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

14 Sep 10 Underwater Mortgage Relief

Attention homeowners who are struggling with an underwater mortgage – - – good news may have arrived.  HUD recently announced a new mortgage relief program that targets distressed homeowners who are trying to refinance a mortgage but have been unable to qualify because of negative equity.  The Emergency Homeowner Loan Program was developed to assist borrowers who have been able to pay their mortgage on time, but unable to refinance because their mortgage is greater than their property value.

In the recent past, the Obama administration has attempted to help the struggling housing market but most of mortgage relief initiatives have failed. Refinancing underwater mortgage loans has certainly become a common challenge that thousands of homeowners appear to be ready to embrace.  This new FHA program which started last week is often referred to as the FHA short refinance because the 1st mortgage balance is written down to the present market value, thus “short refinance.“

This refinance relief program was created to help to borrowers with underwater mortgage liens refinance into reduced principal mortgage loans. The maximum amount allowed to be forgiven is 10%. To help facilitate the news refinances, the U.S. Treasury has pledged to offer incentives for existing second mortgage liens who agree to “full or partial extinguishments” of the liens.  So, this new FHA plan that is boasting to help 1.5 million homeowners has me a bit concerned.The major obstacles most borrowers are facing are that their present mortgage lender has to agree to write off at least 10% of the principal balance on the 1st mortgage lien.  Like some of the past loan modification and FHA Secure programs, this mortgage relief effort is voluntary in nature and requires the consent of both first and second mortgage lien holders.

The government has placed aside $14 billion in TARP funds to help support this new program. But the question of the foreclosure day is, “Will lenders and mortgage servicers cooperate?”  Qualifying for the Emergency Homeowner Loan Program or FHA short refinance may be difficult but the financial rewards are significant so we recommend that you attempt to get qualified.  Getting your mortgage balance reduced and your monthly payment lowered are two amazing feats worth striving for.

  • Share/Bookmark

Tags: ,

19 Jun 10 Are California Loan Modification Plans Working for Lenders?

Thousands of struggling California homeowners have been screaming for years to get additional mortgage relief. Did you know that banks holding mortgage notes foreclosed on nearly 200,000 homes in California last year? Worse yet, it looks like the California loan modification plans are not working because 2010 toll looks like it will increase last year’s totals for loan defaults. California state lawmakers continue to try and plead with the lending banks to do extend more loan workouts that help both sides. Yet homeowner advocates say a serious problem remains. SB 1275 would prevent mortgage lenders and banks from foreclosing on borrowers who are seeking to modify their loans.

According to the LA Times, Many mortgage lenders are “overwhelmed and disorganized but they continue to foreclose on borrowers who are actually in the process of finalizing a home loan modification that would ensure more affordable monthly payments. At a time when the housing market is flooded with foreclosed homes, this doesn’t help anyone. The federal government rolled their attempt to stem the foreclosure crisis with the Home Affordable Modification Program that was created to stop lenders from foreclosing while a modification is pending, but other initiatives don’t.

California Senators Mark Leno and Darrell Steinberg are proposing to extend the same protection to all Californians seeking loan modifications. The California loan modification bill (SB 1275) would stop a home loan lender or mortgage service company from initiating the foreclosure process until after a mortgage loan modification application was denied. It’s a modest change that wouldn’t require mortgage lenders to change the terms of any loan modification program. Nor would it require lenders to do more to reach borrowers before foreclosing than state law already requires or to slow down foreclosures on borrowers who are beyond help. The law would require mortgage lenders to notify borrowers who get behind on their home loan payments about the foreclosure process and the availability of home refinancing or loan modification options, if any. And if borrowers applied unsuccessfully for a loan workout, the mortgage company would have to send them a letter explaining why they were denied and how they can appeal the decision before filing a notice that the mortgage was in default. The purpose of the bill was not just another attempt to help homeowners avoid making their mortgage payments; but it was created to help protect lenders from themselves. A recent report revealed that Housing counselors say the No. 1 problem is poor communication between mortgage companies and distressed borrowers.

