US Consumer Loan Aid–Has Its Limits:

November 27, 2008

U.S. Consumer Loan Aid Will Trickle Only So Far


 If you’re buying a home, refinancing a mortgage or seeking an auto or student loan, the new government plans to make borrowing cheaper and easier sound like a gift.

One problem, however, is that whole categories of people may be ineligible. If you are refinancing, you could be out of luck if your mortgage balance is more than your house is worth. And for all kinds of new loans, lenders have raised their standards even as their customers’ credit records are deteriorating because of late payments and other problems.

And then there is the fact that the government’s efforts may take a while to start working — if they do at all. Once again, the government hopes that the benefits to consumers will trickle down. It is not simply lending to them directly.

So while mortgage rates fell by at least a quarter of a percentage point on Tuesday, the day of the government announcement, and stayed there Wednesday, it could take months for the piece that affects credit card and small-business loans to kick in.

“It’s not going to be like flipping a light switch,” said Joe Belew, president of the Consumer Bankers Association. “You’re not going to see an avalanche of new loans. But the system is under a lot of stress, and anything that can lubricate the markets is a good thing.”

The federal government made two big moves on Tuesday. The first, already known as TALF, for Term Asset-Backed Securities Loan Facility, is a $200 billion program that will lend money to private investors who buy securities backed by student and auto loans, credit card debt and small-business loans guaranteed by the Small Business Administration.

The goal of the plan is to fix the mechanism that keeps credit flowing freely from lenders to borrowers. Lenders often package consumer loans into securities and sell them to investors. Then the lenders use the proceeds to issue more loans to consumers. But over the last two months, those investors have stopped buying.

To encourage those investors to start buying again, the Federal Reserve has agreed to lend them money at attractive interest rates to buy the securities backed by consumer debt. It is also providing an insurance policy should many of the loans underlying those securities default.

In the second part of the program, the Fed has agreed to purchase $500 billion of mortgage-backed securities guaranteed by Fannie Mae, Freddie Mac and Ginnie Mae.

“This brings a major buyer into the marketplace with very deep pockets to snap up available securities, and a sizable number of them at that,” said Keith T. Gumbinger, vice president of the financial publisher HSH Associates in Pompton Plains, N.J. “With new demand for both debt- and mortgage-backed securities coming into the market, the dollar value of those investments can rise, helping to lower their yields. Mortgage rates track those yields, and decline right along with them.”

Lower mortgage rates will certainly help some consumers qualify for mortgages who may not have otherwise; lower rates translate into lower payments. The move downward will also move some borrowers to try to refinance their mortgages. But that does not necessarily mean banks will be any more likely to oblige. Another complication is that the value of many homes — even those owned by people with stellar credit — have declined, making refinancing difficult.

“At the end of the day, it still comes down not to just a rate discussion, but a discussion about qualifications as well,” said Cameron Findlay, chief economist at LendingTree. “There are fundamental elements of qualifications for loans that will inhibit the ability of this program to have any meaningful, significant impact.”

Lower mortgage rates do little when unemployment rises and wages stagnate, he added.

To qualify for the best rates, borrowers will need to have a credit score of at least 720 and a down payment of at least 10 percent and probably closer to 20 percent. Borrowers seeking to refinance will need to have the same amounts in home equity.

Still, lower rates may lure some potential homebuyers back to the market. Some brokers have already started fielding calls. “The phones are ringing,” said Joseph Taglivia, chief operating officer of Manhattan Mortgage. “There were certainly people who called to lock in a refinancing or to find out what they qualified for to purchase.”

The efforts to loosen the purse strings in other areas of consumer lending may take longer, however, if they work at all. Most of the big credit card companies are parts of banks with billions on deposit. They can already use those deposits as a ready source for new credit card loans.

“Banks may want to fund fewer of these loans out of their deposits,” said Odysseas Papadimitriou, who worked in the card industry at Capital One before starting Evolution Finance, parent company of, a consumer card selection site. It is possible, he said, that they will simply swap one source of financing for another and not increase the total amount of loans that they are willing to make.

American Express is unique in that it does not have a big deposit-gathering apparatus. Joanna Lambert, a company spokeswoman, said that the company was still working through the details of the TALF program but would take advantage of it if it was eligible.

It is not yet clear how much the government program will help grease the wheels for small-business bank loans, but there is already a potential bright spot that business borrowers may not have considered. “Credit unions have been seeing so many opportunities in the marketplace,” said Christine Barry, research director at Aite Group, a financial services research and consulting firm. About 40 percent of credit unions are either lending to small businesses now or expect to start doing so soon, she said.

With auto and student loans, there may be more reason for optimism, given that many lenders in these areas are specialists who may not have access to consumer deposits to use to finance loans. The renewed opportunity to sell more loans to investors could help those consumers.

But none of the government’s moves alters some unfortunate facts. Lenders want better credit scores from consumers in every category. At the same time, millions of people are much less creditworthy than they used to be, because of the damage they have done to their credit scores through late or missed payments.

Lenders themselves have contributed to the downturn in creditworthiness by lowering the credit limits on huge numbers of customers’ credit cards. This has the effect of raising the percentage of available credit that a consumer is using, which usually causes their credit scores to fall.

Clearly, the banks do not have the confidence in how consumers will handle credit that they might have had six months ago. It is not clear whether a new source of funds will cure this skittishness.

Nor is it certain how much untapped desire to borrow exists. The fact that consumer spending fell an entire percentage point last month, as the Commerce Department reported Wednesday, may reflect something other than a lack of capital.

“If consumers are afraid to make purchases, it doesn’t really matter how much available credit you have,” said Mr. Papadimitriou of Evolution Finance.

Foreclosure Recovery Scams–Be Warned:

If any firm claims they can stop your foreclosure immediately if you sign a document appointing them to act on your behalf, you may well be signing over the title to your property and becoming a renter in your own home!  Never sign a legal document without reading and understanding all the terms and getting professional advice from an attorney, a trusted real estate professional, or a housing counselor

FORECLOSURE ALERT – Homeowners: Be Informed About Foreclosure Consulting Services

Las Vegas — The Nevada Division of Mortgage Lending and the Consumer Affairs Division are warning homeowners to be cautious when contracting with companies representing themselves as “foreclosure consultants”. While many of these providers are legitimate, many are not and may charge hundreds of dollars up front to negotiate with a lender on behalf of the homeowner, often without success.

“There are laws prohibiting fees being charged up front for foreclosure assistance,” says Mortgage Lending Commissioner Joe Waltuch. According to NRS 645F.400, foreclosure consultants cannot charge a fee before they have performed the services you’ve contracted for. 

“It’s important to remember, however, that those laws only take affect when the home has officially been placed in the lender’s foreclosure cycle,” continued Commissioner Waltuch. “Depending on the services offered, the foreclosure consultant may also need to be registered with the Nevada Consumer Affairs Division under the Credit Service Organization law.”

According to NRS 598.741, companies providing “counseling or assistance to a person in establishing State of Nevada or effecting a plan for the payment of his indebtedness” must be registered with Consumer Affairs. “Before signing any contracts, check with Consumer Affairs to determine if the company is registered,” says Consumer Affairs Commissioner James Campos. “It also helps to check with the Better Business Bureau for complaints and to research the company on the Internet to see what experiences other consumers have had.”

Adds Commissioner Waltuch, “Be careful when using the Internet to find these types of companies.  There are many out-of-state companies, and some lawyers, who claim they can help you. Make sure they are legitimate businesses, properly licensed to operate in Nevada.”

Consumers may also receive foreclosure assistance, including loan modification help, by working with a qualified housing counselor. Legitimate foreclosure consulting agencies are generally nonprofits that never charge an up-front fee and are usually free. Visit for a list of qualified Nevada housing counselors.

If you think you have been victimized by an unscrupulous foreclosure consultant, file a complaint with Consumer Affairs at For more information about foreclosure scams, visit the Foreclosure Help Website at

In addition, Commissioner Campos encourages consumers to visit the Fight Fraud Website at “The site includes extensive tips on how to prevent fraud and provides downloadable complaint forms to help you respond effectively if you become a victim,” says Campos. “Visit it regularly for the latest fraud alerts.”


