Frustrated with the slow and lazy pace (of course snail’s pace), the Obama administration is soon going to do some progressive changes in the HAMP program. Basically, the program announced in February, 2009, has not brought much needed change and upset the rising trends in foreclosure. Nevada is especially high on this trend. However, the good news is that there is widespread changes expected very soon in this program by the Obama administration.
Archive for November, 2009|Monthly archive page
The Obama Administration has added another weapon on its arsenal of programs and strategies to help millions of distressed homeowners save their properties from becoming foreclosed homes. Lately, there has been mixed result in its success. I have also posted another article on this blog about the mixed reviews this Obama Plan is getting from various sources.
The “Making Home Affordable” foreclosed homes relief plan is aimed at helping distressed homeowners reduce their monthly payments to allow them to stay current on their mortgages. I am sure now everyone has heard about this HAMP plan and already applied under it. It does not cover every situation but it does cover most of the hard pressed situation, and it is a best guarantee against foreclosure along with the Nevada Mediation program.
Here are some points that housing experts believed distressed homeowners should consider before applying for a foreclosed homes prevention plan: There are no magic bullets here. Just consistency, patient, and preparation is enough. I had given these timeless hints many times in my articles. I am dovetailing it once more.
Be patient. Always bear in mind that you are not the only distressed homeowner who want to save your property from becoming foreclosed homes. It is expected that mortgage lenders and servicers will be inundated with questions about the mortgage relief plan. There are some 100,000 calls only received by bank of American. There faxes are jammed, some time out of paper and some time their ink pads are over used. Again, many times the senders had not written their loan number on each and every page with the result that these faxes cannot be traced to the owners.
Most of these new hires are of course not fully trained. Most of them has only basic high school education, or if they have some experience, is not about this job. Do not expect mortgage lenders, real estate and finance experts to know every infinitesimal detail of the plan as it will take some time for lenders to sign agreements to take part in the federal government’s foreclosed homes prevention plan.
Be persistent. Continue making that calls to your mortgage lender to inquire on the status of your loan modification application. Please do not assume that your lenders had received your paperwork. Call to confirm.
Be aware of your financial status. Before meeting with your mortgage servicer, know first how much debt you owe, your monthly budget and mortgage payment. According to Americana Mortgage Group President Bob Moulton, most distressed homeowners who are not knowledgeable about their finances often make uninformed decisions that they would regret later.
Prepare Financial Documents. Ask for a list of financial documents that you would need to apply for a loan refinancing or modification under the foreclosed homes prevention plan.
Write your hardship letter. I have various hardship samples on this blog. You are welcome to copy them and craft according to your own situation. At least, I can provide this service free. The letter, which will be a part of your documents that you will submit to avail of a loan refinancing or modification, allows you to explain why you need to modify the terms of your loans to make them affordable and save your property from being added to the growing list of foreclosed homes.
Stay Away from Scam:
The U.S. government is cautioning distressed homeowners to avoid fee-based mortgage or financial counselors who may take advantage of their desperation to save their properties from foreclosures.
The Obama Plan came with great fanfare and expectations. Of course, it had done a small dent but is not doing enough to turn the rapid rise in foreclosure especially in Nevada. Nevada is still on top of the foreclosure statistics throughout USA. The Obama Administration’s $75 billion loan modification was able to help only 9 percent of qualified borrower as of July, according to a report released by the U.S. Treasury Department as part of its strategy to force lenders to modify more troubled mortgage loans to trim the growing number of bank foreclosure homes in the country.
The report noted that 10 lenders did not successfully modify a single troubled loan. Leading the list of servicing companies with the most number of loan modifications is Saxon Mortgage Services, the mortgage servicing unit of Morgan Stanley. The unit was able to approve 25 percent of 21,000 of the total 84,000 eligible borrowers for trial modifications.
The report ranked participating servicing companies based on the volume of troubled loans they have modified as percentage of the total borrowers in their portfolio who were eligible for a mortgage modification. Eligible borrowers are those who were 2 months delayed on their mortgage payments and are on the brink of losing their properties to foreclosures.
Both JPMorganChase and GMAC Mortgage approved 20 percent of the eligible loans on their inventories for trial modifications. Wells Fargo trailed the list with just 4 percent completed loan modifications. However, Wells Fargo’s result does not include the loans changed by Wachovia Bank which it acquired in 2008. For its part, Wachovia modified only 2 percent of the loans on its portfolio.
