosing their Home' it is a valuable tool in avoiding foreclosure that the American consumer must realize. Many consumers think they can sit and wait in their house for a year why bother with a Short Sale? How about 'Full Settlement Language' against recourse debt? How about the potential for less tax exposure with a 1099C rather than a 1099A received in foreclosure? How about being able to repurchase again sooner? How about walking away with a little bit of dignity from the transaction!!
-Christopher Rockey
rockey@mresolution.com
Friday, September 11, 2009
Foreclosure Avoidance - Scammer's Beware
Scams that promise to “rescue” you from foreclosure are popping up at an alarming rate nationwide, and you need to protect yourself and your home.
If you’re falling behind on your mortgage, others may know it, too — including con artists and scam artists. They know that people in these situations are vulnerable and often desperate. Potential victims are easy to find: mortgage lenders publish notices before foreclosing on homes. Private firms frequently compile and sell lists of these foreclosed properties and distressed borrowers. After reading these notices, con artists approach their targets in person, by mail, over the telephone, or by e-mail. They often advertise their services on television, radio, or the Web, and in newspapers, describing themselves as “foreclosure consultants” or “mortgage consultants,” offering “foreclosure prevention” or “foreclosure rescue” services. And they are only too happy to take advantage of homeowners who want to save their homes.
If someone offers to negotiate a loan modification for you or to stop or delay foreclosure for a fee, carefully check his or her credentials, reputation, and experience, watch out for warning signs of a scam, and always maintain personal contact with your lender and mortgage servicer. Your mortgage lender can help you find real options to avoid foreclosure. It is important to contact your mortgage lender early to preserve all your options. There are legitimate consumer financial counseling agencies that can help you work with your lender.
This Consumer Advisory, issued by the Office of the Comptroller of the Currency (OCC), describes common scams, suggests ways to protect yourself, provides information on U.S. government loan programs and counseling resources, and lists 10 warning signs of a mortgage modification scam.
Common Types of Scams
Here are some examples of scams related to mortgage modification and foreclosure avoidance.
Foreclosure “rescue” and refinance fraud. The scam artist offers to act as an intermediary between you and your lender to negotiate a repayment plan or loan modification and may even “guarantee” to save your home from foreclosure. You may be told to make mortgage payments to the scammer directly — along with significant, up-front fees — and be told that the scammer will forward the payments to your lender. In reality, the scammer may pocket your money and leave you in worse shape on your loan. The scam artist also may tell you to stop making payments or stop communicating with your lender. Don’t follow that advice.
Remember that your mortgage lender should be the starting point for finding options to avoid foreclosure. You also should consider contacting qualified and approved credit counselors.
Fake “government” modification programs. Unscrupulous people may claim to be affiliated with, or approved by, the government or may ask you to pay high up-front fees to qualify for government mortgage modification programs. While government-supported mortgage modification and refinancing initiatives are legitimate, the scam artists’ claims are not. Keep in mind that you do not have to pay to benefit from these government programs. All you need to do is contact your lender or loan servicer.
The scam artist’s name or Web site may be very similar to those of government agencies. The scam artist may use such terms as “federal,” “TARP,” or other words or acronyms related to official U.S. government programs. These tactics are designed to fool you into thinking the scam artist is somehow approved by, or affiliated with, the government. The government is taking actions to stop this fraud, but you also need to protect yourself. So be wary of claims offering “government-approved” or “official government” loan modifications. Your lender will be able to tell you whether you qualify for any government initiatives to prevent foreclosure. You do not have to pay anyone to benefit from them.
Leaseback/rent-to-buy schemes. In this type of scam, you are asked to transfer the title to your home to the scammer, who will, supposedly, obtain new and better financing and/or allow you to remain in the home as a renter and eventually buy it back. If you do not comply with the terms of the rent-to-buy agreement, you will lose your money and face eviction. The agreement may be very hard to comply with, because it may require, for instance, high up-front and monthly payments that you may not be able to afford. In fact, the scammers may have no intention of ever selling the home back to you. They simply want your home and your money.
Remember that transferring your title does not change your payment obligations — you will still owe your mortgage debt. The difference will be that you will no longer own your home. If payments are not made on the mortgage, your lender has the right to foreclose, and the foreclosure and any other problems will appear on your credit report.
Bankruptcy scams. You may have heard that filing bankruptcy will stop a foreclosure. This is true — but only temporarily. Filing bankruptcy brings an “automatic stay” into effect that stops any collection and foreclosure while the bankruptcy court administers the case. Eventually, you must start paying your mortgage lender, or the lender will be able to foreclose. Bankruptcy is rarely, if ever, a permanent solution to prevent foreclosure. In addition, bankruptcy will negatively impact your credit score and will remain on your credit report for 10 years.
Debt-elimination schemes. Scammers may claim to be able to “eliminate” your debt by making illegitimate legal arguments that you are not obligated to pay back your mortgage. These scammers will provide you with inaccurate claims about applicable laws and finance, such as that “secret laws” can be used to eliminate debt or that banks do not have the authority to lend money. Do not stop making payments on your mortgage based on their claims.
How to Protect Yourself from Mortgage Modification and Foreclosure Avoidance Scams
Always proceed with caution when dealing with anyone offering to help you modify your mortgage or avoid foreclosure. Remember that you do not need a third party to work with your lender — any such party should make the process easier, not harder and more expensive.
