TARP Program Under Presure

Posted on December 15, 2009 by Duane

The Government’s Attempt To Lean On Mortgage Companies

The $50 billion plan got off to a slow start, but government officials say that in hopes of trying to convert more troubled home loans to lower monthly payments, they are pressing the industry hard to improve their performance. One of those ways is not to pay the bank until a permanent modification is in place as opposed to the trial started. Still, many housing advocates have been disappointed with the plan’s progress and say that getting a loan modification is still a battle.

There are some that are saying it is more cost effective for the lender to foreclose on the property rather than offering a loan modification. The National Consumer Law Center put together a great article on that very subject.

CLICK ON THE LINK BELOW “TO FORECLOSE OR TO MODIFY” AND DOWNLOAD YOUR FREE COPY OF THIS 60 PAGE REPORT

To Foreclose or to Modify

Why Servicers Foreclose When They Should Modify

Economists doubt the Obama administration will reach its broad goal of helping 3 to 4 million borrowers within three years and I can agree with that statement because of the shear scope of the problem.

There are not enough qualified loss mitigation negotiators in place at the banks to handle this problem and I’m sure there is an internal shuffle of staff to address the issue. Traditionally mortgage servicers were low-cost operations, with workers in collections departments trying to collect payments from tardy borrowers.

Those workers, and thousands of new ones, are now engaged in a far different job – figuring out whether thousands of borrowers qualify for help or not and while the banks are trying to get to as many cases as possible the collections department is also in full swing calling H/O’s and pressuring them to make a payment “or else”.

We will discuss the different collection tactics lenders use with what to say to them and how to overcome their questions in another article.

For the most part banks have been slow to adapt to an unfamiliar climate of sinking home prices and soaring unemployment resulting in people not being able to pay their mortgage on time and people not refinancing to a lower interest rate to pay down other debt.

Even as foreclosures and delinquencies were soaring, everybody underestimated how ugly the housing picture was and how bad it was going to get. And with rising foreclosures and depress home prices there is still a threat to the sustainability of the fledgling economic recovery.

A recent report from the Mortgage Bankers Association found that 14 percent of homeowners with mortgages were either behind on payments or in foreclosure and as long as unemployment continues to rise more and more families will be threatened.

The Congressional Oversight Panel, a committee that monitors spending under Treasury’s bailout program, concluded in a report last month that foreclosures are now threatening families who took out conventional, fixed-rate mortgages and put down payments of 10 to 20 percent on homes that would have been within their means in a normal market.

Treasury’s program, known as the Home Affordable Modification Program, “is targeted at the housing crisis as it existed six months ago, rather than as it exists right now,” the report said.

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At National Foreclosure Prevention Services we are dedicated to keeping our clients from becoming another statistic through education and guidance.

Treasury Department’s Loan Modifications

Posted on November 15, 2009 by Duane

National Foreclosure Prevention Services has been very successful with the cases we have recently modified and we are always working hard to maintain the highest level of customer satisfaction. Here are some of the Loan Modification approvals we did this year for your review. Click on the links below.

Ocwen – Wells Fargo – HSBC – Vericrest Financial – Select Loan Servicing – HomEQ Servicing – American Home Mortgage Servicing

We manage several Loss Mitigation and Short Sale cases in many different states and it is important to maintain a constant line of communication with our clients. The Homeowner, the Realtor and the Attorney all have to be notified of any changes and our management system helps us keep in touch with everyone at one time.

30 Day Free Trial
Simple Short Sale Management – Web Based, 24/7 Access

In June we wrote about the mortgage relief programs the government had established to help homeowners facing foreclosures. Well every month for the last six months we have heard many different stories about the success and failures of these programs and I can say from experience that these programs are not helping enough people.

After a slow start, the Obama Administration’s mortgage relief program has reached one in five eligible homeowners and more than 650,000 borrowers, or 20 percent of those eligible, have signed up for trials lasting up to five months, the Treasury Department said Tuesday.

The trials are a verbal assessment of the homeowners financial situation and they are an attempt to allow the homeowner to make reduced mortgage payments while they review the documents submitted by the homeowner and I have several issues with the way the program is being implemented.

Most of the borrowers enrolled so far have been signed up for preliminary trial modifications for up to five months. To make the change permanent, though, they must complete a big stack of paperwork and show they can make their payments on time. The government expects to release details in the coming weeks on permanent modifications.

…And these are my issue with the program and its implementation.

>> First, while the banks review the documents submitted by the homeowner they go through several stages to verify the information. One of those stages is a BPO which by the way is charged to the H/O at any “reasonable” rate they want, but if that BPO comes back showing equity in the home the modification can be denied regardless of the borrowers hardship -IE loss job or reduction of hours.
>> Second, the program guidelines are based on a 31% income ratio which only accounts for the mortgage in question and not the other household bills. They don’t even factor in the second mortgage payments if one exist
>> Third, if the borrower does not qualify, the discounted mortgage payments are then converted to make a complete mortgage payment and the difference is then considered outstanding. For example-if the mortgage payment is $2,000 and the trial payment is $1,000 for 6 months and the modification is denied then the bank will take the $6,000 in trail payments make and convert them to three months paid leaving the H/O with an outstanding balance of $6,000 or three months.

