Stop Foreclosure Answer

August 31, 2009
In Stop Foreclosure, Preventing Foreclosure and Loan Modifications

Right now 27 mortgage companies have signed up to participate in the Making Home Affordable Modification Program. This is the program introduced by the Obama Administration designed to help people facing foreclosure save their homes.

Until recently there has been little mention of the large mortgage companies which so far have not agreed to participate in this program. Seven large companies as well as some smaller ones have not yet signed up for the program.

The large companies are SunTrust Mortgage, HSBC, American Home Mortgage Servicing, Litton Servicing, HomeEq, PHH and Flagstar Mortgage. None of these companies have given valid reasons for not applying to participate.

SunTrust has indicated that they are still considering whether or not to join. HSBC was analyzing whether it would be in their best interests and the interests of their customers. American Home Mortgage Servicing and Litton Servicing said they would join soon. The other three had no comment.

There is no reason for any of these companies not to participate in this program. Any people who have mortgages with them and who are facing foreclosure are at a tremendous disadvantage.

I am sure that state and federal officials as well as many civic groups will be urging them to get involved with the program. When that happens, most of these will rush to join the program.

If your mortgage company is one of these seven and you are facing foreclosure, don’t try to contact and to negotiate with them on your own. You will definitely need the help of a lawyer or an expert in dealing with foreclosure to help you. You have too much to risk and it looks like none of these companies will be very helpful to you.

Much Success,

Mark Elkins

August 30, 2009

KeyWords – Stop Foreclosure, Foreclosure Help and Loan Modifications

If you are facing foreclosure and are thinking about requesting a loan modification, I found something which you will want to view.

Freddie Mac, one of the government sponsored companies that buys mortgages in this country, has just put up a video on YouTube.  The title of this is “Stop Foreclosure: Documents Your Lender Needs to Help You.”  It is about 2 minutes long.  It explains what documents you should submit to your mortgage company.

Check it out now.  Here’s the link, www.youtube.com/FreddieMacWeb.  It is a very informal video.  It explains the backlog at most mortgage companies and it shows what documents you should get together,

I like the video because it is short and to the point.  The only issue I have with it is that it doesn’t specify all of the documents you need to get together.  If you have a large number of medical bills which you have had to pay, get those out.  If you had to do any major repairs on your home or your car and you spent a lot of money on those, gather up those bills.  If you had any other expenses which were out of the ordinary, include those.

I recommend something else that is not included in the video.  The video talks about the backlog at the mortgage companies.  Because of the amount of requests for loan modifications that companies have received and not having sufficient staffs to handle these, two major problems have arisen.  First, many have lost applications or the paper work that accompanied them.  Second, many times it is 90 days or longer before a decision is made by the mortgage company.  These can be very frustrating for people who apply for loan modifications.

For these reasons and because you are not an expert in this area, I suggest that you get someone to represent you.  That should be a lawyer or an expert in handling cases like yours.  Get together all of the documents mentioned in the video as well as the other bills I mention above and sit down with the lawyer or expert you have chosen.  Let them put together the application for the loan modification and submit it for you.  Also let them represent you with your mortgage company.

You have too much to lose by trying to handle this yourself and not getting expert help.

Much Success,

Mark Elkins

I am really annoyed as I write this.  I believe that by the time you finish reading this post, you will be too.

 

On August 4^th, the Obama Administration released their first status report on the Making Home Affordable Modification Program.  I was thoroughly upset when I learned how badly the mortgage companies were performing in trying to help people save their homes from foreclosure.

 

During the period from March through July of 2009, the report estimated that there were 2,705,302 loans where foreclosure started.  On these the mortgage companies could have offered trial modifications. 

 

If you are unfamiliar with the Making Home Affordable Modification Program, the goal is to lower the monthly payment on the mortgage of the person who is having financial challenges to a point where the person should be able to resume making the payment consistently.  The next step is to put the person on a trial modification for 3 months to see if they can make that reduced payment consistently.  If they make their payments on time, then the modification is converted to a permanent modification.

 

The status report revealed that trial modifications had started on only 9% of those 2,705,302 loans.  Let me repeat that – Only 9% of the loans had trial modifications.  That is a disaster.  A far greater percentage of these loans should have had trial modifications.

 

38 mortgage companies are participating in the Making Home Affordable Modification Program.  Not all of them have been in it since the start.

 

Let’s look at 3 of the larger companies that have been in the program almost from Day 1.  They are Bank of America, Wells Fargo and Ocwen Financial Corp.

 

                                                Estimated Loans                     Actual

Eligible for Trial                        Trial

Modifications                       Modifications           Percent

 

Bank of America                     796,487                                  27,985                       3.6%

 

Wells Fargo*                            394,530                                  21,575                       5.5%

 

Ocwen Financial                       55,516                                    2,517                       4.6%           

 

          *Wells Fargo assumed the loans for Wachovia Mortgage and Wachovia   

           Bank.  These are the combined figures for all 3.

