Legal Loan Relief
California Homeowners Can Stop Foreclosure with Loan Modifications, Forensic Loan Audits and Negotiated Mortgage Loan Modification Terms.

31 Mar 09 Mortgage Relief Comment from Wells Fargo Post

Low and behold, I was astounded to see today that Wells Fargo made a comment about mortgage relief and loan modification qualifications in a blog post. I was shocked not because Wells Fargo was associated with a loan workout, but because it is not their public relations style to comment on a blog about their specific role in the foreclosure prevention arena. Wells Fargo has extended thousands of mortgage modification plans to homeowners over the last few years and I really think that the media and homeowners have given them a “bum rap” that is not warranted.

Let’s not forget that Wells Fargo never offered 2-year adjustable mortgages and high risk option ARM’s with the 1% teaser rates that Chase, WAMU, IndyMac, Countrywide, World Savings and pretty much every other subprime mortgage company offered a years back.

Here is the unsubstantiated comment: “Knowing that it would probably be unlikely that Wells Fargo could comment publicly on the mortgage issues facing the Kropkowski family, I still asked the company for a response early Monday. This came in Monday night, just after my column deadline:

“During a time of financial hardship, various workout options are explored and may be available to customers.  If a homeowner can’t demonstrate financial ability to afford a loan modification under the investor guidelines, Wells Fargo is unable to extend a loan modification.  Due to customer confidentiality and other privacy considerations, Wells Fargo cannot share specific customer loan information beyond what the customer has chosen to make public.” Debora Blume, in the Communications Dept. of Wells Fargo Home Mortgage. Original Blog Post >

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15 Mar 09 Loan Modifications in California

Foreclosure activity in San Diego, California dropped by nearly 12% from last month, as mortgage lenders cut back on repossessing dwellings in anticipation of President Barack Obama’s plan to help distressed homeowners. MDA DataQuick, a research firm located in San Diego reported recently that there were 1,107 foreclosures last month, a 15% drop from a year earlier. It was the first year-over-year decline in foreclosures since March 2005.

There were 2,808 notices of default in the county last month, a drop of 8% from the previous month and nearly 10% from January 2008. Such notices mark the start of the foreclosure process. Mortgage lenders are hoping that Obama’s $75 billion foreclosure-prevention program will help them avoid the expense of taking back homes and reselling them at reduced prices during the housing slump. Many San Diego homeowners have missed mortgage loan payments for several months without receiving default notices, analysts say. When mortgage lenders reclaim numerous defaulted homes, they place downward pressure on property values and reduce their own profits from foreclosure re-sales.

The Federal Government continues to put pressure on lenders to provide harder to keep people in their homes has been building since before the November election. I think we are going to see February numbers artificially low and we will see how the nation responds as the foreclosure-prevention proposals kick in March.” DataQuick analyst Andrew LePage said many home loan lenders will likely delay foreclosures even without the Obama plan, because finding alternatives to default is in their own best interest.

Federally controlled mortgage giants Fannie Mae and Freddie Mac and major banks JPMorgan Chase, Citigroup, Morgan Stanley and Bank of America are delaying foreclosures through March 6, Sharga said. Obama’s foreclosure program got under way March 4th, but little progress has been made. Fannie Mae and Freddie Mac had suspended foreclosure sales during the winter holidays and stopped evictions from foreclosed properties through the end of this month. Together, they own or guarantee about half of all U.S. home loans. Many California homeowners have jumbo mortgage loans that exceed the loan amount limit that is targeted for relief with mortgage modification programs and mortgage refinancing for borrowers up to 105% loan to value.

According to RealtyTrac, increased efforts to loan workouts and foreclosure prevention haven’t kept pace with the deepening housing market decline. Nationally, more than 2.3 million homeowners faced foreclosure proceedings in 2008, up more than 80% from 2007, Distressed borrower Brendan Klein, 33, of San Marcos is skeptical of federal stimulus efforts. “Politicians are running around saying, ‘We are going to set this up for people in trouble,’ but none of it is happening,” Klein said. Klein, a skateboard shop manager, is trying to negotiate a loan modification to avoid foreclosure on a two-bedroom condominium he shares with his wife and 1-year-old son. Klein said he took out a risky stated-income loan to buy the home in 2004. Now that his home loan payments have adjusted higher, his budget is stretched to the limit. Unfortunately, he has been unable refinance because the home is worth $150,000 less than he paid. Klein said he doesn’t want to walk away from his debt, but he has cut back spending as far as he can. “I don’t have a gambling debt,” he said. Critics say such borrowers may receive little help from the $75 billion foreclosure-prevention program.

