More Foreclosure: When it is going to stop?


More bad news coming about foreclosure filings as it rose in August, as more homebuyers fell behind on their mortgage payments.The new statistics shows that filings were up 7% compared to July, but were still 33% lower than they were a year ago — marking the eleventh straight month of year-over-year declines, according to RealtyTrac, a leading online marketer of foreclosed properties. According to the report, 228,098 homes in the U.S. received some kind of foreclosure filing in August. Default notices, which typically initiate the foreclosure process, surged more 33% from July. Foreclosure auctions and bank repossessions, which come later in the process, both fell slightly.

The lenders did take a pause after the “robo signing” last year but now they are increasing the pace of forelcosure again. We had stated that the recovery of economy depends upon the recovery of housing market. Sometime ago NY Times reported that Obama administration is working on a plan to give refinancing option to home owners who would not otherwise qualify for refinancing on the lowest interest. But we had not heard more details on this program so far. Unfortunately, our judicial system is clogged by thousands of complaints, lawsuits involving lenders, homeowners and brokers. This seems to be an unending crisis, and presently we do not see any light at the end of the tunnel. Obama administration is gearing up for the second election, and his Treasury Secretary is a hopeless person. Once there was a rumor of his resignation, the market briefly rose but came back to negative again, when he denied resigning from this post. Too me, he is like Dan Quayle with the Senior Bush. The senior Bush did not want to get rid of him, and eventually lost election.

The Whistleblowers Get Rewarded: Good Work


US Department of Labor finds Bank of America in violation of Sarbanes-Oxley Act whistleblower protection provisions. Here is the good news as Bank is ordered to reinstate fire employee employee and pay $930,000. This interesting story is new, and came from San Francisco where it has found Charlotte, N.C.-based Bank of America Corp. in violation of the whistleblower protection provisions of the Sarbanes-Oxley Act for improperly firing an employee. The bank has been ordered to reinstate and pay the employee approximately $930,000, which includes back wages, interest, compensatory damages and attorney fees. The findings follow an investigation by OSHA’s San Francisco Regional Office, which was initiated after receiving a complaint from the Los Angeles-area employee.

“It’s clear from our investigation that Bank of America used illegal retaliatory tactics against this employee,” said OSHA Assistant Secretary Dr. David Michaels. “This employee showed great courage reporting potential fraud and standing up for the rights of other employees to do the same.”

The employee originally worked for Countrywide Financial Corp., which merged with Bank of America in July 2008. The employee led internal investigations that revealed widespread and pervasive wire, mail and bank fraud involving Countrywide employees. The employee alleged that those who attempted to report fraud to Countrywide’s Employee Relations Department suffered persistent retaliation. The employee was fired shortly after the merger.

“Whistleblowers play a vital role in ensuring the integrity of our financial system, as well as the safety of our food, air, water, workplaces and transportation systems,” added Michaels. “This case highlights the importance of defending employees against retaliation when they try to protect the public from the consequences of an employer’s illegal activities.”

Both the complainant and Bank of America can appeal the monetary damages to the Labor Department’s Office of Administrative Law Judges within 30 days of receiving the findings.

OSHA enforces the whistleblower provisions of the Sarbanes-Oxley Act and 20 other statutes protecting employees who report violations of various airline, commercial motor carrier, consumer product, environmental, financial reform, food safety, health care reform, nuclear, pipeline, public transportation agency, railroad and maritime laws. Under these laws enacted by Congress, employers are prohibited from retaliating against employees who raise various protected concerns or provide protected information to the employer or to the government. Employees who believe that they have been retaliated against for engaging in protected conduct may file a complaint with the secretary of labor to request an investigation by OSHA’s Whistleblower Protection Program. Detailed information on employee whistleblower rights, including fact sheets, is available at http://www.whistleblowers.gov.

Under the Occupational Safety and Health Act of 1970, employers are responsible for providing safe and healthful workplaces for their employees. OSHA’s role is to ensure these conditions for America’s working men and women by setting and enforcing standards, and providing training, education and assistance. For more information, visit http://www.osha.gov.

