Why are you foreclosing on me?

For some time now, I have been listening to people discuss the relative merits of demanding that a mortgage company produce the actual note.

When I discussed it with an attorney, I realized the problem. Nobody understands what the real argument is!   An attorney specifically said to me that a judge told him that if his client expects the court to strip the mortgage off the property and give the defendant a free house than “he is mistaken”.  This is when I discovered why this attorney, and likely yours, is having difficulty defending this position. The problem is that you do owe somebody money for your house. You must complain that don’t owe money to the company that is suing you.

When you admit that you owe money you change the nature of the argument and are now asking the bank that is suing you to prove something different than they expect. The banks and the judge start by presuming you owe them money and have at least photocopies of documents to prove it. You must then argue why you don’t owe money.  By arguing that you owe money, but not to these people in particular, they must now prove that even though they may have the mortgage paperwork, that you did, at the time they filed foreclosure owe the money to them and not someone else. They must also prove that this has not changed since the suit was filed.


Here is an example: What if Countrywide lent you the money? It is fairly common belief that Bank of America took over the assets of Countrywide and therefore it would be easy to ASSUME that you now owe bank of America. In reality, many companies bought assets from Countrywide.

What if yours is just on the list that Bank of America got but has not actually been transferred to Bank of America and instead belongs to Bank X? Bank X has decided that because of the value of your house, it is better for them to wait a few years for the market to come back before suing you. You are forced into court by BOA and must defend against their seemingly powerful position. If they win, don’t you still owe the money to Bank X? Bank X may now sue you and because they own the loan they may recover and you have no recourse against BOA because your appeal rights have expired.

The bottom line is that you must argue that you owe money but not to the bank that is suing you and you don’t know who you actually owe money!

You May Need a Lot of Help to Get the Balance on Your Mortgage Reduced

In my post on April 1, I talked about the changes to the Making Home Affordable Program the Obama Administration announced on March 26.

Principal Write-Downs on Mortgages

The change that caught the news media’s attention was the one that talked about principal write downs on mortgages.  The revision simply said mortgage companies would write down the balance of a mortgage for people facing foreclosure in those instances where the balance of the mortgage was far greater than the value of the home.

Since the start of this foreclosure crisis in our country, the value of homes has dropped.  This drop has been substantial.  I believe that the value nationwide has dropped about 20%.  In California, Florida and some other areas values may have dropped 50% or more.

Many people owe far more on their mortgages than their homes are worth.  In these situations some people facing foreclosure are not motivated to try to save their homes.  They feel that they will never be able to recover what they pay for their home.  So they walk away and let their mortgage company foreclose.

Members of congress and various consumer advocacy groups in the past saw the problem here.  They lobbied to have judges in bankruptcy cases be allowed to lower the balance of the mortgage to what the home was worth.  The lobbyists for the mortgage industry are very powerful.  Each time this proposal had been made, the lobbyists were successful in getting it defeated.

In the revisions to the Making Home Affordable Program announced March 26 the Obama Administration dealt with this.  They announced that mortgage companies would have to consider writing down the principal balance for certain people who have applied for loan modifications. This is supposed to be done if the balance owed on a mortgage is greater than 115% of the current value of the home.

Say the value of a home is $100,000.  The amount currently owed is $130,000.  The mortgage company is being urged to reduce the balance on the loan to $115,000.

The mortgage company would run a New Present Value Test.  As long as that indicated it was worthwhile to reduce the balance of the loan, the company is supposed to do so.

The mortgage company would initially put the amount to be reduced into a separate forbearance account.  As long as the person remains current on their loan payments, the mortgage company will forgive the amount reduced in 3 equal payments over 3 years.

Let’s look at our example above.  The mortgage company would reduce the amount owed by $15,000 from $130,000 to $115,000.  As long as the payments were made on time, the mortgage company would forgive $5,000 a year.  The entire $15,000 would be forgiven at the end of the third year.

As you can see, this form of principal reduction is greater than the one that members of congress and consumer advocacy groups had proposed in the past.  This covers all people facing foreclosure who applied for loan modifications not only those who filed for bankruptcy.

An Incentive for Mortgage Companies to Write Down Loan Balances

The Obama Administration is giving mortgage companies an incentive to do this.  They will pay them $.15 on the dollar for the amount that a mortgage company reduces a mortgage by if the balance is from 115% to 140% of the value of the home.  If the balance of the mortgage is greater than 140% of the value of the home, they will pay the mortgage company $.10 on the dollar for the amount reduced.