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17 Feb 09 20% Northern California Home Mortgages Underwater

A huge percentage of Northern California homeowners suddenly owe more on their home mortgage loans than their homes are actually worth.  A recent mortgage relief report indicated just how quickly and far house values have tanked in, Silicon Valley. Mortgage industry groupies call this “underwater.” That is when you owe more on the total home mortgages than the home’s current fair market value. In a recent article, mortgage financing expert, Jason Cardiff said, “The homeowners that can afford their mortgage need to look forward and avoid getting caught up in the home devaluation crisis of 2009.” Cardiff continued, “California home values will rebound in a few years once the housing market receives the measure it needs for correction.” “California is still the greatest place to live on the planet and that why West coast homeowners need to stick it out if they can afford their mortgage.”

This new housing report shows that 20% of homeowners in Silicon Valley owe an outstanding mortgage balance that is greater than their property value. According to real estate news company, during the 4th quarter of 2008, nearly 20% of homeowners in the San Jose metro area were experiencing “negative home equity.” Home values vary greatly in some Santa Clara County neighborhoods. This is the most significant decline in over a decade. Many home financing evaluators are predicting that mortgage modifications will reduce foreclosures in 2009.

When people are concerned about their income and savings disappearing, fewer will purchase homes despite low mortgage interest rates and falling prices. It is a difficult time for homeowners with these drops in values, but most real estate experts believe that home values will rebound eventually. Until then, FHA continues to extend a great opportunity for 1st-time homebuyers previously priced out of the market. Low interest rates along with lower home prices, especially foreclosure properties, are encouraging more new home buyers.

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11 Feb 09 Fed Agrees to Purchase Bad Credit Securities and Keeps Key Interest Rates Near Zero

Federal Reserve committed to buy bad credit mortgage securities and treasuries if deemed effective; Fed believes that mortgage interest rates to remain low for “some time”. The Fed is committed to mortgage relief expansion that includes the purchase of housing debt and bad mortgages.

Watch the Mortgage Relief and Financing Analysis by Richard Dekaser of National City Bank.

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11 Feb 09 20% Silicon Valley Homes Have Negative Equity

A report out Tuesday morning gives a fresh look at just how quickly and far home values have plunged in Silicon Valley. A huge percentage of South Bay homeowners now owe more on their mortgage loans than their homes are worth. It is called “underwater.” That is when you owe more on the home mortgage than the home’s market value. This new report shows that 1 out of 5 homeowners in Silicon Valley is in this situation. The reason is a great decline in the prices of these homes.

According to real estate valuation company, during the fourth quarter of 2008, nearly 20% of homeowners in the San Jose metro are upside down with “negative equity.” Property values range significantly in Northern California neighborhoods. In Gilroy, for example, the median home value dropped 38%. Los Altos declined only 5.4%. But, in Palo Alto, the only city to post an increase, median home values jumped about 5%. This one of the major reasons that California loan modification plans have become so popular with local residents.

Overall the value of homes in the San Jose metropolitan area fell just over 17% in the final three months of 2008, compared with the same period in 2007. This is the steepest drop in more than a decade. Because of the economic downturn the effects of growing insecurity really started to show during the last October-to-December period.

When people are worried about losing their jobs and their stock market investments crumbling, fewer will buy homes despite low mortgage rates and falling prices. It is a tough time for homeowners with these drops in values, but they will eventually rise again. In the meantime, this is a great opportunity for first-time homebuyers previously priced out of the market. Low mortgage interest rates along with lower home prices, especially foreclosure properties, are encouraging more buyers.

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03 Feb 09 Home Loan Defaults and the State of California Housing

A law that requires mortgage lenders to discuss ways to avoid foreclosure with California borrowers before filing a default notice went into effect in September. Defaults plunged to 14,995 that month, and were back up to 39,993 in December. `No one expected defaults to stay at the much lower levels we saw immediately after the new law took effect,” MDA DataQuick President John Walsh said in a statement.