 

This is totally disgraceful.  As you may know from reading my other blog posts and from my website, I believe that mortgage companies too frequently have zapped the people who have loans with them.  These statistics for Bank of America, Wells Fargo and Ocwen Financial just reinforce my thoughts about them.  While each company said right along that they desired to help people save their homes from foreclosure, it sure does not look like it from these numbers.

 

What were the reactions of these companies when this report came out?  Each of them seemed to have learned from politicians.  They put their own spin on it to make themselves look better.

 

Spokespeople for Bank of America and Wells Fargo made similar statements.

 

The spokesperson for Bank of America said that during the first 6 months of 2009 they had authorized modifications on 150,000 loans in their own program outside of the Making home Affordable Modification Program.  The spokesperson went on to say that these 150,000 people were at serious risk of foreclosure.  After the modification they were able to remain in their homes with an affordable mortgage payment.

 

Give Me a Break. 

 

First, this number, 150,000, was just thrown out there all by itself.  There was no mention out how many loans were eligible for modifications.   Was the percentage any higher than the 3.6% in the Making Home Affordable Modification Program?

 

Second, Bank of America took over certain mortgage companies that had failed.  The largest was Countrywide.  Law suits had been started against Countrywide by the attorneys general in many states.  In the settlement reached Bank of America had to go back and modify many loans.  Were these loans included in the 150,000?  Were there other lawsuits?  How many loans were modified as a result of these?  How many were in the 150,000?

 

Third, the spokesperson implies that the modifications lowered the monthly payments so much that the people were saved from foreclosure and will never face it again.  Up till the start of The Making Home Affordable Modification Program, loan modifications were not that successful.  On a very high percentage of the cases, the people fell behind and were facing foreclosure again within a fairly short period of time.

 

The spokesperson for Wells Fargo merely commented that for January through July of 2009 their company modified 240,000 loans outside of the Making Home Affordable Modification Program.  They added that the modification program will be their first choice for future loan modifications.

 

Here Wells Fargo did not clarify how many loans were eligible for modification.  Nor did they mention how successful their modifications were.  Without these numbers it is impossible to see what type of job Wells Fargo is doing.

 

I really loved the response from Ocwen Financial. 

 

Their executives went on the attack.  They implied that many of the mortgage companies started trial modifications too quickly.  They did not completely verify the borrowers’ incomes before determining what their lower monthly payments should be during the trial period.  Their president said that first they overhauled their operations.  They then opted to verify each person’s income before offering a trial modification.

 

Let’s take a closer look at Ocwen Financial’s response. 

 

First they say that the other companies acted too hastily.  Then they implied that they did a better job by improving their operations and verifying each borrower’s income.

 

They already had their own loss mitigation department to deal with people facing foreclosure.  All mortgage companies do.  There are always foreclosures.

 

In 5 months they only offered modifications on 2,593 loans.  That is a little over 500 a month.  It seems like a really small number.

 

Their second argument about verifying income does not make sense.  They are implying here that by doing this there was a delay in the process.  When people apply for a loan modification with them, Ocwen Financial requires that they submit a financial package.  This is outlined on their website.

 

In this package all the people on the loan have to submit copies of last year’s tax returns with all schedules.  This shows all of the income each person earned last year.

 

Each person has to submit copies of two of their pay stubs in the last 90 days.  This documents their income for the current year.

 

If they get any other type of income they have to submit documentation for that.

 

They also have to submit signed IRS forms, 4506-T.  This permits Ocwen Financial to get copies of their tax returns from the IRS.

 

So the company has documentation of the income right when they start to process the application.  You might say that they have to verify this.

 

Verifying current income from an employer normally tales about 3 to 4 days.  Getting copies of tax returns from the IRS normally takes about 1 to 2 weeks at the most.

 

So it seems that Ocwen Financial just made up excuses to try to make people unfamiliar with the process believe that the verification they were doing took much longer than it actually does.

 

Senators and congressmen in Washington along with other groups are talking about making the loan modification process mandatory.  The results in this initial report just give them more ammunition to make this happen.  If it does happen, there will be another uproar about how the government is getting involved in areas that they shouldn’t.  Yet how long can we go with the poor work being done by companies like Bank of America, Wells Fargo and Ocwen Financial.

 

In the meantime what does all of this mean if you are facing foreclosure and want to save your home?  Especially if Bank of America, Wells Fargo or Ocwen Financial is your mortgage company. 

 

Do you think that they are going to do all they can to help you?  Do you believe that they are going to give you the best modification that they can?  Do you think that they will expedite your application?  What chance do you think that you will have if you try to get the modification on your own?

 

There are lawyers and experts in loan modifications available to help you.  I suggest that you get one to represent you.  How do you find one?  How do you find out more about the loan modification process?  You may want to check out my EBook, the Stop Foreclosure Answer EBook.  This will guide you.  You can find out more about the EBook by clicking here.