If your property mortgage is delinquent and you are facing foreclosure, you may be contacted by a person or company willing to take the property off your hands to save your credit. While some of these companies are actually good and do help, others are not.

  • Do not sign anything that you do not understand or that is blank. Go through a reputable escrow company to make sure that your mortgage(s) is paid off to the satisfaction of the lender(s). If you do not do this, you may find that the person or company has title to or owns your property, yet the mortgage is still in your name. The person or company pays nothing to the mortgage(s) holder. The foreclosure happens. Your credit is ruined while the company “saving” your credit has made money from your property by renting it until the foreclosure.

If you think you’ve been a victim of this fraud, contact Nevada Consumer Affairs Division at (702) 486-7355 or (775) 688-1800.

 Common Foreclosure Scams

  1. Equity skimming: A “buyer” approaches you, offering to get you out of financial trouble by promising to pay off your mortgage or give you a sum of money when the property is sold. The “buyer” may suggest that you move out quickly and deed the property to him or her. The “buyer” then collects rent for a time, does not make any mortgage payments, and allows the lender to foreclose. Remember, signing over your deed to someone else does not necessarily relieve you of your obligation on your loan.

  2. Phantom help: The “rescuer” charges outrageous fees for light-duty phone calls or paperwork that the homeowner could easily do, none of which results in saving the home. This predatory scam gives homeowners a false sense of hope and prevents them from seeking qualified help.

  3. The bailout: In this scam, the homeowner is deceived into signing over title with the belief that he will be able to remain in the house as a renter and eventually buy it back over time. The terms of these scams are so onerous that the buy-back becomes impossible, the homeowner loses possession and the “rescuer” walks off with most or all of the equity.

  4. The bait-and-switch: In this scam, the homeowners think they are signing documents to bring the mortgage current, but instead actually surrender their ownership. They usually don’t even know they’ve been scammed until they’re evicted.

  5. Phony counseling agencies. Some groups calling themselves “counseling agencies” may approach you and offer to perform certain services for a fee. These could well be services you could do for yourself for free, such as negotiating a new payment plan with your lender, or pursuing a pre-foreclosure sale.

7 Ways to Avoid Foreclosure Scams

Follow these tips from the National Consumer Law Center.

  1. Don’t panic. Get detailed information about the deadlines you face in resolving your problems. Pay special attention to the date on which you would lose legal right to ownership.
  2. Never sign a contract under pressure. Take your time, and consult a lawyer if possible.
  3. Never sign away ownership via a quitclaim deed or other means without consulting a lawyer. Be especially suspicious of offers to lease back your home, in order to buy it back over time. These offers are weighted against you.
  4. Never make your mortgage payments to anyone other than your lender. If you can’t pay, do not ignore warning letters from your lender; contact them instead.
  5. Beware of any home-sale contract in which you are not formally released from liability for your mortgage. Make sure you know the rights you are giving up and that you agree to give them up.
  6. Don’t sign anything with blank lines or spaces; information could be added later without your knowledge and consent.
  7. If you do not speak English, never use a “rescuer’s” translator. Instead, insist on using your own translator.

 Source:,, and the NationalConsumerLawCenter


Speedier Service at Countrywide

Countrywide has started moving things faster than the previous procedure. Phones are picked up sooner than expected. I talked to one of the supervisor and she told me that they have hired more people. In fact, when I called this morning, the whole room was buzzing with sounds and seems an efficient way to run this onslaught of loan modification business. The supervisor was pleasant and eager to help. As long as your documents are in order, and you supply them ahead of time, a loan modification specialist would contact you and discuss negotiation of your loan modification. Folks, as I stated before Countrywide is under a legal agreement with the Nevada State Attorney General to do loan modification up to the tune of 600 millions dollars for the state of Nevada. Please contact me for more information.

Next Two Months are Important in Loan Modification

It seems like the loan modification program by various banks is moving forward albeit on a slow pace. My impression is that once all the policy is laid down, and the loan modification personnel’s doubts are cleared, the pace of loan modification would pick up. However, for people who like to do loan modification it is suggested that they should have their papers in order and ready. We like to sum up all those documents one more time:

– Bank statements for the last three months

– Payroll stubs for the last 3 months

-Tax Return for the year 2007

– Employment record of both spouses

– Hardship letter, and reasons why this loan modification is required

-copies of their mortgage payments coupon

FDIC Lays Down Home Loan Modification Plan

FDIC lays out broad home loan modification plan

Fri Nov 14, 2008 2:47pm EST
 Related NewsBy Karey Wutkowski

WASHINGTON (Reuters) – The federal agency that insures most U.S. bank deposits unveiled a plan to prevent about 1.5 million home mortgage foreclosures by promising to share any losses with mortgage companies that agree to refinance certain home loans.

The agency, the Federal Deposit Insurance Corp, said on Friday the plan would cost the government about $24.4 billion, which could be paid from the U.S. Treasury’s $700 billion bailout program for the financial industry.

So far, most of the money in the bailout program, the Troubled Asset Relief Program, or TARP, has been injected as capital into banks.

FDIC Chairman Sheila Bair, who spent weeks unsuccessfully lobbying Bush administration officials for the foreclosure prevention plan, unveiled her agency’s proposal two days after Treasury Secretary Henry Paulson dismissed the idea of the government underwriting failing home loans.

Paulson told reporters on Wednesday, “That (foreclosure plan) is a subsidy, or spending, program. The TARP was investment, not spending.”

The FDIC pushed forward with its plan, posting it on its website Friday morning (

“Although foreclosures are costly to lenders, borrowers and communities, the pace of loan modifications continues to be extremely slow,” the FDIC said. “It is imperative to provide incentives to achieve a sufficient scale in loan modifications to stem the reductions in housing prices and rising foreclosures.”

The FDIC said its plan would modify about 2.2 million mortgage loans by offering financial incentives to mortgage servicers. It would pay servicers $1,000 to cover expenses for each loan modified to the required standards, and would promise to share up to 50 percent of losses incurred if a modified loan defaults.

Eligible borrowers would include those who have missed at least two monthly payments on loans for homes they live in. Servicers would be expected to lower those borrowers’ monthly payments to about 31 percent of the borrowers’ monthly income.

The Treasury Department said on Friday that it was aggressively looking at ways to reduce skyrocketing home foreclosures under the TARP.

“We continue to aggressively examine strategies to mitigate foreclosures and maximize loan modifications, which are a key part of working through the necessary housing correction and maintaining the strength of our communities,” Treasury Interim Assistant Secretary Neel Kashkari said in testimony prepared for delivery to a U.S. House of Representatives committee.

(Reporting by Karey Wutkowski; editing by John Wallace) 

Summary of the Housing and Economic Recovery Act

Summary of the “Housing and Economic Recovery Act of 2008”

 A. Summary of the “Federal Housing Finance Regulatory Reform Act of 2008

 This legislation strengthens and modernizes the regulation of the housing government-sponsored enterprises – Fannie Mae and Freddie Mac (the enterprises) and the Federal Home Loan Banks (FHLBs or Banks) – and expands the housing mission of these GSEs. In addition, it creates a new program at FHA that will help at least 400,000 families save their homes from foreclosure by providing for new FHA loans after lenders take deep discounts.The program is built on five principles:

  •  Safety and Soundness Regulation of the Housing GSEs The “Federal Housing Finance Regulatory Reform Act of 2008” establishes a new, independent, “world class” regulator for Fannie Mae, Freddie Mac, and the Federal Home Loan Banks, the housing government-sponsored enterprises (GSEs). The legislation endows this regulator with broad new authority, equivalent to the authority of other federal financial regulators, to ensure the safe and sound operations of the GSEs, including the power to: Establish capital standards;establish prudential management standards, including internal controls, audits, risk management, and management of the portfolio;
  • enforce its orders through cease and desist authority, civil money penalties, and the authority to remove officers and directors;
  • • restrict asset growth and capital distributions for undercapitalized institutions;• put a regulated entity into receivership; and• review and approve (subject to notice and comment) new product offerings.
  • II. Mission Improvement The new legislation also significantly enhances the affordable housing component of the GSEs’ mission, and expands the number of families Fannie Mae and Freddie Mac (the enterprises) can serve by raising the loan limits in high cost areas (areas with median house prices that are higher than the regular conforming limit) to 150% of the conforming loan limit. Currently, this would be $625,000.

