Loan Modification information

January

January 15th, 2010
Obama has set aside $75 billion to subsidize lenders that successfully modify troubled loans by reducing interest rates, extending loan repayments, deferring principle payments for up to five years and adjusting other mortgage terms.

GMAC Mortgage Inc. remained the leader in successful loan modifications, completing 9,872 permanent payment plans as of Dec. 31, the Treasury said in its report today. Wells Fargo & Co. finished 8,424 modifications, while JPMorgan Chase & Co. made 7,139 permanent, the report shows. Bank of America Corp., the largest U.S. mortgage company, completed 3,183 modifications.

Source: Bloomberg Businessweek

January 15th, 2010
Lenders permanently modified 66,465 of the 4 million U.S. mortgages originally targeted for reduced payments under President Barack Obama’s main foreclosure prevention plan last year, the Treasury Department said.
Source: Businessweek - In case you don't know math, that is about 1.6% of all loans modified...pretty sad.

February

Let's Look at how HAMP did in 2009

Less than 1% Loan Modification Applications have been accepted as permanent modifcations by Lenders.

More than 99% of Loan Modifications are only temporary "Trial Period Plan" modifications.

Source: Thealrg.com

March

"Traditionally speaking, loan modifications have tended to kick the can of a borrower default a little further down the road — 60% or so of loans successfully modified would re-default within 12 months, so a loan modification would help some borrowers, but not most borrowers" Source: Housingwire.com

May - More May stories

"Fewer than 10% of U.S. homeowners eligible for a government-backed loan modification have received one." - The Arizona Republic (May 16, 2010)

What happens to many applicants that take part in the Obama's HAMP program
"Modifications are usually canceled if the borrower fails to make the adjusted payments, or if during the trial period, does not meet the program's criteria or hand in the required income verification paperwork."

"A total of 295,348 people have received permanent long-term help under the loan modification plan, but another 3,744 who were converted to permanent status were later cut from the program anyway." Remember this is out of 4 MILLION needing help, so far that is only 7.38%, not that impressive.

"Some 637,353 troubled borrowers remain in trial modifications", officials said. The pace of people entering the program has slowed as servicers begin implementing new requirements to collect documents at the outset. Remember this is out of 4 MILLION needing help, so far that is only 15.93%, again not that impressive. But why would you want to be one of these people....Read our HAMP Article to find out why HAMP is BAD for homeowners!

NEW RULES (i.e. new requirements)
Starting June 1, homeowners will have to provide all their income verification documents before they are put into trial modifications. This will make it harder for troubled homeowners to start the process, but it should make it easier for them to qualify for permanent assistance.

So HOW FAST are these Lenders going through their clients files to evaluate for the HAMP program, let's take a look,
Bank of America (BAC, Fortune 500) at 25%, Wells Fargo (WFC, Fortune 500) at 25%, JPMorgan Chase (JPM, Fortune 500) at 22% and Citigroup (C, Fortune 500) at 21%.

Source: CNNMoney.com

June - More June stories

"194,056 trial mortgages which have been canceled through April"
"there were only 299,092 permanent modifications started through April — is not a sign of good news"
Source: Reuters.com

"The number of borrowers dropped from the [government’s loan modification] program… eclipses those who have been helped." - The Washington Post (June 22, 2010)

Statistics show that approximately one in seven homeowners are behind on their mortgage payments and over eighty percent of loan modifications are being declined.

In California, our Notice of default time frame got extended once again, first it was at 90days, then 120days and now it is at 180days (that's 6 months!!!). It is completely possible (and verified in our own dealings) that people have stopped paying on their mortgages several months ago, but have yet to receive their Notice of Default (NOD). This is happening for a few reasons,
   1) the bank got paid through the HAMP program and needs to keep "pushing" clients in to HAMP.. HAMP is OPTIONAL PEOPLE !!! Read our HAMP Article to find out why HAMP is BAD for homeowners !!!
   2) the banks are getting a LOT of property back, but not as many for deed in lieu, but many have just walked and the bank will likely sue those individual in the future.
   3) due to the back log of pre-foreclosures in the state of California, the only way to act with in the law was to have it legally extended...so that gives more time for the bank to issue a NOD, set up Trustee Sales, Take back homes and push unsuspecting people in to HAMP.

The Following excerpts were taken from Mortgagecalculator.org, we agree on two things, which I will state in a moment,

"As you can see from the chart to the left, an impressive 3 million modifications have been completed by the country’s five largest lenders, with Citi and Chase leading the pack, and Wells Fargo and Bank of America not far behind. However, there are a couple of disappointing sub-trends buried in this figure. First of all, the vast majority of modifications have been completed privately, outside of the government’s HAMP program. Second, the majority of borrowers that receive loan modifications ultimately go on to default anyway, which means the true number of borrowers that have been helped is far below the 3 million documented by the industry."