Meanwhile, Bank of America modified 6 percent of loans, including those of Countrywide which it acquired in 2008. CitiMortgage, a unit of Citigroup approved almost 15 percent eligible loans for trial modifications. According to the Treasury report, 235,000 homeowners or 9 percent were approved for the Home Affordable Modification Program out of the 2.7 million borrowers who were deemed eligible for the foreclosure prevention initiative.
The report pointed out that servicing companies offered trial modifications to nearly 15 percent of eligible borrowers or about 400,000. In the case of JPMorgan Chase, it reported 394,000 delinquent home loans on its inventory and offered modification to 30 percent or 117,000. However, the bank was able to renegotiate only 20 percent or 79,000 of the troubled loans.
The Treasury released over $20 billion under the Troubled Asset Relief Program to servicing companies as part of the government’s subsidy for the cost of loan modification.
I just read an excellent article by a Harvard professor, and rather than giving you brief excerpts, I am providing the whole link to this wonderful article. Please read all the details why servicers and lenders are reluctant to help, and why despite widespread federal guidelines, still foreclosures is on the rise.
I have been always asked this questions many many times, and I always is reluctant to answer it meaning cannot answer it straigt because it may come back and haunt me. This is a very difficult decision of whether to keep an undervalued home. It is painful to discuss the pros and cons of keeping a highly undervalued home in this crisis. However, in this short piece, I am going to attack this issue in my own peculiar ways. And please think, I am not alone. It is as usual not a legal advice. You are the final arbiter in your own complexity of issues.
Let me analyze my arguments and present it in an orderly way. I had very reluctantly said to the prospective clients, let the home go. Very little. Why? Becuase I am an optimist. I hate short selling or surrender of deeds. It is an anti American dream, and it perpetuates a bad economic cycle. The short selling should be stopped. It is an invention of real estate brokers to make money and make endlessly make money and capitalize out of the miseries of the people. They have always made money, and exploited every bad situations and they are doing it again. They are short sale expert. Who benefits most from short sale? Of course the real estate brokers and the banks. Because the like the pawn-shop value of your home. They want to erase this negative things on their books and start afresh. Would you be getting anything from this? Of course not. Who makes money? Of course not the homeowners. Not a single penny goes to their pockets. But what can you do when you have no equity in your home.
- Did you buy this home as a primary home?
If you bought this home as a primary home to spend times with your families, and you bought it because the school is close by, and your children can walk to school. The reasons are still valid even after the equity is lost. Your children can still walk to school and they have friends whom they spend quality time. They are building lifelong friendship.
-If you bought this home because of Tax Breaks from IRS?
The reasons are still valid. You are still getting tax breaks and you needed a shelter because you were making more money and giving it in the form of taxes to uncle Sam. So, you thought a house would give you the appropriate shelter. These reasons are still valid even after you have no equity in your home. Don’t you get few thousand dollars at the end of the year from uncle Sam? If so, that is the net benefit to you.
-This home you bought is because you love this home?
You fell in love with this home. The walls of this home is decorated with the pictures of your families, the sweet moments at or around the fire places, the healthy time spent in your living rooms, in the kitchens, the sweet aroma of food and fragrance coming from the newly embedded flowers, and of course the new garden you built with your own hands, making endless trips to the local nurseries. Your kids helped you with that waling path made of bricks and mortars. The window treatments, the pictures of your parents hung on the wall. These are still the valid reaons even after the depression in the housing market and loss of your equity.
-You still have to live somewhere? I have counseled clients to let their undervalued and expensive automobiles be returned, to save their cash flow. Yes, I had advised my clients, but to let the primary house go—Truthfully, I have been reluctant to give this advice. Make your own choice folks. I am not an anti American dream. I can’t tell you to live on trees or under the highway bridge. This is your home, protect it. Because, basically this is not a legal matter. It is an emotional matter, and let your emotion decide. What you want to eat today? This is your decision, and someone cannot force you. Telling their clients to abandon their home is counter intutive to me, it is like a stock guru who has his own TV finance shows, telling his audience, buy stock, buy stock, and all of a sudden shouts in one bad market day—sell your stocks. Truthfully, when DOW was dipped sometime ago, I seen myself a guru (much acknowledged) telling clients, Sell the Stock and Sell it Now, and that created a big panic in the market. Next day, he was in good morning America, and he apologized for his irrational exuberance. Do you know home. Watch him on MSNBC, he is the buy with his sleeves rolled high, and shouts like a circus clown everyday around 7 pm.
Let us call a spade a spade. The current economic crisis is not abating and as it relates to housing, will continue to press down on home values for 3 to 5 more years. The FEDS had done something, some half hearted measures, the lenders are not fully cooperative and hired lots of nincompoops, who does not how to add two plus two. Their math is wrong, their manners are rude, and they don’t want to learn from anything.
