Thoughts of a Foreclosure Analyst
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Looking for Proof that the Housing market is turning around?
Even for the the most conservative there are the signs of a housing market turnaround are undeniable (alebeit modest). Attention home buyers and investors, start circling the wagons...
Looking for Proof that the Housing market is turning around?
Even for the the most conservative there are the signs of a housing market turnaround are undeniable (alebeit modest). Attention home buyers and investors, start circling the wagons...
One of the new foreclosure Laws being implemented
Southern Nevada lawyers have warned the state Supreme Court that a new program to reduce foreclosures could fail because loan servicers won't be able to modify loans for home buyers.
Attorney Kirk Williams expressed concern that loan servicers won't offer better terms to home buyers facing foreclosure because the actual owners of the loan in default are investors.
"The investors won't appear," Williams said during a public hearing held in Las Vegas and simulcast in the court chambers in Carson City.
Thinking about contacting your Congressman?
WASHINGTON (AP) — Can't afford your mortgage payment? If the bank won't take your call, your member of Congress just might.
Several lawmakers whose districts are drowning in foreclosures are taking unprecedented steps to help people stay in their homes, including picking up the phone themselves to negotiate with banks on behalf of their constituents.
The pain of being put on hold for an eternity can be an educating experience for a member of Congress.
As a body, Congress has failed to come up with a broad fix for the foreclosure crisis. So some lawmakers are helping homeowners one at a time and seeking creative ways to make a difference in their districts.
Rep. Elijah Cummings, a Maryland Democrat whose Baltimore district has been walloped by unemployment, arranged for 19 banks to set up shop at Morgan State University on Saturday to work with homeowners struggling to pay their mortgages.
Cummings is asking people to come to his anti-foreclosure fair with recent pay stubs, tax returns, their monthly budget and any late notices or foreclosure threats they've received by their banks. He predicted 500 people would show up, a turnout he hopes will help convince the White House that federal money is needed to bailout homeowners directly.
Forensic Loan Audits
There is a new strategy in the fight against foreclosure: Forecnsic Loan Audits (FLAs). FLAs reveal lender violations during the original funding of your loan. It can be a a useful step in trying to modify your home loan successfully. If you have a high cost loan or if your monthly payments are about to increase - and you are enduring a personal hardship - then the the FLA should be your absolute FIRST step in the search for a resolution. 3 of 4 loans contain some type of Federal and State violations.
Here at EHS though our attorneys push for loan modifications first to avoid the high costs associated with FLAs, sometimes they are necessary. You will be hearing a lot more about FLAs in the news in the coming weeks. In the meantime here's another interesting article on dropping rates from Mortgage News Daily:
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Mortgage rates moved downward last week after three straight weeks of increases. According to the Primary Mortgage Market Survey released on Thursday by Freddie Mac, average rates for the 30-year fixed-rate mortgage (FRM) during the week ended February 12 dropped from 5.25 percent to 5.16 percent. Fees and points also moved down from 0.8 point to 0.7.
The 15-year FRM averaged 4.81 percent with 0.7 point for the week compared with 4.92 percent with 0.8 point during the week ended February 5.
Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) moved slightly lower, from 5.26 percent to 5.23 percent. Fees and points remained at 0.6 point.
One-year Treasury-indexed ARMs were up, averaging 4.94 percent this week compared with an average 4.92 percent last week. Fees were unchanged at 0.5 point
"Interest rates for 30-year fixed-rate mortgages are almost 1.5 percentage points below 2008's peak set on July 24, 2008, offering many homeowners an incentive to refinance," said Frank Nothaft, Freddie Mac vice president and chief economist. "This would translate into a monthly payment savings of around $188 on a $200,000 mortgage. "The Bureau of Economic Analysis estimated that the weighted average mortgage rate of loans outstanding was about 6.2 percent in the fourth quarter of 2008. As a result, the share of refinancing among the total number of conventional mortgage applications has exceeded 50 percent for the past 11 weeks and averaged 80 percent over this period, according to the Mortgage Bankers Association."