AND the article goes on to say,
"Let’s begin with the first issue- that loan modifications have been a largely private effort. On the one hand, this could be viewed positively, since only $250 million of public money (a small fraction of the the $40 Billion that was initially allocated by the government for the program) has been spent to date. This means that borrowers are being helped without the use of taxpayer funds. On the other hand, I think the correct – albeit cynical – interpretation of this situation is that lenders are deliberately circumventing the government in order to offer their own, watered-down modifications. Think about it – why would lenders pass up “free” incentive money from the government, all else being equal? The explanation is that the government’s modification program (HAMP) offers terms that are more favorable to borrowers than lenders wish to offer."

Continuing,
"Since I’m on the subject of HAMP, it’s worth pointing out that only 390,000 borrowers have received permanent modifications. While this is nothing to scoff at in absolute terms, it falls far short of the number of borrowers that could benefit from assistance (10 million?) and even short of the government’s projection that 3 million borrowers would receive assistance from the program. The WSJ recently mused, “So how big a flop is HAMP? Modifications still face a high re-default rate, largely because borrowers still have heavy debt loads. Some borrowers have found themselves worse off because they do everything possible to get a trial modification, only to be turned down.” Still, the author of the story conceded that at the very least, the government’s program galvanized the private sector into action." Source: Mortgagecalculator.org

Our reaction and stats give us a slightly different perspective, which leads us to agree with only two things, HAMP is a Failure and HAMP kicked off the private sector to "HELP" the distressed homeowner. The biggest OOPS factor that they FAILED to place in this story was the NUMBER of people that got a "Principal reduction"? Our research has shown only 1% of all loads that get accepted for a Loan Modification of that only 7% get the principal reduction... I'll say it again, 7% of ONLY 1% of all loan mods are principal reduction modifications. The BULK of the modifications are
1) Interest Rate Reduction, this is the biggest modification done, but it is only temporary
2) Half payment modification, this is where they (the lender) allows the home owner to make 1/2 monthly payments for a period up to 1 year, then the other half of those payments either come due or end up on the backside of the loan AND your credit still gets dinged every month
3) Forbearance, Very similar to #2 above, however you are evaluated in what you can make as payments and the balance you are not paying goes to the back of the loan to collect more interest...AND your credit gets dinged every month.

July - More July stories

"340k of the 4million have been helped with HAMP" - Jeff Andersen, NR Instructor-July College

"Wells Fargo new loan mod policy (current rate, no reductions) 30 year fixed rate, if it doesn’t fit too bad" - reported to be in a corporate email at Wells Fargo
Not a single plan has gone down since they started their new program at the beginning of June 2010, which means that Wells Fargo is pretty much ignoring the HAMP, while keeping what ever money they got from the Obama plan and still hounding their borrowers (home owners). All I have to say to that is Every person in Pre-foreclosure that has a Wells Fargo account is my potential client, call us today at 619.7HOUSE1

KEEP UP to day with Loan Modification News

Sadly, REALTORS® are not perceived as trusted advisers by many nonprofit professionals. In fact, the word REALTOR® does not appear as a recommended consumer resource at Arizona foreclosure events. I attended an event in Tucson where the word REALTOR® appeared only once in a day-long event with hundreds of consumers. A leading state bankruptcy/foreclosure attorney pointed to REALTORS® in a cautionary presentation about "Predators and Scam Artists." Source: aaronline.com

REALTORS® have little success processing loan modifications. Loan-mod-for-money companies tout high success rates, but their success is tied often to short-term solutions, not long-term, sustainable results. The high failure rate of loan modifications across the board is sad evidence of the fruits of their chicanery. Source: aaronline.com

August - More August stories

Fannie Mae unveils consumer website for borrowers - Washington Post
Government & Fannie Mae launches "Know your Options.com", Once again the Government is PUSHING the HAFA program throughout this site, DON'T BE Fooled, when has the government EVER given you anything to REALLY help you? Read our HAMP Article to find out why HAMP is BAD for homeowners !!!

Housing Assist of America: Nearly Half of Homeowners Terminated From Obama's Mortgage-Aid Program

August 30, 2010 - LOS ANGELES, CA -- In this ailing housing market borrowers throughout the nation are losing their homes every day. The quick fix was thought to be the Obama administration's mortgage relief program. Unfortunately this program has not been conducive for homeowners who are trying to hold onto their properties. We are seeing an increasing number of homeowners fall out of the program faster than they had ever imagined. The Treasury Department states, "approximately 630,000 people who had tried to get their monthly mortgage payments lowered through the effort have been cut loose through July." This is nearly 50% of homeowners who had enrolled in the program.