Foreclosure Lawyers Not Above Board–Judge Berate Bank Lawyers


While we criticize everyone including lenders, mortgage brokers, bank attorneys has been berated by judges lately. Now judges are lamenting and doing their scorching criticism of lawyers–notably bank lawyers. Judges have accused lawyers of processing shoddy or fabricated paperwork when representing their clients i.e banks. Here, is one such judge. Judge Arthur M. Schack of New York State Supreme Court in Brooklyn has taken aim at an upstate lawyer, Steven J. Baum, referring to one filing as “incredible, outrageous, ludicrous and disingenuous.” As we know, New York judges are also trying to take the lead in fixing the mortgage mess by leaning on the lawyers. In November, a judge ordered Mr. Baum’s firm to pay nearly $20,000 in fines and costs related to papers that he said contained numerous “falsities.” The judge, Scott Fairgrieve of Nassau County District Court, wrote that “swearing to false statements reflects poorly on the profession as a whole.”

The courts in New York State, along with Florida, have begun requiring that lawyers in foreclosure cases vouch for the accuracy of the documents they present. This also prompted a protest from the New York bar. We know that involvement of lawyers in questionable transaction can expose them to disciplinary conduct under their respective bar associations. It may reflect very poorly on our profession as a whole. The role of lawyers is under scrutiny in 23 states where foreclosures must be reviewed by a court. The situation has become especially heated for high-volume firms whose practices mirror the so-called robo-signing of some financial institutions. Robo signing, as you may know, was an accelerated process to do foreclosure without actually physically signing by someone knowledgeable and was merely a rubber stamp hoodwinked the foreclosure process.

Can you save your home via bankruptcy?


Home Foreclosure and BankruptcyI have dealt with this topic many times here, one more time I like to dwell this very important topic in somewhat greater details.
When You Are Facing Imminent Foreclosure?
A bankruptcy may stop imminent foreclosure regardless of the time if you file it before the fall of hammer, even if it is done few minutes and is intimated to the auctioneer. I have filed bankruptcy many times and then rushed to the auction place and stopped the foreclosure by showing the bankruptcy papers to the auctioneer. It is only done in emergency when the homeowner is either very lazy or hesitant to do any action or does not know his choices and the lender backed out from a loan modification promise at the 11th hour. It does not make difference if you had merely filed a skeletal i.e emergency bankruptcy regardless of the chapter you had chosen. Of course these measures are temporary. As you should know, the filing of bankruptcy petition an automatic stay is issued which is inherent in the petition of bankruptcy. In Chapter 7, you can prolong the stay if a mortgage negotiation is conducted during the mandatory period and before the creditor requests a motion to lift stay from your petition. However, when the discharge is granted, it is likely, that your creditor/lender would start the foreclosure proceedings again and try to evict you. It is different in case of Chapter 13 where debtor/homeowner might be able to cure the defaults on the mortgage under the plan and keep up ongoing payments. If so, the Chapter 13 debtor may be able to save the home from foreclosure.
One should understand that the bankruptcy can stop only the foreclosure for a short term. You need to handle the basic cause and cure the deficiency or negotiate the loan modification. If someone tells you that filing a bankruptcy is a permanent cure, then he/she is lying to you big time. Bankruptcy can buy some essential time for negotiation and cure of the loan. Again, the loan can be transferred from the underwriting department to the bankruptcy department of the bank and they now permission from your bankruptcy attorney to talk to you or some of your representative and that may be time consuming.

Reaffirmation of Mortgage
If you are willing to continue making the required monthly payments, you could still lose your home if you file for bankruptcy under Chapter 7.
In other words, in Chapter 7 filing, if you have no equity in your home and you have not made your payments, the creditor can foreclose on your home during or after bankruptcy (after the motion to lift stay is taken away, or within 30 days, or when your bankruptcy is discharged.

Would Trustee Take Your Home?It depends on two basic factors. (1) How much equity you have? (2) how much of the home value is sheltered under the exemptions?

Please remember under Nevada laws, the exemptions of homestead is $550,000.

What is Homestead Exemption?The homestead exemption is the amount of your home’s value that the law puts out of the reach of your unsecured creditors. Mostly, in Nevada, Trustees are shying away from doing this extreme action because basically very few home owners have value which is non exempted and has otherwise equitable interests in their properties in this struggling economy.

