Stop Foreclosure Answer

At a conference of the Mortgage Bankers Association in October mortgage companies started to warn that the results of loan modifications in the Making Home Affordable Modification Program may not be as good as expected. 

As of the end of September trial loan modifications had started on 500,000 loans.  These trial modifications last for 3 months.  If the people make their monthly payments timely during that period, they are supposed to be offered permanent modifications.  Representatives from many of the mortgage companies were saying that many of the people in these trial modification periods would not be offered permanent modifications because they have not submitted or are not submitting the required documents. A spokesman for one company said that ninety-nine percent of the modification packages returned to them are missing required information or have errors in them.

Treasury Department Reports May Reflect Badly on Mortgage Industry

The three month trial modification periods are starting to end for those people given these in July and August.  If a very low percentage of these are given permanent modifications, then the mortgage companies will look bad.  The Treasury Department will start to reflect the number of permanent modifications being offered in their monthly report in November. 

While the mortgage companies have been warning that the results may not be as good as expected, they have also asked the Treasury Department to loosen the guidelines for the Making Home Affordable Modification Program.  Fannie Mae has reduced the number of signed documents required to two and has given an extension of two months to certain people facing foreclosure to send in documents that are required during their trial modification period.

Mortgage Companies Continue to Shift the Blame

I hear about stuff like this and it makes my blood boil.  Ever since this Making Home Affordable Modification Program started, mortgage companies have been claiming that they are trying to help people facing foreclosure.  However, many are not doing what the companies have asked them to do. The companies have also said that many times they try to contact these people and get no response.

Articles and News Reports Do Not Support This Argument

Since the start of the program people facing foreclosure have complained that they have been unable to talk to a live person at their mortgage company about their loans.  Many have ended up in voice mail limbo or have been placed on hold for long periods of time and no one has ever picked up the call.

Others have said that they have had to submit the documents several different times to their mortgage companies because their mortgage companies have repeatedly lost what they sent in.

The One Overriding Question

Most of the people who have received a trial modification to their mortgage have had to do much to get these.  Some have had to fight for them.  Does it make any sense that people who have fought to get a trial modification will fail to submit any document that they are requested to so that their modification can be converted from a trial to a permanent one? 

I am sure that you will concur with me that the answer to that questions is no.   Who in their right mind would fail to do so?

If needed documents are not being submitted, I would venture to guess that the reason is simple.  The mortgage companies are not asking the people facing foreclosure for them.  When they do ask for them, their request is probably at the last minute and is delayed.

The Treasury Department, Fannie Mae and Freddie Mac need to do an investigation here to get to the root of the problem.  If it is the mortgage companies, as I suspect, they need to be penalized for their lack of action.

If you are facing foreclosure and are in a trial modification period, what do you do?  Make sure to submit everything your mortgage company asks for on a timely basis.  Make notes of what they requested and keep copies of what you send to them.  Also note the date you sent it.

If you have not heard from your mortgage company, call them and ask them what they require from you so that your modification can be converted from a trial to a permanent one.

If you are not represented by a lawyer or an expert in loan modifications I again urge you to get representation.  Get as much knowledge of the foreclosure process and steps you can take to save your home as you can.  I have a lot of information in my EBook on this.  You can find out more about it by clicking Stop Foreclosure.

Much Success,

Mark Elkins

In a recent post I told you about the spin Bank of America is putting on their performance in the Making Home Affordable Modification Program.  If you have not read that, please go and read it now before you read this post.  You will see what I am talking about.

In the press release I mentioned in that post, Bank of America said that their employees were working hard to help as many people facing foreclosure as possible save their homes.

Oh Yeah? Is That What They Did With This Couple?

Michael and Tamara Florea own a home in southwestern Ohio.  Their mortgage was with Countrywide. 

The attorney general of Ohio filed suit against Countrywide alleging that Countrywide knowingly loaned money to people in Ohio under false pretenses.  On these mortgages Countrywide knew that the payments were unrealistically high and there was no way the people could make them.  In December of 2008 Countrywide settled the suit and agreed to modify the loans of each of these people.

The Floreas had one of these mortgages.  In January of 2009 Countrywide offered the Floreas a loan modification.  In this modification the payment was reduced from $924 to $584 a month.   Michael and Tamara signed the modification agreement on January 10, 2009 and sent it back to Countrywide via Federal Express.

Every month after that the Floreas paid the $584 as agreed to in the modification.

