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March 2019
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According to DataQuick. the worst may be over for California’s hard-hit housing markets, The state’s most affordable markets, which represent 25% of the state’s housing stock, accounted for 34.9% of all home foreclosure activity in the fourth quarter, down from 52% a year earlier.  Nevertheless, mortgage loans were still more likely to go into default in inland areas such as Merced, Stanislaus and Riverside counties, which were ravaged by foreclosures during the downturn. The coastal counties of San Francisco, Marin and San Mateo had the least probability of default.  California loan modification agreements continue to flood the loss mitigation departments of banks across the country.

While many of the loans that went into default were originated in early 2007, the median origination month for last quarter’s defaulted home loans was July 2006, the same month as during the prior three quarters. According to DataQuick, the median origination month a year before was June 2006, so the foreclosure process has moved forward through one month of bad loans during the last 12 months.  “Mid-2006 was clearly the worst of the ‘loans gone wild’ period and it’s taking a long time to work through them,” Walsh said. “We’re also watching foreclosure activity start to move into more established mid-level neighborhoods. Homeowners were able to make their payments longer than homeowners in entry-level neighborhoods, but because of the recession and job losses, that’s changing.”  The mortgage lenders that originated the most loans that went into default last quarter were Countrywide with 5,588, Wells Fargo with 3,482 and Washington Mutual with 3,460. Along with Bank of America (1,760 loans) and World Savings (1,869), they were also the most active lenders in the second half of 2006. Last quarter’s default rate on loans originated in the second half of 2006 ranged from 1.5% for Bank of America to 13.1% for World Savings, according to DataQuick.

On mortgage loans from primary residences, California homeowners were a median five months behind on their mortgage payments when lenders filed notice. The borrowers owed a median $13,510 on a median $325,818 mortgage.  On home equity loans and lines of credit in default, borrowers owed a median $3,939 on a median $62,965 credit line. The amount of the credit line that was actually in use can’t be determined from public records.

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To most distressed homeowners, loan modifications and mortgage relief opportunities seem to be fading.  HOPE NOW recently announced the launch of a new Web portal that will allow the Department of Housing and Urban Development (HUD)-approved housing counseling agencies the ability to submit completed Home Affordable Modification (HAMP) applications for borrowers at-risk of foreclosure.

According to California loan relief guru, Jeff Morris, “Homeowners need to take a deep breath and reevaluate their mortgage relief options, even if they were recently denied by a loan modification company or mortgage lender, because new opportunities have arisen.”  For borrowers with no equity looking to refinance, they should consider the Home Affordable Refinance Program that enables the refinancing of Fannie Mae and Freddie Mac mortgage liens up to 125%.

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Bank of America has provided mortgage relief through concluded and trial loan modifications to more than 600,000 homeowners since January 2008.” A spokesman for Bank of America said they remain focused on providing loss mitigation solutions to help distressed customers maintain homeownership.”  Loan modification strategies remain in the big picture for companies like B of A, Wells Fargo, Citi and Chase.  The loan modification processing centers at these banks is clearly bottle-necked, so you may need to work with an experienced law firm that specializes in foreclosure prevention solutions.  Many of the California loan modification prgrams have been outsourced to processing centers in Arizona, Nevada and Texas.

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Many distressed homeowners have suffered from loan modification fraud.  In an effort to further protect California homeowners from predatory lending and loan modification fraud, CA Bill 764 by led by Pedro Nava of Santa Barbara introduced a new law only allowing individuals or loan modification companies to collect fees only after a mortgage loan modification is successfully obtained. Many lawmakers had warned distressed homeowners against paying advanced fees. Those loan modification fees can be in the thousands of dollars, and often times these companies or individuals will do little or no work after getting their fees. In his veto message of AB 764, Governor Schwarzenegger wrote, “I do not agree with the provision of this bill that will only allow fees to be collected if a mortgage loan modification is successful. This could adversely affect legitimate businesses that provide loan modification services.”

Jeff Morris of the Loan Modification Relief firm in California expressed approval in the Governor’s action. “Even though there is unfortunate fraud happening, it does not mean that you need to attack all loan modification companies.  Morris continued, “If loan modification companies were not allowed to charge fees up-front, there would be no more loan modifications, because the process can take 6 months for successful mortgage relief.  Who in their right mind would work for free for 6 months?”

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The California Assembly passed a new bill that claims to protect homeowners from mortgage modification scams who charge fees in advance to satisfying the homeowner with mortgage relief.  But the reality is that the Senate Bill 94 could end up having the unintended consequence of eliminating a homeowner’s ability to retain a loan modification lawyer, or a mortgage relief attorney to help them save their home from foreclosure.  So the bill completely ignores the fact the THOUSANDS of homeowners have had great results from loan modification companies that successfully lowered their mortgage payment while preventing them from losing their home to foreclosure.

The bill, which has an “urgency clause” attached to it, now must pass the State Senate, and if passed, could be signed by the Governor on October 11th, and go into effect immediately thereafter.  SB 94’s author is California State Senator Ron Calderon, the Chair of the Senate Banking Committee, which shouldn’t come as much of a surprise to anyone familiar with the bigger picture.  Sen. Calderon, while acknowledging that fee-for-service providers can provide valuable services to homeowners at risk of foreclosure, authored SB 94 to ensure that providers of these loan modification services are not compensated until the contracted services have been performed.