In a recent report, MDA DataQuick said that California home loan defaults declined 7.7 % in the 4th quarter after the state enacted a law to delay home foreclosures. California homeowners received 75,230 default notices in the fourth quarter, down from 81,550 a year earlier. 4th quarter defaults dropped 20% from the previous three months, according to DataQuick. Kelly Media Group President, Jason Cardiff commented, “When homeowners are waiting to modify their home loan, most mortgage lenders don’t report loan defaults even if the borrower is behind six months.” Cardiff continued, this means “We need to be extremely cautious when considering foreclosure data and housing reports.” See the complete California real estate article> Southern California Home Sales up 50% but Most Are Foreclosures.

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05 Jan 09 Rates Drop and More Lenders Offer Mortgage Relief

Mortgage interest rates have dropped dramatically ever since the Federal Reserve unveiled a plan last month to buy up to $500 billion of mortgage securities backed by government-sponsored enterprises, Fannie Mae and Freddie Mac. The program also entails buying up to $100 billion of debt issued by Fannie Mae, Freddie Mac and the Federal Home Loan Banks. The Fed cutting rates benefits home refinancing and mortgage relief and foreclosure prevention alternatives.

Direct Mail Marketing Company, Kelly Media Group president, Jason Cardiff said in a statement yesterday, “Conversion rates for mail pieces targeting troubled homeowners with loan modification offers have received phenomenal double digit numbers.” Cardiff continued, “We have not seen mail to call ratios in the mortgage business since the 125 second mortgage boom in the late 90’s.” We are seeing positive results for mortgage brokers, law firms and loan modification companies. banks need to trust restored as well and the only motivating reason for consumers to start borrowing again will be low mortgage rates.”

Federal Reserve Leaves Interest Rates Unchanged

Fed Maintains Rate at Range of 0-0.25%.

Can borrowers with bad-credit refinance into an affordable payment or will they lose their home to foreclosure? In a recent report, Freddie Mac chief economist Frank Nothaft said, “Interest rates for thirty-year home loans with fixed rates declined for the tenth straight week.” Mortgage rates dropped to 5% but how many distressed homeowner will actually qualify for a refinance loan with these 5% rates?

Former Ditech executive, Jeff Morris said, “Loan modifications give these rejected homeowners a new opportunity to negotiate a lower mortgage rate and in many cases the interest rate the lender agrees to is less or equal to the prime rate that mortgage lenders are offering “A” paper borrowers with 740+ fico’s with equity and full documentation.” Morris continued, “What it means in laymen terms I that struggling borrowers that can’t qualify for a refinance loan, still qualify for a loan workout that actually has a lower interest rate.”

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01 Dec 08 Qualifying a Loan Modification & Calculating an Affordable Mortgage Payment

In order to calculate an affordable mortgage payment, recent financial income information must be available for the borrower. Efforts to contact the homeowner using direct mailings, calling campaigns, email, and other outreach methods are in play. The FDIC Loan Modification Program calculates the modified principal, interest, taxes, and insurance (PITI) payment per a borrower specific HTI ratio of no more than 38%.

Housing expenses on a Principal Interest Taxes Insurance (PITI) basis may include:

  • The modified principal and interest payment for the subject mortgage, as applicable,
  • Real estate taxes,
  • Property hazard, flood, and mortgage insurance premiums,
  • Leasehold estate payments, and
  • Homeowners’ association (HOA) dues.

Industry standards set forth by certain FHA mortgage lending programs (Hope for Homeowners)indicate a mortgage payment based on a 31% to 38% HTI ratio is affordable. The FDIC Loan Modification Program follows these mortgage origination standards as illustrated below:

Example of HTI ratio calculation

Monthly Gross Income ___

$3,618 – Borrower 1

$2,756 – Borrower 2

$6,374 – Total Monthly Gross Income

If the initial loan modification calculation at 38% does not decrease the borrower’s payment by 10 or more, the HTI ratio is lowered to 35% and then lowered to 31% to achieve the 10% savings. In cases where a 10% savings cannot be realized, the 31 % HTI ratio is used for affordability purposes.

PITI Payment Determination

$6,374 x 38% = $2,422

Monthly Housing Expense ______________________

$2,422 – Maximum Total Monthly Housing Expense

$ – 364 – Taxes, hazard, flood, and mortgage insurance, etc.