     B. Summary of the “HOPE for Homeowners Act of 2008”

     The “HOPE for Homeowners Act of 2008” creates a new, temporary, voluntary program within FHA to back FHA-insured mortgages to distressed borrowers. The new mortgages offered by FHA-approved lenders will refinance distressed loans at a significant discount for owner-occupants at risk of losing their homes to foreclosure. In exchange, homeowners will share future appreciation with FHA.

    Finally, the legislation creates a new Housing Trust Fund and a Capital Magnet Fund, financed by annual contributions from the enterprises, which will used for the construction of affordable rental housing.

     For the Federal Home Loan Banks (FHLBs), the legislation requires new affordable housing goals similar to those that apply to the enterprises for FHLB mortgage purchase programs. The legislation also requires the FHLBs to create a public use data base for such programs. Treasury-certified Community Development Financial Institutions (CDFIs) would become eligible to join FHLBs. Finally, community financial institution members of the FHLBs may use FHLB advances for community development purposes.

     1. Long-term affordability. The program is built on the idea, expressed by Federal Reserve Chairman Bernanke, that creating new equity for troubled homeowners is likely to be a more effective way to avoid foreclosures. New loans will be based on a family’s ability to repay the loan, ensuring affordability and sustainable homeownership.

    2. No investor or lender bailout. Investors and/or lenders will have to take significant losses in order to benefit from the proceeds of the loans refinanced with government insurance. However, these losses would be less than the losses associated with foreclosure.

    3. No windfall for borrowers. Borrowers will share their new equity and future appreciation equally with FHA. Borrowers will pay for the FHA insurance.

    4. Voluntary participation. This will be a voluntary program. No lenders, servicers, or investors will be compelled to participate.

    5. Restore confidence, liquidity, and transparency. Credit markets are fearful and frozen in part because banks and other financial institutions do not know what their subprime mortgages and related securities are worth. The uncertainty is forcing lenders to hoard capital and stop the lending necessary for economic growth. This program will help restore confidence and get markets flowing again.

      An Oversight 

      . The new program will be overseen by a Board made up of the Secretary of HUD, the Secretary of the Treasury, the Chairman of the Federal Reserve Board, and the Chairman of the Federal Deposit Insurance Corporation (FDIC). The Board will have the authority to develop standards within the framework of the legislation. Eligible Borrowers

     . Only owner-occupants who are unable to afford their mortgage payments are eligible for the program. No investors or investor properties will qualify. Homeowners must certify, under penalty of law, that they have not intentionally defaulted on their loan to qualify for the program and must have a mortgage debt to income ratio greater than 31 percent as of March 1, 2008. Lenders must document and verify borrowers’ income with the IRS.

     New Loan Amount

     Equity & Appreciation Sharing For the enterprises, the legislation tightens targeting requirements of the affordable housing goals, and rewrites those goals to ensure that the enterprises provide liquidity to both ownership and rental housing markets for low and very-low income families. The legislation requires the enterprises to serve a variety of underserved markets, such as rural areas, manufactured housing, and the preservation market. The legislation improves reporting requirements for affordable housing activities, including the expansion of the public use data base, and strengthens the new regulator’s ability to enforce compliance with the housing goals.

    . In order to avoid a windfall to the borrower created by the new 90% loan-to-value FHA-insured mortgage, the borrower must share the newly-created equity and future appreciation equally with FHA. This obligation will continue until the borrower sells the home or refinances the FHA-insured mortgage. Moreover, the homeowner’s access to the newly created equity will be phased-in over 5 years.

    Eligible Mortgages

    . In order to protect against adverse selection, the program prohibits the Secretary from paying an insurance claim whenever the representations and warranties required to be made by lenders are violated, or in cases in which a borrower has an early payment default and misses the first payment. The Act provides the Board the authority to establish other protections against adverse selection, such as requiring “seasoning” for certain higher risk loans before they can be insured under the program. Appraisers of property insured by FHA must be certified by the state where the property is located, or by a nationally recognized professional appraisal organization, and have “demonstrated verifiable education” in FHA appraisal requirements.

    Existing Subordinate Liens

    . Before participating in this program, all subordinate liens must be extinguished. This will have to be done through negotiation with the first lien holder.

    Qualified Safe Harbor

    The legislation provides servicers with an incentive to participate in the program by offering a safe harbor against legal liability.

    Program Size

    The program is authorized to insure up to $300 billion in mortgages and is expected to serve approximately 400,000 homeowners.

    Program Sunset

    The program will begin October 1, 2008 and sunset on September 30, 2011. CBO say the program will net nearly $250 million for taxpayers. The program is paid for by using part of the Affordable Housing Trust Fund; the GSE bill provides a further $2 billion cushion for the government by establishing a reserve fund at Treasury over ten years. If the program costs less than projected, the unused funds are returned to the Affordable Housing Trust Fund. If the program more than pays for itself (as was the case during the Roosevelt Administration), any excess savings are dedicated to reducing the national debt.

    C. Summary of the “Foreclosure Prevention Act of 2008”

    The Foreclosure bill passed by the Senate on April 10 contains the following provisions designed to address the problems faced by families and their communities in light of the foreclosure crisis:. To ensure that additional families can access the FHA program, which provides safe, fixed-rate mortgages, significant FHA reform is included to modernize, streamline and expand the reach of the FHA program. Under this bill, the FHA loan limit is

    1. FHA Modernization

     increased from 95% to 110% of area median home price with a cap at 150% of GSE limit (currently, $625,000), allowing families in all areas of the country to access homeownership through FHA. Downpayments of 3.5% will be required for any FHA loan and counseling requirements are enhanced to help provide for stable homeownership.

    Homes that have been foreclosed upon and are sitting unoccupied lead to declines in neighboring house values, increased crime and significant disinvestment. To ensure that communities can mitigate these harmful effects of foreclosures, $3.92 billion is provided to communities hardest hit by foreclosures and delinquencies. These supplemental Community Development Block Grant Funds will be used to purchase foreclosed homes, at a discount, and rehabilitate or redevelop the homes to stabilize neighborhoods and stem the significant losses in house values of neighboring homes.

    To help families avoid foreclosure, this bill provides $150 million in additional funding for housing counseling. These funds will be distributed by the Neighborhood Reinvestment Corporation by the end of 2008 to ensure families can quickly get the help they need. As many as 250,000 additional families connect with their mortgage servicer or lender to explore options that will keep them in their homes as a result of these counseling funds. In addition, $30 million is provided to help provide legal services to distressed borrowers.

    To ensure that consumers are provided with timely and meaningful disclosures in connection with mortgages, the bill expands the types of home loans subject to early disclosures (within three days of application) under the Truth In Lending Act (TILA) including refinancings. The bill requires that disclosures be provided no later than 7 days prior to closing so borrowers can shop for another loan if not satisfied with the terms. The bill requires a new disclosure that informs borrowers of the maximum monthly payments possible under their loan, and also increases the range of statutory damages for TILA violations from the current $200 to $2000 to $400 to $4000.

    To assist returning soldiers avoid foreclosure, this bill lengthens the time a lender must wait before starting foreclosure from three months to nine months after a soldier returns from service and also provides returning soldiers with one year relief from increases in mortgage interest rates. In addition, the Department of Defense is required to establish a counseling program to ensure veterans and active service members can access assistance if facing financial difficulties. Also included is a provision that increases the VA loan guarantee amount, so that veterans have additional homeownership opportunities. The bill contains provisions to do the following: increase benefits paid to veterans with disabilities such as blindness for the purpose of adapting their housing; provide a moving benefit to servicemen and woman who are forced to move out of rental housing because the owner of the housing was foreclosed on; provide that veterans benefits received in a lump sum are treated the same for the purposes of eligibility for housing assistance as monthly benefits; and to allow the Veterans Administration to provide for improvements and structural alterations to homes of veterans with service-connected disabilities.