SB 94 prevents loan modification companies, brokers, individuals… and even lawyers… from receiving fees or any other form of compensation until after the contracted services have been rendered.  What loan modification company in their right mind would go through 120 days of work negotiating a loan modification with their client’s lender only to have the client say, sorry we don’t have the money to pay you for your services.

The loan modification bill will now go to the Democratic controlled Senate where it is expected to pass.  Loan modification executive, Glen Silver said in a recent press conference, “Too bad for genuine loan modification companies, Bush couldn’t get a third term, because he wouldn’t have signed it, but we know everyone’s buddy Obama would sign a national bill as soon as he smells political success.”  Silver continued, “The President would be able tell his buddies on capitol hill that he saved Americans from loan mod scams, but really he is just going to kill the loan mod business and lenders will get their leverage back.  I guarantee the lender lobbyists created this bill.

Watch this Video Proclaiming Salvation from their Short-Sided Loan Modification Bill

Supporters of the loan modification fraud bill say that the state is literally teeming with con artists who take advantage of homeowners desperate to save their homes from foreclosure by charging hefty fees up front and then failing to deliver anything of value in return.  They say that by making it illegal to charge up-front fees, they will be protecting consumers from being scammed.

Yes there have been some shady brokers who committed predatory lending abuses that took advantage of distressed homeowners, but thousands of borrowers benefitted from genuine mortgage relief negotiations from trust-worthy loan modification firms across California. The actual number of loan mod scams remains unclear.  Now that we’ve learned that lenders and servicers have only modified an average of 9% of qualified mortgages under the Obama plan, it’s hard to tell which companies were scamming and which were made to look like scams by the servicers and lenders who failed to live up to their agreement with the federal government.

In fact, ever since it’s come to light that mortgage servicers have been sued hundreds of times, that they continue to violate the HAMP provisions, that they foreclose when they’re not supposed to, charge up-front fees for mortgage loan modification plans, require homeowners to sign waivers, and so much more, who can be sure who the scammers really are.  Let’s consider how the President is cracking down on corruption…Bank of America, received the worst grade of any bank on Obama’s report card listing because they only modified 4% of the home loans from borrower’s who were eligible for mortgage relief since the plan began.  Didn’t the government give Bank of America 200 billion in the bank bail-out of the century?  Bank executives assert that the loss mitigation department is running into obstacles handling the incoming phone calls.

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State and federal officials have launched ‘”Operation Loan Lies” — an effort targeting nearly 200 loan modifications firms for a number of alleged illegal practices including promising services they can’t deliver, charging more than $5,000 in advance fees and misrepresenting their affiliations with mortgage servicers.  Former Ditech executive, Jeff Morris said in a recent interview with Loan Modification Buzz, “There is nothing wrong with paying a loan modification company money to renegotiate the terms of your mortgage, but make sure the company actually submits a loan workout request with your lender’s loss mitigation department.”  Morris reminded the news company that not all loan modification firms were bad and that some were actually save families from foreclosure.

Federal and state agencies took 189 actions today against modification and foreclosure-rescue firms, the Federal Trade Commission announced. The coordinated actions were part of a national law-enforcement effort by 2 federal and 23 state agencies to crack down on loan modification scams.  “Operation Loan Lies,” has targeted loan modification firms that allegedly promised to obtain modifications or stop foreclosures, but the companies actually did nothing. Advance fees charged by the loss mitigation firms were equal to one or more mortgage payments, but no loan negotiations ever took place. 

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Fitch Ratings published a report recently that examined the performance and effectiveness of foreclosure preventions with loan modification programs in terms of helping prevent a borrower from losing their home in foreclosure. Their report pointed out massive failure rates. Fitch’s foreclosure prevention reports that had come out earlier in year found that 50% of mortgage modifications done in the first half of 2008 had gone back into default by year-end. The recent loan modification study by Fitch estimates that between 65% and 75% of modified subprime mortgages will become 60-days or more delinquent again within a year of  that the loan is modified.

Loan modifications can combine lower interest rates, maturity date extensions, changing from adjustable to fixed interest rates, and the reduction of principle. Of the four, principle reductions are statistically the best way to ensure the long term success of a loan modification. According to LPS reports, loan work-outs that included principle reductions had a 25% lower re-fault rate than those without a reduction. Fitch’s numbers concurred with those numbers, indicating that loan modification plans that included principle reductions saw a 40% to 50% chance of a re-fault. Not surprisingly, Fitch found that loan modifications where loan principle was increased due to missed payments and penalties being added to the backend of the loan had a re-fault rate of 60% to 70%

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The state of California announced a new state law imposing a 90-day moratorium on home foreclosures that went into effect for local borrowers who were unable to get access to a loan modification program. Under the program lenders must prove they attempted to offer mortgage loan modifications with delinquent home loans before they begin the home foreclosure process. The moratorium is very similar to the federal mortgage relief program that started last December and ended April 1.

The goal is to ensure loan servicers make legitimate attempts to work with borrowers before foreclosing. Because of the Federal moratorium, most of the big mortgage lenders already have a loan modification program in place. Those companies don’t have to comply with the new state law and can apply for an expemption.

That process however, can take up to a month to complete. During that time mortgage loan servicers can carry on with business as usual, including foreclosing on delinquent accounts. The State announce the California moratorium would go into effect immediately, but will the major mortgage lenders fall into line with it?

California Foreclosure Moratorium Guidelines:

ü The moratorium applies to first mortgages made from 2003 through 2007.

ü The mortgage loan must be for your principal residence.

ü The homeowner must have received a notice of default.

ü The home loan servicer does not have a California loan modification program in place.

