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What’s Still Needed To Resolve This Crisis?

Good Afternoon!  This is Connie Saunders with the Foreclosure Freedom Network Show.  I’ve been in the mortgage industry for 20 years and am a Licensed California Realtor and hope to help every homeowner understand this crisis better and what the remedies may be for you, if you or a friend is in trouble.  So get your pens and paper ready to take notes.  This subject isn’t easy to understand or I wouldn’t be here, but if you take a few notes, such as writing down important URL’s.  For those of you who don’t know what url means, it means “Uniform Resource Locator”, and is the exact web address put into the top line of your web browser telling your computer the location of that specific resource available online.

In this show I will give you the addresses of some vital resources for you to view on your home computer in order to get more on top of any situation with your finances. One important URL is www.foreclosurefreedomnetwork.com.  When there click on Blog and once in the Blog look for the tab for the Radio Show.  Here you can see transcripts and past shows and will quickly see this one as well.  It’s a good way to follow along when re-listening!

This is a half hour show and todays show will focus on:

What’s still needed to resolve this Crisis?

Anyone following the saga of lenders woes with mortgage loans likely knows that lenders do have a choice, they can choose to give a home owner a loan modification or not, even if the loan is pooled with others in a peculiar way that makes it difficult.  The key words here are Knowledge, Responsibility and Control.

Many lenders have become overwhelmed during this crisis and have new personnel without enough time to properly educate them in the many changing State laws and codes or other important rules and regulations of the various mortgage pools of loans.

When you don’t know, you get slow.  Think about it.  Many servicer agents or counselors simply close their eyes and hope that the stacks of hundreds of files on their desk will all somehow just go away.  With many lenders forging on with foreclosure actions pending any other solution approval, this is what often really does happen.  New personnel in the Home Retention departments often have this particular phenomena manifest and it’s good to be on the lookout for it and prepared to handle.

Most often the actual negotiator isn’t readily available by phone, because if he/she were they would be too flooded with phone calls to do their jobs.  You occasionally get a real gem, but often have to contend with lender negotiators who at best are just uninformed and remain uninformed because of their overload and they adopt the easiest remedy for a top heavy desk, which is “denied” stamped out in a letter with a cryptic -at best- reason why.  Why is this and what does one do?

Lenders have always known how to foreclose; this was their usual time honored process.  So when the market first collapsed the first line of attack was just to foreclose, despite all apparent attempts to help with loan modifications or short sales, many lenders weren’t equipped with personnel who could really think with qualifications and fraud prevention and the safe route was foreclose.

Problem with this is that it is what created the debacle we now have.  So many lenders foreclosed and then took the properties back at the auction and put them onto the market as REO’s (or Real Estate Owned) properties.

What happened next is what happens every time there is too much inventory and no one is buying, the prices went down.  Unfortunately the personnel who were linked to resolving a particular properties distress got the first rejection and kept trying to conform any loan modification or short sale offers to what the investors representative wanted (documented in their first counter offer) but this was way too late, as the market has been dropping in some areas by 3% per month.  Offers take 60 days to review and while this is occurring prices are dropping another 6% and then if the offer isn’t accepted because when reviewing the appraiser noted a property was sold three months earlier for 6% more, it’s now already too late and no-one will put in an offer that high.

It really has been a ‘catch 22′ on this, but there are some things you can be sure of when going through this process, to get your point(s) across.

He who knows will lead the discussion.  If you can take more responsibility for both lender/servicer and yourself, it’s more likely that you will eventually gain control in this.  This is a simple truth even though it may seem hopelessly lost in today’s confused scene.

How do you do this?

One way is to know their rules and guidelines and be able to point these out to them in a conversation.  Even if all you can do is talk to the Negotiators receptionist, you can point this out and often times can get them to memo something to the Negotiator on their internal messaging system and can sometimes get a reply while you are on the phone.

If you don’t know their regulations better than they do, it may be a waste of time, but if you do, you may be surprised to suddenly get cooperation.

First line of defense for you is to learn your own States new codes on Foreclosures.  Often times you can ‘Google’ this or talk to a Title Agent or Realtor or Senior Loan Officer who has familiarity with this.  Or you can simply really study the new Obama Plan and all the various options and recognize that this is reasonable considering the current circumstances, so if your lender isn’t negotiating in these terms it is comparatively unreasonable and therefore violates the 4^th Amendment “Unreasonable Search and Seizure of your home”, to foreclose when a better workout can be done.

Also I advise everyone to read and understand the 4^th Amendment to the Constitution.  The State of California has adopted this 4^th Amendment as a reason for lenders to assist all home owners to stay in their home where financially stressed and a better loan workout would both help them to stay in their home and would be better for the lender than foreclosure, financially.