    Preserving the American Dream for Our Nation’s Veterans.Enhancing Mortgage Disclosure.Providing Pre-Foreclosure Counseling for Families in Need.Assisting Communities Devastated by Foreclosures.

     . The size of the new FHA-insured loan will be lesser of the amount the borrower can afford to repay, as determined by the current affordability requirements of FHA; or, 90% of the current value of the home. Loans must be 30-year, fixed rate loans.


Consumers Frequently Asked Questions:


HOPE for Homeowners Frequently Asked Questions for Consumers


General/Program Related Questions

What is the HOPE for Homeowners Program (H4H)?

This new program, created by Congress, is intended to help borrowers at risk of default and foreclosure refinance into more affordable loans.

How can the H4H program help me?

If you are having trouble making your mortgage payments, this program may allow you to refinance your loan into a new 30-year fixed rate loan with lower payments.

Do I have to pay anything to apply?

There will be closing costs associated with HOPE for Homeowners loans; however, they may not be required to be paid out of pocket by the borrower. Please consult your lender or a HUD-approved Housing Counselor for more details.

How long will the process take?

Processing time will vary, but usually takes approximately 60 days. Please consult your lender when you apply.

What information do I need to apply?

Your lender is in the best position to answer this question based on your specific situation, but at a minimum you will need evidence of your income and assets, as well as your current mortgage information.

How long is the H4H program available?

The program began on October 1, 2008 and will end on September 30, 2011.

What interest rate will I receive?

The interest rate for the new H4H loan will be provided by the lender and is based on current market rates.

I don’t want another adjustable rate mortgage. Will this interest rate be fixed or adjustable?

All HOPE for Homeowners loans are 30-year fixed rate mortgages insured by the Federal Housing Administration (FHA).

I contacted my lender and they are not interested in participating in this program. Can I apply with HUD?

HUD does not accept loan applications or lend money directly; however, you may apply with any FHA-approved lender who is participating in the program. You may also consult a HUD-approved housing counselor.

Eligibility Questions

My lender has started foreclosure proceedings. Can I still apply for H4H?

Yes, however, time is of the essence.

Is there an income restriction?

No, but you will need to demonstrate that you have sufficient, steady income to make the new H4H mortgage payments.

I recently filed for bankruptcy. Am I still able to apply for H4H?

Yes, borrowers in bankruptcy may participate; however, you will want to consult with the person handling your bankruptcy.

My lender has already foreclosed on my home. Can I still apply for H4H?

It may be possible depending on which stage of the foreclosure process you are in. You should talk to your lender immediately for more detailed information.

I have a first and second mortgage on my home. Can I still apply for H4H?

Yes, however, all your existing lenders must agree to release the liens against your home.

I am current on my mortgage. Can I apply for H4H?


Lender Related Questions

Can you recommend a lender?

HUD does not recommend lenders; however, a list of participating lenders is located on our website at In the section marked “At your service,” please click on the link “Find a HUD approved Lender in your area.”

I can’t reach my lender and I would like to apply. What should I do?

You may contact any participating lender to apply. For a list of HUD-approved lenders, please go to our website at In the section marked “At your service,” please click on the link “Find a HUD approved Lender in your area.”

My lender is not registered and I would like to apply. What should I do?

You may contact any participating lender to apply. For a list of HUD approved lenders please go to our website at In the section marked “At your service,” please click on the link “Find a HUD approved Lender in your area.”

Counseling Questions

I am not clear on what to do. How do I decide if this is the right choice for me?

You can contact a HUD-approved Housing Counselor in your area. They can help you evaluate the different options that may be available to you, and help you determine your best course of action. You can locate a housing counselor in your area on our website.

How can a housing counselor help me?

Housing counselors are knowledgeable about available programs to help struggling homeowners. They can review your specific situation, identify your options and help you make an informed decision.

Will I have to pay taxes on the portion of my loan(s) my current lender(s) “write off” or forgive?

You should contact the Internal Revenue Service at (800) TAX-1040, or your tax advisor regarding tax-related questions.



Loan Modifications Get Mixed Reviews:

Loan-modification plan gets mixed reviews

Bank of America’s new program to enable some homeowners to modify existing Countrywide mortgages may help people stay in their homes — but also could shove borrowers into a new cycle of loan failures, analysts said Monday.

The bank agreed to settle claims brought by state attorneys general in connection with risky loans Countrywide had originated. The loan-restructuring program would apply to borrowers who obtained subprime loans with adjustable or fixed rates, or who got adjustable-rate mortgages with multiple payment options.

“We will reach out to customers who may be eligible for this program,” said Dan Frahm, a Bank of America spokesman. He said that borrowers need to be seriously delinquent or at serious risk of becoming seriously delinquent. “This could even apply to individuals who are in foreclosure proceedings right now,” he said.

Bank of America bought Countrywide on July 1.

Up to 390,000 borrowers are expected to be eligible for a loan modification under the terms of the settlement. The loan restructuring could apply to about 120,000 borrowers in California, Frahm said. Bank of America will begin sending offers to borrowers Dec. 1.

The settlement is preferable to a prior program of loan workouts that Countrywide had initiated on a voluntary basis, according to California Attorney General Jerry Brown.

“This is mandatory,” Brown said. “We are going to enforce it and make sure it’s reasonable.”

But the new efforts could create a fresh round of problem loans and foreclosures a few years from now, warned Sean O’Toole, founder and chief executive with Discovery Bay-based Many of the restructured loans could produce more woes later.


“Maybe the loan won’t blow up now, but it will blow up in five years,” O’Toole said.

That ominous assessment is based on Countrywide’s approach in the voluntary program. In more than a few instances, O’Toole said, Countrywide’s restructured loans featured payments based on super-low interest rates of 2 percent, with payments rising over time. Put another way, the loans bear similarities to the ones at the heart of the current problems.

“A lot of what we have seen from Countrywide so far is more of the same, maybe worse,” O’Toole said.

Bank of America should restructure the loans so that the payments are high enough to pay down the principal on the mortgages, O’Toole said.

If the housing market doesn’t rebound strong, mortgage balances could still burden houses with more debt than the residences are worth, O’Toole said. He cited the restructuring of a mortgage with a $930,000 balance for a house valued at $500,000. Bank of America rewrote the loan with a fixed interest rate of 2 percent that would last five years.

“Bank of America and Countrywide are kidding themselves if they think that house will be back to $930,000 in five years,” O’Toole said.

But the program appears to at least be a starting point.

“It sounds awesome,” said Carol Hardy, interim director of Vallejo Neighborhood Housing Services. “This is a glimmer of hope. I think it will be exceedingly helpful.”

The key is the prevention of foreclosures, said Guy Schwartz, a branch manager with San Ramon-based CMG Mortgage Inc.

“Anything they can do to help people stay in their homes will help the market,” Schwartz said. “Maybe they’re just buying some time. But if they keep people in their homes, that would slow the foreclosure mess.”

And low interest rates are important in keeping the monthly payments affordable. Under some scenarios, a restructured Countrywide loan could be transformed to a mortgage with an interest rate as low as 2.5 percent during the initial years of the new loan, Bank of America spokesman Frahm said.

Under the program, mortgage and related payments should not exceed 34 percent of a borrower’s monthly income. And borrowers who have payment option ARMs could see an adjustment to their loan balance to create equity in the house.

Bank of America will not proceed with a foreclosure until they have determined if a borrower is eligible, Frahm said.

“Why not do this?” said Scott Simonich, president of San Ramon-based BWC Mortgage Services. “If BofA is going to attempt to make the deals more appropriate for people to handle the payments, it’s a positive development.”

More lenders could attempt to restructure loans in an aggressive fashion, said Jason Brown, a senior vice president with Danville-based StoneCastle Land & Home Financial.

“Bank of America is trying to find the bottom of the market,” Brown said. “Other banks will be under pressure to follow suit or be left in the dust.”