  • Share/Bookmark

Tags: , , , ,

07 Jun 10 Qualifying for the Federal Loan Modification Program

The last thing distressed homeowners need is more run around when they apply for a loan modification plan. The Obama administration has extended mortgage relief with the new federal loan modification program. One of the concerns people have is loan modification eligibility. Not every borrower will qualify so before you risk losing your house, find out if you qualify for the federal loan modification program. These home loan relief initiatives were created to help struggling homeowners, overcome financial hardships with foreclosure preventions with a loan workout.

Are You Eligible for a Government Loan Modification Plan?

Are You Eligible for Obama’s Loan Modification Program? To be eligible for mortgage loan modification options under the federal initiative, borrowers should be able to meet the following basic requirements:

o The home for which the loan being modified must be the primary residence of the applicant.

o The value of the present home mortgage cannot exceed $ 729,250 for a 1-unit property.

o The existing home loan should have been approved before 1st January, 2009.

  • Share/Bookmark


17 May 10 Home Affordable Modification Plans Failing?

According to CNN Money there are 637,353 distressed homeowners that remain in a trial loan modification agreement. The rate at which of borrowers entering the Home Affordable Modification Program HAMP has slowed as servicers have begun to implement new requirements to gather income documentation at the beginning of the mortgage relief process.

Is HAMP helping second mortgage lenders? New home loan modification statistics released by Treasury provide additional insight into just how well servicers are doing in converting trial mortgage modifications to permanent status. The six servicers who verified borrowers’ income before placing them in trials have transferred more than half to long-term adjustments, with HomEq Servicing and Ocwen Financial Corp leading the way with 83% converted. Those lending companies using stated income or no limited documentation approach, however, have yet to hit the halfway mark.

According to the State Department, the California loan modification program has not had much success either because borrowers still can’t afford their mortgage loan, even after the lender modifies the loan to a reduced monthly payment. The largest mortgage loan servicers are behind most of the top lending banks like, with Bank of America 25%, Wells Fargo at 25%, JPMorgan Chase at 22% and Citigroup at 21%. Homeowners also languished in trial loan modifications at certain servicers. Some 76% of those in the trial phase at Saxon Mortgage Services and 72% at JPMorgan Chase have remained at that stage for at least six months. Servicers, who met with Treasury and Housing Department officials last week, told the administration they would clear the bottle-necked process by the end of June.

According to industry insiders, major changes to the federal loan modification program are coming soon in the wake of criticism that the Obama administration must offer federal mortgage relief to struggling borrowers. Starting June 1st, homeowners will have to provide all their income verification documents before they are put into trial modifications. This will make it harder for troubled homeowners to start the process, but it should make it easier for them to qualify for permanent assistance. Refinance loans have been difficult for most homeowners to qualify for because of depleted equity and slumping credit scores, so the loan modification has become an important part of the foreclosure prevention equation.

  • Share/Bookmark

Tags: , , ,

01 Feb 10 San Diego Home Foreclosures Rise

DataQuick reported recently that home foreclosures in San Diego County surged last month, even as default notices dropped to their lowest level in more than a year. Analysts read those contradictory signs as further evidence that the local market might be stabilizing, since foreclosures pave the way for purchases by financially strong buyers. Fewer defaults mean either a decline in distressed owners or greater action by mortgage lenders to offer loan modifications or refinance mortgages to prevent a foreclosure. But they said other factors, such as rising delinquency levels, higher interest rates expected this spring and continuing high unemployment, point to uncertainty in housing for the foreseeable future.

DataQuick reported that home foreclosures totaled 1,515 in December, up 41.9% from November and up 20.9% from a year earlier. It was the biggest stack of foreclosures since June’s 1,630. Meanwhile, notices of default, the first legal action on the road to foreclosure, dipped 11.5 % from November’s 2,122 to December’s 1,878, the smallest figure since November 2008. It was down 38.5 % year over year. To real estate agents hungry for inventory of low-cost foreclosures to sell to bargain hunters, the upsurge in foreclosures promises to refill empty lists of homes for sale, although agents have complained in recent months that banks aren’t moving quickly to list those properties as a California short sales possibly increasing their bottom line..

