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.

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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.

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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.

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10 Aug 09 State of California Suggests Loan Modification Refund Policy

CA Borrowers should consider California loan modification programs that offer a refund policy if the loan modification company is not successful modifying the mortgage with your lender.  This protects against most foreclosure prevention scams.

The U.S. Federal Trade Commission and authorities in 20 states have sued dozens of individuals and loan modification companies as part of what they said on Wednesday was a crackdown on loan modification scams that have accelerated the home foreclosure crisis.  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 provide mortgage relief for troubled homeowners but after they take their money they throw them an anchor instead of a lifeline.”

United States 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.  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.” 

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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.

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25 Jun 09 Loan Modification Applicants Report Bottleneck

If you want to change the terms of your mortgage loan without mortgage refinancing then you need a loan modification. Unfortunately, recent reports indicate that you will be facing a huge bottleneck in the loss mitigation departments with most mortgage lenders. Homeowners have been screaming for foreclosure prevention assistance and more forgiving refinance loan programs, but nothing is ever good enough to solve this mortgage mess. Distressed homeowners continue to claim that they have been waiting months and only a small percentage of borrowers are getting tangible results with their lenders.

Frustration is going back and forth from homeowners to lenders. Unfortunately, Washington, is not helping much either. The Obama administration set up a $75 billion Making Home Affordable program to pay mortgage lenders to modify home loans, but a Treasury Department spokeswoman couldn’t even say whether lenders and banks have to reveal how many mortgage loans have been changed. So why bother trying to get an unaffordable loan modified? John Ulzheimer, president of consumer education for, points out that a loan modification, if you can get it, won’t damage your credit the way a foreclosure or a short sale would. And he notes: This process, although difficult, is free.

You don’t have to use those law firms and companies that are advertising heavily, saying they can pull off a modification for a fee, usually of a few thousand dollars. To learn more about the Obama’s loan workout program and mortgage relief in general, go to Homeowners Hope Hotline, 888-995-HOPE. Article was written by Harriet Johnson Brackey for the South Florida Sun-Sentinel.

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24 Jun 09 Foreclosure Moratorium California Loan Modifications

The State of California announced a new state law imposing a 90-day moratorium on foreclosures is in effect. Under this mortgage relief initiative, California lenders must prove that they made an effort to provide a loan modification with delinquent mortgages before they begin the foreclosure process. During that time home loan servicers can carry on with business as usual, including foreclosing on delinquent accounts. The State announced the California foreclosure moratorium would go into effect immediately, but will the major mortgage lenders fall into line with it?

California Foreclosure Moratorium Guidelines:

ü The moratorium applies to first mortgages made from 2003 through 2007.

ü The home loan must be for your principal residence.

ü The homeowner must have received a notice of default.

ü The home loan servicer does not have a California loan modification program in place.

ü Because many homeowners are upside down on their home loans

There is a concern that the 90-day negotiating period will only postpone the inevitable because so far the banks are not reducing the principal. Read the complete Article from the Loan Modification Outlet.> Loan Modification Plans and California Foreclosure Moratorium

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01 Jun 09 Home Loan Defaults Rise

Home foreclosures have been a major burden on the Inland economy for Southern California. In April, there were almost 5,000 notices of default filed in Riverside County, according to ForeclosureRadar, a tracking service. The notices are the first step in the foreclosure process. The county had the fourth-highest rate of foreclosure sales last month. San Diego and orange County reported an increase in loan modification and default activity as well.  Mortgage relief measures continue to  be a top priority for government officials in California.

San Bernardino County had about 4,000 notices of default and the seventh-highest rate of foreclosure sales in April. The main state foreclosure law to emerge last year was SB 1137. It requires lenders and loan servicers to talk with borrowers before starting foreclosure proceedings. The goal is to get more mortgage loan modifications. This year, lawmakers introduced more than 30 foreclosure- and mortgage-related bills. Nearly all of the authors are members of the Legislature’s Democratic majority. About two-dozen measures are still pending, with most facing a Friday deadline to clear the Legislature’s appropriations panels.

Some of the bills would put the state in compliance with the federal Secure and Fair Enforcement of Mortgage Licensing Act approved in July 2008. The law requires mortgage loan originators to be licensed and complete 20 hours of pre-licensing legislation, along with other requirements.

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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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