Stop Foreclosure Answer

I came across some amazing statistics that I want to share with you today.

One website I monitor is www.realtytrac.com. RealtyTrac compiles statistics on the number of foreclosures and people facing foreclosure nationwide. They also track this by state, county, city and zip code.

RealtyTrac had an article about the number of foreclosures in the first quarter of 2009. In this article they broke down the foreclosures by state.

Typically a mortgage company starts to foreclose on a property when a person is three months behind on their mortgage payments. I decided to check out how many people started to face foreclosure in the first quarter of 2009 and what states had the majority of these.

RealtyTrac reported that during the first quarter of 2009 306,785 people nationwide entered the foreclosure process. Almost 81% of these were in five states. The breakdown is:

State Total PercentageNationwide 306,785Isn’t that amazing? 81% in five states. I then tried to figure out the reasons for this.

California 124,875 40.7%

Florida 70,114 22.9%

Nevada 20,534 6.7%

Illinois 19,848 6.5%

Ohio 12,279 4.0%

Total 247,650 80.7%

There seem to be two reasons for the high numbers in California, Florida and Nevada. The first is real estate value. The second is the unemployment rate.

California always has led the nation in the cost of homes. People who bought homes at their peak in value in late 2006 have seen the value of their homes drop far below what they paid for them. The unemployment rate in California is currently at 11.5%. When people who overextend themselves to buy a home suddenly lose their jobs and the value of their homes drop far below what they owe on these homes foreclosures jump.

In most areas of Florida real estate values jumped tremendously in 2004, 2005 and 2006. Many people bought thinking that they would make easy money on their investment. Then suddenly the bottom fell out. Values started to fall. People couldn’t sell the homes they bought. Couple that with an unemployment rate of 9.5% and you have a disaster.

In Nevada the values of homes skyrocketed from 2003 to 2006. The prices just went up faster than they should have. Here again people thought they would make a killing. So they paid far more than they should have for homes. Then the recession hit. The unemployment rate has jumped to 10.5%. Suddenly people found that they could no longer afford to make the monthly payments on the homes they had bought.

In Illinois and Ohio it looks like the main reason is unemployment. While home values had risen in both states, the increases were not as astronomical as they were in California, Florida and Nevada. In Ohio the unemployment rate is 10.1%. In Illinois it is 9.4%. Even many of the people who did not lose their jobs suddenly found their income reduced substantially. In both states people did not have enough savings to continue to tide them over. They could not make their mortgage payments when they lost their jobs or when their income was reduced.

I thought that you would find this as interesting as I did.

If you are facing foreclosure, try to remain positive. Take all the action you can to save your home. Explore all of the options open to you. You might want to check out my EBook. In it you will find ideas on how you can take charge of the foreclosure process.

Much Success,

Mark Elkins

You may be able to make your mortgage payments right now. However, money is getting tighter and tighter. You have found it necessary to take money out of your savings to pay your mortgage.

The amount in your savings account is decreasing quickly and in a couple of months you don’t know what you’ll do. There will be no way to make those mortgage payments. You and your family love your home. You don’t want to lose it. What are you supposed to do?

One option you might have is to refinance your mortgage. You think that you can get a lower interest rate. Your monthly mortgage payment will drop but not that much. You can manage on that. However, it will be a sacrifice.

You have never been in a situation like this before. You have always paid your bills on time. Should you refinance your mortgage?

Up until March I would have told you that refinancing probably would have been your best option. There were certain other options like getting a modification to your mortgage. However, mortgage companies only modified the mortgages of those people who were three months or more behind in their payments.

Even then the modifications were in the mortgage company’s favor. Penalties and interest were tacked on to the balance of the mortgage. The monthly payments were not reduced much at all. In some instances the payments were increased.

In early March the Obama Administration announced the Making Home Affordable Modification Program. This standardized the way loan modifications are done. The monthly payment is brought down to 31% of a person’s income. That payment includes not only principal and interest but also taxes and insurance.

These lower payments continue for 5 years. After that they rise. However, they only rise until they hit a low fixed rate which is set at the time the modification is agreed to.

The Making Home Affordable Modification Program was modified at the end of April. This change provides for the modification of second mortgages.

So what does this mean for you? Very simply you may come out better with a loan modification under the Making Home Affordable Modification program than you would if you refinanced your mortgage.

That’s not all. You would be better off to consult with a lawyer or an expert who specializes in helping people facing foreclosure. They can review your situation to see if there was anything illegal about the mortgage you got. If there is, you might qualify for even a lower interest rate and a lower monthly payment than you would with a modification under the Making Home Affordable Modification Program.