Contact your lender or mortgage servicer first. Speak with someone in the loss mitigation department for mortgage modification options and other alternatives to foreclosure.
Make all mortgage payments directly to your lender or to the mortgage servicer. Do not trust anyone to make mortgage payments for you, and do not stop making your payments.
Avoid paying up-front fees. While some legitimate housing counselors will charge small fees for their services, do not pay fees to anyone before receiving any services. Make sure you are dealing with a legitimate organization.
Know what you are signing. Read and understand every document you sign. Do not rely on an oral explanation of a document you are signing — make sure that you read and understand what the document actually says. Otherwise, a document may obligate you to terms you don’t want or may even convey ownership of your home to someone else. Never sign documents with blank spaces that can be filled in later. Never sign a document that contains errors or false statements, even if someone promises to correct them. If a document is too complex to understand, seek advice from a lawyer you trust or a legitimate, trusted financial counselor.
Do not sign over your deed without consulting a lawyer you select. Foreclosure scams often involve transfer of ownership of your home to a con artist or another third party. Never agree to this without getting the advice of your own lawyer, financial advisor, credit counselor, or other independent person you know you can trust. By signing over your deed, you lose the rights to your home and any equity built up in the home — and you are still obligated to pay the mortgage.
Get promises in writing. Oral promises and agreements relating to your home are usually not legally binding. Protect your rights with a written document or contract signed by the person making the promise. Keep copies of all contracts that you sign. Again, never sign anything you don’t understand.
Report suspicious activity to relevant federal agencies, such as the Federal Trade Commission, and to your state and local consumer protection agencies. Reporting con artists and suspicious schemes helps prevent others from becoming victims. If your complaint or question involves a national bank and you cannot resolve it directly with the bank, contact the OCC’s Customer Assistance Group by calling (800) 613-6743, by sending an e-mail to customer.assistance@occ.treas.gov, or by visiting www.HelpWithMyBank.gov.
Contact a legitimate housing or financial counselor to help you work through your problems.
To find a counselor, contact the U.S. Department of Housing and Urban Development (HUD) at (800) 569-4287 or (877) 483-1515, or go to www.hud.gov/offices/hsg/sfh/hcc/hccprof14.cfm.
Call (888) 995-HOPE, the Homeowner’s HOPE Hotline to reach a nonprofit, HUD-approved counselor through HOPE NOW, a cooperative effort of mortgage counselors and lenders to assist homeowners.
Visit NeighborWorks America’s Web site at www.nw.org/network/home.asp.
-Christopher Rockey
If you’re falling behind on your mortgage, others may know it, too — including con artists and scam artists. They know that people in these situations are vulnerable and often desperate. Potential victims are easy to find: mortgage lenders publish notices before foreclosing on homes. Private firms frequently compile and sell lists of these foreclosed properties and distressed borrowers. After reading these notices, con artists approach their targets in person, by mail, over the telephone, or by e-mail. They often advertise their services on television, radio, or the Web, and in newspapers, describing themselves as “foreclosure consultants” or “mortgage consultants,” offering “foreclosure prevention” or “foreclosure rescue” services. And they are only too happy to take advantage of homeowners who want to save their homes.
If someone offers to negotiate a loan modification for you or to stop or delay foreclosure for a fee, carefully check his or her credentials, reputation, and experience, watch out for warning signs of a scam, and always maintain personal contact with your lender and mortgage servicer. Your mortgage lender can help you find real options to avoid foreclosure. It is important to contact your mortgage lender early to preserve all your options. There are legitimate consumer financial counseling agencies that can help you work with your lender.
This Consumer Advisory, issued by the Office of the Comptroller of the Currency (OCC), describes common scams, suggests ways to protect yourself, provides information on U.S. government loan programs and counseling resources, and lists 10 warning signs of a mortgage modification scam.
Common Types of Scams
Here are some examples of scams related to mortgage modification and foreclosure avoidance.
Foreclosure “rescue” and refinance fraud. The scam artist offers to act as an intermediary between you and your lender to negotiate a repayment plan or loan modification and may even “guarantee” to save your home from foreclosure. You may be told to make mortgage payments to the scammer directly — along with significant, up-front fees — and be told that the scammer will forward the payments to your lender. In reality, the scammer may pocket your money and leave you in worse shape on your loan. The scam artist also may tell you to stop making payments or stop communicating with your lender. Don’t follow that advice.
Remember that your mortgage lender should be the starting point for finding options to avoid foreclosure. You also should consider contacting qualified and approved credit counselors.
Fake “government” modification programs. Unscrupulous people may claim to be affiliated with, or approved by, the government or may ask you to pay high up-front fees to qualify for government mortgage modification programs. While government-supported mortgage modification and refinancing initiatives are legitimate, the scam artists’ claims are not. Keep in mind that you do not have to pay to benefit from these government programs. All you need to do is contact your lender or loan servicer.
The scam artist’s name or Web site may be very similar to those of government agencies. The scam artist may use such terms as “federal,” “TARP,” or other words or acronyms related to official U.S. government programs. These tactics are designed to fool you into thinking the scam artist is somehow approved by, or affiliated with, the government. The government is taking actions to stop this fraud, but you also need to protect yourself. So be wary of claims offering “government-approved” or “official government” loan modifications. Your lender will be able to tell you whether you qualify for any government initiatives to prevent foreclosure. You do not have to pay anyone to benefit from them.