Proposed Chages in Loan Modification


There is an interesting article published in today’s NY Times about probable changes in the bank’s foreclosure and loan modification process.

http://www.nytimes.com/2011/03/05/business/05mortgage.html?hpw
According to NY Times, the following proposals are on the table. This proposal is advanced by state attorneys generals who had presented these proposals to the nation’s biggest five banks with these demands. The net result would be that government would have sweeping authority over the mortgage modification process.

What are the proposed changes?

1. Banks would be prohibited from starting foreclosure proceedings while a borrower was actively trying to lower the interest rate or ease other terms of the home loan, a process known as a mortgage modification.

2. Any borrower who successfully made three payments in a trial modification would be given a permanent modification.

3. When a modification was denied, it would be automatically reviewed by an ombudsman or independent review panel.

According to NY Times, this blueprint is still just a draft, and weeks, if not months, of tough negotiations with the banks remain. Several big banks, including Citigroup, Bank of America and JPMorgan Chase, declined to comment.

The government’s current program to help troubled home borrowers, known as HAMP, continues to face fierce criticism. Both

How to bounce back after bankruptcy?


Can you bounce back after bankruptcy?
I have been asked many times what would be the life after bankruptcy and how the debtors can reestablish their credit again and acquire credit again. Of course, it would be difficult and time consuming, but it is not impossible. Soon after the discharge of bankruptcy, one start getting offers from credit card companies and a secured credit card is an ideal form for reestablishing credit. Actually, almost anyone can get credit soon after a bankruptcy. It’s just a matter of knowing how and what steps to take. Of course, bankruptcy deals a devastating blow to your credit and your credit score, the three-digit number lenders use to gauge your credit-worthiness. your FICO is at the bottom of scores, but you should not be discouraged by this devasating score. Of course, you can build it slowly and surely. But the effects don’t have to be lasting. Long before the bankruptcy drops off your credit report, you could be qualifying for loans with good rates and terms. I still consider FICO a fiction but it still runs your credit life, and all the lenders use this tool all the time. So, it is an important yardstick.

Nothing in credit remains forever. A bankruptcy legally can remain on your credit report for up to 10 years, but its effect on your credit score can start to diminish the day your case is closed — if you adopt responsible credit habits such as paying your bills on time, using only a small portion of your available credit and not applying for too much credit at once. Well, to start, one must learn some lesson, some financial education after declaring bankruptcy and devise a saner financial course. The days of wasteful expenditure should be gone forever and one must always learn new tools, education, train, or get a professional training to acquire more money. Of course, if you become wealthier, it may solve lots of your financial problems.

You may live on cash for quite some time and paying by cash is a good habit, but still one has to use credit. Afterall, we live in a credit society and we have to travle, hire a cab or rent a car and buy grocery sometime on credit cards. You have to get and use credit to build your credit score. But if you want to rebuild your credit score, you can’t sit on the sidelines.

Did you ever try to make a budget? Of course a written budge, and not something on whims only. No technical knowledge is required. Simply write one page all sources of your income and on the next page write faithfully all of your expenditure, and see why there is so much widespread deficit in both. Why can’t you balance the budget and live a healthy life.
Of course it is time to clean up your credit report. You may find someone who can help you or you can write simple letters to all the credit bureaus. Possibly, your credit report may still show some of the delinquencies which ought to have been wiped out but still lingering there like a bad dream. Also, if you have other serious mistakes on your credit report, those need to be corrected as well. Your credit score is based on information in your credit report, so errors on your report can seriously dampen your score.

More Banks Falling


We all know how slow the banks are when it comes to loan modification. We send repeatedly the loan documents with all the requirements, and yet the bank still keeps on asking more and more documents and never even acknowledging the docs which they already had received. Well, banks keep on losing money because they were not getting any mortgage payments, nor any modified payments from homeowners, yet paying their HOA, insurance, home upkeep, cash for keys and foreclosure fees. This all compound to their losses. We always thought they would listen, and business judgment would prevail where they can cut their losses. However, lots of banks are also working on some kind of “Exit Strategy” or “Strategic Default” which many homeowners are doing. Please read this link and see how many banks are “foreclosing” upon themselves. (i.e declaring bankruptcy)

http://www.dailyfinance.com/story/insurance/2010-bank-closures-failures/19561975/

