Stop Foreclosure Answer

Here is another story about a guy right here in my area who tries to do everything he can to save his homes and gets zapped by his mortgage companies.

His story starts 3 years ago when he gets a promotion and moves from Chicago to Wisconsin. Great so far. A new job – one that he really likes and his future looks great.
His family is excited for him.

He has a home in Chicago. Because he needs to move to Wisconsin quickly, he doesn’t have time to sell his home. He buys a new home in Wisconsin. Because he does not have money for a down payment, his company arranges for him to get almost 100% financing. He gets an 80% first mortgage and a Home Equity loan for the balance. Both of these are with Wells Fargo.

Some time prior to getting the new job he got an interest only loan on his home in Chicago through Ohio Savings. Later, they became Amtrust.

He puts his home in Chicago up for sale. He expects to sell it quickly. However, the real estate market in the area around his home suddenly starts to deteriorate. He can’t sell it. He has one offer on it. That is in the summer of 2008. The sale falls apart when the appraised value comes in over $100,000 lower than the sale price.

In the meantime, he is doing all he can to make the payments on all 3 mortgages he has each and every month. He exhausts all of his savings. The he cashes out his 401K plan. Then he takes advances on all of his credit cards. In early 209 he is at a point of no return. He has no savings, his credit cards are maxed out and he learns that this year because of the downturn in the economy his bonus from his work will be nowhere near what it had been in prior years

In January he contacts both Wells Fargo and Amtrust and asks about a loan modification. Things look promising. Both companies send him applications. He completes them and sends them in.

Then the problems start. He follows up with Amtrust. One of their representatives tells him that they have no record of receiving his application. So he has to submit a new one. He follows up with Wells Fargo and is told that his application is being considered.

Months go by and he calls both Amtrust and Wells Fargo regularly. They lead him to believe that they are working on the application. In April he can no longer make the payments on all of the mortgages. So he does not make the payment on the Amtrust mortgage.

Everything comes to a head in May.

In a phone conversation with Wells Fargo he is told that he does not qualify for a loan modification on their mortgages. They cannot explain why he does not qualify for one. Their representative tells him that for $5,000 they can refinance his existing mortgages. The challenge is that he does not have the $5,000.

He follows up with Amtrust. He is told that the representative to whom he spoke several weeks earlier has closed his case. Their determination was that his property be sold as a short sale. No reason was given for this. He also was never notified of this by Amtrust.

The strange thing about his case is that he should have qualified for a modification on his loans through Wells Fargo. They had no reason to offer him a refinance other than to try to make additional money on his case.

While the Chicago property was no longer his primary residence but rather a second home, Amtrust should have discussed a loan modification with him.

In late May he contacted a lawyer for representation.

Here is a man who did all he could on his own to get a loan modification. Neither Amtrust nor Wells Fargo seemed to know what they were doing. He first inquired about a solution to his situation in January when he was still making his mortgage payments on time.

He didn’t fall behind on his mortgage payments until April when he couldn’t make the payment to Amtrust. At that point his credit rating took a hit. When you think about it, that was uncalled for. Both Amtrust and Wells Fargo should have done something on his case in the months before that.

This is one of the reasons I encourage you to get help from a lawyer or an expert in loan modifications as soon as you can. They know how to work with the mortgage companies. They know what to expect from each company. They can guide you accordingly.

Much Success,

Mark Elkins

In July I told you about a community that was rallying behind a Tennessee grandmother who was in the midst of foreclosure. Wells Fargo, her mortgage company, was finalizing the foreclosure on her home.

Her home had been scheduled to be auctioned off at the end of May. The auction was rescheduled for June 26. Her story became known in her community. The people there jumped in to help her. A local church scheduled a car wash to raise cash for her. A local mortgage company took on her case and was trying to get her a reverse mortgage.

Well, the story has a happy outcome. Lorraine Zickefoose, the 72 year old grandmother, has been able to save her home. She got the reverse mortgage and was able to pay off the Wells Fargo mortgage.