Leaseback/rent-to-buy schemes. In this type of scam, you are asked to transfer the title to your home to the scammer, who will, supposedly, obtain new and better financing and/or allow you to remain in the home as a renter and eventually buy it back. If you do not comply with the terms of the rent-to-buy agreement, you will lose your money and face eviction. The agreement may be very hard to comply with, because it may require, for instance, high up-front and monthly payments that you may not be able to afford. In fact, the scammers may have no intention of ever selling the home back to you. They simply want your home and your money.
Remember that transferring your title does not change your payment obligations — you will still owe your mortgage debt. The difference will be that you will no longer own your home. If payments are not made on the mortgage, your lender has the right to foreclose, and the foreclosure and any other problems will appear on your credit report.
Bankruptcy scams. You may have heard that filing bankruptcy will stop a foreclosure. This is true — but only temporarily. Filing bankruptcy brings an “automatic stay” into effect that stops any collection and foreclosure while the bankruptcy court administers the case. Eventually, you must start paying your mortgage lender, or the lender will be able to foreclose. Bankruptcy is rarely, if ever, a permanent solution to prevent foreclosure. In addition, bankruptcy will negatively impact your credit score and will remain on your credit report for 10 years.
Debt-elimination schemes. Scammers may claim to be able to “eliminate” your debt by making illegitimate legal arguments that you are not obligated to pay back your mortgage. These scammers will provide you with inaccurate claims about applicable laws and finance, such as that “secret laws” can be used to eliminate debt or that banks do not have the authority to lend money. Do not stop making payments on your mortgage based on their claims.
How to Protect Yourself from Mortgage Modification and Foreclosure Avoidance Scams
Always proceed with caution when dealing with anyone offering to help you modify your mortgage or avoid foreclosure. Remember that you do not need a third party to work with your lender — any such party should make the process easier, not harder and more expensive.
Contact your lender or mortgage servicer first. Speak with someone in the loss mitigation department for mortgage modification options and other alternatives to foreclosure.
Make all mortgage payments directly to your lender or to the mortgage servicer. Do not trust anyone to make mortgage payments for you, and do not stop making your payments.
Avoid paying up-front fees. While some legitimate housing counselors will charge small fees for their services, do not pay fees to anyone before receiving any services. Make sure you are dealing with a legitimate organization.
Know what you are signing. Read and understand every document you sign. Do not rely on an oral explanation of a document you are signing — make sure that you read and understand what the document actually says. Otherwise, a document may obligate you to terms you don’t want or may even convey ownership of your home to someone else. Never sign documents with blank spaces that can be filled in later. Never sign a document that contains errors or false statements, even if someone promises to correct them. If a document is too complex to understand, seek advice from a lawyer you trust or a legitimate, trusted financial counselor.
Do not sign over your deed without consulting a lawyer you select. Foreclosure scams often involve transfer of ownership of your home to a con artist or another third party. Never agree to this without getting the advice of your own lawyer, financial advisor, credit counselor, or other independent person you know you can trust. By signing over your deed, you lose the rights to your home and any equity built up in the home — and you are still obligated to pay the mortgage.
Get promises in writing. Oral promises and agreements relating to your home are usually not legally binding. Protect your rights with a written document or contract signed by the person making the promise. Keep copies of all contracts that you sign. Again, never sign anything you don’t understand.
Report suspicious activity to relevant federal agencies, such as the Federal Trade Commission, and to your state and local consumer protection agencies. Reporting con artists and suspicious schemes helps prevent others from becoming victims. If your complaint or question involves a national bank and you cannot resolve it directly with the bank, contact the OCC’s Customer Assistance Group by calling (800) 613-6743, by sending an e-mail to customer.assistance@occ.treas.gov, or by visiting www.HelpWithMyBank.gov.
Contact a legitimate housing or financial counselor to help you work through your problems.
To find a counselor, contact the U.S. Department of Housing and Urban Development (HUD) at (800) 569-4287 or (877) 483-1515, or go to www.hud.gov/offices/hsg/sfh/hcc/hccprof14.cfm.
Call (888) 995-HOPE, the Homeowner’s HOPE Hotline to reach a nonprofit, HUD-approved counselor through HOPE NOW, a cooperative effort of mortgage counselors and lenders to assist homeowners.
Visit NeighborWorks America’s Web site at www.nw.org/network/home.asp.
-Christopher Rockey
Just When You Thought it Was Safe to Go Back in the Water
The foreclosure crisis grinds on amid signs of hope.
A report released Thursday shows that substantially fewer people had their homes repossessed in August. Showing evidence of lender market manipulation on pre and post foreclosure.
Unfortunately, a large number of Americans are still falling behind on their payments, to the point where letting your house go has finally become a badge of honor.
A total of 76,134 troubled borrowers lost their homes in August, but that is 12.7% fewer than in July, according to RealtyTrac, an online marketer of foreclosed properties.
The pipeline of troubled borrowers remains full, however. Filings of all kinds dropped only slightly, just 0.5%, from July. Filings include NOD, NOT and Lis Pendens.