Earlier in the week Fannie Mae released results of its survey of weekly mortgage yields for the period ended February 9. Servicing fees are not included in the figures.
The average yield on a conventional 30 year FRM was 4.73 for the week compared to 4.72 a week earlier. The 15-year FRM was also down slightly from 4.3 percent to 4.24. Government guaranteed FHA/VA 30 year loans climbed to 6.23 from 6.05.
One-year ARM yields averaged 4.56 percent compared to 4.70 the week before.
Swindlers messing up this good business
My father forwarded me the article below - a good read from the New York Times. I suppose because he worries I may get caught up in the bad press foreclosure rescue operations seem to be attracting lately. An attorney once told me that transparency and full disclosure was the only way to go. I agree. Foreclosure Rescue outfits go wrong when they promise they can reduce a mortgage payment or interest rate by a specific amount. This is not possible. The truth is -loan modification particulars are at the disgression of the lender.
Amanda Rivkin for The New York Times -January 15th 2008
Carol McClelland turned to third parties that offered to renegotiate their mortgages but did nothing and was evicted.
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Heidi Schumann for The New York Times
One company told Maria Martinez that for $1,000, they would negotiate with her mortgage company to lower her interest rate.
Until recently, defrauders tried to bilk homeowners out of the equity in their homes. Now, with that equity often dried up, they are presenting themselves as “foreclosure rescue companies” that charge upfront fees to modify loans but often do nothing to stave off foreclosure.
The Federal Trade Commission brought lawsuits last year against five companies representing 20,000 customers, and state and local prosecutors have brought dozens more. In Florida, Attorney General Bill McCollum recently sued a company that he said had more than 600 victims.
“There’s no way for the consumer to sort out the legitimate companies,” said Mr. McCollum, who added that he had limited resources to fight what he called “a sheer volume question.”
The companies under suspicion typically charge an upfront fee of up to $3,000 to help borrowers get lower rates on their mortgages from their lenders. But borrowers often cannot afford the fees, the service can be bogus and, in the worst cases, the homeowners lose their chance to renegotiate with their bank or to file for bankruptcy protection because of the time wasted.
There are companies that provide legitimate foreclosure services, but the industry is largely unregulated, making it difficult for homeowners to separate the good from the bad. Some of the fraudulent companies — often run by former real estate agents or mortgage brokers — are local; others are national. Many have official-looking Web sites that suggest that the companies have government affiliations and give homeowners a false sense of security.
“That’s all I’ve been doing for the last year,” said Angela Rosenau, a deputy attorney general in California, citing more than 300 complaints about fraudulent companies last year, not counting those made to local prosecutors.
Experiences like those of Maria Martinez, of Stockton, Calif., are playing out with greater frequency across the country, the authorities say. Ms. Martinez struggled to pay her mortgage last summer. She had no shortage of people offering to help. Fliers for rescue companies filled her mailbox.
At a seminar for troubled borrowers near her home, one company offered a service that promised just what Ms. Martinez needed: for $1,000, the company said it would negotiate with her mortgage company to lower her interest rate.
“I was desperate,” said Ms. Martinez, 57, a clerk at the San Joaquin County Jail. She made an initial payment of $500 and paid another $500 a few weeks later.
Now the house is in foreclosure, and Ms. Martinez is waiting for the sheriff to evict her. She cannot reach the man she paid to modify her loan.
In California and 20 other states, including New York, companies are prohibited from collecting payment until they have completed their services, something Ms. Martinez did not know. In Colorado, the attorney general’s office has closed 15 mortgage rescue companies that charged fees up front.
Carol McClelland, 46, fell into foreclosure on her Chicago home when she lost her job as a waitress in two restaurants. She received a call from a company called Foreclosure Solutions Experts, promising to stop the foreclosure and lower her mortgage payments to around $550 a month, from $1,056, Miss McClelland said.