More Federal Help for Nevada Homeowners


This is the latest breaking news for NV homeowners. More federal help is on the way. We hope that this is not an election stunt to reelect Harry Reid, but would be a real help for dwindling hopes for NV homeowners.

http://www.lvrj.com/business/nevada-homeowners-could-get-help-from-federal-funding-97004429.html

New HAMP Modification Effective June 1, 2010


New Home Affordable Modification Program (“HAMP”) Loan Modification Guidelines Taking Effect June 1, 2010

The federal government provided new HAMP borrower outreach and communication guidelines for foreclosure actions while a borrower is being evaluated under HAMP. Furthermore, these guidelines provide additional protection for delinquent borrowers who have filed bankruptcy but would otherwise be eligible for HAMP benefits. For a copy of the full disclosure, see Supplemental Directive 10-02.

Here are some of the key highlights from the directive include:

FORECLOSURE

Additional Foreclosure steps are required:
• The servicer must evaluate the borrower’s eligibility under HAMP and determine that the borrower is ineligible before referring the borrower to foreclosure (or make “reasonable solicitation efforts”).

• If foreclosure activity has already been initiated, the foreclosure sale cannot occur until after the servicer has determined the borrower is ineligible under HAMP (or make “reasonable solicitation efforts”).

• The servicer must give the borrower 30 days to respond to HAMP “Non-Approval Notices” in certain circumstances before conducting the foreclosure sale.

• The servicer must provide the foreclosure attorney certification in writing that the borrower is ineligible for HAMP before conducting the foreclosure sale.

BANKRUPTCY• If the borrower in active Chapter 7 or Chapter 13 bankruptcy (or attorney or bankruptcy trustee) requests, the servicer MUST consider the borrower under HAMP and can no longer decline borrower as a “proper exercise of discretion.”

• If the borrower has been approved on a trial loan modification and files a Chapter 7 or Chapter 13, the servicer MAY NOT deny the borrower for a permanent modification only because of filing bankruptcy.

• If a delinquent borrower has a discharged Chapter 7 and chose not to reaffirm the first lien mortgage debt is still eligible under HAMP, with the following provision added to the permanent modification agreement: “I was discharged in a Chapter 7 bankruptcy proceeding subsequent to the execution of the Loan Documents. Based on this representation, Lender agrees that I will not have personal liability on the debt pursuant to this Agreement.”

Joy of Foreclosure.


Yes, it is painful, it is headache, but if there is only choice of foreclosure left, then folks are enjoying it. No one can blame them. They got out of this miserable situation for which they can’t be blamed alone. To them heck with loan modification, lengthy phone calls to lenders all day and sending unending faxes to all those fax machines and talking endless to half trained people over the phone whose only tactics were rudeness, arrogance and collections. Let us enjoy reading this article from NY Times.

http://www.nytimes.com/2010/06/01/business/01nopay.html

Nevada Scam Loan Modification Agencies Fined by MLD


The Division of Mortgage Lending continues to diligently enforce mortgage lending laws by disciplining 10 entities for various violations of those laws.

* The Division fined now former mortgage agent Charmaine A. Hicks $2,500 plus administrative costs for failing to cooperate in a Division investigation.

* Henderson-based mortgage broker Evofi One was fined for sharing office space with unaffiliated businesses. The Division issued a fine of $5,000, plus administrative costs.

* Las Vegas-based The Sussex Group, an escrow agency, and its sole shareholder, Barry L. Fulco, were ordered to Cease & Desist operations after the Division discovered that the physical location listed on the application did not match the location provided to clients, after the business vacated a location without disclosing it to the Division, and after the Division was unable to subsequently find a permanent office location for the business. The Sussex Group was ordered to provide a full accounting of all transactions and moneys held in trust and was issued a $30,000 fine, plus administrative costs.

* Las Vegas-based mortgage broker Pinnacle Lending Group has entered into a Stipulated Settlement Agreement with the Division because the company improperly compensated its mortgage agents. This activity resulted in a fine of $10,000 (a portion of which was suspended) and administrative costs.

* Pea Management Group, Inc., dba Escrow Unlimited, entered into a Stipulated Settlement Agreement with the Division because the company did not maintain complete and suitable transaction records. Pea Management has been fined $3,500. The company has corrected the records deficiencies and has also agreed to increase its surety bond.