ü Because many homeowners are upside down on their mortgages

There is a concern that the 90-day negotiating period will only postpone the inevitable because so far the banks are not reducing the principal. California doesn’t know how many people will actually have their foreclosures put off, nor what banks already have loan modification programs in place. The Department of Corporations does plan to post which institutions apply to be exempt from the moratorium.

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Loan modification activity continues to rise as delinquent homeowner look for help. Mortgage loan modification agreements have helped many homeowners salvage their homeownership with lower mortgage payments, but not everyone qualifies. Mortgage modifications and loan workouts are successfully negotiated when the borrower has a job and has the ability to afford the revised loan payment.

A new cycle of mortgage bills arising from the high number of home foreclosures in the Inland area and around California is moving through the Legislature, following major initiatives at the state and federal levels in the past year.

The bulk of the new state proposals expand protection for renters living in foreclosed properties, create new rules for reverse mortgages, and impose standards on loan-modification consulting companies, such as banning them from taking advance payments from troubled homeowners.

Some industry groups and lawmakers question the need for more state legislation so soon after Congress and the Legislature approved measures to address the foreclosure problem. Some of the laws have been on the books for only a relatively short while.

A 90-day foreclosure moratorium approved as part of the February budget package takes effect Monday. “It’s premature to add new legislation on top of what we have before we see what the results are,” Dustin Hobbs, of the California Mortgage Bankers Association, said. “We’re not saying more action can’t be taken down the road. But let’s see what happens first.” But supporters say much remains to be done to address the state’s foreclosure problem, and to prevent it from happening again.

Paul Stein, associate director of the California Reinvestment Coalition, which advocates for low-income residents in the financial sector, said Congress is taking the lead in crafting foreclosure-related fixes. Those include possibly making it easier for bankruptcy judges to modify mortgage payments for struggling borrowers.

There is still a large role for the state to play, he said. “It’s still the case that … financial institutions are not accountable for the impacts of foreclosures on borrowers and communities. They’re really not obligated to help anybody,” Stein said.

Home Loan Defaults Rise

Foreclosures have been a major burden on the Inland economy. In April, there were almost 5,000 notices of default filed in Riverside County, according to ForeclosureRadar, a tracking service. The notices are the first step in the foreclosure process. The county had the fourth-highest rate of foreclosure sales last month.

San Bernardino County had about 4,000 notices of default and the seventh-highest rate of foreclosure sales in April. The main state foreclosure law to emerge last year was SB 1137. It requires lenders and loan servicers to talk with borrowers before starting foreclosure proceedings. The aim is to get more loan modifications. This year, lawmakers introduced more than 30 foreclosure- and mortgage loan modificationj related bills. Nearly all of the authors are members of the Legislature’s Democratic majority. About 24 measures are still pending, with most facing a Friday deadline to clear the Legislature’s appropriations panels.

Some of the foreclosure prevention bills would put the state in compliance with the federal Secure and Fair Enforcement of Mortgage Licensing Act approved in July 2008. The law requires mortgage loan originators to be licensed and complete 20 hours of pre-licensing legislation, along with other requirements.  It wasn’t clear whether mortgage lenders and banks would be exempt from this new licensing requirement.

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The Treasury Department has expanded its loan modification program and is now offering incentives for short sales and insurance to “partially offset” price declines on loan modifications during the first two years. The “Home Price Declines Protection incentives are designed to address investor concerns that recent home price declines may persist,” according to a Treasury fact sheet. And it provides cash payments based on average local price declines. The incentives accumulate each month the modified loan is current and payments are made at the end of the 1st and 2nd year. “It’s just an additional incentive to participate in the program,” Treasury secretary Timothy Geithner told reporters. For distressed homeowners that are eligible for a Home Affordable Modification but can’t keep up with the payments, Treasury is providing incentives for servicers, investors and homeowners to try a short sale or deed-in-lieu if the property is not sold in 90 days. Secretary Geithner noted 14 servicers have signed up for the modification program and they have made modification offers to 55,000 borrowers so far. “This is just the beginning,” the secretary said. Treasury is prepared to expand and improve the program to “reach as many Americans as we can,” he added. Treasury also reported that Fannie Mae has purchased 2,150 Home Affordable Refinance loans so far. The mortgage giant has received over 51,000 eligible mortgage refinance applications where the loan-to-value ratios are between 80% and 105%. Freddie Mac has purchased 1,500 of these refinanced loans that do not require new mortgage insurance.

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Loan modification lead buyers can select from internet, live transfer, click to call, press 1 campaigns, direct mail marketing and TV infomercial leads.


Loan Modification Lead Opportunities Online


Loan modification leads are in high demand. Take a moment and talk to an account executive who manages marketing for loan modification companies in your area. To speak with a loan representative now visit go online or Buy Loan Modification Leads and help some Americans keep their home.

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The Obama administration kicked off the “Making Home Affordable” initiative, a $75 billion loan modification program, which runs through 2012. To qualify for this mortgage loan relief program, borrowers will have to provide their most recent tax return and two pay stubs, as well as an “affidavit of financial hardship”.

Homeowners are only allowed to have their home loans modified once, and the program only applies for loans made on Jan. 1 2009 or earlier. Up to 4 million borrowers are expected to qualify. Separately, up to 5 million borrowers who have mortgages held by government controlled mortgage finance giants Fannie Mae and Freddie Mac should be eligible to refinance through June 2010.