So what I am telling you is, Don’t jump at the first option presented to you. You need to know all of the options that you have. You want to choose the best one. Your goal is to protect yourself and your family and save your home at the same time.

Much Success,

Mark Elkins

The main focus of the new Making Home Affordable Modification Program is to bring the monthly mortgage payment down to a level that the person facing foreclosure can make the payment every month and save their home.

Lowering a monthly mortgage payment and modifying a mortgage have been around for quite awhile. At the end of 2008 some statistics came out which questioned how successful loan modifications actually are.

These statistics showed that in over 50% of the cases where mortgages were modified during the first quarter of 2008 the people fell behind on their mortgages within 6 months and were facing foreclosure again. Yes, in over 50% of the cases the loan modifications did not work.

There were six reasons for this:

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Many people had overextended themselves originally. They had just purchased a more expensive home than they could afford.

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They owed much more on their mortgage than their home was worth. As the months went by the values of their homes continued to drop. They got discouraged and felt that there was no reason for them to continue to try to save their home.



Many people had a lot of other debt. Their car payments were high and they had quite a bit charged on credit cards. Trying to get out from under their debt load was just too much for them.



Some people just felt that even with the modification they could not overcome their financial challenges. If they fell behind on their mortgage payments again, their mortgage companies just might modify their mortgage payments further and reduce their mortgage payments more.



In some instances mortgages were modified. However, the monthly payments were increased. If a person could not make the original mortgage payment, how could they make the new higher payment?



People lost their employment or lost the new jobs that they had gotten. They just didn’t have the income to make their monthly mortgage payments.

I am sure that if you are facing foreclosure your heart dropped when you saw that over 50% of the time where loan modifications were made the people fell behind on their mortgage payments within six months. Let me just say that things are a little different now.

The guidelines in the Making Home Affordable Modification Program address many of the issues raised. The mortgage payment is reduced to 31% of a person’s income. That is substantially lower than what a payment was reduced to in previous modifications.

Never will a person’s new payment be higher than their original payment. Right from the start it is made clear that if people fall behind and don’t make their mortgage payments on time, they will be taken out of the program. There are no second chances.

True – with the declining value of homes people may owe more on their mortgages than their homes are worth. The Federal government is looking at other ways to correct this.

In the Making Home Affordable Modification Program, each person’s entire debt load is looked at. If it is over 55% of their gross income, they are required to go to financial counseling.

I recommend that anyone facing foreclosure get help from a lawyer or an expert who specializes in loan modifications and helping people save their homes. The reason is that they are going to look at the person’s entire financial situation not just their monthly mortgage payment.

I also suggest that anyone facing foreclosure get ongoing emotional support from their church, a non-profit organization or skilled counselors. They will be much better equipped to get through the crisis they face.

Much Success,

Mark Elkins

I don’t know if you saw or heard about the councilman in Detroit.

On the Internet in late April there was a news item about him. It said that in December of last year the councilman, Kwame Kenyatta, and his wife moved out of their home and sent the keys for it to their mortgage company.

The councilman said that they bought their home for $225,000. The value had dropped to $100,000. The monthly payment had been $2,600. It was going to increase by about $1,000 a month. Their mortgage payments had been made on time. They were not late. They were not in foreclosure and they did not qualify for any relief programs that their mortgage company was offering.

The news reports had two other comments. The first was that Kwame had considered running for mayor of Detroit. The second was that he had been a strong advocate of ways to improve areas of Detroit where there were large numbers of foreclosed homes.

Let’s look at this a little more closely. Here is a couple who are not behind on their mortgage payments. All of their payments had been made on time.

Their main concern seems to have been that the value of their home dropped from $225,000 to $100,000. Their second concern was that their mortgage payment was going to increase from $2,500 to $3,500.

So they send keys for their home to their mortgage company. It looks like they signed away their rights to their home to their mortgage company. The only advantage to doing this is that their credit rating would not have been hurt as much as it would if they lost the home through foreclosure.

They may have lost heart. They may have believed that their situation was hopeless. They may have felt that the only choice they had was what they did.

Did the Kenyattas do all they could to save their home? It does not look like that.

It does not look like they contacted their mortgage company and explained their situation to them. It is very possible that the mortgage company would have considered modifying their mortgage to keep their mortgage payments fixed at what they had been paying and cancelling the increase of $1,000 a month.

There are two reasons the mortgage company may have done this. The first is that there are so many foreclosures in Detroit. Mortgage companies just don’t want to own any more homes there. The second is that they were current on their mortgage payment. No mortgage company would want a homeowner signing over another home to them especially when the homeowner was not behind on their payments. I believe that the mortgage company would have given special consideration to Kwame and his wife.