On the default side, the continuing decline reflects the pressure being placed on lenders to work with troubled owners by modifying loans to make them more affordable, at least on a short-term basis, or allow properties to be sold as short sales — sold for less than the outstanding mortgage balance. “Clearly, many lenders and (loan) servicers have concluded that the traditional foreclosure process isn’t necessarily the best way to process market distress,” DataQuick President John Walsh said.

DataQuick analyst Andrew LePage said San Diego had the state’s highest large-county foreclosure spike in December. “It’s a mystery,” he said of the increase. Home foreclosures were up only 19 % in the six-county Southern California region. Many analysts warned against extrapolating from the latest data to assume that widespread distress on the wane. “Because the economy is no better and values have not come back significantly, there’s pressure on banks to postpone notices of default in an effort to seek alternatives,” said Mark Goldman, an adjunct professor of real estate at San Diego State University. He said San Diego might be nearing a “rough landing” and some price increases in certain areas. But the high-end part of the market still appears weak.

  • Share/Bookmark

27 Jan 10 California Mortgage Defaults Down 24%

According to DataQuick the number of homes entering the first stage of foreclosure fell in the fourth quarter compared with the previous quarter, says a sign that banks are working with delinquent borrowers. Clearly, loan modification programs have helped thousands of California homeowners avoid foreclosures. Fewer Californian borrowers entered foreclosure during the last three months of the year as bailed-out banks appeared to step up their work with delinquent homeowners, according to data released this morning, although the number of homes taken back by banks rose slightly. California mortgage rates remain low, but most borrowers are unable to qualify for a refinance, so loan modification plans have become more important than ever.

The number of homes entering the first stage of foreclosure, or receiving notices of default, declined 24.3% during the fourth quarter from the prior three months, according to county data collected by DataQuick, a San Diego research firm. The decline in the default number is significant because any new wave of foreclosures will first be detected by that measure, according to the firm. Meanwhile, the number of homes taken back by lenders through trustee sales ticked up 2.1% in the fourth quarter over the third. The trustee sale is the final stage of California’s foreclosure process. “Clearly, many mortgage lenders and servicers have concluded that the traditional foreclosure process isn’t necessarily the best way to process market distress,” MDA DataQuick President John Walsh said. He said banks have been negotiating with distressed borrowers to keep them in their homes and increasingly turning to “short sales” in which the banks accept an offer that is less than the value of the outstanding mortgage; banks end up taking a loss on such deals. At the same time, big banks are feeling intense pressure in Washington to work with troubled borrowers through the Obama administration’s Making Home Affordable program. Much of that relief has been temporary.

Through December, banks had lowered mortgage payments for 172,288 California borrowers, but only 7.8% of those modifications were permanent, according to government data. Many experts consider that record a failure and fear that if the government doesn’t improve its performance those mortgage loans eventually will go into foreclosure and put pressure anew on the state’s housing market.

While the number of California mortgage delinquencies declined to 8.71% at the end of the fourth quarter from 8.87% at the end of the third, according to data from Equifax and Moody’s, the percentage loans that were 120 days or more past due increased to 4.7% from 4.51%. Those figures indicate that the Obama administration’s efforts to help troubled homeowners have allowed some borrowers to stay out of default but kept many in a kind of late stage of delinquency limbo, said Celia Chen, senior director of Moody’s If the majority of borrowers who have received temporary loan modifications under Obama’s program are unable to get permanent changes to their bad credit-mortgages, another wave of foreclosures could follow, she said. “Given what we see in terms of the number of distressed properties that are in the pipeline, we do expect that home foreclosures will mount as borrowers are not able to make it from a trial modification to a permanent modification,” Chen said. “This will cause home prices to start falling again.” A total of 84,568 notices of default were recorded at county recorders offices during the fourth quarter, an increase of 12.4% from the fourth quarter of 2008. Trustees deeds recorded, or the actual loss of a home to foreclosure, totaled 51,060 during the fourth quarter, up 10.6% from 46,183 for fourth-quarter 2008. An all-time high for notices of default was reached in the first quarter of 2009 at 135,431.