The legislation that gives bankruptcy judges the power to force lenders to lower mortgage rates or principal balances has been narrowed. Now, judges would have to consider whether a homeowner had been offered a reasonable deal by the bank to rework his or her home loan before seeking help in bankruptcy court. Borrowers also would have a responsibility to prove that they tried to modify their home mortgage loans. The compromise in legislation is expected to come to a vote in the House as early as Thursday.

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I received another inquiry about a mortgage relief through a law firm.  A loan workout is a negotiation with your attorney and lender with the goal of modifying your mortgage terms to something you can afford.  The process is very strategic and requires a significant amount of legal maneuvering to achieve the best results for you.  The attorney that represents you means “everything” to your case.  That is why you should feel comfortable working with a law firm to negotiate a reduced payment achieved through a loan modification.

Loan Modification Tips from Jeff Morris on Negotiating with Mortgage Lenders


There are 4 primary reasons why most people like working with an attorney-backed loan modification company versus a mortgage broker or individual. 


1.    First, make sure the law firm is an AV rated law firm which means it’s ranked the highest in the nation – sort of like a Johnny Cochrane style law firm. 


2.    Secondly, the lead attorney should be ranked in the top 1% in the state of California – which puts him ahead of 99% of the rest of the attorneys statewide. 


3.    Thirdly, choose a law firm that will allows you to break up your payments into 3 or 4 low payments.  This helps significantly when a person is in a financial bind. 


4.    Lastly, 95% of your calls are coming from pop up loan modification companies.  You should contract work from one of the most well respected law firms in all of California that was doing business prior to the turn of the century.


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Harry Smith spoke with Ray Martin about how President Obama’s new mortgage plan will help homeowners in various states of foreclosure. 


Watch Federal Foreclosure Options for Struggling Homeowners


Ray Martin considers the two main foreclosure prevention options:

1. Loan Modification

2. Mortgage Refinance

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Most home financing experts like Jason Cardiff believe that “we have not hit the bottom of the market and lending companies have lost so much that they can’t afford to repossess more homes in this foreclosure crisis.

Mortgage executive Scott Hess sat down with Loan Modification Buzz recently and discussed the mortgage relief movement by lenders who simply do not want to take over more properties from foreclosure. Hess said, “Many properties in California owe significantly more than their home could be sold for.”

Watch Video of Loan Modification Buzz Interview with Scott Hess

More than 12% of homeowners in one Solano County ZIP code are more than 90 days late making their mortgage payments, according to an online data base.

According to the First American CoreLogic database, as of November, the 94589 ZIP code -- the part of Vallejo north of Redwood Street and West of Interstate 80 -- had the area’s highest rate of late payments, at 12.48%. That’s about three times the previous year’s rate. Homeowners in this region of California have been targeted for loan modification plans by many of the mortgage lenders that funded most of the mortgage loans between 2005 and 2006.

First American CoreLogic is a firm that collects national, state and local real estate sales-related data. Homeowners in the 94533 ZIP code had the second-highest late payment rate at 9.56%. In that area -- which covers most of Fairfield proper -- only just over 4% of homeowners were in that position in November 2007. Vallejo’s 94590 ZIP code, which incorporates most of central Vallejo, is right behind at 9.32% of homeowners more than 90 days late.

Foreclosure rates in Vallejo-Fairfield increased during December over the same period last year, as well, CoreLogic found. According to its most recent data, the foreclosure rate for the area was 2.20% for December, an increase of 0.40 %age points over last year’s 1.90% rate. That’s higher than the national foreclosure rate of 1.7% for December. The home loan delinquency rate in the Vallejo-Fairfield area increased to nearly 9% in December from 5.50% in the same period in 2007, CoreLogic reports.

In the 94558 ZIP code, Napa’s Spanish Flat area at the tip of Solano County, only 2.42% of the homeowners are behind 90 days or more on their mortgage payments, according to CoreLogic. But though that is the area’s lowest late rate, it is a significant jump from .73% from last year.

Homes in Vallejo’s 94591 ZIP code, the area east of I-80 and includes Hiddenbrooke, seem to be selling best, Collins said. A high percentage of homeowners at least 90 days late paying their mortgage would ordinarily mean a correspondingly high percentage of new foreclosure proceedings, said Alan Schwartzman of Benicia’s Advance Mortgage. But these aren’t ordinary times. Some mortgage lenders are in the middle of a foreclosure moratorium and distressed home owners may get some mortgage relief from the national stimulus package, he said. Read the complete article online written by Rachel Raskin-Zrihen of the Herald Times.

You can visit them online at Loan Modification Leads or Live Transfer Leads online. LMB provides premium mortgage modification leads for many of the most respected law offices and top producing loss mitigation companies nationally.

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With its bailouts of Bear Stearns and American International Group, the Federal Reserve took a vast portfolio of mortgages onto its books. Now, it is trying to use its control of billions of dollars worth of home loans to help prevent foreclosures. The Fed will seek to revise negotiated mortgage terms it owns that might otherwise enter foreclosure, Chairman Ben S. Bernanke told congressional leaders in a letter yesterday. The decision won praise from congressional Democrats, who took it as a sign that the central bank’s leaders are cooperating with mortgage relief efforts from the government’s power to try to reduce home foreclosures nationally.

