Tag Archives: Government Programs

Collections or Loss Mitigation Department

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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.

Treasury Department’s Loan Modifications

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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.

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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)

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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.

Foreclosed Homes for Sale

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$6 Billion Available For Purchase of Foreclosed Homes

The Obama administration introduced the Neighborhood Stabilization Program (NSP) for the purpose of helping communities that have suffered from foreclosures and abandonment. The program facilitates purchase and redevelopment of foreclosed and abandoned homes and residential properties. The government has allocated nearly $6 billion for the NSP. The $3.92 billion allocated under the Housing and Economic Recovery Act of 2008 will contribute a large part of the NSP

The NSP funding will go to households earning less than 120% of the median income of the local area, with 25% of the money going to families earning less than half the median. . While the program was authorized last year, it has been slow to take off so far.

Neighborhood Stabilization Program

Why is the Neighborhood Stabilization Program good for the economy; because foreclosures in your neighborhood can affect your home value? According to a report from the Center for Responsible Lending, a consumer advocacy group, houses located in neighborhoods of foreclosed homes experience a drop in value. The CRL said that foreclosures are likely to cause 69.5 million nearby homes to suffer price drops, which would average about $7,200 per home this year.

THE FIRST SIX ARE SIGNED UP

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The Treasury Department announced the first six participants to sign up for President Obama’s loan modification program.

Details of the loan modification program where only loans where the cost of the foreclosure would be higher than the cost of modification will qualify.  The modification plan calls for the bank to reduce interest rates so that the monthly obligation is no more than 38% of a borrower’s pre-tax income. The government would then kick in money to bring payments down to 31% of income.  Mortgage servicers (banks and mortgage companies) can also reduce the loan balance to achieve these affordability levels, and the government will share in the cost of the reduction, up to the amount the servicer would have received if it had reduced the interest rates.

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