  • Share/Bookmark

Tags: ,

13 Oct 09 California Passes New Mortgage Loan Modification Bills

California Governor Arnold Schwarzenegger approved 7 new mortgage relief laws that affect loan modifications and a range of mortgage processes. The new loan modification law will restrict how lawyers and loan modification companies can receive money. California loan modification options may quickly disappear without a financial motive for professionals to negotiate mortgage loan modifications. This law will affect a variety of consumer homeowner protections to home-mortgage holders and may permit a few to keep their homes.

The governor signed AB 260 which will take effect January 1, 2010 and will tighten restrictions on mortgage brokers so they will be unable to steer borrowers towards riskier, higher-interest loans when they qualify for safer, more affordable home mortgages.

The mortgage relief law will also prohibit negative-amortization home loans, which offer monthly payments that do not include any principal or even all of the monthly accrued interest, which can cause the amount of a home loan to increase over time.

The law also limits prepayment penalties to no more than 2% of the home loan balance and gives state regulators the power to enforce federal lending laws. The governor vetoed similar legislation last year at the urging of some groups in the mortgage and real estate industries. The California Association of Mortgage Brokers, the California Mortgage Association and the California Association of Realtors opposed this year’s version of the bill to no prevail.

  • Share/Bookmark

11 Aug 09 California Foreclosure Crisis Not Over

Unfortunately quite often, the same case could be made for loan modifications, because we are seeing a 50% failure rate for California loan modification plans. So to tune out the noise, just look at the 90-day rate. In article posted by Mathew Padilla, he discussed the second wave foreclosure wave coming in Southern California.

Sam Khater, senior economist, First American CoreLogic. “To say there is a second wave implies the existing wave has receded,” Khater told me. “I don’t see that the wave has receded.” Khater shared his historical data of 90-day delinquency rates for Orange County, as well as the foreclosure-in-process rates and rates of REOs, or foreclosures on banks’ books. The 90-day rate includes all outstanding 1st mortgages at least three months late but not yet foreclosed. The foreclosure rate is just 1st mortgages with a notice of default or trustee’s sale filing.

If you look at the 90-day rate it has been heading straight up it has not scaled back. Khater also said the California foreclosure rate and REO rates have been impacted by government tinkering in the market. He said federal and state efforts have mostly delayed foreclosures, preventing few.

In Khater’s view it shows “one giant wave.” Local State and Federal loan modification programs have helped thousands of borrowers keep their homes, but in some cases the mortgage relief was simply delaying the inevitable loan default that will push the homeowners out with a legal foreclosure.

Mathew Padilla elaborated more the 2nd-wave of foreclosures looming for so-Cal neighborhoods. He said it’s based on the idea that there has been a lull in home “foreclosures and the big second and maybe third or fourth waves will come as low introductory payments end on various types of adjustable-rate loans.” Credit Suisse released reports with graphs highlighting significant of resets and interest rate recasts in 2010, 2011 and 2012.

Industry insiders have already discussed that defaults remain high for negative amortization option ARMs. The report reminds us that we need not wait for the adjustable rate loans to adjust, because many of them are already defaulting. If you are a homeowner seeking a loan workout make sure that you contract with a reputable law firm or loan modification company. Ask about their refund policy, in case the lender rejects your request for a loan modification.

  • Share/Bookmark

21 Jul 09 Loan Modification 101

What do homeowners need if they are considering working with a loan modification company in an effort to reduce their mortgage payment that they are 2 months behind on?… Gathering the necessary documentation for a loan modification submission is imperative for the Lender to grant a loan workout.

Adrian Sainz wrote an article a few days ago, that I wanted to share with you. Homeowners worried about missing mortgage payments and entering foreclosure may have another option: a loan modification. Despite some signs of stability in the housing market, foreclosures remain a major obstacle to a meaningful recovery. And more borrowers in good standing are likely to miss their mortgage payments as the recession claims more jobs.  That’s why some people have gone for a loan modification — a permanent change in a mortgage that results in more affordable payments for the borrower.

