Omega Cap eReport Loan Modification Blog

Loan Mods - where is the success

2009-04-13T02:34:00.000-07:00

permission to be shared granted by SF Gate

Report finds U.S. mortgage problems increasing

U.S. homeowners are falling behind on their mortgages at increasing rates, and efforts to address the foreclosure crisis with loan modifications are falling short, according to an authoritative government report being released today.

The report identified what makes loan modifications more effective - lower monthly payments - a point that may inform future efforts to help struggling homeowners.

Mortgage problems are spreading beyond the troubled subprime category into Alt-A and prime mortgages made to borrowers with better credit, according to the report from the Comptroller of the Currency and the Office of Thrift Supervision. Those two agencies, which oversee the nation's largest banks and thrifts, directed the institutions to provide data on the mortgages they own and service.

The report covers about 34.7 million home loans, representing two-thirds of all outstanding U.S. mortgages. It looks at their performance during the fourth quarter of 2008, as well as the full year.

Of all mortgages covered, at year-end slightly more than 10 percent were nonperforming, meaning behind on payments, compared to about 7 percent nonperforming in September.

Among other findings:

-- Prime and Alt-A mortgages. One of the report's most troubling conclusions was that a larger share of prime borrowers - people with good credit who made substantial down payments and could fully document their income - are becoming delinquent on their mortgage payments.

In the first quarter of 2008 (the earliest period covered), 1.11 percent of all prime borrowers were seriously delinquent - behind by 60 days or more. By the fourth quarter, that had more than doubled, with 2.4 percent of all prime borrowers seriously delinquent. Although on a percentage basis the delinquencies remain low, the comptroller's office underscored that the rapid increase is worrisome.

"Historically speaking, that's the highest we've ever seen prime mortgages (in default)," said John Dugan, comptroller of the currency, in a conference call. "It started at a very low level, unlike subprime mortgages, but it also is where two-thirds of all mortgages are, so we watch it very carefully. To the extent we see problems there, it indicates (problems with) a much wider swath of all mortgages in the United States."

Alt-A loans, made to borrowers whose profiles fell between prime and subprime - often people with good credit, but smaller down payments and/or no proof of their income - also showed rapidly rising delinquencies. Serious delinquencies in Alt-A affected 5.18 percent of borrowers in the first quarter, and reached 9.1 percent in the fourth quarter.

Subprime loans, the risky loans made to borrowers with poor credit, small or no down payments and often no proof of income, showed serious delinquencies increasing from 10.75 percent in the first quarter to 16.4 percent in the fourth quarter.

-- Re-default rates. Loan modification - changing mortgage payments to help borrowers keep their homes - is a cornerstone of efforts to prevent foreclosures. Previously, the comptroller reported that more than half of modified loans ended up delinquent again within months.

"Consistent with last quarter's report, re-default rates of modified loans were high and rising," the current report said.

But this time, the report identified the loan modifications with the best success rate as those that reduced borrowers' monthly payments. While it may seem obvious that lower payments would make it easier for borrowers to stay current, the majority of loan modifications covered by the report resulted in unchanged or increased payments. Unchanged payments may have been because servicers simply froze the existing payments rather than allowing them to adjust higher, while higher payments could come from adding on missed payments, late charges and other fees.

"It stands to reason that more affordable payments would be more sustainable and lead to lower re-default rates, whereas increased payments would lead to higher re-default rates," the report said.

Indeed, the data showed that to be true. By six months after modification, 22.7 percent of people whose loan payment were reduced by more than 10 percent had fallen behind by 60 days or more. By contrast, 45.8 percent of people whose loan payments had increased were 60 days or more delinquent.

Those data bode well for President Obama's housing rescue plan, which calls on loan servicers to reduce payments to 31 percent of borrowers' income.

"The approach the administration has taken with its program - which focuses very heavily on reducing monthly payments - this validates that thought," Dugan said. "It supports the notion that it could very well be a sensible approach to producing sustainable modifications."

The report did not look at whether lenders reduced principal balance when they modified loans.

"We know (principal reduction) is very, very small; a tiny part of the loans they modify," Dugan said.

E-mail Carolyn Said at csaid@sfchronicle.com.

41 Years Later ......The World Remembers

2009-04-03T22:45:00.000-07:00

Real Estate is my chosen profession and one of my passions but one of my key interest is History, and those who follow our Blogs understand why we take pride in interpreting our perspective while sharing historic topics from time to time.

For some April 4, 1968 seemed like yesterday, while for others it never happened, but for most they only hear what someone else told them or they read. As a nation, we take pride in celebrating births and in rare occasions deaths become just as celebrated. Today 41 years ago marks the Assassination of Dr. Martin Luther King, Jr. Not only in America but around the globe people are paying respect to the ideals Dr. King stood for. I was 16 at the time of Dr. King's death and I remember when his birthday became a federal holiday, my wife and I were in San Francisco and had to hustle back to Los Angeles so we can see the first parade. Anyway, among celebrations throughout the years, we were extremely blessed last year to attend the 40th commemorative celebration last year in Memphis, TN. It was an event I never will forget. A small tidbit for other history buffs is two of Dr. King's grown children (Marty King, III & Rev. Bernice King) had never made the trek to the infamous Lorraine Motel so last year was the FIRST TIME THEY visited the site where he was assassinated as well as review the room he stayed. Losing my father in the 70's, I could only be emphatic of how they felt as they showed tremendous inspiration and spoke to the thousands in attendance.