* The Division has fined Home Plus Financial, Inc., formerly licensed as a mortgage banker, a total of $5,000: $2,500 for failing to submit financial information and $2,500 failing to permit an examination.

* Cedar Mortgage Company, Inc., dba Cedar Mortgage, based in Fallon, Nevada, has entered into a Stipulated Settlement Agreement with the Division. Cedar Mortgage providedmortgage broker services out of an licensed California office. The company agreed to pay a fine of $2,500 and surrender its mortgage broker license.

* The Division has revoked Las Vegas-based OneCap Mortgage Corporation’s mortgage broker’s license because of its failure to abide by the terms of a previous settlement agreement.

* The Division has issued a Cease & Desist Order to Las Vegas-based Homekeepers RSVP, formerly dba Homekeepers, LLC, for performing unlicensed loan modification services. The company is prohibited from advertising for and/or soliciting foreclosure or loan modification consulting business and cannot provide these services to Nevada consumers. The company has also been fined $20,000 and must pay the Division’s investigative costs.

* After investigating numerous complaints, the Division has issued a Cease & Desist Order to Las Vegas Paralegal Services and Maria D. Davila for providing foreclosure and loan modification consulting services without a license from the Division. Ms. Davila and Las Vegas Paralegal Services are prohibited from advertising for and/or soliciting foreclosure or loan modification consulting business and cannot provide these services to Nevada consumers. They have each been fined $10,000 and are required to pay the Division’s investigative costs as well as any attorney’s fees the Division may incur.

“Today’s announcement once again highlights our continuing commitment to protecting Nevada consumers,” said Mortgage Lending Commissioner Joe Waltuch. “Those allowing or participating in inappropriate mortgage-related activity will be held accountable.”

For more information about the Division of Mortgage Lending, visit http://mld.nv.gov/index.htm

How to prepare financial information before you talk to your lender?


HOUSEHOLD FINANCIAL INFORMATION INCOME BUDGET FOR HOUSEHOLD

SOURCE OF INCOME LAST MO. ACTUAL THIS MO. EXPECTED THIS MO. ACTUAL ADJUSTED MONTHLY
Employment $ $ $ $
Overtime ______________________________________________________
Child Support/Alimony ___________________________________________
Pension _______________________________________________________
Interest _______________________________________________________
Public Benefits _________________________________________________ ______________________________________________________________
Dividends
Trust Payments ________________________________________________
Royalties ______________________________________________________
Rents Received _________________________________________________
Other (List) ____________________________________________________

TOTAL (MONTHLY) $ $ $ $

NOTES/ANTICIPATED CHANGES:______________

EXPENSE BUDGET FOR HOUSEHOLD

TYPE OF EXPENSE LAST MO. ACTUAL THIS MO. EXPECTED THIS MO. ACTUAL ADJUSTED MONTHLY
Payroll Deductions $ $ $ $
Income Tax Withheld ____________________________________
Social Security _________________________________________
FICA
Wage Garnishments ____________________________________ Credit Union _______________________________________
Other ________________________________________________
Home Related Expenses
Mortgage or Rent ______________________________________
Second Mortgage ______________________________________
Third Mortgage ________________________________________
Real Estate Taxes ______________________________________
Insurance _____________________________________________
Condo Fees & Assessments ______________________________
Mobile Home Lot Rent ___________________________________
Home Maintenance/ Upkeep ______________________________
Utilities _______________________________________________
Gas __________________________________________________
Electric ___________________
Oil _______________________
Water/Sewer ____________________
Telephone:
Land Line _______________________
Cell ____________________________
Cable TV ________________________
Internet
Other __________________________
Food
Eating Out ______________________
Groceries _______________________
Clothing ________________________________
Laundry and Cleaning _____________________
Medical ________________________________
Current Needs _______________________
Prescriptions _______________________
Dental _______________________
Insurance Co-Payments or Premiums
Other _________________________________
Transportation _________________________
Auto Payments ________________________
Car Insurance ________________________
Gas and Maintenance _________________________
Public Transportation _______________________
Life Insurance _________________________
Alimony or Support Paid _________________________
School Expenses _________________________
Student Loan Payments _________________________
Entertainment _________________________
Newspapers/Magazines _________________________
Charity/Church _________________________
Pet Expenses _________________________
Amounts Owed on Debts _________________________
Credit Card__________________________________
___________________
Credit Card
___________________
Credit Card
___________________
Medical Bill
___________________
Medical Bill
___________________
Other Back Bills (List)
___________________
___________________
Cosigned Debts
Business Debts (List)
___________________
___________________
Other Expenses (List)
___________________
___________________
Miscellaneous
TOTAL _______________________________________________________