It does not look like the Kenyattas consulted a lawyer or an expert in loan modifications to find out what steps they could take to save their home. A lawyer or an expert in loan modifications may have been able to help them.

It looks like they acted on their own. They didn’t see any way to resolve the situation in their favor. So they decided that sending the keys to their home to the mortgage company and moving out was the only option for them.

The drop in the value of their home was a concern. However, that is due to the current economic situation in Detroit. Detroit has had its ups and downs just like most major cities in the United States. In good times the value of their home would have come back.

The action Kwame and his wife took just about ruined any chance he had to win any election for mayor of Detroit. While he proclaimed to be a strong advocate of ways to improve those areas of Detroit affected by large numbers of foreclosed homes, he turned and ran when it came to his own home.

Other people facing foreclosure will be discouraged by hearing of his story. In their own mid they are thinking that if a city councilman decides to give his home to his mortgage company even when he is current on his mortgage payments, there is no chance for us to save our homes when we are 3 months behind on our payments.

If you are facing foreclosure or fear that you will be in the future, take charge of the process. Do all you can to protect your family and to save your home. I highly recommend that you consult a lawyer or an expert who specializes in foreclosures. They will be able to review all of your options with you.

Much Success,

Mark Elkins

To stop the foreclosure process and to save your home you have decided to apply for a modification to your mortgage. You have sent to your mortgage company the information which they have asked for.

You wonder how long it will take them to make a decision and to let you know. You are anxious. You want to know if they will agree to modify your mortgage and to reduce your monthly payment. What will that new payment be? Will you be able to make it every month?

Will you be able to keep your home or will you and your family have to find another place to live? If you have to move what will your relatives and friends think? Will you be able to find as nice a home in the same area where you live right now?

All of these things are on your mind and you would like to know quickly. Let me tell you. Your mortgage company probably is not going to respond as quickly as you want.

In normal times it would take a mortgage company anywhere from 30 to 90 days to respond to a request for a loan modification. However, right now, the system is backlogged. With the new Making Home Affordable Modification Program the guidelines have been relaxed. More people will be applying for a loan modification.

Mortgage companies have been overwhelmed with requests for loan modifications. They are not staffed to handle the volume of requests that they are receiving. What does that mean? It may take 6 months or longer before they make a decision on some cases.

Let’s look at what a mortgage company is most likely to do. They will most likely work on the easier cases first. They will also work on those cases which need to be done more quickly first.

Most mortgage companies are reactive. If they pick up a file and all of the information they need to make a decision is not in it, they will be slow in communicating what they need. If all of the information they need is not submitted at the same time, they won’t look at the file until everything they need comes in.

If information they need is submitted at different times there is a greater chance that some of it may be misfiled and lost. They will request it again and not look at the file again until it is received.
What steps can you take to make sure that your application is looked at as quickly as possible?

First – make sure that you know all of the information your mortgage company requires. Submit it all at once to them. Send it registered mail. Keep copies of everything you send. If they ask for more information, send that registered mail too. Also keep copies of that.
After you submit it, call and ask them how long it is taking them to process applications. Ask them for the best and worst case scenarios. Mark on a calendar the earliest date they told you that they might make a decision. If you have not heard from them by that date, call your mortgage company and find out the status.
If they are still working on your application, ask them when they may finish. Note that on your calendar. If you have not heard from them by then, call and get an update on where they are at.
Keep doing this until you get their decision.
Keep a log of each time you call. Make a note of what you are told. Get the name and title of each person you talk to. Also get their phone number. The next time you call, ask for the same person again.
Mortgage company people are notorious for saying that they will call people back by a certain date and never doing so. So don’t rely on anyone to call you. Always be proactive and make the call yourself.
As you can imagine, this process can be very frustrating for people facing foreclosure who apply for a loan modification. You are better off to get a lawyer or an expert specializing in foreclosures to help you.
Because of all of the work the lawyer or the expert have done, they may have had prior experience of working with your mortgage company. They may know how to get your application looked at more quickly. They may also know people to talk with to find out the status of your file.
If you hire a lawyer or expert, have them call the mortgage company. Keep track of the dates they tell you and follow up with them right after each date to get the status. If the mortgage company calls you, don’t talk to them. Politely refer them to your lawyer or the expert working for you.
Remember – You always want to take charge of the foreclosure process and to keep your home – the home you always wanted and have worked so hard for. You want to do all that you can to protect yourself and your family.
In my EBook I go into more detail on steps to take to help you avoid foreclosure. You may want to check that out.

Much Success,

Mark Elkins