A key thing for all of you to find out WHO is in CONTROL on your loan workouts really.  To do this you must realize is that even if you think your loan is with Bank X and all paperwork and notices are from Bank X, 99% of the time it is not actually owned by Bank X.  Bank X has sold this loan back to Fannie Mae, Freddie Mac or other Servicing Pool, etc. and the original lender has retained only the servicing rights.  It’s important for you to find out the real scoop on this.  You can do this simply by asking your current Servicer.  If they say they do not know, go up the line of command until you find someone who will find out and report back to you on this.

If your mortgage has MIP, which is Mortgage Insurance Premium, regardless of who actually loaned the money, it is the Mortgage Insurance Premium company representative who holds all the cards.  Find out who this is!

Anyone can then Find something wrong with how your loan modification is being processed, something just plain wrong with it.  One that is clearly wrong with most is the 4^th Amendment issue where the lender is happy enough to foreclose but is meanwhile refusing to modify this loan for you, so that it is more affordable while it continues the lender in a better position than foreclosure.  Once you have found that key thing, document, document, and document this.  Keep copies of all notes during phone calls, try to get permission to tape phone calls discussing this, Go up the line of command and talk to 2^nd level and 3^rd level support personnel on this subject to gain agreement that this is something to use as a guideline.

At this point with the new Obama Plan, if you aren’t getting assistance it is likely because your loan doesn’t conform to the standards required in this plan, however it could also be because of lack of persistence.  It certainly isn’t hopeless and if you follow the key step above and obtain Knowledge of both the Crisis and acceptable solutions, take responsibility not just for your half of the problem but for the lenders side and ensure they are following their own internal and external rules and resolve to persist until an optimum solution is approved, you will likely get yourself into the winners seat.

Where you are going to go wrong with this is if your mortgage payment is not 31% or more of your income.  Let’s say your income is only $1500/Mo and your mortgage is $400.  Any lender is going to feel this should be able to be paid by you and if you can’t pay over $450 for this mortgage then you should just let this property go.

In the other direction if your mortgage, principal, interest, taxes and insurance is greater than 50% of your income, you will begin to get legitimate worries as to the feasibility of your being able to pay this back.  This is legitimate and you too have license to be concerned about ability to pay.   When you know this is the case but know that you can indeed pay, the more details and proof you can come up with to document your situation, the better.

I’ve worked with many individuals who have a changing situation.  They are self-employed and their client base or receivables have crashed.  Even though their three-year average shows they can qualify, their current income is atrocious.  The current loan modification standards require the lender to adjust flexible income amounts to a three-year average, however the entire picture must show ability to pay is a stable prediction with the new terms or it will likely be denied.  If you are in this situation I strongly advise not to put in for a loan modification.  Perhaps what can be applied for is a temporary forbearance program instead, requesting the lender only charge you 2% interest only for several months to two years perhaps, and that you will then put in for a loan modification when your circumstances are more favorable.

If, however your mortgage (including Principal, Interest, Property Taxes and Homeowners Insurance) is within the 31% to 55% of your income range, you should be able to get yourself into a loan modification or refinance.

Sometimes it’s best to just get refinanced into the H4H (Hope for Homeowners) program, which has shared appreciation (where government and owner share all appreciation over the Current Market Value at time of refinance when property is later sold.) because here the loan basis is lowered to Current Market Value of the home and though interest is often higher, the home can then be sold.  Where the home value has gone too far downhill this may be your best option.

For lenders the real solution is to keep your minds open to solutions for keeping the homeowner in the home.  This will prevent increasing inventories of property on the Real Estate Market needlessly, which is only continuing to force prices down and down.  This will also prevent the formation of slums.  Home owners have far more pride in keeping their property up than renters do and are more stable and often more ethical residents in a region, further bolstering up the value of all homes in a neighborhood.

There is nothing preventing you or any person from writing up a Knowledge Report and presenting this to the actual Investor or Mortgage Insurance Premium Company Representative for your loan - outside of normal Servicer channels - always show time date, all data including employee names and number where possible and servicer name and branch location and be sure you show real illogic’s.  It is not illogical for them to refuse to modify your loan if you aren’t making enough money to pay a premium that is reasonably set according to the new criteria for Affordable Home Loans supported by Obama’s plan.

For lenders to wait to see a green light from Obama or other leader is only an admission that they are not themselves thinking responsibly.  I never hesitate to clime the chain of command where I see this - no matter what the ‘allowed’ programs are, people need to make sense with the workout that they are approving and not reject a workable plan that otherwise will lead to foreclosure.  If more people would complain, go up to 2^nd or 3^rd tier customer support, servicers will likely begin to play a better game.

Connie Saunders

Foreclosure Freedom Network
(877) 333-4506
www.foreclosurefreedomnetwork.com

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