According to RealtyTrac spokesman Rick Sharga, there are a couple of possible explanations for the decline in bank repossessions, called REOs in the industry.
"It could be that the government-led mortgage modification programs are finally gaining some traction," he said. "But it could also be that the banks are still delaying repossessions of these properties." The latter derives from accuracy.
Because banks take big losses on REOs, they may leave delinquent borrowers in their homes, especially where lenders already have a substantial amount of vacant, unsold inventory. Presumably, the borrowers are caring for the properties, which saves banks the time and expense of upkeep and maintenance.
Plus, there is always hope that some of these borrowers will "self-cure" -- or catch up on their loans without assistance -- which is better for banks' bottom lines. In fact, a recent report from the Boston branch of the Federal Reserve found that 30% of borrowers who have missed two mortgage payments eventually become current. I would argue that this figure is categorically incorrect based on the data provided to us by lenders. In fact lenders have specifically told us face to face, 'On the record' once a property goes down 60 days, we know they are not coming back. For those that try, that's great, your hearts in the right place but the inevitable is awaiting i assure you.
Increases in short sales could also be reducing the repossession statistics, according to Duane LeGate, president of HBN Interactive, a short-sale specialist. These are transactions in which lenders allow borrowers to sell their homes for less than what they owe.
"A lot of banks are delaying the foreclosure process if they see any kind of chance of making a reasonable short sale," he said. Indeed you can postpone a Trustees sale with a fair market value offer, but we have even seen lenders get worse at this including, WAMU and Sun Trust.
The reprieve in repossessions could be coming to an end, however. Sharga expects a spate of payment problems to start this fall as interest rates reset on some of the exotic mortgage products that proliferated during the boom. Option ARMs (adjustable rate mortgages) in particular will be a big problem. It's OK you can be honest and say the truth 'A huge market changing crisis.' Big problem under illustrates the actual issue at hand.
A Fitch Ratings report released last week forecast that of the $200 billion in option ARMs outstanding, $29 billion will reset to fully amortizing loans by year's end, and another $67 billion will recast in 2010. The average payment increase will be 63%, or $1,053 a month -- an impossible hurdle for many borrowers. Or for all of them who have not recently been visited by the sweepstakes van.
These loans are named for the options they give borrowers. They can pay at a minimum rate, which does not even cover interest; at an interest-only rate; at a fully amortizing 15-year rate; or at a fully amortizing 30- or 40-year rate.
More than 60% of all option ARM borrowers, and more than 80% of all option ARMs issued in 2006 and 2007, often pay just the minimum amount, according to First American LoanPerformance.
That means the principal balances of these loans actually grow. And when they get too large, somewhere between 110% and 125% of the original loan amount, the lender will convert the loan into a fully amortizing mortgage. That usually results in payment shock, a huge jump in monthly mortgage costs.
"We're in the soup for at least another year," Sharga said. In the soup? That's treading lightly? How about something more accurate like, if you are currently in a payoption arm you need to call your lender now for a Loan Modification or be ready to move out of your home.
That could mean a third dismal year of foreclosures. So far this year 540,222 homes have been lost to repossession, which is on par with the first eight months of 2008.
Where it's worst
Six states account for 60% of all foreclosure filings, according to the RealtyTrac report. California, where many option ARMs were issued, leads with more than 92,000 filings, followed by Florida with more than 62,000. Michigan is next with more than 19,000; Nevada, whose foreclosure rate of one for every 62 households was the highest in the nation, and Arizona both had close to 18,000. Illinois recorded more than 13,000.
California homeowners also lost more properties to repossession than any other state. There were 14,590 in August, twice the number of Florida, which was the second worst-hit state with 6,446.
Still, those figures show month-over-month improvement. In California, the August total was down nearly 32% from July, and Florida showed a 4.6% improvement. REOs also steeply fell in Arizona (down 16.7%) and Nevada (off 23.8%).
The list of cities worst hit by total foreclosure filings include many names familiar from past months. Las Vegas had the nation's highest foreclosure rate, with 16,798 filings, or one for every 47 housing units.
Second was another repeat offender, Stockton, Calif., where one of every 62 homes had a filing. Modesto, Calif. was third with one in 63.
Several honorable mention that I don't have time for now. I am headed to Oregon to see how Portland and Eugen is going to be doing. I have a feeling I know the answer.
-Christopher Rockey
A report released Thursday shows that substantially fewer people had their homes repossessed in August. Showing evidence of lender market manipulation on pre and post foreclosure.
Unfortunately, a large number of Americans are still falling behind on their payments, to the point where letting your house go has finally become a badge of honor.
A total of 76,134 troubled borrowers lost their homes in August, but that is 12.7% fewer than in July, according to RealtyTrac, an online marketer of foreclosed properties.
The pipeline of troubled borrowers remains full, however. Filings of all kinds dropped only slightly, just 0.5%, from July. Filings include NOD, NOT and Lis Pendens.
According to RealtyTrac spokesman Rick Sharga, there are a couple of possible explanations for the decline in bank repossessions, called REOs in the industry.
"It could be that the government-led mortgage modification programs are finally gaining some traction," he said. "But it could also be that the banks are still delaying repossessions of these properties." The latter derives from accuracy.
