Tag Archives: Loan Modifications

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.

Banks Are Too Large And Failure Is Not An Option

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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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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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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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Say It Isn’t So

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More than half of delinquent borrowers who had their mortgages reworked earlier this year to avoid foreclosure were behind on their new loan payments after just six months, a federal regulator said yesterday. John C. Dugan, US Comptroller of the currency, told a housing forum yesterday that data his agency is collecting shows the increase in repeat defaults by homeowners is “remarkably high.”

“Put simply, it shows that over half of the loan modifications seemed not to be working after six months,” Dugan said.

So if you thought Loan Modifications or Short Sales would slow down going into 2009 you might want to reconsider that thought and consider a partnership with National Foreclosure Prevention Services.

National Foreclosure Prevention Services is a full service company specializing in Loss Mitigation and Short Sale Services to the investor, realtor and homeowner. We will do all the paperwork, negotiations and in some cases marketing of the property to insure an amicable resolution that will benefit all involved.

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