Reach George Avalos at 925-977-8477 or Reach Eve Mitchell at 925-952-2690 or

Persistence Pays Off When Doing Loan Modifications:

The Mortgage Professor

Persistence Pays Off When Loan Modification Saves House and Credit

  A loan modification is a change in the loan contract agreed to by the lender and the borrower. The modifications getting attention now are those designed to reduce the payment burden on borrowers faced with impending interest rate increases that will make monthly payments unaffordable to them. Many are subprime borrowers.

 By Jack Guttentag

Saturday, October 20, 2007; Page G04

Homeowners faced with this prospect, whether they are delinquent or not, should request a modification.

You are unlikely to get such a change if you don’t ask, and you should make the investment required to make the case. The stakes are very high: your house and your credit.

In most cases, the decision on a modification is not made by the firm that owns the loan. It is made by a firm servicing the loan under contract to the owner. The owner could be a single lender, or it could be a group of investors who own pieces of a mortgage-backed security collateralized by a pool of loans.

Whoever owns the loan, the servicing firm is contractually obligated to find the solution to payment problems that will minimize loss to the owner. If the lowest-cost solution is a contract modification, that’s great — everyone involved prefers a modification instead of a foreclosure. But if a foreclosure would generate lower costs for the owner, the decision will be to foreclose. The cost of foreclosure to the borrower does not enter the decision.

Yet the decision is far from cut and dried, and it can be materially affected by whether and how the borrower presents his case. I discussed this issue with Warren Brasch, a lawyer who represents borrowers seeking loan modifications. Our combined observations:

Equity: Perhaps the most important factor affecting the modification decision is the amount of equity the borrower has in the property. If the borrower has enough equity in the property to pay any deferred interest plus foreclosure expenses, foreclosure is almost bound to be the lower-cost solution.

Equity depends on property value, which the borrower is much better positioned to know than the servicer. The borrower knows or can easily find out how many houses in the neighborhood are for sale and what the trend has been in recent sale prices. In a weakening market, it is easy for the lender to overestimate value, and the borrower must prevent that.

Moral hazard: Servicers fear that if they are liberal in granting modifications, borrowers who don’t need a modification will seek one anyway. They protect themselves against this by entertaining modification proposals on a case-by-case basis, while placing the burden of proof on the borrower.

Borrowers must accept the burden of proof. In addition to the data on property value, they need to document that they cannot afford the payment increase that is pending, and they must document what they can afford.

To do so, borrowers should calculate their total debt ratio: the sum of mortgage payment, other debt payments, property taxes and homeowner’s insurance as a percent of their gross (before tax) income.

This number should be calculated as it stands now and as it would be after the rate adjustment. It should also be calculated to demonstrate what the borrower can afford. On the last, Brasch suggests that a servicer may be willing to accept 45 percent as a reasonable maximum.

Servicing cost: Servicers have an interest in minimizing modifications because they add to costs. They try to keep costs down by computerizing the servicing process to the greatest degree possible and standardizing customer support procedures so that low-paid and easily trained employees can perform them.

Modifications must be handled by a special group who are more highly trained and better-paid, and the increased cost of expanding their number cuts into the bottom line. Hence, there is a tendency to be nonresponsive in the hope that the borrower will go away.

Borrowers have to be persistent. Brasch said: “If a servicer says they will call you back . . . forget about it. You need to call them and call them constantly. They will lose your paperwork, fail to return calls, put you on hold and then hang up. It’s what they do. Keep fighting, calling, faxing. This does work!”

In deciding whether a modification would be less costly than a foreclosure, servicers usually ignore an asset possessed by the borrower that could tilt the balance toward modification. This is the right to future appreciation in the value of the borrower’s house.

In exchange for a modification that might otherwise be more costly to the owner than a foreclosure, the borrower could pledge a percent of the future appreciation, which could shift the balance to modification. I will discuss that next Saturday.

Jack Guttentag is professor of finance emeritus at the Wharton School of the University of Pennsylvania. He can be contacted through his Web site,

Copyright 2007 Jack Guttentag

Distributed by Inman News Features

Loan Modifications Frequently Asked Questions:

A Loan Modification is a permanent change in one or more of the terms of a mortgagor’s loan, allows the loan to be reinstated, and results in a payment the mortgagor can afford.

Question 1: In utilizing the Loan Modification option to bring an asset current, can the mortgagee include all fees and corporate advances?


Question 2: May a mortgagee perform an interior inspection of the property if they have concerns about property condition?


Question 3: Can a mortgagee include late charges in the Loan Modification?



Question 5: Is there a new basis interest rate which mortgagees may assess when completing a Loan Modification?


Answer: Yes, Mortgagee Letter 2008-21 states that the new

Answer: Mortgagee Letter 2008-21 states that accrued late charges should be waived by the mortgagee at the time of the Loan Modification.

Question 4: When utilizing a Loan Modification option, can a mortgagee capitalize an escrow advance for Homeowner’s Association fees?


Answer: HUD Handbook 4330.1 REV-5, Paragraph 2-1, Section B, Escrow Obligations states: Mortgagees must also escrow funds for those items which, if not paid, would create liens on the property positioned ahead of the FHA-insured mortgage.

Answer: Yes, the mortgagee may conduct any review it deems necessary to verify that the property has no physical conditions which adversely impact the mortgagor’s continued ability to support the modified mortgage payment.

Answer: Mortgagee Letter 2008-21 states in part: Legal fees and related foreclosure costs for work actually completed and applicable to the current default episode may be capitalized into the modified principal balance.

List of Participating Lenders:

List of Lenders Who Are Participating in the HOPE for Homeowners (H4H) Program

The lenders listed below have indicated an interest in refinancing loans under the HOPE for Homeowners program.  When contacting any of the lenders listed below, you are strongly encouraged to contact your servicing lender and any subordinate lien holders since their participation is vital for you to refinance into a HOPE for Homeowners mortgage.  It is important to remember that the HOPE for Homeowners program is voluntary and your servicing lender may offer different solutions for avoiding foreclosure. 

When contacting any lender on this list, please use the contact information provided.  Do not give anyone money or pay any fees until you have spoken with your existing lender and know it is participating in the HOPE for Homeowners Program.

To view the list of lenders who are participating in the HOPE for Homeowners program click on the link below. Your browser will open a PDF document. 

 The H4H Lender List was updated on November 10, 2008. We will refresh the list on most Fridays.  



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Press Conference by Secretary of Treasury:

HOPE for Homeowners

 Information by State
 Esta página en español
 Print version

[HOPE for Homeowners]

The HOPE for Homeowners program will refinance mortgages for borrowers who are having difficulty making their payments, but can afford a new loan insured by HUD’s Federal Housing Administration (FHA). The program begins October 1, 2008 and ends September 30, 2011.

 -   Press Release
 -   Remarks by Secretary Preston
 -   For participating lenders

Watch Secretary Preston’s press conference

 -   Without captions
 -   With captions

Fact sheets

 -   Press Fact Sheet
 -   Consumer Fact Sheet
 -   Lender Fact Sheet

Common Questions

 -   Consumer FAQs
 -   Industry FAQs

Guide to Avoid Foreclosure?

Guide to Avoiding Foreclosure

Avoid Foreclosure]

Related Information

 -   PD&R Foreclosure Kit
 -   Foreclosure process
 -   State laws on foreclosure
 -   Glossary of terms
 -   Common questions about foreclosure

Housing Discrimination and Foreclosure
Have you been discriminated against in either the lending or foreclosure process? You may file an online discrimination complaint

 -   In English
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 -   Toll-free housing discrimination hotline at (800) 669-9777.

Whether you’re in foreclosure now or worried
about it in the future, we have information that can help.


Get Help Now!

 -   Talk to a housing counselor
 -   Talk to your lender
 -   Find state and local foreclosure resources
 -   Contact HOPE NOW

Keep Your Home

 -   Are you at risk of foreclosure?
 -   Tips for avoiding foreclosure
 -   Foreclosure scams

Refinance Options

 -   Learn about FHA Secure
 -   Learn about HOPE for Homeowners
 -   Who to call when a lender won’t work with you

If You Can’t Keep Your Home

 -   Redemption period – your last chance to save your home
 -   Local renting resources
 -   Rental assistance
 -   Relocation resources
 -   U.S. Postal Service Movers Guide


How to Stop Foreclosure in Nevada?