Because banks take big losses on REOs, they may leave delinquent borrowers in their homes, especially where lenders already have a substantial amount of vacant, unsold inventory. Presumably, the borrowers are caring for the properties, which saves banks the time and expense of upkeep and maintenance.
Plus, there is always hope that some of these borrowers will "self-cure" -- or catch up on their loans without assistance -- which is better for banks' bottom lines. In fact, a recent report from the Boston branch of the Federal Reserve found that 30% of borrowers who have missed two mortgage payments eventually become current. I would argue that this figure is categorically incorrect based on the data provided to us by lenders. In fact lenders have specifically told us face to face, 'On the record' once a property goes down 60 days, we know they are not coming back. For those that try, that's great, your hearts in the right place but the inevitable is awaiting i assure you.
Increases in short sales could also be reducing the repossession statistics, according to Duane LeGate, president of HBN Interactive, a short-sale specialist. These are transactions in which lenders allow borrowers to sell their homes for less than what they owe.
"A lot of banks are delaying the foreclosure process if they see any kind of chance of making a reasonable short sale," he said. Indeed you can postpone a Trustees sale with a fair market value offer, but we have even seen lenders get worse at this including, WAMU and Sun Trust.
The reprieve in repossessions could be coming to an end, however. Sharga expects a spate of payment problems to start this fall as interest rates reset on some of the exotic mortgage products that proliferated during the boom. Option ARMs (adjustable rate mortgages) in particular will be a big problem. It's OK you can be honest and say the truth 'A huge market changing crisis.' Big problem under illustrates the actual issue at hand.
A Fitch Ratings report released last week forecast that of the $200 billion in option ARMs outstanding, $29 billion will reset to fully amortizing loans by year's end, and another $67 billion will recast in 2010. The average payment increase will be 63%, or $1,053 a month -- an impossible hurdle for many borrowers. Or for all of them who have not recently been visited by the sweepstakes van.
These loans are named for the options they give borrowers. They can pay at a minimum rate, which does not even cover interest; at an interest-only rate; at a fully amortizing 15-year rate; or at a fully amortizing 30- or 40-year rate.
More than 60% of all option ARM borrowers, and more than 80% of all option ARMs issued in 2006 and 2007, often pay just the minimum amount, according to First American LoanPerformance.
That means the principal balances of these loans actually grow. And when they get too large, somewhere between 110% and 125% of the original loan amount, the lender will convert the loan into a fully amortizing mortgage. That usually results in payment shock, a huge jump in monthly mortgage costs.
"We're in the soup for at least another year," Sharga said. In the soup? That's treading lightly? How about something more accurate like, if you are currently in a payoption arm you need to call your lender now for a Loan Modification or be ready to move out of your home.
That could mean a third dismal year of foreclosures. So far this year 540,222 homes have been lost to repossession, which is on par with the first eight months of 2008.
Where it's worst
Six states account for 60% of all foreclosure filings, according to the RealtyTrac report. California, where many option ARMs were issued, leads with more than 92,000 filings, followed by Florida with more than 62,000. Michigan is next with more than 19,000; Nevada, whose foreclosure rate of one for every 62 households was the highest in the nation, and Arizona both had close to 18,000. Illinois recorded more than 13,000.
California homeowners also lost more properties to repossession than any other state. There were 14,590 in August, twice the number of Florida, which was the second worst-hit state with 6,446.
Still, those figures show month-over-month improvement. In California, the August total was down nearly 32% from July, and Florida showed a 4.6% improvement. REOs also steeply fell in Arizona (down 16.7%) and Nevada (off 23.8%).
The list of cities worst hit by total foreclosure filings include many names familiar from past months. Las Vegas had the nation's highest foreclosure rate, with 16,798 filings, or one for every 47 housing units.
Second was another repeat offender, Stockton, Calif., where one of every 62 homes had a filing. Modesto, Calif. was third with one in 63.
Several honorable mention that I don't have time for now. I am headed to Oregon to see how Portland and Eugen is going to be doing. I have a feeling I know the answer.
-Christopher Rockey
Thursday, September 10, 2009
Las Vegas Lender Panel
Yesterday in Las Vegas was close to be blood shed. The agents are hostile and in my opinion they have every right to be. I have said it over and over again, "The market must start respecting Buyers or they are going to check Out." You would perhaps be appalled at some of the answers the lenders were giving and the sad truth, they were honest! Not deficiency release language, cutting commissions, taking forever, loosing files, the list goes on. The panel attendees were the Las Vegas area top producing Short Sale agent, Chase, HUD, Freddie Mac, Mortgage Resolution Services www.mresolution.com, Wells Fargo and Bank of America. Each panelist had a unique prospective of Short Sales but none had the answers we require to afford market stabilization.
We are actually going to host a webinar to follow up because there are so many agents that attended that are frustrated. NAHREP and AREAA did an excellent job at putting this event together. Our hats off to them.
For a link to the webinar please email questions@mresolution.com
-Christopher Rockey
We are actually going to host a webinar to follow up because there are so many agents that attended that are frustrated. NAHREP and AREAA did an excellent job at putting this event together. Our hats off to them.