Dr. King was an inspiration for America and the World. I know some may dispute that sentiment but they are welcome to pin their own blog. His message was love and hope and specifically for America wanted a place where all people could share in the resources that provide a reason for us to live a productive life.
Obviously, Dr. King is not here - but few can dispute his spirit abounds humanity. During my trek to Memphis, I had the opportunity to speak with Judge Joe Brown, who was the judge for the trial in determining how Dr. King was murdered. Some have no reason to want to explore who assassinated Dr. King. The current record list James Earl Ray, so for most that is the history they accept. After talking to the Judge, I am convinced James Earl Ray is not the absolute assassin. I bring this up........not to stir the pot or add to your anxiety, but simply to suggest you think with a rationale mind. As prior to going to Memphis, I accepted the pinned version but luckily I ran into Judge Brown and there was no motivation on his part.....that I could tell, why he would fabricate any of his comments. All I'm saying is take time to understand the legacy of Dr. King and if you're really interested do a little digging and reach your own conclusion on whether the assassin was James Earl Ray........or someone else.

In the meantime, I will be paying homage to the day Dr. King became an immortal soul.

Thanks for taking time to read. And of course in the spirit of Dr. King feel free to offer your comments.

__________________________________________

Fred Thomas, III VP, CB

Chief Bloggeroligist

Omega Capital Financial, Inc.

Everyone claims to have a better idea.

2009-03-23T07:41:00.000-07:00

We've written about this before, but it must be repeated. Loan Modification is not a new process, yet as simple as it is........it is a transaction and must go through various steps.

Of late, especially with the news of Making Home Affordable and other sites aimed at equipping homeowners to get their mortgage resolved, the facts are it is not as easy for the "Do It Yourselfer." Yet, we hear almost daily from various media sources that there are Free services available. Yes that is a true statement.

It's one thing to have your loan modified but the jarring question is how do you know you have received a far deal. I guess that is a personal question and everyone has a different perspective.

Here's the reality - yes you can achieve a Loan Modification BY YOURSELF OR EVEN FOR FREE......AND YES THERE ARE TONS OF CON ARTIST MANIPULATING HOMEOWNERS. No one likes to be ripped off, let alone have it communicated across the news, but that in itself can not be a broad indictment against company's (like ours) who are fee based.
In the end, it boils down to:
1. Do you have the time to manage your Loan Modification?
2. Do you feel comfortable in speaking with your lender or will you be intimated?
3. Do you understand the process and components needed to communicate with your lender?
4. Aside from Zero, what will represent a Fair deal to you?

These are just a few components that you must deal with which is why for most it may be better simply to have a solid professional assist you, AND YES YOU WILL HAVE TO PAY A FEE........but you pay for most things which require solid expertise.

That's our 2 cents for the day ....... feel free to chime in.
5.

Loan Modification - A legitimate process gone awry.....

2009-03-21T09:12:00.001-07:00

"You've heard the saying a few bad apples spoil the bunch" well that's what has been going on with Loan Modifications. As legitimate and desparately needed the process is, the facts are most homeowners require professional assistance to navigate through the process. Sure, many Lenders and Servicers, Media pundits and the like will swear......"Oh - It's not big deal - you can do the process by yourself and for FREE!!!!!!" Yeah! - you can also pull your own tooth out......but who in their right mind wants to take that chance??

Anyway, there are tons of scammers, as a matter of fact the initial company we were affiliated with (even after doing our due dillegence, etc. as you need someone who has the time and proficency to communicate with your lender/servicer and the facts are even in a great day, they are very difficult to reach, which is why you try and align yourself with a company who has the muscle to get inside) was a complete bust or joke, for the sake of a better word. They were horrific and we simply have worked too hard to develop a positive relationship with our clients as well as the market we serve, so after digging, and digging, and getting a better handle of what is needed to effectively and professionally complete this process for clients in need we settled with a new provider.