 Substantive Grounds for Challenging the Foreclosure

The following claims and defenses are among those that may be raised so as to defeat a foreclosure altogether or reduce the amount of any deficiency:Late

Payments Were Accepted on Other Occasions. This suggests that the lender waived the right to refuse late payments and was estopped from foreclosing.  

The Lender Refused to Supply a Pay-Off Amount or Accept Full Payment so Foreclosure Could Be Avoided. Despite unfavorable precedent, this could be a viable ground. 

 A Borrower was in Military Service at the Time of the Foreclosure.   The Loan was Unconscionable. Challenging Wrongful Foreclosure in Las Vegas

   That is, the inequality of the bargain is so manifest as to shock the judgment of a person of common sense, and the terms are so oppressive that no reasonable person would make them on the one hand, and no honest and fair person would accept them on the other. 

The Making of the Loan, or the Servicing of It, was Riddled with Unfair and Deceptive Practices that Violated the Nevada Consumer Protection Act.   The Servicer Collected Unauthorized Fees for the Escrow Account, or as Late Charges, or as Attorney Fees during the Foreclosure Process

  • One Spouse Was Required to Sign the Mortgage Note even though the Credit of the Other Spouse was Sufficient.  One or More Borrowers Lacked the Mental or Physical Capacity to Borrow.
  • The Mortgage Broker Was Paid an Unlawful Sum by the Lender.  
  • The Lender Violated a Relationship of Trust with the Borrower that Developed in the Lending Process.
  • There Was Fraud or Misrepresentation by the Lender in the Making of the Loan.  

Disclaimer: This is just an illustration and not meant as a legal advice. It is good to consult a qualified attorney in this regard. Call (702) 270-9100 to talk to attorney Malik Ahmad. 

This is a brief guide for lay persons about how to challenge foreclosure successfully, a feat that is possible though difficult. This memo is not a substitute for legal assistance, which is usually essential in this complex area of the law. It is divided into the following parts:

 • Filing Bankruptcy before Foreclosure Occurs

  1.  Suing to Set Aside a Foreclosure that Has Already Taken Place

Generally, you will need a lawyer in bankruptcy. You must file before the foreclosure sale takes place, a time that usually is only 20 or so days after the foreclosure process starts with a letter to you or a notice in a newspaper.

 Temporary injunctions require a “clear” showing of “immediate and irreparable injury, loss or damage” or “that the acts or omissions of the adverse party will tend to render [the] final judgment ineffectual.” Judges take this requirement seriously.

 The most difficult requirement of all may be the need to give a bond “in such sum as the court … deems proper” unless you successfully obtain permission to bring the action as an indigent person. A homeowner with only modest amounts of other assets and income may be unable to qualify as indigent and may also be unable to find anyone willing to provide a bond, especially one on short notice.

Insufficient Notice by Newspaper Publication or Posting in Public Places. Under  Nevada statutes, advertisement of a foreclosure sale must be made three different times in “some” newspaper “published” in the “county where the sale is to be made.” Only 20 days’ notice is required, and the use of publications read almost exclusively by lenders and lawyers is permitted. Both the shortness of the time and the use of obscure newspapers seem vulnerable to constitutional objection. In addition, some counties have no eligible newspapers. In this case, written notice may then be posted in five “of the most public places in the county.” There is no guidance about what such places are or how they are to be determined. This is too vague a standard to pass constitutional muster. 

Failure to Give Notice Required by the Deed of Trust. Many deeds of trust require notice of foreclosure by certified mail, or at least by mail, in addition to notice by newspaper publication. Many also require notice – before foreclosure is sought — that the entire sum has been declared to be due because of a late payment or other default. 

 Meaningful Opportunity to Dispute the Foreclosure. This too is a constitutional challenge to Nevada’s foreclosure process. It is based on the notion that making you find a lawyer and file a lawsuit in 15 days, assume a high burden of proof, and furnish a bond are unfair hurdles imposed on you.  Defects in the Foreclosure Sale.  Nevada judges have said that the foreclosure must occur in the county in which the property is located; it must take place at an accessible location; and a lender may not use a purely technical default as a basis for foreclosure. However, when the lender demands the full amount of the debt, they have refused to let the borrower cure the delinquency by paying the disputed amount before  The foreclosure occurs. They also have ruled that there is no minimum price that must be paid and have allowed the lender to recover a deficiency judgment if the amount received in the sale is less than the amount owed. They have yet to decide whether the combination of a shockingly low price and another procedural defect are sufficient to disallow the foreclosure.

 This is often the shortest and simplest procedure. It has the following advantages: a bankruptcy filing automatically prevents foreclosure temporarily and sometimes permanently; you have the opportunity to cure a default in your payments by paying the delinquent amount in installments over a reasonable period; you may be able to reduce or eliminate the fees of the lender’s attorney; and you may be able to avoid interest on the amount you are delinquent (though not interest on the loan itself).Suing to Enjoin Foreclosure before It OccursTo obtain an injunction, you must file a complaint in a court. You will need a lawyer. The process is made more arduous by a requirement that you give five days’ notice to the lender before seeking to enjoin the foreclosure. This reduces the 20-day period to 15 days for acting.

 • Suing to Enjoin Foreclosure before It Occurs

  1. • Suing to Set Aside a Foreclosure that Has Already Taken Place
  2. • Filing a Counterclaim in the Detainer Action after Foreclosure Has Occurred
  3.  • Filing Bankruptcy after Foreclosure
  4.  • Procedural Grounds for Challenging the Foreclosure
  5. • Substantive Grounds for Challenging the Foreclosure
  6.  Filing Bankruptcy before Foreclosure Occurs

  You have the burden of proof in a lawsuit to set aside a foreclosure. Damages are the only remedy. There is nothing to prevent a third-party purchaser from keeping your house even if he knows of your claim against the lender and even if he believes that your claim is meritorious.

 The grounds for setting aside a foreclosure are limited to “some evidence of irregularity, misconduct, fraud, or unfairness on the part of the trustee or the mortgagee that caused or contributed to an inadequate price.” Defenses like the absence of a delinquency or violations by the lender of federal or state commercial law may not be raised.

 Filing a Counterclaim in the Detainer Action after Foreclosure Has Occurred

   Not every new owner is successful in obtaining possession. It may overlook the proof that is necessary to show that it the foreclosure was conducted properly and that it was entitled to foreclose – things like affidavits or testimony showing that you did not make timely payments. You may and should contest every assertion made by the new owner, even if you do not have a lawyer. The new owner has the burden of proof. If it fails to meet that burden, the judge may conclude that you are entitled to remain in possession even though you no longer own the home.

On the other hand, if the new owner is successful in the detainer action, it is entitled not only to possession but also to the rental value of the property from the date of foreclosure until the date of removal. You have only ten days for an appeal to Circuit

 Filing Bankruptcy after ForeclosureNo personal notice to a borrower is required by statute. However, we believe that federal and state constitutions require personal notice to each borrower, either by summons or by certified mail that is actually received, and we are litigating cases so as to establish this principle.  Foreclosure may be challenged by a counterclaim when the lender (or other new owner of the property) seeks possession by a “detainer” action. It is better to file the counterclaim in writing, and the grounds for doing so are discussed below. It is preferable that you use a lawyer to assist you, but most persons do a detainer action. Lenders may assert that a wrongful foreclosure may not be challenged even when the parties are before the court on the issue of possession, the right to possession is necessarily founded on ownership, and ownership depends on the lawfulness of the foreclosure. In our view, the statute disallows only attacks upon title based on transactions prior to the creation of the deed of trust. We also believe that the statute is inapplicable to counterclaims seeking to set aside a foreclosure even if it bars defenses to the detainer action.

 There is some good news even if you lose the challenge; bankruptcy usually discharges all or part of a deficiency judgment against you for any amount still due after the foreclosure occurs.

 It is possible to set aside the foreclosure through the bankruptcy process. The grounds that may be asserted are discussed below.