For a link to the webinar please email questions@mresolution.com
-Christopher Rockey
Thursday, September 3, 2009
Consumer Warning: Loan Modification Fraud on the Rise
In some states in order to work on a Loan Modification it is considered licensed activity. In other states Loan Modification can only be done by attorneys and unfortunately in most states there is very little accountability, reliability or oversight in any way for a Loan Modification company. Check with your local department of Real Estate and ask if they either have a 'No Objection List' of Loan Modification company's or if they have another viable resource connected with a governmental regulatory agency like the Attorney General or even the Better Business Bureau.
Hundreds of people calling themselves "foreclosure rescue specialists," promising to quickly cut through red tape and reduce mortgage payments, have taken millions of dollars from South Florida homeowners over the past year for their services.
But unlike mortgage brokers or real-estate agents, mortgage modifiers are not required to have any special training or even a license — something many consumers don't know.
That has contributed to a dramatic rise in the number of struggling homeowners complaining they paid thousands to foreclosure loan modification or foreclosure rescue outfits, but received little or no help in return, state regulators say.
The Florida Attorney General's Office has received about 16,127 calls or complaints about mortgage modification from March through Aug. 24, state records show. The agency currently has filed 15 civil lawsuits against these operations, is actively investigating 83 statewide and has 99 additional companies under review.
Susan Spurgen, a Tampa attorney who specializes in real estate litigation, was surprised to learn the troubled industry that quickly sprung up in the wake of the sub-prime mortgage fiasco is largely unregulated.
"It's sad, given that you want only licensed professionals who know what they are doing taking money from people," said Spurgen, who gave a Florida Bar seminar on modification earlier this year.
Homeowners will have more protection beginning Jan. 1. That's when a new law passed by the Legislature this year will require all unlicensed modifiers, loan originators and mortgage lenders to get a broker's license through the state's Office of Financial Regulation.
The statute, which brings state laws in line with the 2008 federal mortgage licensing act, also requires brokers to renew their licenses annually instead of every other year, go through a background check, have 24 hours of training and pass a written exam. Beginning in 2011, they also must be listed in a nationwide registry that will include employment histories and disciplinary actions from all states.
Officials with the Attorney General's Office, saying the new requirements should help weed out questionable operators, supported the law. So did the Florida Association of Mortgage Brokers.
"We are hoping that by requiring licensure, it will hold people accountable," said association president Valerie Saunders.
Until licensing becomes law, consumer advocates and regulators advise homeowners to steer clear of modification companies asking for money up front — something prohibited under the 2008 state Foreclosure Rescue Act. The 2009 law narrowed the exemption allowing attorneys to collect advance fees, stating as of July 1 it applied only to those handling modifications as "ancillary" work connected with other cases, such as bankruptcies.
"If someone asks you for money prior to completion of work, they are breaking the law," said State Rep. Ritch Workman, R- Melbourne, a mortgage banker who worked on this year's bill. Even taking post-dated checks or credit card numbers, to be charged later, is not allowed.
In the past 15 months, hundreds of foreclosure rescue and modification firms have cropped up in the state, Saunders said. While homeowners can try renegotiating their loans themselves, "it's extremely paper intensive and it's complicated," Saunders said.
And slow. The Treasury Department reported earlier this month that eligible homeowners going through the federal Making Homes Affordable program — designed to encourage lenders to renegotiate loans with struggling homeowners — can't get modifications approved by their lenders or mortgage servers. Only 9 percent received loan reductions. The White House has called on servers to start on at least 500,000 modifications by Nov. 1.
I predict the licensure provisions will drive out some of the bad actors and encourage some legitimate foreclosure operations to consolidate. I suspect it also may make it harder for homeowners with bad credit to get approved for modifications or that they'll be charged higher fees.
"The sub-prime model was that everyone was entitled to a mortgage. We don't need that same model for loan modification negotiators"
-Christopher Rockey
rockey@mresolution.com
Hundreds of people calling themselves "foreclosure rescue specialists," promising to quickly cut through red tape and reduce mortgage payments, have taken millions of dollars from South Florida homeowners over the past year for their services.
But unlike mortgage brokers or real-estate agents, mortgage modifiers are not required to have any special training or even a license — something many consumers don't know.
That has contributed to a dramatic rise in the number of struggling homeowners complaining they paid thousands to foreclosure loan modification or foreclosure rescue outfits, but received little or no help in return, state regulators say.
The Florida Attorney General's Office has received about 16,127 calls or complaints about mortgage modification from March through Aug. 24, state records show. The agency currently has filed 15 civil lawsuits against these operations, is actively investigating 83 statewide and has 99 additional companies under review.
Susan Spurgen, a Tampa attorney who specializes in real estate litigation, was surprised to learn the troubled industry that quickly sprung up in the wake of the sub-prime mortgage fiasco is largely unregulated.
"It's sad, given that you want only licensed professionals who know what they are doing taking money from people," said Spurgen, who gave a Florida Bar seminar on modification earlier this year.
Homeowners will have more protection beginning Jan. 1. That's when a new law passed by the Legislature this year will require all unlicensed modifiers, loan originators and mortgage lenders to get a broker's license through the state's Office of Financial Regulation.
The statute, which brings state laws in line with the 2008 federal mortgage licensing act, also requires brokers to renew their licenses annually instead of every other year, go through a background check, have 24 hours of training and pass a written exam. Beginning in 2011, they also must be listed in a nationwide registry that will include employment histories and disciplinary actions from all states.