Later in January Bank of America finalized its takeover of Countrywide.  At that point it became legally obligated to honor the loan modifications agreed to by Countrywide.

The Shock in June

So in June they were floored when they got a letter from Bank of America indicating that their monthly payment was $924.  It also indicated that there was a past due balance of $11,083. 

Tamara called Bank of America several times to clarify what happened.  Each time she spoke with different representatives who told her that their loan modification was being processed.  In a phone conversation in late July Tamara was told that Bank of America would start foreclosure proceedings against them if they didn’t pay what they owed and resume making their monthly payments of $924.

On August 24 Tamara tried to make a payment by phone.  It was refused.  The Bank of America representative with whom she spoke informed her that she and her husband were delinquent in their payments and because of that a hold had been placed on their account.  Several others with whom she spoke told her that her loan modification had not been processed because the income information was inconsistent.

Here’s the Kicker

Afterwards the Floreas discovered that Bank of America had been reporting negative information about them to the credit bureaus since at least March.  That had lowered their credit scores.

The Law Suit Against Bank of America

The Floreas have filed a law suit against Bank of America.  They want the court to order Bank of America to honor the modification agreement they signed with Countrywide and to prohibit them from filing a foreclosure action.

On Tuesday, October 6, they had their first victory.  In a phone conference Bank of America agreed to a court order barring it from filing foreclosure while the case is pending.

I am sure you would agree that Bank of America has zapped the Floreas. 

• How could they renege on the loan modification Countrywide sent out that the Floreas signed off on?
• How could they say that the Floreas owed them $11,083?
• How could they file foreclosure against the Floreas?
• How could they zap the Floreas’ credit scores?

A company that truly wanted to help their customers facing foreclosure save their homes would never do this.  Bank of America should be penalized for their actions here.

If you are facing foreclosure, don’t believe that your mortgage company is going to help you save your home.  Don’t trust them until they prove to you that they are worthy of your trust.  If your mortgage company is Bank of America, get legal assistance immediately.  You can’t afford to have them do to you what they did to the Floreas.

If you want to find out more about the foreclosure process and steps you can take to save your home from foreclosure, you might want to get my EBook.  You can find out more about it by clicking Stop Foreclosure.

Much Success,

Mark Elkins

Historically when mortgage companies have reduced monthly payments in loan modifications to help people facing foreclosure save their homes, they have done it by either reducing the interest rate or extending the remaining period of time over which the mortgage was to be repaid. Several times congress has sought to change the law and give judges in bankruptcy cases the power to reduce the outstanding principal balance on mortgage.  By doing that the mortgage company would have to lower the monthly payment.

The mortgage companies have fiercely resisted this.  The industry’s lobbyists in Washington have been so powerful that they have been able to get congress to defeat this change any time it has been proposed.  

Principal Balances Reduced on 10% of Loans Modified

So it was surprising to see in the Mortgage Metrics report released by the government in September that in the second quarter of 2009 the mortgage companies reduced the principal balances on 10% of the loans they modified.  The Wall Street Journal picked up and reported this in an article in early October.  What the Wall Street Journal failed to realize and report was

Where The Principal Balances Were Reduced.

A closer look at the report revealed that the mortgage companies lowered the principal balances on 30.5% of the mortgages modified that were in their own Portfolio.  These were mortgages where they put up the money out of their own funds.  These were not mortgages that they sold to other investors and were still servicing.  On the loans that they sold to other investors and  that the mortgage companies modified they did not reduce the principal balance on any.

From my outsider’s observer’s perspective it looks like the mortgage companies reduced the principal on these mortgages to try to make sure that they would reduce the number of foreclosures on loans in their own Portfolio.  They didn’t care about the mortgages that they had sold to other investors.

What Does This Mean For You?

If you are facing foreclosure and have applied for a loan modification, your mortgage company may lower the principal balance on your mortgage to lower your monthly payment if they have kept your loan in their own Portfolio.  How can you tell if yours is in their Portfolio?  The only way would be by calling them?  If your loan was sold to Fannie Mae or Freddie Mac or if you have an FHA or VA loan, it would not be in their Portfolio.

If you have a lawyer or expert in loan modifications helping you, they can find out who the investor on your loan is.  If in a loan modification that your mortgage company offers you, you find that they are lowering your principal balance, consider yourself fortunate.  You are one of the very few who has gotten this concession.