It is unclear how many homeowners stand to benefit. Under the program, the Federal Reserve can provide loan modifications by reducing what a homeowner owes on a mortgage, lower the interest rate, lengthen the term of a loan or take other steps to keep a loan from defaulting, if doing so would offer taxpayers a better long-term payoff than foreclosure. Individual borrowers are unlikely to know whether their mortgage loans are owned by the Fed, but if they qualify for a renegotiation, they would deal only with their mortgage servicer. The Fed is emphasizing reducing the amount of principal owed by people at risk of foreclosure, particularly those with a mortgage loan balance that is more than 125% of the estimated value of their property. Private lenders have been reluctant to renegotiate mortgage rates that way, as some of the institutions that own those loans, in the form of mortgage-backed securities, stand to lose money and therefore object. Bernanke has previously advocated principal reductions, saying in a speech in March that they could be an “effective means of avoiding delinquency and foreclosure.” Mortgage modification programs remain the hottest alternative to home refinancing.

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This week the House Judiciary Committee approved legislation aimed at helping Americans keep their homes through bankruptcy. I introduced the Helping Families Save Their Homes In Bankruptcy Act of 2009 to give courts the power to modify mortgages to bring them in line with underlying home values. For families in distress, this is a much-needed home financing reform. And considering the realistic mortgage alternatives, it is fair to all concerned.

I have been working on this bill for nearly two years. I believe it represents one of the most tangible and productive steps we can take to limit the fallout from the real-estate depression that has been sweeping the nation. While it is not the entire answer to the economic crisis, it is a common-sense and practical approach to stopping a downward spiral where foreclosures also depress nearby home values and thereby hurt other homeowners. This spiral is not helping anyone — not homeowners, not lenders, and certainly not communities.

Some argue that we are acting too quickly, and that we should delay my legislation to give homeowners and lenders more time to modify the terms of existing home loans on a voluntary basis outside of bankruptcy. But the evidence shows that such modifications don’t work. For one thing, many of the service companies who control the mortgage loans claim they are not legally permitted to agree to voluntary loan modifications. And even when they are legally permitted to agree, their financial incentives are stacked in the direction of foreclosure.

As a result, the much-vaunted federal “Hope for Homeowners” program launched in October has been only a limited success. The program is supposed to facilitate new mortgages for homeowners if FHA mortgage lenders agree to reduce the amount of money owed on a home to 90% of its assessed value. The FHA loan program went into effect with the goal of helping hundreds of thousands of homeowners. To date, it has processed less than 400 FHA Hope for Homeowners applications. To those who claim that my bill will end up harming consumers by increasing the cost of credit, I would respectfully suggest that they are not taking account of the track record of the modern-day bankruptcy code.

For more than three decades, the bankruptcy code has permitted the very kind of court modification we are considering today, for every other form of secured debt, including loans secured by second homes, investment properties, luxury yachts, and jets. For over twenty years, this very kind of mortgage modification has been available for home mortgages already — if the home is a family farm. There is no indication that this has in any way increased the cost of credit for any of these kinds of home loans.

As for my legislation, we have narrowed it to apply only to existing mortgages. So it will have no effect on new home mortgages and cannot impact their cost. This is one reason why Citigroup is now among the many business and consumer groups that support this proposal. It’s also one reason why the Obama administration supports my bill. Article Written By JOHN CONYERS JR. Read the complete article >

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Recent mortgage loan delinquency reports indicated that 10% of homeowners in the United States are now in default with their lender. Mortgage loan modification experts forecast that in the next year or two that the number of borrower’s defaulting will double to more than 20 million households, with many others on the verge. This is nearing epidemic proportions, say industry professionals. With the fear of foreclosure and the threat of losing their houses, many homeowners remain discouraged because they have been turned down for mortgage refinancing. In addition, these borrowers are often misinformed about loan modifications and alternative mortgage relief solutions that may be available to prevent foreclosures. The Loan Modification Buzz reports that consumers are fed up with low rate talk that in most cases is only available to homeowners who have high credit scores and tangible equity in their home.

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Chase announced today that it has extended its mortgage modification efforts to their mortgage loans that are owned by investors that it services — about $1.1 trillion of home mortgages — significantly expanding the outreach and effectiveness of the mortgage relief announced previously with their mortgage modification programs. Chase now owns WAMU, so the number of loan modifications possibilities is staggering.  These foreclosure prevention efforts include investor-owned home loans held in securitizations.

Based on the company’s review of investor agreements and its experience with investors and trustees to date, Chase has made the decision that they can legally restructure loans with loan modifications of the majority of mortgage loans owned by investors consistent with the relevant investor agreements and the best interests of investors and intends to offer loan modifications where their loss mitigation department deems appropriate. Chase will continue to seek investor approval in the small number of situations where investor agreements contain specific terms that may limit modification actions Chase can take. “Building on our loan modification efforts for Chase-owned mortgage loans, we have reviewed closely the terms of our investor agreements and have worked with investors, trustees, government officials and other interested parties to fashion an approach to foreclosure prevention efforts that will work for investors and homeowners,” said Charles W. Scharf, Chief Executive Officer for Retail Financial Services at Chase.