Officials with the Attorney General's Office, saying the new requirements should help weed out questionable operators, supported the law. So did the Florida Association of Mortgage Brokers.
"We are hoping that by requiring licensure, it will hold people accountable," said association president Valerie Saunders.
Until licensing becomes law, consumer advocates and regulators advise homeowners to steer clear of modification companies asking for money up front — something prohibited under the 2008 state Foreclosure Rescue Act. The 2009 law narrowed the exemption allowing attorneys to collect advance fees, stating as of July 1 it applied only to those handling modifications as "ancillary" work connected with other cases, such as bankruptcies.
"If someone asks you for money prior to completion of work, they are breaking the law," said State Rep. Ritch Workman, R- Melbourne, a mortgage banker who worked on this year's bill. Even taking post-dated checks or credit card numbers, to be charged later, is not allowed.
In the past 15 months, hundreds of foreclosure rescue and modification firms have cropped up in the state, Saunders said. While homeowners can try renegotiating their loans themselves, "it's extremely paper intensive and it's complicated," Saunders said.
And slow. The Treasury Department reported earlier this month that eligible homeowners going through the federal Making Homes Affordable program — designed to encourage lenders to renegotiate loans with struggling homeowners — can't get modifications approved by their lenders or mortgage servers. Only 9 percent received loan reductions. The White House has called on servers to start on at least 500,000 modifications by Nov. 1.
I predict the licensure provisions will drive out some of the bad actors and encourage some legitimate foreclosure operations to consolidate. I suspect it also may make it harder for homeowners with bad credit to get approved for modifications or that they'll be charged higher fees.
"The sub-prime model was that everyone was entitled to a mortgage. We don't need that same model for loan modification negotiators"
-Christopher Rockey
rockey@mresolution.com
Wednesday, September 2, 2009
CNN Is Reporting Toward Market Manipulation
Shares of Toll Brothers (TOL), Hovnanian (HOV) and KB Home (KBH) and other builders have surged. The exchange-traded fund that tracks the group has nearly doubled since March.
Home starts have risen for five straight months, while sales of new homes recently hit their highest level since last September. Prices are up as well: the Case-Shiller index of national house prices rose 2.9% in the second quarter, ending a three-year decline.
These signs -- as well as anecdotal reports about house shoppers growing more willing to write a deposit check -- have executives at homebuilding firms declaring the worst is over.
"We believe declining cancellations and more solid demand indicate that the housing market is stabilizing," Toll Brothers chief executive officer Bob Toll said this month in a conference call with investors and analysts.
But housing boosters have forecast turnarounds repeatedly since the market peaked in 2006, only to be proved wrong by plunging prices. And skeptics say they're wrong again now.
They argue that a deeply indebted consumer, a weak job market, expiring incentives and rising foreclosures spell a quick end to any housing rebound.
"We're entering the phase where the homeowner has to earn his way out of this mess," said Mark Hanson, who runs a California real estate research firm. "This summer is shaping up as the gateway into the next move down."
Sales shift
Hanson attributes the much-ballyhooed recent house price gains to a shift in the types of properties changing hands. Earlier this year, as many as half of all transactions nationally were resales of foreclosed properties, largely at low prices.
Since then, so-called organic sales (those not involving distressed properties) have risen while foreclosure sales have remained stable. This improved mix -- together with cheap financing and a couple of popular tax incentives -- helped to revive prices in some hard-hit areas.
Thus, house prices in California have risen for three straight months, according to data provider MDA DataQuick. Foreclosure sales there have dropped to about a third of recent transactions from a high of 57% earlier this year.
But with schools opening up again and the summer home-selling season winding down, sales by nondistressed sellers are likely to fall in coming months, Hanson said.
Adding to the pressure on prices, the end is in sight (or already here) for some popular housing subsidies. An $8,000 federal tax credit for first-time home buyers is due to sunset in December. A $10,000 California tax credit for buyers of newly constructed houses expired last month.
Prime problems
Another concern is that the housing woes appear to be spreading well beyond the questionable borrowers who were at the center of the first stage of the financial crisis.
Banks leave foreclosures hanging
While many mortgage defaults in 2007 and 2008 stemmed from frauds perpetrated at the height of the bubble, a greater share of problems now are being driven by the weak job market. That's evident in the fact that more so-called prime borrowers -- those with the best credit histories -- are falling behind on their payments.
Prime fixed-rate mortgages now account for about a third of foreclosure starts, according to the Mortgage Bankers Association. MBA chief economist Jay Brinkmann said in a statement earlier this month this is "a sign that mortgage performance is once again being driven by unemployment."
Some 44% of prime borrowers fell behind on payments last year because they lost a job or income. That's up from 36% in 2006, according to data from Freddie Mac.
Other numbers bode ill for a housing recovery as well. The inventory of houses for sale has come down from a recent peak but remains "high on a historical basis," Office of Thrift Supervision economist Sharon Stark said this month.
"The supply of homes continues to be a drag on home prices and the ability for home prices to recover," she added.
An orgy of homebuilding over the past decade has driven vacancy rates higher. The Census Bureau said 14.3% of rental and owner-occupied housing units were vacant in the second quarter, compared with 9.7% a decade ago.