She closed on the reverse mortgage on Monday, June 8. Her church raised thousands of dollars through the car wash and collected donations. She used the $106,173 that came from the reverse mortgage and from the church to pay the Wells Fargo mortgage off. That was almost $30,000 short of what Wells Fargo was owed on the mortgage. They wrote off the difference.

This lady had been trying to work out a solution with Wells Fargo for 8 months. She qualified for the reverse mortgage last fall but it was not enough to cover what Wells Fargo was owed on their mortgage. They would not accept it. After months of phone calls and emails from her mortgage company plus the community rallying to support her and the negative publicity they received, Wells Fargo finally gave in.

In my original post on this, I wondered why Wells Fargo took such a hard line on this case. You know – I still do. Why did this case have to reach the point it did before Wells Fargo agreed to settle? Why did the community have to get involved?

Some may say that Wells Fargo did what they did because they didn’t want to lose $30,000. Let’s look at that more closely. If they had foreclosed, they would have had to sell Ms. Zickefoose’s home and probably would have lost much more.

So Ms. Zickefoose keeps her home and Wells Fargo has another black mark against it. It seems that in many of the stories I have read about recently where people suffering from extreme hardship were facing foreclosure, their mortgage company was Wells Fargo. Wells Fargo’s reputation has really gone downhill in this foreclosure crisis. Over and over again the company has looked like the villain.

If you are facing foreclosure and want to save your home, be prepared for what may be a very long battle. Don’t get discouraged. Also I recommend that you get help from a lawyer or an expert in loan modifications. They will help you avoid unnecessary work. You will also have someone guiding you each step in the process.

Much Success,

Mark Elkins

From 2000 to 2005 when the real estate market was booming there were a group of investors who were willing to invest their money in riskier real estate deals.  They would typically loan money on a shorter term basis to people who wanted to buy property and who could not get loans through regular lenders. 

Many of these were 100% loans on properties to be rehabbed.  The loans were typically for 6 months to a year.  The interest rate charged was between 1 and 2% a month.  The payments were interest only.  The objective of the person getting one of these loans to buy and rehab a property was to have the rehab work done as quickly as possible so that they could either sell the property or refinance into a regular mortgage.

Because of the higher interest rates, these were called Hard Money loans.  The investors who put up their money for these loans were a very special group of people.  They were willing to take on a lot of risk for a very high rate of return.

With the downturn of the housing market since 2007, the need for these Hard Money Loans has dried up.  The investors who specialized in them no longer can get the type of return on their money that they had been.  Some have now turned to investing in mortgages to help people avoid foreclosure.

They focus on loaning their money to people facing foreclosure who can’t get help any other way.  Frequently they will put up the money the person facing foreclosure needs to do a short refinance.  A short refinance is where the original lender agrees to take less money to pay off their mortgage than the person owes on it.

A Lender will accept less than the person owes for several reasons.  The primary one is that the value of the home has dropped and is now lower than the outstanding balance on the mortgage.  A second reason is that the person facing foreclosure will never be able to catch up on their payments.  If the lender does not accept the lower amount, foreclosure will occur.  The lender will have to sell the home.  They will get less for it than they would on a short refinance.

Hard Money Lenders sometimes are willing to offer the people facing foreclosure interest rates as low as 3 to 4% on these short refinances.  Typically they will sell these loans to regular lenders once the person facing foreclosure has shown that they are able to consistently make their new monthly payments on a regular basis.

Why would these investors accept a return of 3 to 4% when in the past they made 1 to 2% a month?  They are getting a greater return on their money than they would if they had invested it elsewhere.  Money invested in the stock market is not paying that much.  Money Market accounts and certificates of deposits are not.  Many mutual funds have continued to lose money.   So these investors are making more on their money than they would elsewhere.

If you are facing foreclosure and you have run out of options in how to save your home, you may want to check to see if you can get one of these investment groups to loan you the money for a short refinance.

Much Success,

Mark Elkins