If the balance of the loan is less than 115% of the value of the home, The Obama Administration is giving the mortgage company an added incentive.  They will pay them $.21 on the dollar for the amount reduced.

Going back to our example, the loan balance of $130,000 is 130% of the value of the home ($100,000).  The amount that the balance is reduced is $15,000.  So the mortgage company would be paid $2,250 (15,000 X $.15).

Sounds great, doesn’t it.  If you are facing foreclosure and are in this position,

Don’t Get Your Hopes Up

Certain problems are going to arise.  These have not been addressed by the Obama Administration.

The first is that this is voluntary for the mortgage companies.  What happens if some elect not to do this?

The second is that there is no time limit for the mortgage companies to put this in place.  Are the mortgage companies going to delay implementing this?  Will we see the same type of delays that have plagued the Making Home Affordable Program from the start?

The third is that the mortgage company or investor will contact those people who are eligible for this.  Do you know who the investor on your mortgage is?  Not many people do.  By the way, the mortgage company to whom you are sending your monthly payments is normally not the investor.

How will your mortgage company or investor determine who actually qualifies for this? Will anyone monitor them to make sure this is done fairly?  What if some mortgage companies do this quickly and others drag their feet?

Fourth – What happens in those instances where there are two loans?  It looks like the administration assumed that most people who have a first and second loan got these through the same mortgage company.  So the balance on the second loan will be reduced first.  If the remaining balance is still over 115%, the balance on the first loan is reduced.

The guidelines indicate that a mortgage company that has to reduce the balance on a second lien to bring the total down to 115% will be paid $.06 on the dollar for the amount reduced.  This payment will only be made if the person had not made a payment on that second loan in more than 6 months.

Let’s look at the example we have been using.  The balance on both loans totals $130,000.  The balance on the first mortgage is $109,000.  The balance on the second is $21,000.  The value of the home again is $100,000.

115% of $100,000 is $115,000.  The balance on the second loan would be reduced to $6,000.  The balance of $109,000 on the first loan would remain unchanged.

If there was a different mortgage company for the second loan, they are being asked to forgive $15,000 of their loan.  For that the government may pay them $900 ($15,000X$.06).  They will get that only if the person facing foreclosure has not made a payment on that loan in the last 6 months.

So the mortgage company here can possibly get $900 at most while in those instances there is only one loan, the mortgage company there would get $2,250 regardless of when the last payment on that loan was made.

Is There Anything Wrong With This Picture?

It sure looks like the mortgage company handling the second loan is getting the shaft.  Do you think that most mortgage companies on these second loans are going to willingly participate in this program?

Current estimates are that in about 50% of the cases where people are facing foreclosure first and second loans exist.  It is not clear on how many of these two different mortgage companies are involved.  Chances are the percentage is high.

One Other Big Challenge Exists . . .

. . . for mortgage companies when it comes to reducing the principal balances on loans.  If they start doing this for people facing foreclosure, won’t the people who have made their loan payments on time and are not facing foreclosure complain?  Won’t they demand that the balance on their loans be reduced if the value on of their homes has dropped?

Many people facing foreclosure who are expecting the principal balances on their mortgages to be reduced are in for a rude awakening if it does not occur.

What steps can you take if you are in this position?

I suggest that you get in touch with your mortgage company.  Tell them that you heard about the revisions that were made at the end of March to the Making Home Affordable Program.  Let them know that you believe the balance on your mortgage is greater than 115% of what your home is worth.  Ask them what you have to do to be considered for a reduction in the balance of your mortgage.

If you have a first and second mortgage and these are handled by 2 different mortgage companies, call both companies. Explain the situation to them.  Ask them for consideration.

Expect the people you talk to tell you that they are not going to reduce the principal balances on any mortgages.  Get the name and phone number of the person to who you talk.  Make a note of what they tell you.  Then call or write your congressman and let them know your situation and what you were told.  Ask for their help.

If you are being represented by a lawyer or a housing counselor, discuss this with them.  See what they will do.

By the way here is another reason I recommend that anyone facing foreclosure get a lawyer or counselor to represent them.  Anyone who represents themselves most likely not won’t follow through on things like this.  In the long run they will lose out because they did not.