$ – 85 – HOA dues

$1,973 – Maximum modified principal and interest payment

Total HTI Ratio_______

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01 Dec 08 FDIC Mortgage Loan Modification Versus Legal Loan Relief Program

The FDIC Loan Modification Program targets homeowners who are presently having financial difficulty with their 1st and 2nd mortgage loan payments, but have the ability and willingness to make a mortgage payment. The FDIC uses a streamlined approach to identify loan modification candidates and to provide a customized modification offer when the modification minimizes loss. If a borrower does not qualify for streamlined mortgage loan modifications, an individual loan review may result in a personalized modification that still maximizes value like the FHA loan program, Hope for Homeowners. Private loan modification companies, like Legal Loan Relief, offer mortgage restructuring options for homeowners who have debt to income ratios between 38% and 100%.

Watch the Fox Video regarding the FDIC Loan Modification Plan

This mortgage relief approach is one of several loss and mitigation strategies that a mortgage service companies should consider when dealing with a distressed borrowers. Mortgage refinancing is should always be the homeowner’s first option, but many people simply do not qualify for a FHA home refinance loan whether it’s a government or a traditional rate and term mortgage. However, many borrowers are unable to refinance their loans in the current economic environment and repayment plans typically do not provide.

Many California homeowners are not aware of the State’s position on foreclosures. The Golden State’s Governor continues to promote a Foreclosure Moratorium for California. Whether you are upside down with a mortgage balance greater than your home value or simply need a payment that is more affordable, consider a loan modification as one of the recommended foreclosure prevention methods.

Once the homeowner’s loan modification is determined, the mortgage lenders’ service company must perform a property valuation test between the cost of a loan modification and the estimated cost of foreclosure to provide modification results in a reduced cost solution to the investor. By providing an automated valuation method that compares the cost of the modification and the estimated cost of foreclosure, the service company fulfills the terms of most home loan servicing agreements.

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25 Nov 08 FAQ About Modification and Loan Relief

What Does Legal Loan Relief Do?

In order for us to determine whether we will be able to help modify your problem home loan, we first need to conduct a loan document review, from which we will issue a written report of any perceived violations of federal or state law we find in the loan documents, as well as the extent your particular circumstances warrant relief under the various loan modifications available. 

So we can expedite the process, we will need to have you complete the accompanying application and provide us with all the documentation described in the application, and have all that faxed to us at your earliest convenience along with your authorization for payment, and the signed retainer agreement, all of which are in this package.

If we are not able to negotiate modified loan terms with your lender that are acceptable to you, then in the third stage of the law firm’s flat fee Mortgage Mitigation Program we can negotiate either a short sale, deed in lieu of foreclosure, or forbearance with your lender on your behalf.  The flat fee for those services are not included in the flat fee charged for either stage one (loan document review) or stage two (modification of loan terms).   We can discuss the flat fee to be charged for that phase if and when the need arises.  Any litigation that would be filed on your behalf is not a part of this flat fee program.

What Can You Expect to Happen Once You Submit a Mortgage Mitigation Program Application to Legal Loan Relief?   

After our receipt of the signed retainer that accompanies this letter, and the complete Mortgage Mitigation Application package and payment of the initial retainer is returned by you to the law firm you can expect the following to occur:


a. Client Orientation.  Once the Mortgage Mitigation Application and the initial retainer payment as specified above is received by the law firm, you will participate by telephone in a Client Orientation meeting with one of the company’s loan modification consultants.  Either at that time, or within two (2) working days from the time of your orientation interview, you will be advised that the application has been accepted, qualifying you for participation in law firm’s flat fee Mortgage Mitigation Program.  Should the attorneys determine at that point in time that your particular case is not one that law firm will be able to provide any potential mortgage mitigation relief, then the agreed Stage One flat fee paid by you will be refunded to you on a 100% no-cost basis.


b.  Follow-Up re: Completeness of Application Documents.  Once your application is accepted in LAW FIRM’s Mortgage Mitigation Program, all of your information is reviewed by attorneys’ mortgage mitigation consultants to determine that your application is complete, and they will follow up with you as needed to ensure the package is completed.


c. Comprehensive Review of Loan Documents and Personal Information.  Your completed loan documents and other relevant personal information provided will undergo an exhaustive review process, and the law firm’s mortgage mitigation consultants will work with you to prepare a package of paperwork that will have the best possible chance of success with your lender.


d.  Production of Loan Document Review Report.  The loan modification law firm will strive to complete the Stage One (document review) phase within fourteen (14) working days from law firm’s receipt of the final, complete information packet, which must include all supplemental information requested by the attorneys before it is deemed to be complete.  Thereafter the law firm will provide you with a letter report entitled “Loan Document Review Report” in which the specified attorney will outline the recommended course of action for mortgage relief, and any findings the law firm has made regarding actual or potential violations of federal or state lending laws the lw firm was able to locate in the loan documents you have provided.