Efforts to modify home loans have been easily outpaced by the number of new delinquencies, according to a Treasury Department report released in late June. In the first quarter, loan companies modified 185,156 mortgages, up 55 percent from the previous quarter, while the number of foreclosures in process increased to 844,389, up 22 percent.  Still, modification has been an option for many troubled homeowners. Lenders have been overwhelmed by calls from people seeking to modify their home loan, leading to reports of frustration and delays, according to mortgage finance giant Freddie Mac, which recently released an Internet video discussing this topic.  In the face of these delays, it’s important to start the loan modification process fully prepared. That means having the correct paperwork handy before calling or meeting with a loan servicer or housing counselor.  Here are some questions and answers about what you should have on hand.

Question: What are some basic documents to gather ahead of a loan modification meeting?

Answer: First, the servicer will want to quickly find the file in question, so have the monthly mortgage statement in hand.  Next, find the most recent statement for any homeowners’ or condominium association fees. Some borrowers have seen association fees increase in light of more home vacancies brought on by foreclosures, stressing monthly budgets — so you’ll want evidence of what you’ve been paying each month.  Also, borrowers who took out home equity lines of credit, and second or third mortgages, should have paperwork for those loans handy.  All of these documents go a long way in displaying a troubled borrower’s financial situation and determining their eligibility for a loan modification. Borrowers should also enter the process with a budget plan that includes how much they can actually afford to pay in monthly housing expenses, including insurance and taxes.

Question: Are there any documents not specifically related to the home that should be nearby during the meeting with the loan servicer?

Answer: Yes. Bring along statements showing balances and minimum monthly payments on active credit cards, car loans, student loans and other debts or obligations, Freddie Mac says.  These documents give the servicer a sense of the borrower’s monthly expenses outside of housing-related expenditures, to come up with a manageable monthly mortgage payment that will be sustainable.

Question: Is that all?

Answer: Actually, no. Freddie Mac recommends that homeowners write a statement that discusses the financial problems that are or could be leading to foreclosure.  This should be an honest account — the writer should set pride aside and give the servicer a sense of how bad the situation really is.

Loss mitigation and mortgage relief can be a complex decision for some mortgage lender, so remeber that you have the opportunity to make another 1st impression, so don’t blow it…process. In most cases, homeowners should have an attorney guide them through the loan modification process to work through any technicalities and make sure the lender is taking the correct steps.

  • Share/Bookmark

Tags: , , , , , , ,

21 Jul 09 FTC Shuts Down Loan Modification Scams

The U.S. Federal Trade Commission and authorities in 20 states have sued dozens of individuals and companies as part of what they said on Wednesday was a crackdown on loan modification scams that have multiplied in the housing meltdown.  The 189 lawsuits and other court actions target the “con artists” who offer to help homeowners facing foreclosure, only to take up-front fees and perform little or no service.  “It’s an operation full of hollow promises designed to fatten the pockets of criminals and con artists,” FTC Chairman Jon Leibowitz said in announcing the move at a press conference in Los Angeles.  “These con artists see the high foreclosure rates as an opportunity to prey on people in distress,” Leibowitz said. “They promise to rescue homeowners in troubled financial waters but after they take their money they throw them an anchor instead of a lifeline.”

U.S. mortgage fraud reports jumped 36% last year as desperate homeowners and industry professionals tried to maintain their standard of living from the boom years, the U.S. Federal Bureau of Investigation said last week, calling fraud rampant and growing.  Leibowitz said that many who offer loan modification schemes deceive homeowners by posing as quasi-governmental agencies or implying that they are working with federal agencies and cautioned consumers to be aware of the scams.

According to Real Estate News Publication, Housing Crisis Under Fire, California loan modification scams lead the nation in loss mitigation fraud.  California Attorney General Jerry Brown said his office had sued 21 individuals and 14 companies accused of scamming homeowners, saying that many of the operations were based in Orange County, south of Los Angeles. Also Brown said that bogus loan modification scams had proliferated widely following the subprime meltdown and housing crash, to the point where authorities with limited resources were unable to effectively pursue all of them.  “We’re going to do everything we can to stop it, realizing that there are more of these rats that come out of their holes than we can stomp on,” Brown said. “This is one of the more egregious wrongs we see committed in society and we are going to fight it.” 

  • Share/Bookmark

Tags: , , , , ,