“She showed me other clients’ files, and they were paying $650 a month,” she said. The charge for the service was $1,300, which Miss McClelland paid in installments, borrowing the money from friends and relatives.
When the loan servicer notified her that the house was still in foreclosure, Miss McClelland said, the representative from Foreclosure Solutions Experts told her that the matter had been taken care of.
“She told me everything was all settled; I don’t have to worry about anything,” Miss McClelland said. “All I had to worry about was getting the rest of the money to her.”
According to a suit brought by the Illinois attorney general in November, Foreclosure Solutions Experts does little or nothing to help consumers, and when it does take action, the result is often a repayment plan unsuited to the borrower’s ability to pay. The suit alleges that the company never contacted Miss McClelland’s lender, HSBC.
Illinois is one of the states that bans upfront payments to foreclosure rescue companies. The attorney general’s office has received “thousands” of complaints about such companies, said Michelle Garcia, an assistant attorney general, and the suit against Foreclosure Solutions Experts is one of 22 filed by the state.
Stacy Strong, who runs Foreclosure Solutions Experts, did not return calls for comment.
Advocates say foreclosure rescue scams are particularly insidious because they prey on people’s desperation and because they victimize those who can least afford it.
Borrowers seeking loan modification are often frustrated that they cannot reach the right people at their lender or that the lender insists on a repayment plan they cannot keep, said Ira Rheingold, executive director of the National Association of Consumer Advocates.
“When you’re desperate, that’s when the crooks come out,” Mr. Rheingold said. “You’ve tried everything, and a guy calls you up on the phone or there’s an ad on TV, and you have no other options, what do you do? You go to those guys.
“People probably know in their heart of hearts that they may be getting ripped off, just like most people understood on their mortgages that they were getting in too deep, but bankers said yes, so it must be O.K. It’s the same thing. The real problem is that we continue to fail to have systems in place that help people.”
Ms. Rosenau, the California prosecutor, said that even when she told people that they had been swindled, “they don’t believe it, because they want it not to be true.”
“And any money they had to possibly work with the lender is now gone to the scam,” she said.
In Baltimore, where neighborhoods have been buffeted by successive waves of mortgage scams, Ann Norton, director of foreclosure prevention at the nonprofit St. Ambrose Housing Aid Center, said companies promising loan modifications started to multiply last summer.
“It’s the same people that joined the industry during the refinance boom, and now they’re making fees for submitting loan remediation forms,” said Ms. Norton, whose agency provides free help to borrowers.
Although Maryland was among the first states to enact legislation defining mortgage rescue fraud, Ms. Norton said, “it’s a growing industry, and it’s under the radar.”
Often the scammers represent themselves as having connections to government groups, or copy the name and typography of the Hope Now program, an alliance of nonprofit, government and lending agencies, said Marietta Rodriguez, director of national homeownership programs at NeighborWorks America, a nonprofit group that provides free government-certified foreclosure counseling through 235 local organizations.
“Several took the Hope Now Web site and just reskinned it with their own information, or they use government seals,” Ms. Rodriguez said. “They’re very crafty, and their marketing strategies are aggressive.”
Peggy L. Twohig, associate director of the financial practices division at the Federal Trade Commission, said consumers should be wary of companies that promise results, charge upfront fees or tell them not to contact their lender on their own. Ms. Twohig said consumers could get the same help free from nonprofit housing counselors.
“Our advice to consumers is to contact their loan servicers directly or to call Hope Now or HUD-approved housing counselors,” she said.
Last year, Congress approved $180 million in grants to nonprofit housing counselors.
As Ms. Martinez awaits eviction, the temptation to try another foreclosure rescue specialist remains. “There’s other agencies that say they can help,” she said, “but I’m scared that I can’t trust them.
“One man said, ‘You have to be persistent,’ ” she said. “But I’m scared to get someone else, because they probably won’t help me, or can’t.”
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