A copious amount of borrowers have complained about the many faults that this program presents. MSNBC reports, "Borrowers complain that banks often lose their documents and then claim borrowers did not send back the necessary paperwork." This plan was initially intended to lower the monthly mortgage payments of the people in financial trouble.

Homeowners who are in this predicament and want to avoid foreclosure can turn to companies such as Housing Assist of America (www.housingassist.com), who help those who have been turned down visit their alternatives to foreclosure. President of Housing Assist Aram Afshar says, "We have successfully helped hundreds of homeowners avoid foreclosure via a short sale. Loan modifications do not get rid of negative equity, so your property is still worth less than what you owe the banks. This is an opportunity for homeowners to get out of a bad investment."

Real estate data company RealtyTrac reports, "Overall foreclosure activity, including notice of default, scheduled auction and repossession, rose 4 percent in July from June. Actions were taken on 325,229 properties, with one in every 397 housing units getting a foreclosure filing." Homeowners are getting foreclosed on left and right; it is important that they know their options. Many are now turning to short sales as an opportunity to get out of an unfavorable situation.
Source: http://www.thecreativeinvestor.com/News2195.html

September - More September stories

HAMP Failure of the Day

September 10, 2010: He’s (Felix Salmon) telling the story of Mike and Ellen Kahara, who signed up for a HAMP mortgage-modification program through their lender, Wells Fargo. They made all their HAMP payments in full for the three-month trial period, and then continued to make payments as Wells dawdled over whether or not to make the loan-mod permanent.

Eventually, on August 11, Wells Fargo sent the Kaharas a letter saying that the bank had rejected their application for a permanent loan modification. That’s bad enough — but the bank made matters infinitely worse by then turning around and selling the Kaharas’ house, in a foreclosure sale, just five days later, on August 16. Without even bothering to notify the Kaharas that they were foreclosing in the first place.
Source: Reuter.com

October - More October stories

Portrait of HAMP Failure: How HAMP Connects to Foreclosure Fraud

October 12, 2010: Now that the foreclosure fraud scandal has deepened, I wanted to show how it connected to the problems with HAMP, using some reader stories as an illustration. While I’ve put this project into the background in recent weeks, I still receive personal stories about struggles with the servicers almost every day, and the problems they’re having are consistent whether you’re talking about modifying a loan or preventing foreclosures. They still feature document flim-flammery, double-talk and a clear violations of established rules, whether in the legal foreclosure process or the rules set up by Treasury for HAMP.

Tina Kimmel is an epidemiologist in California who saw her salary cut by Arnold Schwarzenegger to balance the budget, and this reduction in income put her in trouble with her mortgage. She tried to get into the HAMP program in June 2009, when it began, through her lender, Citi Mortgage. Source: firedoglake.com

Some comments about bankruptcy

Several people we have spoken to are under the impression they can file bankruptcy and keep the house....NOPE !!!
Here's the basics on the 2 bankruptcy strategies

  • Chapter 7 (discharge of non-secured debt) does not do the home, “lift of stay” and it will continue with foreclosure and you won’t have the option to sell it because it now belongs to the lenders.
  • Chapter 13 (restructure of debt) includes the home, but you will be paying fees on top of your home payments, you must 2-5 years, if you miss a payment, they will dismiss it and all your fees will be reinstated and your home taken from you.

Cancellation of Debt

Remember people, if you do a deed in lieu or a short sale, you will have to get with your tax professional and talk to them about,
IRS Form 1099A – comes from the title company, should be $0, which is the profit the sellers made on the property
IRS Form 1099C – cancellation of debt, under the debt relief act.
You may want to have tax preparer sign an IRS Form 982 (www.irs.gov/pub/irs-pdf/f982.pdf) this is part of the debt relief act, for the year of the short sale.
Read more about Cancellation of Debt in our article and make sure you ask questions of your tax professional

DID YOU KNOW?

RE Agents are by law required to work together
RE Attorneys are by law required to be adversaries.

SCAM and wacked Stories

Yes, where there is an opportunity to make money there is ALWAYS a SCAM, here are some article we have found on SCAMS
"Loan-modification scams circulate in Tolleson" - AZCentral.com
"Loan modification mishap update: Bank of America responds" - WinkNews.com
"Does Wells Fargo Hate Black People?" - Philadelphiaweekly.com