 Procedural Grounds for Challenging the Foreclosure

 Court and must furnish a bond. The amount of it can be prohibitive: a “sufficient amount to cover, besides costs and damages, the value of the rent of the premises during the litigation.” Even the furnishing of an affidavit of indigency may be insufficient to retain possession during an appeal.

Nevada Attorney General Announces Settlement with Countrywide

 DATE: October 6, 2008 


Las Vegas, NV—

Attorney General Catherine Cortez Masto announced today that her office has reached an agreement with Countrywide Financial that will help almost 400,000 borrowers across the nation facing foreclosure.

“Our citizens are suffering from the mortgage foreclosure crisis. We lead the nation in foreclosures. My office has been working with Countrywide and the larger settlement states to bring some immediate relief for Nevada homeowners. Today, we are finalizing the details of the proposed settlement. The proposed settlement is intended to help those eligible Nevadans stay in their homes during these pressing economic times. We will have more details available in the coming days,” Masto said.

General Masto said Monday that mortgage lender Countrywide Financial Corp. has agreed to provide loan modifications to up to 397,000 borrowers nationwide under a settlement with Nevada and other states. Permanent relief to borrowers could equal about $7 to $8 billion nationwide, the states believe.

The tentative agreement was reached late Sunday by several states with Bank of America, which acquired Countrywide Financial on July 1, 2008.

Under the agreement, eligible subprime borrowers will be able to modify the terms of their loans to make monthly payments more affordable. Modified loan terms will vary according to the circumstances of the borrower, but they may include an automatic freeze or reduction in interest rates, conversion to fixed-term loans, and refinancing or reduction of principal owed.

Assuming every eligible borrower and investor participates, this loan modification program will provide benefits to eligible borrowers in Nevada as follows: 

• Suspension of foreclosures for eligible borrowers with subprime and pay-option adjustable rate loans pending determination of borrower ability to afford loan modifications;

• Loan modifications valued at up to $219 million worth of reduced interest payments and, for certain borrowers, reduction of their principal balances;

• Waiver of late fees of up to $2.2 million;

• Waiver of prepayment penalties of up to $2.16 million for borrowers who receive modifications to, pay off, or refinance their loans;

• $3 million in payments to borrowers who are 120 or more days delinquent or whose homes have already been foreclosed; and

• Approximately $4.8 million in additional payments to borrowers who, in the future, will be unable to afford monthly payments under the loan modification program and lose their homes to foreclosure.

Countrywide said the loan modification program will be ready for implementation by December 1, 2008, and that the company would engage in proactive outreach to eligible customers by then. Countrywide also noted that foreclosure sales will not be initiated or advanced for borrowers likely to qualify until Countrywide has made an affirmative decision on a borrower’s eligibility.

The toll-free number for Countrywide subprime customers who want more information is 800-669-6607. There also will be information soon at Countrywide’s website,

The tentative settlement resolves allegations that Countrywide used unfair and deceptive tactics in its loan origination and servicing activities – and that borrowers often were put in structurally unfair and unaffordable loans. Countrywide is the largest provider of subprime mortgages in the U.S.

Countrywide said the loan modification program was designed to achieve affordable and sustainable mortgage payments for borrowers who financed their homes with subprime loans or pay-option adjustable rate mortgages (“ARMs”) serviced by Countrywide that were originated prior to December 31, 2007, and who are seriously delinquent or are likely to become seriously delinquent as a result of loan features, such as interest rate resets or payment recasts.

Under the settlement, which does not constitute an admission of wrongdoing, Bank of America/Countrywide also agreed to: stop offering pay option ARMs and significantly curtail offering “low-documentation” and “no-documentation” loans; initiate an early identification and contact program for people who have trouble making their payments; and continue working with non-profits, federal agencies, and state Attorneys General on ways to use REO (real estate owned) and other properties for community development.

The Bank of America/Countrywide settlement resolves investigations into Countrywide’s lending practices in Arizona, Iowa, Nevada, Ohio, Texas and Washington. The settlement also resolves lawsuits against Countrywide initiated by Illinois, California and Florida. Other states also are participating in the settlement.

Additional information as well as other valuable information on consumer protection, is also available on the Attorney General’s website at


CONTACT: Ernest Figueroa 775-684-1197

Arrest of scam artist for Senior Citizens


 From the Office of the Attorney General: Catherine Cortez Masto,  Attorney General


DATE: November 4, 2008

CONTACT: John Kelleher

(702) 486-3396

Edie Cartwright

(775) 684 1189


Las Vegas, NV—


Attorney General Catherine Cortez Masto, announced today the arrests of Roxanne Lynette McCoy and Shanease Renee Bauman, employees of Proserve Mortgage.


The arrests were made in connection with an alleged scheme involving the submission of forged loan application documents to a bank for a mortgage loan, after being informed by the victim, Jeri Cooper, age 69, that she could not afford the loan and did not want to complete the loan application process. A third suspect, Laticia Renee Carter, also a Proserve Mortgage employee, remains at large.

The State alleges the defendants forged the elderly victim’s signature on several loan application documents and fraudulently submitted the loan for funding to the lender in order to collect a commission on the loan. The victim had expressly told the defendants that she could not afford the monthly payments and did not wish to complete the loan application process after learning of the payment terms.

The State alleges that, as a result, the elderly victim is being held responsible for payment of the loan and now faces possible foreclosure.

“Mortgage related crimes affect everyone in the community and we intend to prosecute these aggressively,” said Attorney General Masto. “In this particular case, the victim is a senior citizen. Protecting Nevada’s seniors is a priority for my administration.”

Defendants Carter, McCoy and Bauman are each charged with multiple felonies including: one (1) count of Forgery, one (1) count of Obtaining Signature by False Pretenses, one (1) count of Theft and one (1) count of Mortgage Lending Fraud. The initial appearance in Justice Court for Bauman and McCoy is set for December 3 at 7:45 am in Las Vegas Justice Court Department 10.

The case was filed by prosecutors assigned to the Attorney General’s Mortgage Fraud Task Force, which was created by Attorney General Masto in early 2008 to address mortgage fraud scams throughout Nevada. The task force combines the resources of several Attorney General Bureaus, including the Bureau of Criminal Justice and the Bureau of Consumer Protection. It works closely with other State agencies including the Mortgage Lending Division to investigate and prosecute mortgage fraud crimes in Nevada.

The charges against the named individuals are merely allegations. TheDefendants are presumed innocent until or unless proven otherwise in a court of law.

Consumers who wish to report mortgage fraud are asked to contact the Attorney General’s Bureau of Consumer Protection in Las Vegas at (702) 486-3194 to obtain a complaint form. Consumers with internet access may also obtain a Consumer Complaint Form, as well as other consumer protection and contact information, on the Attorney General’s website at








555 E. Washington Avenue, Suite 3900

Las Vegas, Nevada 89101

Telephone – (702) 486-3420

Fax – (702) 486-3283

Web –

What Information you need to have before you talk to your lender?

Information to Have Ready When You Call

Before you have any conversation with your lender (or loan servicer), prepare.

First, gather the following financial information:

  • Your loan account number
  • A brief description of your circumstances
  • Recent income documents, such as
    • Pay stubs
    • Benefit statements from Social Security, Disability, Unemployment, Retirement, or Public Assistance
    • If you are self-employed, have your tax returns or a year-to-date Profit & Loss Statement available for reference
  • List of household expenses

Then, write down the answers to the following questions:

  1. What happened to make you miss your mortgage payment(s)? Do you have any documents to back up your explanation for falling behind? How have you tried to resolve the problem?
  2. Is your problem temporary, long-term, or permanent? What changes in your situation do you see in the short term, and in the long term? What other financial issues may be stopping you from getting back on track with your mortgage?
  3. What would you like to see happen? Do you want to keep the home? What type of payment arrangement would be feasible for you?

Expect to have more than one phone conversation with your lender (or loan servicer).

Your lender (or loan servicer) will usually mail you a “loan workout” package.

  • This package contains information, forms and instructions.
  • If you want to be considered for assistance, you must complete the forms and return them to your lender quickly.
  • The completed package will be reviewed before the lender talks about a solution with you.
  • If you do not hear back from the lender (or loan servicer) in a reasonable amount of time after submitting the workout package (generally 7-10 days), contact your lender (or loan servicer) again.  Continue to follow up.