e.  Negotiation of Mortgage Mitigation Option(s).   Once you and the law firm agree on the course of mitigation you wish to pursue, and upon the attorneys’ receipt of the agreed flat fee payment for either Stage 2 or Stage 3 services, The law firm will take your case through the agreed stage of avoidance of foreclosure, and will keep you apprised on a regular basis of the progress of your case, up to the final outcome through regular contact by either telephone, tele-fax, email, or password protected access to website information.  A separate flat fee applies to our negotiation on your behalf at this phase of the work, payable in installments.   The potential mitigation options the law firm may be able to negotiate with Client’s lender that are included within this Agreement include the following:

(1)  Loan Modification: Your lenders agree to modify the terms of your loan, such as reducing monthly payment amounts, the loan balance, or the interest rate, or fixing an adjustable rate.

(2)  Short-Sale: An agreement by the lender to reduce the payoff balance that allows you to sell your home at the reduced price to a buyer that you or your real estate agent has found.

(3)  Forbearance:  A modified repayment agreement that lasts for a period of time.  The goal of this plan is to allow you to catch up on any delinquent mortgage payments, while making current payments.

(4)  Deed-in-Lieu of Foreclosure: Giving the lender possession and title to your home rather than going through the foreclosure process.

Should the law firm determine that none of these above options would be helpful to your given case, LAW FIRM may be able to refer you to other professionals, such as credit repair specialists or bankruptcy counsel, who can assist you further in terms of other forms of debt relief that are not part of LAW FIRM’s program.

How Long Will The Process Take?

Assuming you otherwise qualify, and that the lender and you are able agree to an acceptable modification of your home loan, the loan modification process typically takes between 90-140 working days from when LAW FIRM first receives a complete loan modification application from you and commences work on your behalf. 

Why Use An Attorney to Seek Mortgage Mitigation?

LAW FIRM and its staff are trained on how to negotiate.  We know the law and how to apply the law to your best advantage.  The flat fees earned are for LAW FIRM obtaining an offer of modified loan terms from your lender or loan servicer, whether or not these negotiated terms ultimately are accepted by you. 

There of course are no guarantees on how long it will take you and your lender to reach an agreement on an acceptable loan modification, it ever, or that the lender even will offer any loan modification, or that LAW FIRM can actually reach a point where the proposed loan modification offer negotiated with your lender would be acceptable to you. 

What is certain, however, is that LAW FIRM’s trained negotiators are better equipped to address these loan modification issues than an average homeowner, and that LAW FIRM’s attorneys and staff will work to get the best offer we are able to negotiate on your behalf. 

Also, if loan modification turns out not to be available, or is not a viable option for you, LAW FIRM is better equipped than the average homeowner to negotiate and close a deal on other alternatives to loan modification, including forbearance, a short sale, or a deed in lieu of foreclosure.

Why Pay for a Review of Loan Documents?

If in the course of LAW FIRM’s loan document review we are able to identify potential violations of federal or state law in your loan documents, we would expect that sort of information would help us negotiate a better loan modification than otherwise would be possible without this sort of information.  Without a loan document review that finds the lender has potentially violated federal or state lending laws, even with current government programs that are now in place urging lenders to participate in aggressive loan modification programs, you still are at the mercy of the lender to provide a loan modification.  That is not to say that you will need to show the existence of some discernible violation of federal or state lending law in your loan documents in order to modify your loan – - it just means that you likely will have a much better chance at loan modification if LAW FIRM is able to negotiate on your behalf from a position of strength because we are able to locate such problems in your loan documents. 

Why Wait?

The earlier you get started on this mortgage mitigation process, the better your chances are of our being able to negotiate modified terms of your home loan that you can manage under your current financial circumstances.  Once you have achieved a loan modification that fits your current ability to pay, so long as you stay current on your new payment schedule obligation, you will stay on in your house without the cloud of foreclosure. 

As soon as we receive your signed retainer agreement, the signed payment authorization, and all the information listed in the accompanying application, we can get started on working on your case.  Please email or fax this information as soon as you can and someone from this office, or one of our mortgage mitigation consultants, will be in contact with you to discuss your case further. We look forward to being able to assist you and obtaining a successful outcome on your behalf.

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