Too much Fraud (by property owners, agents & investors)
In order to maximize the amount of money banks are receiving for their assets, their fiduciary duty to their shareholders and moral duty to the American taxpayers who have to bail them out when they get into financial trouble and are "too big to fail", banks need to introduce a higher element of transparency in the short sale transaction process.
Like many REO lenders have already started to do, all short sale offers should be submitted via a lender-direct website that goes directly to the loss mitigation department of the existing lien holders.
No more putting your house up for short sale to extend the amount of time you can live for free.
You don't have to pay the sellers just change the mortgage underwriting guidelines so that after a short sale where the seller fully participates (not someone who milked the system to live for free as long as possible) you can buy a home. How about take the number of mortgage payments missed multiplied by a factor say 2, 3 or 4 + a base number ( say 3 months) and that is how long a buyer has to wait to buy a new home after a short sale versus the 3-4-5-7 years they have to wait for allowing the house to go into foreclosure.
Do this and you'll get much better participation and you dont' have to use more taxpayer TARP-funded money to give to overextended homeowners.
With the introduction of the Home Affordable Modification Program (HAMP) many homeowners that are not currently behind on their mortgages are being faced with a situation where they are being offered potential relief.
Obviously their first reaction would be to accept this relief but the government had done something smart (yes, give credit where credit is due). They made it mandatory for loan servicers to report derogatory history to the credit bureaus for all borrowers who participate. The creators of HAMP did this to weed out the people that can afford their payments but want a modification of their loan terms on the taxpayer dollar.
Those in true financial need won't mind, they are most likely already behind on their payments and their credit…
California Attorney General Jerry Brown unveiled a new website aimed at ending abusive practices in the loan mod industry
Overall this is a good thing, I think consumers should make sure that they are dealing with a licensed person/company when attempting a loan modification. If things don't work out their should be an accountable individual or entity to deal with for the consumer. Getting a signed advanced fee agreement is a must. I'm still not completely convinced that homeowners get the best modifications when representing themselves though...
Also debatable is whether certain homeowners will ever face reality. The homeowner that choose the 1% option arm over the 5.75% 30 year fixed against the advice of more conservative voices because they…
As I said in my last blog SB94 will have an effect on how consumers handle their mortgages SB94 has already passed the Senate and the community and now goes to the assembly there are many reasons to think this will help as well as many reason to think it would not, the bill it self is as follows
This bill would prohibit persons from charging advance fees to
borrowers in connection with a loan modification, and require
those who wish to charge a fee for loan modification services
(after performing them) to provide a specified notice to
borrowers regarding other options available to the borrower.
The violation of those…
A lot of Direct Lenders, Banks, Government Agencies and Non-profit organizations are inundating homeowners with messages that Third Party Loan Modification Companies are "scammers" and that borrowers should use extreme caution when doing business with these companies. They tell homeowners that they will do their loan modification for free. !FREE Loan Mod! That sounds great! I'll take it!
Unfortunately as the old saying goes, there is no free lunch...especially when it comes to loan modifications.
I'll give you an example of what I mean. I just called Chase Bank to check status of a Loan Modification sent in on 5/18/09. The first representative told me I needed to wait 6 weeks before I could confirm receipt of the package. I knew that had to be…
I am adamant in my opinion that Obama’s mortgage plan will be a bust. It seems difficult for people to understand that:
borrowers need to be in homes they can afford, regardless of the level of rates;
home prices should (and will) fall to levels consistent with area incomes;
re-default rates will continue to rise for a host of reasons;
seems like the only mod plan that is working is the one where banks actually cut principal by a significant amount; and
it is horrific public policy to give people that have loan modifications a credit after 5 years if they have paid their mortgage on time over that period, but provide other folks like renters and homeowners who have paid their mortgage on the up and up no relief.
Lots of lawyers or "Law Groups" are spending lots of money trying to convince consumers Mortgage Brokers and Real Estate Agents are bad and Lawyers are good. To me this is like a fox offering a Chicken a "safe haven" in its den from a Cat its running for its life from.
Here are some issues a homeowner should be aware of before choosing any person or company to modify their loan:
Who is telling me what type of loan modification results I'm likely to get? A salesperson on commission for getting my check? or someone with experience negotiating with different lenders' Loss Mitigation Departments?
Who will be negotiating with my lender? An actual attorney, or an out of work, unlicensed, former sub-prime mortgage flunkee who is doing loan mods now? …
Just wanted to start this thread to get some ideas out there. I think too much negative energy is being spent on figuring out who to blame for our Economic problems and not enough positive focus on coming up with creative solutions. These rough draft ideas are my humble attempt to put something out there to change that...
Principal Reduction: Homeowners want it, Banks don't. I believe there is a way to give principal reduction that would be less pain for banks than continuing with their current loss mitigation strategies.
In many areas of the country there is big gap between current market value and amount owed against the property. A foreclosure forces a lender to realize the loss immediately on books. Why not reduce principal but create a…