And Hanson said the pace of foreclosures could soon accelerate as mortgage servicers catch up on foreclosures they have delayed while grappling with new mortgage modification guidelines.
"There could be a big wall of foreclosures once the servicers get running again," he said.
Even Toll, who was talking about housing markets "dancing on the bottom or slightly above that" as long ago as December 2006, has been saying lately that the homebuilders could use a hand -- from taxpayers, of course.
Toll said on a conference call Aug. 12 that the government should consider a Cash for Clunkers type plan for the housing market: giving consumers a rebate to scrap an old home and buy a new one.
Toll argued that a four-month program that offered people $15,000 vouchers for new home construction could "put twice as many people to work, twice as fast as what's being done with the auto industry."
It won't be a shocker if Toll finds some takers in Congress for that one, given the growing jobless rolls across the nation. But legislators might first want to consider how effective such a plan might be.
"It took 10 years to create this problem," said Hanson. "Do people really believe we can correct it all in 36 months?"
-Christopher Rockey
877.446.5152
http://www.mresolution.com
Home starts have risen for five straight months, while sales of new homes recently hit their highest level since last September. Prices are up as well: the Case-Shiller index of national house prices rose 2.9% in the second quarter, ending a three-year decline.
These signs -- as well as anecdotal reports about house shoppers growing more willing to write a deposit check -- have executives at homebuilding firms declaring the worst is over.
"We believe declining cancellations and more solid demand indicate that the housing market is stabilizing," Toll Brothers chief executive officer Bob Toll said this month in a conference call with investors and analysts.
But housing boosters have forecast turnarounds repeatedly since the market peaked in 2006, only to be proved wrong by plunging prices. And skeptics say they're wrong again now.
They argue that a deeply indebted consumer, a weak job market, expiring incentives and rising foreclosures spell a quick end to any housing rebound.
"We're entering the phase where the homeowner has to earn his way out of this mess," said Mark Hanson, who runs a California real estate research firm. "This summer is shaping up as the gateway into the next move down."
Sales shift
Hanson attributes the much-ballyhooed recent house price gains to a shift in the types of properties changing hands. Earlier this year, as many as half of all transactions nationally were resales of foreclosed properties, largely at low prices.
Since then, so-called organic sales (those not involving distressed properties) have risen while foreclosure sales have remained stable. This improved mix -- together with cheap financing and a couple of popular tax incentives -- helped to revive prices in some hard-hit areas.
Thus, house prices in California have risen for three straight months, according to data provider MDA DataQuick. Foreclosure sales there have dropped to about a third of recent transactions from a high of 57% earlier this year.
But with schools opening up again and the summer home-selling season winding down, sales by nondistressed sellers are likely to fall in coming months, Hanson said.
Adding to the pressure on prices, the end is in sight (or already here) for some popular housing subsidies. An $8,000 federal tax credit for first-time home buyers is due to sunset in December. A $10,000 California tax credit for buyers of newly constructed houses expired last month.
Prime problems
Another concern is that the housing woes appear to be spreading well beyond the questionable borrowers who were at the center of the first stage of the financial crisis.
Banks leave foreclosures hanging
While many mortgage defaults in 2007 and 2008 stemmed from frauds perpetrated at the height of the bubble, a greater share of problems now are being driven by the weak job market. That's evident in the fact that more so-called prime borrowers -- those with the best credit histories -- are falling behind on their payments.
Prime fixed-rate mortgages now account for about a third of foreclosure starts, according to the Mortgage Bankers Association. MBA chief economist Jay Brinkmann said in a statement earlier this month this is "a sign that mortgage performance is once again being driven by unemployment."
Some 44% of prime borrowers fell behind on payments last year because they lost a job or income. That's up from 36% in 2006, according to data from Freddie Mac.
Other numbers bode ill for a housing recovery as well. The inventory of houses for sale has come down from a recent peak but remains "high on a historical basis," Office of Thrift Supervision economist Sharon Stark said this month.
"The supply of homes continues to be a drag on home prices and the ability for home prices to recover," she added.
An orgy of homebuilding over the past decade has driven vacancy rates higher. The Census Bureau said 14.3% of rental and owner-occupied housing units were vacant in the second quarter, compared with 9.7% a decade ago.
And Hanson said the pace of foreclosures could soon accelerate as mortgage servicers catch up on foreclosures they have delayed while grappling with new mortgage modification guidelines.
"There could be a big wall of foreclosures once the servicers get running again," he said.
Even Toll, who was talking about housing markets "dancing on the bottom or slightly above that" as long ago as December 2006, has been saying lately that the homebuilders could use a hand -- from taxpayers, of course.
Toll said on a conference call Aug. 12 that the government should consider a Cash for Clunkers type plan for the housing market: giving consumers a rebate to scrap an old home and buy a new one.
Toll argued that a four-month program that offered people $15,000 vouchers for new home construction could "put twice as many people to work, twice as fast as what's being done with the auto industry."
It won't be a shocker if Toll finds some takers in Congress for that one, given the growing jobless rolls across the nation. But legislators might first want to consider how effective such a plan might be.
"It took 10 years to create this problem," said Hanson. "Do people really believe we can correct it all in 36 months?"
-Christopher Rockey
877.446.5152
http://www.mresolution.com
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