Other Important Debt Issues:

Wage Garnishments Yes______ No______
Pending Court Cases Yes______ No______
Pending Utility Shut-offs Yes _____ No _____
Car Loan Defaults or Repossessions Tax Debts Yes ____ No____
Student Loan Debts Yes_____ No_____

Other:
Notes/Anticipated Changes:
Describe Assets and Other Resources:

Savings Yes______ No______ Amount $__________________

Court Cases Pending Against Others Yes______ No__________
Value $______________

Anticipated Tax Refunds Yes______ No____________
Amount $______________

Assets Which Can Be Sold Yes ______ No______ Value $______________

Pension or Retirement Funds Yes______ No______ Value $______________

Other Assets and Notes:

INCOME AND EXPENSE TOTALS

Last Mo. Actual This Mo. Expected This Mo. Actual Adjusted Expected
A. Total Projected Monthly Income
B. Total Projected Monthly Expenses
Excess Income or Shortfall (A minus B)

Notes:

OTHER INFORMATION

1. Have you made an effort to arrange a workout on their own? What result?

2. Have you filed bankruptcy? If so when? Current status of case if still pending? If bankruptcy is over, what result?

3. Other issues which came up during this time.

4. Questions and open issues that must be resolved

Strategic Defaults or Walkaways–New Threats to Homeownership


We are hearing new and new words again and our real estate terminology is becoming richer every day. Until only couple years ago, we did not even know what is a short sale or deed in lieu. Now, a new word is becoming familiar every day and it is called strategic default. A strategic default is the decision by a borrower to stop making payments (i.e. default) on a debt despite having the financial ability to make the payments.
This is particularly associated with residential and commercial mortgages, in which case it usually occurs after a substantial drop in the house’s price such that the debt owed is (considerably) greater than the value of the property — the property negative equity or “underwater” — and is expected to remain so for the foreseeable future, such as following the bursting of a real estate bubble. Such borrowers are called “walkaways”.
Even distinguished economists Paul Krugman and Hal Varian have acknowledged that strategic default will be an inevitable result of the collapse of the finance and property bubble of the era following 2006. They also note that this is one of the few ways of freeing people from the burden of mortgage debt
The walkaways are the people who find themselves unable to meet their mortgage payments—and to solve the problem simply move out their belongings at night, drop their house key in the mailbox and disappear. In West Texas, largely because of walkaways, the Federal Government currently has 1,800 repossessed houses on its hands. In seven South Florida counties, walkaways have abandoned 3,000 FHA-homes. The rate of mortgage foreclosures has tripled during the past ten years, to an estimated 3.77 per 1,000 mortgages. Most housing economists agree that the leveling off of home prices in many parts of the U.S. accounts for most of the increase. As long as home prices were rising, a homeowner who could not meet his payments could always sell out—usually at a profit. Now, with prices steady, an overextended homeowner must either sell at a loss or face foreclosure.
WAlkAWAYS are done by homeowners who are financially savvy and had calculated that there is no outcome or light at the end of the tunnel. A strategic default is done by smart and educated people compared to Walkaways who are financially not that savvy and no solid jobs and can move easily. While strategic defaulters calculate and savvy and knows the financial market well. They have good income jobs and mostly both the spouses are working in middle income bracket.
Again, this walkaways and strategic default is a dangerous phenomenon and would nullify all the efforts by federal government in solving this home foreclosure crisis. If it continues, there would be no end in sight and it would engulf all of us. Our situation would not be different than say from Greece or Portugal.

Foreclosures Are Coming Down-Finally something better to read!