Always remember that your mortgage company does not have your best interests at heart.  Make sure that you know as much about the foreclosure process and the steps you can take to save your home as you can.  My EBook has quite a bit of information which I believe that you would find very helpful.  Please check it out.  You can get more information on it by clicking Stop Foreclosure.

Much Success,

Mark Elkins

Foreclosure – Renters Have Rights

Let’s say that you have been renting a home for the last 3 years.  You have always paid your rent on time.  Today you come home and get your mail.  In it there is a letter from a mortgage company.  You open it and it says

This letter constitutes formal and final demand that you vacate the premises within five days of the date this letter is delivered.

You would be shocked, wouldn’t you?  You might break down and cry.  You might have to sit down because you fear that you are going to pass out.

Some people renting homes, like you, have had this happen to them.  The owner of the home fell behind on their mortgage payments.  The mortgage company foreclosed and wanted the renter out.

Can a mortgage company evict a renter on such short notice?  In most instances the answer is no.  In May of 2009 congress passed the

Protecting Tenants at Foreclosure Act

This law says that if the homes where they live have been foreclosed, tenants have the right to remain in them for 90 days or until the end of the lease that they signed with the landlord.  There are two provisions a tenant needs to meet to qualify for this

The tenant has to have been renting the home for awhile.  If they moved in recently, they are not entitled to remain for 90 days or until the end of their lease.

The tenant has had to have paid their rent on time.

In those instances where a person has lived in the home for awhile on a month to month basis and does not have a lease, they can remain for 90 days following the foreclosure.

Why Would a Mortgage Company Try To Evict a Renter Early?

They will try to get away with it because they don’t want to be a landlord.

They are worried that the renter might call them any time of day or night when they have a problem.  The stove, air conditioner or furnace is not working.  It will be difficult for the mortgage company to get these fixed quickly especially in those areas where they have taken over very few homes like this.

They normally they don’t collect rents.  They have nothing in place to do this properly.

They would like to sell the home as quickly as possible.  With a renter living there, it will take them longer to sell.

It is to their advantage to try to have the renter move as soon as possible.  That removes all of these potential problems.

What do you do if you get a notice like this?  Call the mortgage company and let them know about the notice you have received and believe that it is in error.  Tell them how long you have lived in your home and when your most recent lease expires.  If you don’t have a lease and have been on a month to month basis, let them know that.  Tell them that under the Protecting Tenants at Foreclosure Act you understand that you have the right to stay for 90 days or until your lease expires.

I also recommend that you contact a local attorney if you can afford it.  If you can’t, contact a local consumer advocacy group.  Let them know about the notice you have received and ask for their help.  I suggest that you do this even if the mortgage company told you that the letter was sent in error.

Act quickly on this.  You don’t want the sheriff showing up at your home on the date indicated in the letter and telling you that they have to evict you.

If you are not a renter but a homeowner facing foreclosure, I encourage you to take the steps necessary to do all you can to save your home.  I recommend two things.  First, get a lawyer or a housing counselor from a local non-profit agency in your area to represent you.  Second, learn all you can about the foreclosure process and what you can do to save your home.  There is much information available on this.  It is not complex and you don’t have to have a legal mind to understand it.  I offer an EBook with much information on this.  If you want to learn more about my EBook, please click Stop Foreclosure.

Much Success,

Mark Elkins

Foreclosure – Renters Have Rights

Let’s say that you have been renting a home for the last 3 years.  You have always paid your rent on time.  Today you come home and get your mail.  In it there is a letter from a mortgage company.  You open it and it says

This letter constitutes formal and final demand that you vacate the

premises within five days of the date this letter is delivered.

You would be shocked, wouldn’t you?  You might break down and cry.  You might have to sit down because you fear that you are going to pass out.

Some people renting homes, like you, have had this happen to them.  The owner of the home fell behind on their mortgage payments.  The mortgage company foreclosed and wanted the renter out.

Can a mortgage company evict a renter on such short notice?  In most instances the answer is no.  In May of 2009 congress passed the

Protecting Tenants at Foreclosure Act

This law says that if the homes where they live have been foreclosed, tenants have the right to remain in them for 90 days or until the end of the lease that they signed with the landlord.  There are two provisions a tenant needs to meet to qualify for this

The tenant has to have been renting the home for awhile.  If they moved in recently, they are not entitled to remain for 90 days or until the end of their lease.