 

You know – you are truly in a battle with your mortgage company.  I hope that you win it and get the best possible modification that you can.

 

Much Success,

 

Mark Elkins

 

Don’t ever anger a mother. She will get you.

On June 30, the Moms Rising organization sent an email out to everyone on their email list. In that email they told the story of an 84 year old woman in California. Her mortgage company, OneWest, was foreclosing on her and evicting her from the home she lived in for 34 years.

Her husband was receiving kidney dialysis three times a week. He was also suffering from congestive heart failure. He did not want to leave his wife with $30,000 to $40,000 in credit card debt. They explored various options. A representative from IndyMac, a mortgage company, told them that they could refinance their mortgage and take cash out to pay off the credit cards. The representative led them to believe that that was the best option for them.

A month after they refinanced, her husband died. With his passing her monthly income dropped almost $800 a month. As time passed the interest rate and the monthly payments on the mortgage increased several times. Finally she found that she could no longer continue to make the payments.

IndyMac was taken over by the FDIC late last summer. Their mortgages were turned over to OneWest. OneWest is one of four large lenders who have not agreed to participate in the Making Home Affordable Modification program.

The ACORN organization brought this to the attention of the Moms Rising organization. In the email Moms Rising sent out, they asked the readers to click on a link. That took them to a site where they could send a letter to the Chief Executive Officers of all four lenders. In addition to OneWest, the others were Litton, Home Eq and American Home Mortgage Servicing.

The letters were already prepared. All that anyone who wanted to send a letter had to do was type their name, home address and email address. Not only did Moms Rising take care of preparing the letter. They delivered it. What could be easier for a person who wanted to participate.

Can you imagine the reactions of the Chief Executive Officer of OneWest, Litton, Home EQ and American Home Mortgage Servicing when these letters are delivered? I can guarantee you that no one of them wanted this negative publicity.

Since then American Home Mortgage Servicing has signed a contract to participate in the Making Home Affordable Modification Program. Do you think that they were pressured by the work Mom’s Rising did?

We will probably hear how the other 3 companies are starting to do more loan modifications in the future. They may even join the program.

If you want to see what Mom’s Rising campaign looked like, go to this link, http://momsrising.democracyinaction.org/o/1768/campaign.jsp?campaign_KEY=27284. You’ll even see a picture of the nice 84 year old woman who may lose her home.

If you are facing foreclosure, you will find much valuable information on the steps you can take to stop the process and save your home in my Stop Foreclosure Answer Ebook. Click here for more information.

Much Success,

Mark Elkins

On July 5, 3 new laws took effect in Michigan. These laws are designed to encourage mortgage companies to work out loan modifications with people falling behind on their mortgage payments who are facing foreclosure.

Under these laws, a mortgage company is required to give the person who is facing foreclosure the name and phone number of a real person who has the authority to modify their loan. The company is required to include this in the notice they send to them telling them that they are starting to foreclose.

The mortgage company also has to send them a list of approved housing counselors. The person facing foreclosure can have one of these counselors go with them to a meeting with the representative from the mortgage company.

The purpose of the meeting is to work out a loan modification. When the person facing foreclosure requests the meeting, the foreclosure is put on hold for 90 days.

The monthly payment in a loan modification can be no more than 38% of the person’s gross monthly income. The steps to be taken to bring the payment down to that level are specified.

If the person facing foreclosure qualifies for a modification and if the mortgage company refuses to agree to modify the loan, the mortgage company will have to go through a lengthy and costly process to finalize the foreclosure.

These laws only apply to those cases where the foreclosure action starts on or after July 5. Michigan felt that the Making Home Affordable Modification program already covered people facing foreclosure who had Fannie Mae, Freddie Mac, FHA and VA loans. So these loans are exempt from the new laws.

Most large mortgage companies are chartered by the federal government. Normally they only have to abide by laws and regulations of the federal government. They are not bound by state laws. The legislators in Michigan wrote the laws in a specific way so that they would apply to all mortgage companies and that none could get around the provisions of the new laws.

So what does this mean for a Michigan resident who is facing foreclosure?

In effect they have the right to mediation. At the meeting on the loan modification they can have their housing counselor present. The housing counselor will help to negotiate the modification for them.

One major concern is that people facing foreclosure may not follow through and request a meeting with the representative of their mortgage company. It has been found in other states that many people facing foreclosure don’t open the letters from their mortgage company. In addition many believe that they will lose their home through foreclosure and that there is nothing they can do to prevent it. So they do nothing.

A second concern that has come up is that there are probably not enough housing counselors to handle the volume of cases that is expected. This will have to be monitored.

The impact of these new laws won’t be known until the end of this year or early next year. It looks like this is a great step in helping people save their homes from foreclosure. However if people facing foreclosure doesn’t request a meeting or if there are not enough counselors, the success rate may be far lower than expected.

Much Success,

Mark Elkins