The good news is that foreclosure rate is coming down. It is happening all across USA. Nevada is a bit slow to catch up. However, things are improving in Nevada as well. Please read the following article.
http://247wallst.com/2010/05/13/a-little-relief-in-foreclosure-rates/

Lawsuit Filed Against Wells Fargo For Not Doing Permanent Loan Modification


As we know banks had done temporary loan modification and promised permanent loan modifications if the borrowers at least make three payments and their financial conditions are not substantially changed. Many lenders had done temporary loan modification but somehow were reluctact to do permanent loan modification. Here, we have a copy of the complaint where Wells Fargo and Bank of America were sued.

http://www.nclc.org/issues/cocounseling/content/hamp-BosqueWFComplaint.pdf

http://www.nclc.org/issues/cocounseling/content/hamp-Johnson-BOA-Complaint.pdf

What About 2nd Mortgages?


JPMorgan Chase this week became the latest big bank to say it is willing to modify second mortgages for some struggling borrowers. It can be termed as baby step as we had seen a continuous neglect by lenders to modify second mortgages. They had frowned upon this idea for long time. As we know, most of the homes in Nevada has a second loan which are called junior liens in legal language and they are subordinate to the first loan.

Most of the homeowners who are behind on their first mortgage payments are also behind on their second mortgage payments. All the modification programs by federal government only has tackled first mortgages . The Home Affordable Modification Program, which is intended to ease mortgage payment reductions, is aimed at several million struggling borrowers. Of 1.4 million trial modifications offered so far, only 170,000 have resulted in adjustments that the program calls “permanent.” In reality, even after modification many borrowers are still overburdened, and further defaults look inevitable.

That ought to focus banks’ attention on their second-lien loans. There may be little or no chance many of them will ever be repaid. But banks have avoided writing down second liens because accounting rules allow them to consider the loans performing so long as borrowers make interest payments. It’s easy to understand why the banks are avoiding the issue. According to Amherst Securities, of $1.05 trillion in outstanding second liens, commercial banks hold $767 billion. Bank of America, Citigroup, JPMorgan Chase and Wells Fargo alone hold $442 billion of them.
A government modification program for second liens, known as 2MP, was first put forward a year ago. But Bank of America, Wells Fargo and now JPMorgan Chase have only recently joined. It is not likely to reach many borrowers since it focuses on only those few who do “permanent” modifications under the federally sponsored program. Assuming around half of distressed homeowners have second mortgages, this would cover some 85,000 second liens, of the millions that are outstanding.

What Are Predatory Lending Practices?


There are many types of predatory lending practice. However, the following are most common:

1. Flipping: It is a process in which a creditor encourages a consumer to refinance a loan several times in a relatively short period of time, each time adding higher points and fees.

2. Packing. It involves adding fees to a new loan for services such as credit insurance or adding the borrower’s old debt into the new loan. this tactic gets its name from the fact that lenders “pack” old debt into new loans, which can make it more difficult for borrowers to repay them.

3. Stripping. It refers to the practice of basing the terms of a loan on a borrower’s equity in his or her home, rather than on the borrower’s ability to repay the debt. Eventually, foreclosure and sale of the property occurs, and the money derived from the equity is stripped from the homeowners and goes to the creditor in repayment.

4. Also, a predatory lending includes when home improvement contractors go door-to-door, seeking to induce people to take out mortgages to pay for home improvements. Most of the times, the consumers can be unaware of the facts that they were subjected to predatory lending

Now Delinquency in the Modified Loan–What Next?


It was not easy to get the trial loan modification under the HAMP. Borrower had to sent financial documents, that too repeatedly. The lenders was asking non stop pay stubs, 4506-T signed, hardship letter, tax return and bank statements. After resending these many times, the lender may qualify the borrower/homeowner for a trial loan modification. Now, folks who were happy with these trial and finally permanent loan modifications, are becoming delinquent again. Now, they are not sending their payments and either want to do a strategic default or just get rid of the home through any means. This is really bad for the economy and bad for all the contractual obligations. Homeowners reneged on their contractual obligations. The loan modification replaced their old contract. It is unfortunate that the homeowners are again becoming delinquent.

This is released into a new Treasury’s report stated goal is for the modification program to help as many as four million households, the oversight report said, “but only some of these offers will result in temporary modifications, and only some of those modifications will convert to final, five-year status.” The report continued: “Even among borrowers who receive five-year modifications, some will eventually fall behind on their payments and once again face foreclosure. In the final reckoning, the goal itself seems small in comparison to the magnitude of the problem.”