Remember – you should take control of the process to get a loan modification.  If you hire a lawyer or an expert in loan modification to represent you, they are working for you.  You should strive to know as much about the process or more.  My EBook has much information which you might find useful.  You can find out more about it by clicking Stop Foreclosure.

Much Success,

Mark Elkins

Foreclosures are having a disastrous impact on our large cities.  Many of us have heard how they have decimated Detroit.  Yet it is hard to picture how bad the problem is by just reading about it and not actually seeing firsthand what is happening.

When the problem strikes closer to home, then we can really see how devastating foreclosures are.  We really begin to understand that foreclosures impact not only those who have had to vacate their homes but also those who continue to live in the area, adjacent neighborhoods and the city itself.

I live in a suburb of Chicago.  I have seen how in different areas of Chicago where there are quite a few foreclosures

Everyone Loses

Let me tell you what has happened in Chicago.

• 1/3 of the single family homes foreclosed on in the last 3 years were unsold at the end of 2008.
• The people who continued to live in the areas where these homes are have had to deal with boarded up and unsafe homes.
• Those homes that do sell sell for 30% less than what was owed on their mortgages.  The investors who put up the money for these mortgages took a big loss.
• People who continue to live in areas with a large number of foreclosed homes have found that they cannot afford to move.  The values of their own homes have dropped so much because of the foreclosures in their area that they cannot get enough for them.
• Neighbors try to band together, pick up garbage and keep the areas around these homes presentable.  Frequently it’s a losing battle.
• Many of the foreclosed homes that do sell are bought by investors.  Rather than repairing and renting them the investors keep them boarded up.  They plan to hang onto them only until the real estate market comes back and sell them at that point.
• People looking to buy a home avoid looking at homes for sale in these neighborhoods because they fear what may happen to them.

It Just Does Not Make Sense.

We now have blighted areas which will remain that way for years to come.  Everyone has lost.  The homeowner who was foreclosed, the investor on the mortgage, the people still living in the neighborhood, the adjacent neighborhoods and the city itself.

I wonder how many of the mortgage companies really tried to help the original owners save their homes from foreclosure.  Wouldn’t helping them do this have been better than what has happened? 

It’s unfortunate but the mortgage companies will never be held accountable for the problems they have helped create.

If you are facing foreclosure, my heart aches for you.  I know the struggle you will have trying to save your home.  I want you to know that saving your home is worth it.  Your family will appreciate it.  Your neighbors will appreciate it.  Your city or town will appreciate it.

Don’t try to do all the work yourself.  You will get both frustrated and discouraged.  Get help as quickly as you can.  Hire a lawyer or an expert in loan modification.  Also learn as much as you can about the steps you can take to save your home.  You might want to check out my EBook.  You can find more about it by clicking Stop Foreclosure.

Much Success,

Mark Elkins

It never ceases to amaze me.

Here we are in the second year of this foreclosure crisis. We have heard these horror stories of how people who are facing foreclosure have been taken advantage of by their mortgage companies. They have filed applications for loan modifications. Their mortgage companies take forever to review them. The companies lose paperwork over and over again. The only way some get their mortgage companies to act is by letting the public know what has happened. They have had to let the public know how they have been victimized by their mortgage companies before these companies act. Then they agree to modify their loans at the last minute right before the auction of the property is to take place.

Yet most people persist in trying to work with their mortgage company themselves. They deal with them directly. They submit their applications on their own. Then they follow up. For some reason they think that they will be treated differently. Their mortgage company will take care of them.

There Is No Reason for Them to Believe This

It is just false hope.

Some may believe that they are not worthy of being helped. They feel that they have screwed up and there is no reason they should be allowed to keep their homes.

That is Pure Hogwash

Everyone facing foreclosure is entitled to help to save their homes. Since they are not experts in the foreclosure process and do not know the best way to get a loan modification, they need help from people who know the process. They need help from people who know what they are doing. That is either a lawyer or an expert in loan modifications.

I have seen and heard of far too many cases where people wait too long to get this help.

If you are facing foreclosure, please, let me say that again, please don’t represent yourself. Your family deserves better. Find a lawyer or an expert in loan modification to help you. Check with your local county Bar Association for the names of lawyers who specialize in foreclosures. To find an expert in loan modifications click on this link, http://www.hud.gov/offices/hsg/sfh/hcc/fc/. That will take you to the HUD website and you can find an agency and a counselor in your area.

If you want more information on the process and what you can do to avoid foreclosure, check out my EBook at Stop Foreclosure.

Much Success,

Mark Elkins