Collections or Loss Mitigation Department

Posted on March 13, 2010 by Duane

This is an excellent question and a huge part of the problem. The Loss Mitigation Department does not speak to or correspond with the Collections Department and they seem to be working from two different systems because the conversations I have with the loss mitigation department are not coped into the notes from the collections department.

And the collections department has no idea you are working on a loan modification unless you tell them and I would guess they don’t want to know because their job is to collect the outstanding balance or late payment. By the way, if you haven’t figured it out, they get paid a commission on what they are able to collect from the homeowner.

However, the problem is not new and goes beyond the paperwork snafus and staffing shortages at lenders and mortgage servicers that have created massive bottlenecks for the millions at risk of losing their homes. When the Government introduced the Hope Now Alliance in 2007 it was also riddled with problems of inconsistency and constant guideline changes.

It is the Treasury Department that writes these programs and they should learn from their past mistakes about what doesn’t work and avoid repeating them. Instead, the problems, issues and inconsistencies are passed on from administration to administration and so is the blame when the programs don’t work.

Homeowners face numerous hurdles trying to get their mortgage modified and that is why they call National Foreclosure Prevention Services, because we consult with our clients to determine the need and then we strategize a plan of attack that would best meet the needs of our clients. And we will always give our clients several options to choose from – the more options they have the better educated decision they can make.

For a more detailed step by step pre-foreclosure process and a 30 minute presentation on the past and present foreclosure problem facing homeowners visit us at Avoid Foreclosures.

Understanding the Foreclosure Process

Posted on February 10, 2010 by Duane

Millions of Americans who are struggling to save their homes from foreclosure are trapped in a minefield of disappointment and misinformation and the banks, lenders, and servicing companies are all to blame.

Instead of trying to help the homeowner they actually make it more difficult and I know this to be true from firsthand experience. I sometimes pretend to be the homeowner calling the bank for general information on what to do next (and yes this is with my clients consent) and their form of communication is to scare you into submission.

We have seen the fourth revision of the current program and this is the third program the government has put out to help homeowners avoid foreclosure. Homeowners, housing counselors, consumer advocates and attorneys working with borrowers report that the latest effort is falling far short of its original goal.

In some cases, lenders are moving to foreclose even after homeowners get approved for loan modifications. I know this be fact and the reason is simple, but also avoidable. While the loan is being reviewed the collection process continues. The loss mitigation department will tell you that while in review the auction date will be postponed, but not delayed so if you don’t stay on top of your case you will become one of those unfortunate statistics. Click on this link to read our previous post and a great 60 page article titled “Why do lenders foreclose when then can modify”.

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Foreclosures and Home Sales Up and Down

Posted on January 4, 2010 by Duane

In December of 2009 we had the most significant drop in home sales in more than 40 years, but to end 2009 we had the first annual gain in four years. The reducing in the median home value of about $175 had a lot to do with it and the primary culprit to that end was the foreclosure market.

If not for the REO’s and Short Sales this past year, home sales could have been drastically reduced and the economy would have suffered even more than it has. Total sales for 2009 were almost 5.2 million, which was up from 2008 by about 5%.

In March the Federal Reserve is expected to end its program of buying mortgage securities and the extended homebuyer tax credit is expected to end in April. These two factors could have a significant effect on the housing market and could weaken it even further, but stay tuned to our post because I believe the government will extend one or two of these programs.

Unfortunately foreclosure will continue to rise and homeowners need to know their options – Homeowners need to have a place to turn and they need to know that there are options to foreclosure. National Foreclosure Prevention Service offers free confidential consultations; even if we are unable to help at least we can give honest advice to the homeowner about the different options available to them.

It is also clear that the number of people being helped in this recessionary time have been those who are able to take advantage of the many government programs. The tax credit that was sent to expire in November was extended by Congress to allow up to $8,000 for first-time homeowners and a new $6,500 credit for existing homeowners who move.

It remains unknown what will happen when these government programs come to an end before the economy can start to show significant sustainable grown on its own because as most analyst will agree, a healthy real estate market is needed to help the economy continue recovering from recession.

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Banks Are Too Large And Failure Is Not An Option

Posted on December 31, 2009 by Duane

While taming the monster we have allowed it to grow.

Bank of American buys Countrywide and Merrill Lynch while Wells Fargo buys Wachovia and we allowed it to happen under the pretense that if the government didn’t help these institutions there would have been a collapse of the financial sector.

The Obama administration this month has extended the $700 billion financial bailout program until October 2010, setting up a struggle between Democrats who favor using some of the leftover money to help generate jobs and Republicans who say it should be used to shrink soaring budget deficits.

I personally have mixed emotions about this, but I will hold my rant until another time and focus on the two statements made here.

First, we need to get more control over the financial sector with restrictions and oversight on the big picture and not just the immediate problem. Ask the questions smart questions about how we help the unemployed pay their mortgage or should we pay the bank before or after the permanent loan modification.

Keep in mind that we allowed the banks to borrow money from the government at an interest rate of 1 percent to stay solvent and we allowed them to charge the consumer an interest rate anywhere from 18 to 30 percent on your credit cards. What we should have done was added a stipulation preventing the banks from paying bonuses two or three years from paying back the loans.

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.

Second, the administration insists the bailout funds are still needed to prevent further turmoil in the banking system. In announcing the decision Wednesday, Treasury Secretary Timothy Geithner said extending the program also will help homeowners struggling to avoid losing homes to foreclosures and small businesses having trouble getting loans.

My feeling is that these funds will only help struggling homeowners avoid foreclosure if the government has learned anything from this past year. Don’t pay these banks until they have completed the permanent loan modification and somehow get more or have more control over the program and how it is being implemented. In other words help more people faster!

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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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