The Treasury took issue with the report and said the pace of modifications was picking up. The number of active permanent modifications in March was 227,922, an increase of 35 percent from those in February. An additional 108,212 permanent modifications are awaiting borrower approval.

The number of homeowners who defaulted on their mortgages even after securing cheaper terms through the government’s modification program nearly doubled in March, continuing a trend that could undermine the entire program. More Fall Behind on Lower PaymentsData released Wednesday by the Treasury Department and the Housing and Urban Development Department showed that 2,879 modified loans had been ended since the program’s inception in the fall, up from 1,499 in February and 1,005 in January.

The Treasury Department said it could not explain the growing number of what it called cancellations, almost all of which were apparently prompted by the borrower’s being unable to make the new payment. A scant number — 37 — were because the loan had been paid off, presumably because the borrower sold the house. About seven million households are behind on their mortgage payments.

The Obama administration’s modification program has been widely criticized for doing little to help them. The program received another bad review on Wednesday with the release of a report from the Congressional Oversight Panel. The Treasury’s stated goal is for the modification program to help as many as four million households, the oversight report said, “but only some of these offers will result in temporary modifications, and only some of those modifications will convert to final, five-year status.”

The report continued: “Even among borrowers who receive five-year modifications, some will eventually fall behind on their payments and once again face foreclosure. In the final reckoning, the goal itself seems small in comparison to the magnitude of the problem.”

The Treasury took issue with the report and said the pace of modifications was picking up. The number of active permanent modifications in March was 227,922, an increase of 35 percent from those in February. An additional 108,212 permanent modifications are awaiting borrower approval.

Shaun Donovan, secretary of Housing and Urban Development, said in an interview that those were the important numbers to focus on.

“One percent of these loans defaulting is a tiny fraction,” Mr. Donovan said. “Given how stressed these borrowers are, even in the best situation, there will be redefaults. But I don’t think there is any evidence that would cause us to worry at this point.”

Sixty percent of modifications undertaken by banks in late 2008 were in default a year later, according to the latest Mortgage Metrics Report compiled by the Office of Thrift Supervision and the comptroller of the currency

More Fall Behind on Lower PaymentsData released Wednesday by the Treasury Department and the Housing and Urban Development Department showed that 2,879 modified loans had been ended since the program’s inception in the fall, up from 1,499 in February and 1,005 in January.

The Obama administration’s modification program has been widely criticized for doing little to help them. The program received another bad review on Wednesday with the release of a report from the Congressional Oversight Panel.

The Treasury’s stated goal is for the modification program to help as many as four million households, the oversight report said, “but only some of these offers will result in temporary modifications, and only some of those modifications will convert to final, five-year status.”

The report continued: “Even among borrowers who receive five-year modifications, some will eventually fall behind on their payments and once again face foreclosure. In the final reckoning, the goal itself seems small in comparison to the magnitude of the problem.”

The Treasury took issue with the report and said the pace of modifications was picking up. The number of active permanent modifications in March was 227,922, an increase of 35 percent from those in February. An additional 108,212 permanent modifications are awaiting borrower approval.

“One percent of these loans defaulting is a tiny fraction,” Mr. Donovan said. “Given how stressed these borrowers are, even in the best situation, there will be redefaults. But I don’t think there is any evidence that would cause us to worry at this point.”

Julia R. Gordon, senior policy counsel for the Center for Responsible Lending in Washington, said she expected the number of post-modification defaults to continue to rise.

“It’s definitely alarming to look at those statistics,” she said. “The current model for modifications doesn’t necessarily produce sustainable results.”

While the program is too new to predict its long-term success, the data on previous modification efforts is not encouraging.

Sixty percent of modifications undertaken by banks in late 2008 were in default a year later, according to the latest Mortgage Metrics Report compiled by the Office of Thrift Supervision and the comptroller of the currency.

Here is the full article published in NYTimes:

http://www.nytimes.com/2010/04/15/business/15mortgages.html?scp=13&sq=&st=nyt

Class Lawsuite filed Against BAC for Reneging on Loan Modification


Finally, a lawsuit is filed in Seattle against Bank of America. It says that Bank of America dragged its foot in every matter denying the homeowners of the true benefits of both TARP and HAMP

http://www.seattlepi.com/local/417333_mortgage24.html?source=mypi