“When homes are foreclosed, everybody suffers, so working aggressively to modify all home loans -whether owned by Chase or owned by others – on terms that should work for the borrower, makes good sense for everyone,” he said. “Our experience at Chase shows that when home loans are properly modified, using income verification and other appropriate qualifying criteria, they perform very well over time.” Chase announced enhanced foreclosure prevention efforts on October 31, and the company now has in place the people, programs and tools to help more borrowers remain in their houses. Since early 2007, Chase has prevented about 330,000 foreclosures, primarily by modifying loan terms. Since its October announcement covering Chase-owned loans, Chase has accomplished the following below:

o Delayed starting foreclosure on over $22 billion of Chase-owned mortgages of more than 80,000 homeowners so that Chase could review those home loans for possible mortgage modification under the enhanced program.

o Implemented the previously-announced, more attractive package of loan workout offers for delinquent homeowners.

o Finalized for mailing in early February proactive mortgage relief offers to borrowers of Chase-owned loans at imminent risk of default.

o Selected locations for 24 Chase Homeownership Centers in areas with a high rate of foreclosures and loan delinquencies where counselors can work face-to-face with struggling homeowners. Two of the centers are now open; 12 are expected to be open by Feb. 28; and the remaining 10 are scheduled to open by mid-March.

o Added 300 new loss mitigation counselors in the last 11 weeks to provide better help to troubled borrowers, bringing the total number of counselors to more than 2,500.

o Initiated an independent review process to ensure each borrower was contacted properly and offered loan modification plans prior to foreclosure, if appropriate.

o Developed a robust financial modeling tool to analyze and compare the net present value of a home in foreclosure to the net present value of a proposed loan modification; use of this tool will allow Chase to determine that it is acting in the best interests of investors when making loan modifications.

o Worked to help establish a non-profit clearinghouse to join Chase and other mortgage lenders who want to donate or discount their owned real estate with the non-profit and government agencies that can use these properties. Chase is continuing to work with individual non-profit and government agencies; to date, Chase has completed five donations and has 47 discounted sales pending.

o Worked with Fannie Mae and Freddie Mac to implement their new Streamlined Modification Program for borrowers at least 90 days delinquent; 19,000 letters were mailed in the last week of 2008.

Chase continues to work with Fannie Mae to implement Fannie Mae’s previously announced program to assist distressed homeowners in an effort to minimize loan defaults and foreclosures. Through the initiative, Chase believes it will be able to meaningfully increase the number of homeowners it can help.

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According to a recent RealtyTrac report, over than 860,000 properties were actually taken back by mortgage lender in REO’s that more than double the 2007 level. In another article, Moody’s Economy, a research firm, predicted the number of homes lost to foreclosure will likely to increase by another 18 % this year before tapering off slightly through 2011. Still, mortgage foreclosures which continue breaking records going back thirty years, according to the Mortgage Bankers Association will most likely continue foreclosing well above standard levels for years to come, and that will continue to keep home sale prices from rebounding. Hitting bottom is a lot different than coming off the bottom,” said Christopher Thornberg, a principal with Beacon Economics in Los Angeles.

The annual RealtyTrac foreclosure report announced that 2.3 million American homeowners faced foreclosure proceedings last year, an 81 % increase from 2007, with the worst yet to come as consumers grapple with layoffs, shrinking investment portfolios and falling home prices. This foreclosure report comes as Democrats, including President-elect Barack Obama, develop plans to use up to $100 billion of the remaining $350 billion in financial bailout money in an attempt to prevent the foreclosure crisis from blazing a fire burning homes across the country. Loan modification programs have begun to show some positive results as FDIC Chairman, Sheila Bair stepped up to endorse a federal outline for loan workouts after banks like Indy Mac, Bear Stearns and Lehman Brothers started failing.

FDIC Chief: Foreclosure Plan Needed

The 4 states with the highest foreclosure rates last year were Nevada, Florida, Arizona and California. More than 1.1 million properties in those four states received a foreclosure notice, almost half the national total. And more than one in five of those households were in California, which is coping with massive job losses in the housing and mortgage industries as well as a rapid decline in home prices.
Foreclosure news continues to shock real estate insiders across the country. In December, more than 303,000 properties nationwide received at least one foreclosure notice, up more than 40% from a year earlier and up 17 % from November, according to RealtyTrac. Nearly 79,000 properties were taken over by lenders in December, a 61% increase over a year ago.
New state laws, specifically in California, Massachusetts and Maryland, that mandated that homeowners be given advance notice of foreclosure proceedings, lowered filings in several states. But the effect of those laws has worn off and mortgage lenders appear to be going ahead with foreclosure, rather than provide loan modification agreements as promised. “If all you’re doing is basically giving a stay of execution, then the inevitable will follow,” said Rick Sharga, RealtyTrac’s vice president for marketing. Sharga believes that home foreclosures would have been significantly higher last year in states like California if the foreclosure prevention laws were not enacted. Read the original story > US Mortgage Foreclosure Filings Rise 81% in 2008.
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In California, mortgage lenders can foreclose on deeds of trusts or mortgages in default using either a judicial or non judicial foreclosure process.  When considering foreclosure prevention with a short sale or modification, it is important to understand California foreclosure laws.  The judicial process of home foreclosure begins with the mortgage lender filing a Notice of Default. The lender files a lawsuit to get the local court force foreclose, is used when no power of sale is present in the mortgage or deed of trust. However, the State of California has made it clear that lenders and mortgage servicing companies must make every effort to provide a loan workout or mortgage modification prior to the pursuit of the foreclosure process.

In most cases, if the loan modification process is unsuccessful and the local court concurs with the mortgage lender’s foreclosure request, your property will be auctioned off to the bidder who makes the best offer. Using this type of foreclosure process, mortgage lenders may seek a deficiency judgment and under certain circumstances, the borrower may have up to one year to redeem the property.

The non-judicial process of foreclosure is used when a power of sale clause exists in a mortgage or deed of trust. A “power of sale” clause is the clause in a deed of trust or mortgage note, in which the borrower has authorized the sale of property to pay off the balance on a mortgage in the event that the borrower defaults. In deeds of trust or a deed in lieu of foreclosure, where a power of sale exists, the power given to the mortgage lender to sell the property may be completed by the trustee.