-Rental? Once you abandon your home, you need to find a rental, and the cheapest rental in Las Vegas for a family of 2 or 3 is in or around $1200. You don’t know what you gonna get, and where you going to live. You probably needs change of school for your children, your commute time shall be changed, and above all you don’t know who your neighbors will be. You were in that situation, and that is why you bought this home in the first place.
-Did you try loan modification.
That is the most important questions. Did you try lowering your payments by talking to your lender, talking to some other knowledgeable people, talking to some qualified attorney. Had you taken all of the steps and still can’t find a solution. Now you got enough material to think about. Would downsizing is an important factor. Again, you did not bought this home to sell right away, you wanted to sell say in 20 years from the date of purchase? What is so hurry? Had 20 years came yet?
Nevada again is on top of the foreclosure statistics, and I really don’t feel the necessity of citing any sources. It is an open secret. Foreclosure is on the rise, and the tide has become uncontrollable. I like to mention briefly the tips to stop the foreclosure and also cite here an article published in LA Times on the same issues.
1. Please contact your lenders/servicers immediately
2. Open a dialog and tell them your situation.
3. Don’t be frustrated with the process
4. Most of the folks (newly hired)at your lenders and servicers are new folks, and learning the job as they go. Please be patient with them
5. Make record of every phone calls, write down the name, phone extension etc.
6. No need to lose your temper.
7. Send them whatever they want, resend the same things again. Don’t make a big deal about their demands.
8.Try to call the rep by their first name more often than one time during conversation. Try to build a bond between you and him/herself. Yelling, screaming would be totally unproductive. No need to tell them the horror stories, they know enough already. Try to be brief, and not very legalistic. You are not an attorney, you are consumer. Ask yourself one question, why I am behind? How many months I am behind? Why did not I pay them? Afterall, you signed the contract as well. Please stop having over expectations. No one is deliberatly harming you. Accept the fact that you could be wrong also, and you had made mistakes as well. Now, let us sit back and read this wonderful article.
9. Once you have been denied, explore other options.
10. If nothing works, walk out graciously from your home without destroying anything. Maybe try to get a cash deal for “keys”. Treat it as white elephant and balance your budget.
Enough is enough as lenders had their say and swayed of course in all loan modification programs and in preventing the foreclosures process. They have frustrated almost every program the government and the fed had announced. The latest of course was the Obama Plan, which was launched with great fanfare, and of course it had helped the deterioraing foreclosure situations little bit but not enough–it has not stopped tremendous homeowners and their foreclosures. Banks had frustrated all these efforts, and are determined to do their nitpicking on every small issues. We agree with the analysts that the Obama Plan had no teeth in it when it comes to enforcement. Also, the 31 percent limitation of loan modification is not rationale. Again, it had not addressed the principals reduction which is a core issue in this crisis and bring it to the latest market values. Lately, the state top prosecutors are agreeing to seek the judicial remedy again, and are thinking of taking the lenders back to the judicial process. In our view, they are late. A judicial remedy is best, and of course quite expensive for the lenders, who had lately again been giving the despicable bonuses to their executives for doing nothing. When are they going to learn a lesson in this regard. Please read the following links to a very important news item.
New York Times has published an editorial highlighting the gloomy homeownership situation and with a prediction that more homes are going to foreclosure. This is unfortunate true in Nevada which is continuously on the top of the foreclosure statistics of all kinds, throughout USA. The Obama Plan is slow, has no teeth, and give no protection to homeowners. Only 625,000 or close to that loans have been modified, and that again is mostly trial loan modifications. Meanwhile banks are still reaping lots of profts as their Toxic waste has been shed away and they have taken fresh start with new books which of course present a very rosy picture. It is shameful that people are losing their homes in droves and there is no predictable solution. Banks have not learnt their lesson even though some improvement was done in their phones, customers services and some other fine tuning. But basically, they still have the old rotten mentality.
I drive to work from Summerlin (my home) to my office on Sahara and Buffalo, and see signs after signs of lease and rental ads, and it saddens me to see many empty places even spaces which was formerly occupied by big grocery stores like Smith, are empty. Similarly, too much office space is available for rent. The space which was available for at least $2.50 square feet is available easily for $1.00 and sometimes even less. The leasing agent is even agreeable to sign a lease with few months of free spaces. Here, is an article projecting a flood of real estate going bust. Unfortunately, the signs are already very visible. There are “cracks” every where. Here, is the latest link which I found in one of the financial paper.