This is not explained clearly and because of the homeowners lack of experience and knowledge regarding loan modifications the lender will generally get away with this deceptive practice. It is important to hire a qualified loss mitigation consultant to help navigate these complicated, difficult and sometimes exhausting negotiations.

Meanwhile the bank has been paid by the government for satisfying their requirements by offering the trial modification under the Home Affordable Modification Program (HAMP).

Click on this link to read how the banks are being paid to modify your mortgage and why some in government are not pleased at all.

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Making Home Affordable Program (MHA)

Posted on October 31, 2009 by Duane

I read a report recently indicating that lenders such as Bank of America Corp. and Wells Fargo and Co. have lagged behind government expectations in offering loan modifications to those homeowners in need and both banks have received billions in federal bailout money.

And we all know that while the banks drag their feet getting homeowners approved for loan modifications their Collections Department is actively and aggressively calling the homeowner in an attempt to collect the mortgage payment.

According to our experience in working with these lenders they have adopted a policy that requires 60 to 90 to review your documents and get back to you with an answer regarding the approval or denial of your loan modification. However it takes the collections department days or weeks to repeatedly call the homeowner demanding payment or else.

And let us not mention that the banks are borrowing money from the government at an interest rate of 1 percent to stay solvent and charging you an interest rate anywhere from 18 to 30 percent on your credit cards. With the sale of stock options and some other creative financial maneuvering it is no wonder they were able to pay back the money they owed – and by doing so they have freed themselves of the restrictions the government has placed on them regarding bonuses and other perks.

Making Home Affordable (MHA) was created to help an estimated 3 million to 4 million borrowers over a three year period avoid foreclosure, but the government program will not meet those goals as long as the banks and lenders continue to drag their feet.

The Congressional Oversight Panel, charged with making regular assessments of the $700 billion financial rescue fund enacted last year, said the Treasury Department should consider whether to improve the current $50 billion program or adopt new programs to meet an expected rise in foreclosures fed by increased unemployment.

I feel they should not look at adopting new programs, but instead work on fixing the current program. The government moves too slow and to adopt a new program would result in major setbacks, but if they make the necessary changes to the current program based on the obvious mistakes of the last six months they could actually have a working program in place.

So instead of only helping approximately 650,000 homeowners they might actually be able to help the 3 to 4 million people they set out to assist- 3 million or even half of that number would be a tremendous benefit to so many people and would be considered a successful campaign.

National Foreclosure Prevention Services is committed to helping as many homeowners as we possibly can stay in their home by offering Loss Mitigation Services and if the government takes a common sense approach to the problem we will be able to help many more people.

Click here for help with your Loan Modifications and Short Sales.

Option Arm Mortgages

Posted on September 15, 2009 by Duane

Will it Get Better Before It Gets Worse?

The answer to that question is NO! I hate to be the one to break it to you, but from all market indications that I am studying it will not get any better anytime soon.

There are a couple of very real indications that things have not turned around and one indication is that there is a second wave of loans that are about to adjust and they are going to really have a negative impact on the financial market.

The other indicator is the unemployment rate that no one seemed to notice was and has continued to climb resulting in even more foreclosures in the coming months.

Click on this link to read about how the government failed to recognize this problem.

Option Arm Mortgages

Option Arm Adjustable Rate Mortgages are about to go through major resets, sending federal and state regulators scurrying to withstand a new wave of defaults and foreclosures.

National Foreclosure Prevention Services has had some success modifying Option Arm Mortgages, but there are several problems with these mortgages.

1. Most loan modifications will be a principle and interest payment, where the H/O usually paid the minimum payment – not even the interest only payment.

2. When the loan is modified chances are the payment will be higher than what the H/O is currently paying making it imposable to qualify.

3. And because the H/O was paying the minimum and with the reduction of home values, chances are there is no equity and they owe more on the mortgage then they did when they purchased the home.

Most homeowners in an Option Arm Mortgage will either do a Short Sale or walk away from the house – there is very little up side to the picture. However, we do recommend having a conversation with your lender to see what they are willing to do to help.

Despite positive signs of a housing recovery – increasing home prices and sales in most markets nationwide – foreclosures have been continuing to rise, even before option ARMs become an area of concern.

I was reading a great article in Active Rain published by Jeff Geoghan that reinforces my position regarding loan modifications at The Coming Storm. I give props where props are due…he touched base on loan modifications as well and I know from actively doing them the banks/lenders are under staffed and inadequately prepared to handle this crisis.

Is Your Debt In Check

Posted on July 22, 2009 by Duane

Unsettling Times for the Debt Settlement Industry

Be careful of who you hire to negotiate your debt. The debt settlement industry is in crisis and almost everyone including consumers, credit card companies and consumer advocates are suspicious of settlement companies. There are about 2,000 settlement companies that offer advice to troubled borrowers on paying off a percentage of their credit card debt and avoiding bankruptcy. The common complaint is that many debt settlement companies are more interested in their fees than helping their clients.

For the complete story Click Here (April 2009)

For more information down load our 5 part series on “Your Credit Score and What it Means To You as a Prospective Buyer”

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Category Archives: Loss Mitigation