A notice of sale must be: 1) recorded in the county where the property is located at least fourteen (14) days prior to the sale; 2) mailed by certified, return receipt requested, to the borrower at least twenty (20) days before the sale; 3) posted on the property itself at least twenty (20) days before the sale; and 4) posted in one (1) public place in the county where the property is to be sold. The notice of sale must contain the time and location of the foreclosure sale, as well as the property address, the trustee’s name, address and phone number and a statement that the property will be sold at auction.

The defaulting homeowner has up until 5 days before the foreclosure sale to cure the default and stop the process. Mortgage lenders may not seek a deficiency judgment after a non-judicial foreclosure sale and the borrower has no rights of redemption.

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At this point, clearly the Bush administration is stalling on following FDIC Chairwoman Sheila Bair’s recommended loan modification plan.  Lawmakers have begun taking matters into their own hands.  Last week, Rep. Maxine Waters, D-California, introduced the first legislation incorporating Bair’s proposal to systematically restructure mortgages and provide a government guarantee against default. The measure is estimated to ultimately save 1.5 million homeowners from foreclosure and would cost $24.4 billion, which Waters would take from the $700 billion financial industry bailout bill.  “The current foreclosure crisis continues to spiral out of control and our current programs for dealing with this crisis are simply not getting the job done,” Waters said.  Waters’ action is one more sign that Democratic lawmakers want more to be done to help minimize the crisis of delinquent homeowners. Rep. Barney Frank, D-Mass., head of the powerful House Financial Services Committee, said Monday that any new proposals involving the bailout funds must include foreclosure prevention programs.  Waters’ bill, however, will likely have to be reintroduced when the new Congress takes office next year unless similar measures are worked into any new bailout proposals. Several banks, and mortgage lending companies Fannie Mae and Freddie Mac, have recently put their own loan modification plans into place. And as part of its federal bailout, Citigroup must start provide loan modifications in accordance with Bair’s guidelines.


Meanwhile, the number of homes falling into foreclosure is rising daily. A record 1.35 million homes are in foreclosure and a historic high 6.99% of borrowers are behind on their payments, the Mortgage Bankers Association reported last week.  Bair has been a vocal advocate for rolling out a systematic mortgage modification plan and she actually put her loan mod plan into action with IndyMac, which the FDIC took over in July.  Reports have indicated that FDIC officials had a role in restructuring over 5,000 home loans as of mid-November.

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According to a recent Mercury News article, San Jose homeowner Salvador Ruiz paid a foreclosure prevention company $8,950 to negotiate the terms of his home loans with mortgage loan modifications on two properties four months ago, but he says they did nothing and haven’t returned his money. “They tell me everything’s OK, but they haven’t done anything so far,” said Ruiz, who is filing a complaint with the California Department of Real Estate. With non-profits and banks overwhelmed by the demand for their services from people like Ruiz, an army of consultants has sprung up in San Jose and around the state offering homeowners loan work-out assistance banks to provide home loan modifications for a fee.

Some of these businesses charge as much as $5,000 in advance, and many desperate homeowners facing foreclosure will pay to modify their home mortgages to a more affordable loan payment. But some customers are complaining that little was done for the money they paid, while some services have turned out to be scams. “It’s a relatively new phenomenon,” said California Department of Real Estate spokesman Tom Pool. “It’s becoming an issue. As always, people get very clever when they see an opportunity.” Real estate brokers are required to obtain permission from the DRE to collect fees in advance, but do not need permission if they charge after completion of the work. Pool said the agency has issued “desist-and-refrain” orders to a few unapproved companies that were charging advance fees. The DRE advises consumers to check its website to verify that a loan modification company has any negative marks. “Some of our clients have paid companies for modifications and not received service,” said Keisha Woods of EPA Can Do, an East Palo Alto non-profit. “We are advising our clients not to pay for any type of modification service.” EPA Can Do helps low- to medium-income homeowners negotiate loan work-outs for homeowners facing foreclosure or future trouble from a future adjustable interest-rate reset, and helps transition those who do lose their houses, Woods said.

The state Attorney General’s office is prosecuting First Gov, also called Foreclosure Prevention Services, a Los Angeles company that promised to renegotiate loans for $1,500 to $5,000 but instead “ripped them off for thousands of dollars” while their homes went into foreclosure, according to the Attorney General’s office. “Loan modification scams are becoming more and more prevalent across the country, particularly in California,” Attorney General Jerry Brown said when First Gov officials were arrested earlier this month.

Most major banks have their own loan modification processes, which customers can deal with on their own. And non-profits such as Project Sentinel and Neighborhood Housing Services-Silicon Valley will help clients negotiate with banks for free. But these services are clearly overwhelmed by the demand. “The reality is, we’re swamped,” said Martin Eichner of Project Sentinel in Sunnyvale. “We’re currently averaging 12 hours of counselor time per case. It’s labor-intensive, so the idea of charging for the work is not unreasonable. The problem is charging fees in advance before accomplishing anything.” Said Marlene Santiago, a foreclosure intervention counselor with Neighborhood Housing Services: “On Mondays, we have 70 voice mails waiting. It takes me two hours to go through them. We need help, we really do.” Ruiz, the San Jose property owner, ultimately turned to another private company, Home Resolution and Credit Services, which was opened in July by real estate agent Robert Aldana and broker Martha Lopez-Chubb. It’s one of two San Jose companies registered with the DRE to accept advance fees for mortgage modifications. “Plain and simple, if there was enough help out there for free, we would not exist,” said Aldana, who does local Spanish-language radio and television broadcasts on real estate. Read Complete Article