The tenant has had to have paid their rent on time.

In those instances where a person has lived in the home for awhile on a month to month basis and does not have a lease, they can remain for 90 days following the foreclosure.

Why Would a Mortgage Company Try To Evict a Renter Early?

They will try to get away with it because they don’t want to be a landlord.

They are worried that the renter might call them any time of day or night when they have a problem.  The stove, air conditioner or furnace is not working.  It will be difficult for the mortgage company to get these fixed quickly especially in those areas where they have taken over very few homes like this.

They normally they don’t collect rents.  They have nothing in place to do this properly.

They would like to sell the home as quickly as possible.  With a renter living there, it will take them longer to sell.

It is to their advantage to try to have the renter move as soon as possible.  That removes all of these potential problems.

What do you do if you get a notice like this?  Call the mortgage company and let them know about the notice you have received and believe that it is in error.  Tell them how long you have lived in your home and when your most recent lease expires.  If you don’t have a lease and have been on a month to month basis, let them know that.  Tell them that under the Protecting Tenants at Foreclosure Act you understand that you have the right to stay for 90 days or until your lease expires.

I also recommend that you contact a local attorney if you can afford it.  If you can’t, contact a local consumer advocacy group.  Let them know about the notice you have received and ask for their help.  I suggest that you do this even if the mortgage company told you that the letter was sent in error.

Act quickly on this.  You don’t want the sheriff showing up at your home on the date indicated in the letter and telling you that they have to evict you.

If you are not a renter but a homeowner facing foreclosure, I encourage you to take the steps necessary to do all you can to save your home.  I recommend two things.  First, get a lawyer or a housing counselor from a local non-profit agency in your area to represent you.  Second, learn all you can about the foreclosure process and what you can do to save your home.  There is much information available on this.  It is not complex and you don’t have to have a legal mind to understand it.  I offer an EBook with much information on this.  If you want to learn more about my EBook, please click Stop Foreclosure.

Much Success,

Mark Elkins

Ask, and ye shall receive!

Do you remember hearing that there’s no such thing as a stupid question? That’s not exactly true. The stupid question is the one that doesn’t get asked! This is never been more true than it is with regards to your mortgage

If you are having an issue with your mortgage company whether you are in foreclosure or you’re just behind on your payments, there’s a valuable tool available to you provided for by federal law. This is known as a “qualified request” for information. I said in my book that I think sometimes the bank is just foreclosing out of tradition and not because they actually have the right to do it. This is your opportunity to find out.

The law provides that if you write a “qualified request” to the mortgage company, they must respond in a specified period of time. If they fail to respond in that specified period of time, they are subject to penalties. In your qualified request, you can ask all the things that you ever wanted to know about your mortgage. Things you might want to know are, who owns the mortgage, who owns the note, how much do I owe, what is my interest rate, what is the pay off figure for my loan, are there any fees and charges applied to my loan, and any other thing that you could think that you want to ask about your loan. This is your opportunity to do it.

Once you have this information, you be in a better position to decide what to do with it. Certainly knowing these things will be useful in a negotiation for modification, defending a lawsuit for foreclosure or simply assessing your situation.

You’ll never believe what happened to me when I wrote a “qualified request” recently to a bank, with whom I was negotiating. Two weeks after they got my letter they sent me a letter back that effectively said, “we don’t know who you are or why you think you have a loan with us”! It also said, “all of our loans have been sold and are now owned by someone else”.

The significance of this is that the mortgage company that wrote the letter cannot now foreclose. In the lawsuit a bank files for foreclosure, they state up front who they are and why they’re allowed to sue. They will state that they are a bank and that they lent you money, which you didn’t pay, so now they’re entitled to sue you to get the money. This means that somebody handed the lawyers a case with instructions to sue, the lawyers wrote the standard suit and followed the banks instructions. Unfortunately for the lawyers, the bank says that the borrower in this case doesn’t owe them the money. If the borrower doesn’t owe them money, there can be no foreclosure.

Many of these banks were in such a hurry to get your money by making loans, they didn’t pay attention to the small things. In this case, a small thing would have secured their rights and they didn’t do it!

How did I find out this information that stops the foreclosure in its tracks? I asked for it in a “qualified request” for information. Don’t let the small things slip past you! Read my book. You’ll learn how to find them and make them work to your advantage.

Go get ‘em!

Mark