Be sure to keep notes of all your communications with the lender (or loan servicer), including date and time of contact, the nature of the contact (face-to-face, by phone, email, fax or postal mail), the first and last name of the representative, and the outcome.

Also, follow up any oral requests you make with a letter to the lender (or loan servicer). Send your letter by certified mail, “return receipt requested,” so you can document what the lender (or loan servicer) received. Keep copies of your letter and any enclosures.


CALL Your Attorney TODAY!

If they have an attorney, you need an attorney as well
The sooner you call,
the sooner help is available!


How to Avoid Foreclosures?

Steps to Prevent Foreclosure

Are you having trouble keeping up with your mortgage payments? Have you received a notice from your lender asking you to contact them?

If you are unable to make your mortgage payment:

1. Don’t ignore the problem.

The further behind you become, the harder it will be to reinstate your loan and the more likely that you will lose your house.

2. Contact your lender as soon as you realize that you have a problem.

Lenders do not want your house. They have options to help borrowers through difficult financial times.  

3. Open and respond to all mail from your lender.

The first notices you receive will offer good information about foreclosure prevention options that can help you weather financial problems.  Later mail may include important notice of pending legal action.  Your failure to open the mail will not be an excuse in foreclosure court.

4. Know your mortgage rights.

Find your loan documents and read them so you know what your lender may do if you can’t make your payments.  

5. Understand foreclosure prevention options.

Valuable information about foreclosure prevention (also called loss mitigation) options can be found on the internet at

6. Contact a housing counselor.

Housing counselors can help you understand the law and your options, organize your finances and represent you in negotiations with your lender if you need this assistance. Contact a housing counseling agency near you.

7. Prioritize your spending.

After healthcare, keeping your house should be your first priority.  Review your finances and see where you can cut spending in order to make your mortgage payment.  Look for optional expenses-cable TV, memberships, entertainment-that you can eliminate. Delay payments on credit cards and other “unsecured” debt until you have paid your mortgage.

8. Use your assets.  

Do you have assets-a second car, jewelry, a whole life insurance policy-that you can sell for cash to help reinstate your loan? Can anyone in your household get an extra job to bring in additional income?  Even if these efforts don’t significantly increase your available cash or your income, they demonstrate to your lender that you are willing to make sacrifices to keep your home.  

9. Avoid foreclosure prevention companies.

You don’t need to pay fees for foreclosure prevention help-use that money to pay the mortgage instead. Many for-profit companies will contact you promising to negotiate with your lender.  While these may be legitimate businesses, they will charge you a hefty fee (often two or three month’s mortgage payment) for information and services your lender or a housing counseling agency will provide free if you contact them.

10. Don’t lose your house to foreclosure recovery scams!

If any firm claims they can stop your foreclosure immediately if you sign a document appointing them to act on your behalf, you may well be signing over the title to your property and becoming a renter in your own home!  Never sign a legal document without reading and understanding all the terms and getting professional advice from an attorney, a trusted real estate professional, or a housing counseling agency.   For more information about foreclosure recovery scams, click here


What is a Loan Modification?

What is a Loan Modification Program?

Because of a hardship your lender modifies your current mortgage to make it more affordable. This can be done by fixing both the term of the loan as well as interest for the defined term. In the past this was only used when a borrower was delinquent and suffered a hardship such as a job loss, divorce, illness etc.

The Congress just passed and President signed a Housing Assistance Bill where borrowers can obtain mortgage help from their lenders.

The earlier you get started, the better your chances are of negotiating a fixed rate and a payment that you can manage.

If you have an income, and you can afford a reasonable monthly payment, loan modification can be done by your lenders.

Is Your Lender or Servicer Not Helping You or Being Abusive…

Lenders and servicers are very busy with desperate homeowners trying to save their homes from foreclosure. Unfortunately, they do not have the man power or the capabilities to save everyone.

The Loan Modifications Departments are swamped with workload and many people are simply getting lost in the system and suffering an unnecessary foreclosure when they could have worked it out with their lender.

A lawyer involvement can expedite the process, the calls starts getting answered, the phone calls are replied, and the mail answered quickly. That alone can bring a difference in saving of your cherished primary residence. You attorney is the most important ally you have in this most crucial period of your life, and in this stringent economy.

Are You Having Trouble With Your Mortgage?

Are you having trouble with your mortgage? Has it adjusted and you cannot afford the new payment? Were you placed into a bad loan and you can’t refinance into a good one.

The Homeowners Act of 2008: FQA


Questions and answers about the Hope for Homeowners Act of 2008, passed by Congress last weekend and signed into law today, July 30th:

  Q: What exactly is the purpose of this Homeowners Act of 2008the home’s current value. The FHA will insure a total of $300 billion of the loans over a three-year period.  



 It is important to try to steer as many as 400,000 struggling homeowners away from foreclosure:


 Q: Who is eligible?

  Basically, to help the delinquent and economically depressed homeowners. 90 percent of 

 But the decision on whether to write such a loan remains up to banks,  But the decision on whether to write such a loan remains up to banks,  which would have to be willing to take a loss on the existing loans in exchange for avoiding an often-costly foreclosure. 





A: Eligible borrowers must have spent more than 31 percent of their monthly incomes on their mortgages as of March 1, 2008. The troubled loan must have originated within the time period of January 1, 2002 through December 31, 2007 and be the borrower’s primary residence. And the borrower’s income must be verified.

A: It takes effect Oct. 1 and runs through September 2011, although the FHA isn’t likely to have it operating at full capacity until next year.

 Q: Since lenders can pick and choose which loans to refinance, how can consumers determine if theirs will be selected?

A: Check with the bank or financial company servicing your mortgage, but it may be weeks before they make decisions concerning the new guidelines and assess individual loans.

Even then, keep expectations limited.

Servicers are going to be reluctant to take the government up on their offer,” predicted Mark Zandi, chief economist at Moody’s “The earliest they’ll start taking them up on it is early next year. And even then it’s likely to be modest.”


Q: Is there anything a homeowner can do to improve chances of benefiting from the program, such as crunching numbers to make a case for the bank?


A: Not really. The best step is to keep up your payments as best you can.

A: No. If your situation deteriorates enough the bank may reject any possible new loan.

“Turning yourself into a financial basket case is not going to work,” said Dan Seiver, a finance professor at San Diego State University. “If you turn into a complete deadbeat, the servicer is going to just foreclose and dump it.”

 Q: So what should I be doing now besides trying to keep up with payments?

A: Talk to a local credit counselor and call the toll-free hot line of the Hope Now alliance an industry group trying to coordinate a response to the mortgage crisis

 at 1-888-995-HOPE. It is available 24 hours a day to provide mortgage counseling in multiple languages. Mary Thomason, director of resource development for The Impact Group of Atlanta, a housing counseling group, also suggests tracking expenses and income closely in order to be able to forecast your cash flow for the next six months and give yourself better control of your finances. Q: If the banks and lenders refuse to write these loans, then what?




A: Public and political pressure may prompt them to participate. If not, and more people continue to lose their homes, Zandi says the next White House administration subject them to additional regulations or  investigations if they remain unwilling to take on the risks. 

Q: What happens if I’m able to sell my home after I refinance?

A: If you sell during the next five years, you must agree to share 50 percent of any profits from the resale with the government. What’s more, homeowners can only retain equity gains based on a sliding scale. The homeowner would have zero equity from a sale in the first year, with the amount rising 10 percent in each succeeding year and capping at 50 percent from a sale in year five and thereafter, The equity must be repaid because the maximum amount on the new loans will be capped at 90 percent of the current market value, which automatically gives the previously troubled homeowner 10 percent equity in the home.


A: It will allow those who qualify to cancel their old mortgage loans and replace them with 30-year fixed-rate loans for up to 90 What exactly will the legislation do? 

 Q: But doesn’t this provide an incentive to NOT pay your mortgage, if you’re barey keeping ahead of bills and are underwater on your house, so you can qualify?

 Q: When does the program start?