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If you are asked to pay in advance, check the Department of Real Estate”s website to see if the loan relief service dealing with has permission to collect advance fees: Ask to see the mortgage company”s “no objection” letter from the Department of Real Estate. California Foreclosure Lawyers do not have to register with the state as long as they are California attorneys. Real estate and mortgage brokers are allowed to modify mortgage loans as long as their services are fully completed before they are paid. Loan Modification Outlet is an attorney backed mortgage relief service with partial refund options depending on how far along the individual is in the loan modification process to receive a refund.

  • Carefully review the agreement and consider obtaining independent advice before signing it or advancing any fees.
  • Compare the services and fees offered by other licensed brokers on the Department of Real Estate”s list.
  • Do not pay anyone in advance if you have already received a Notice of Default from your mortgage lender.
  • Check with local non-profits that help people modify their home loans without charging money upfront. See More California DRE tips >

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A California-based advocacy group that helped start the grassroots foreclosure freeze movement has taken its appeal to help homeowners to Capitol Hill this week.  Robert Gnaizda, general counsel of The Greenlining Institute, told Legal Newsline that he met with FDIC. Chairwoman Sheila Bair on Monday, and that he would meet with Speaker of House Nancy Pelosi, D-Calif., and Chairman of the House Finance Committee Rep. Barney Frank, D-Mass., on Tuesday.  Gnaizda said he is telling these political powerhouses that investor influence could block loan modification efforts and that a 120-day national freeze on foreclosure activity is critical to prevent foreclosures to reach epidemic proportions.  “Legislation is being introduced,” Gnaizda said, “that has the support of the entire Democratic Party, calling for a foreclosure moratorium of 120 days.”  Gnaizda is also here to criticize the $8.68 billion settlement reached by California Attorney General Jerry Brown, Illinois Attorney General Lisa Madigan and Countrywide Financial Corp. over its alleged predatory lending practices.  The attorneys general called the settlement with Bank of America, which bought Countrywide in July, a historic achievement and the largest settlement of its kind.

But Gnaizda said it suffers from a “fatal flaw” in that it favors Wall Street investors over Main Street homeowners.  “We cannot accept the Bank of America settlement as the gold standard,” Gnaizda said he told Bair, “and despite what the California Attorney General says, Bank of America does not have the power to address those loans that are in the hands of the investors.”  Gnaizda said hedge fund investors that bought mortgage loan securities have been outspoken recently against the potential billions in losses that could occur from modifying loans.  But the California attorney general’s office told Legal Newsline on Tuesday these claims mischaracterized the settlement.  “Countywide has represented to us, and it has been documented in the judgment that it has existing authority or it has substantial investor approval to modify mortgage loans,” said Benjamin Diehl, California Deputy Attorney General for Consumer Law. “It’s one of the two, perhaps in some cases even both.”

Gnaizda, along with San Diego City Attorney Mike Aguirre, have argued that the settlement did not contain an admission of fraud by Countrywide. The pair believes that only an admission of fraud would force hedge funds to allow Bank of America to revise loans.  But the admission of fraud is not necessary, according to Diehl.  “We have the investors on board,” Diehl said, “so we have a program that is going to save homes. The dickering over whether there is an admission of fraud misses the point. The program is being lauded nationally and followed by other mortgage lenders as witnessed by recent announcements from JP Morgan Chase and Citibank.”  Aguirre, who like Brown and Madigan is a Democrat, originally called the settlement a “home run,” but has since been critical of it. Despite their party ties, Aguirre and Brown sparred frequently during the course of the Countrywide negotiations.  Aguirre is the only city attorney to have sued Countrywide. He has not yet agreed to settle his lawsuit. Aguirre also sued both Wachovia and Washington Mutual for predatory lending practices.   But Aguirre lost his bid for re-election on Nov. 4 to Republican Jan Goldsmith, who said he would drop all these suits once he assumes the city attorney post.

Diehl said other states that have sued or will soon sue Countrywide will negotiate their own settlements, though he expects most to follow suit with the deal struck by California and Illinois.  “The terms are going to be fairly universal, especially the loan modification program,” Diehl said.  Which is precisely what motivated Gnaizda’s trip to Washington. Gnaizda believes a tougher deal that ensures protection for homeowners that stop foreclosure with a moratorium providing loan modifications is the only way to ensure victims of predatory loans are protected.   He believes that only 20 % of Countrywide homeowners who face foreclosure will be helped by the settlement.  Diehl said the final percentage cannot be determined because the future of the economy remains in doubt.  “I suspect the real number will end up being higher,” he said. “How it works on the exact percentage depends somewhat on what happens with the economy in the next two and half years. Trying to speculate to a percentage is very hard to do.”  Diehl said he believes the Countrywide settlement will serve as an effective model for future protection of homeowners.

“This is a program that at the time we negotiated it with Countrywide and the attorney general of Illinois, we were proud of,” Diehl said.  “We are hopeful and confident that it will help homeowners avoid foreclosures. We’ve seen the influence it has had. On the other hand, we’re always hopeful that lenders can do more. We don’t want to be seen as a ceiling. If anything we want it be seen as a floor that even more can be done in the future, because that will help even more people save their homes.”

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