Anyway, courtesy of Phoenix news

FBI Sees Rise In Loan Modification Fraud

PHOENIX -- Mortgage fraud is on the rise, and the latest cases often involve loan modification, according to the FBI.Loan modification involves reducing the principal amount owed by negotiating with the mortgage company.Julie Halferty, a supervisory special agent in the Phoenix office, said she had never seen as many mortgage fraud cases as she has in the past few months."If it's too good to be true -- it's too good to be true," Halferty said.Valley resident Byron Kyles believes he fell victim to such a scam.Last year, he fell behind on his mortgage, and he had two choices: walk away from his home or work something out with his mortgage company."Our concern was lowering our payment so we could continue to meet it -- be on time and be a responsible homeowner," he said.Kyles contacted the mortgage company as well as a loan modification specialist. He paid the specialist $4,500, but he said his own efforts are what got the loan modified."In my opinion, they did nothing to help us," Kyles said. "The surely did not do $4,500 worth of work to help us."Halferty said homeowners can talk to mortgage companies about modifying the mortgage themselves, like Kyles."(Specialists) don't have any sort of special magic with your bank that you don't have yourself," she said.Not all companies that offer loan modification programs are scamming customers; however, a homeowner will either qualify or not qualify for a modification.

Mortgage Mod assistance.......sort of

2009-03-19T07:36:00.000-07:00

Some would swear President Obama has been in office for years as nearing just 60 days in office he is doing more than we have seen any President implement - perhaps since our lifetime.
Anyway, housing is a critical piece of the mess we are in and while Loan Modifications have been a complete debacle to date, many are hoping things will turn-around, because after all how long should it take to achieve a successful Loan Modification?????

permission to be shared granted by Reuters

Obama administration launches mortgage aid Website

Thu Mar 19, 2009 9:49am EDT

WASHINGTON, March 19 (Reuters) - The Obama administration on Thursday launched a new Website to provide information to home owners about its mortgage modification and refinancing programs.

The Website, www.makinghomeaffordable.gov is a joint effort of the U.S. Treasury and the Department of Housing and Urban Development.

The administration's housing assistance offers two major components including a refinancing program for current mortgages guaranteed by Fannie Mae and Freddie Mac for homes that have declined in value.

The other big component is a mortgage modification program for those who can no longer afford their mortgages, which shares the cost of reducing payments between the government and lenders and mortgage servicers.

The Treasury said the plan aim to help 7 million to 9 million homeowners who are making a "good-faith effort" to pay their mortgages.

"Putting resources and tools directly in the hands of homeowners will expedite the process of delivering relief to responsible homeowners, and stabilizing the housing market is central to our overall economic recovery," Treasury Secretary Timothy Geithner said in a statement.

The Treasury said it, HUD and other members of a government agency task force have also conducted detailed briefings and training sessions on the programs, briefing about 2,500 participants in the past two weeks, including mortgage loan servicers, investors, nonprofit housing counselors and borrower advocacy groups. (Reporting by David Lawder)

A.I.G. wants a Loan Modification - Happy St. Patricks Day

2009-03-17T08:45:00.000-07:00

AIG and St. Patrick's Day. Seriously, what is Dodd thinking????? taxing the crooks at 98%?????

Mods still seem to take forever and AIG is hustling the public

2009-03-16T07:40:00.001-07:00

The latest ire is AIG's hatrick of paying bonuses to employees it said were part of their contracts. I understand a contract is a contract, as well as some positions are specialized, or on a ship going down the last person you want to throw offboard is the captain, but I guess for me.......it's pretty simple - people are due every dime they earn but I thought Bonuses meant reward to something done over and above???????? Further, what if the company was left to fail????? There would be no money to pay bonuses or anything else for that matter.

Anyway, the airwaves were on fire this weekend but I think we've only heard the first bullet as I expect this thing to really pick up now that Congress is back in session and business is open -
Welcome to Monday!!!!!!
permission to be shared granted by The Los Angeles Times

AIG names firms that got bailout cash

The disclosure, long sought, doesn't drown out the topic of the day: outrage over employee bonuses.

By E. Scott Reckard and Tom Petruno

March 16, 2009

American International Group Inc. bowed to increasing pressure in Congress on Sunday and disclosed the names of dozens of banks and other institutions that benefited from the first chunk of $180 billion in bailout funds it received.

The concession came as public officials expressed outrage at the giant insurer's decision to pay $165 million in bonuses to key employees.

"There are a lot of terrible things that have happened in the last 18 months, but what's happened at AIG is the most outrageous," Lawrence H. Summers, Obama's top economic advisor, said on CBS' "Face the Nation."

AIG and the Federal Reserve have been pressured for months by some members of Congress to reveal the names of the banks and other institutions that were paid after the company -- teetering on the brink of failure because of plummeting investments -- received an $85-billion loan from the Fed in September.

AIG's downward spiral was accelerated by losses related to its huge business of insuring high-risk mortgage securities against default, via complex agreements known as credit default swaps. As the housing meltdown worsened last year, AIG's guarantees, which the company had sold to major banks and brokerages in the U.S. and abroad, came back to haunt it.

The federal rescue of the insurer has since doubled in size, and U.S. taxpayers now own 80% of the company.

The company said it shelled out nearly $100 billion in the final few months of the year to satisfy some of the contracts it had outstanding under credit default swaps and other insurance and investment agreements.

The beneficiaries included major foreign banks such as Germany's Deutsche Bank and France's Societe Generale, as well as U.S. titans Goldman Sachs Group and Merrill Lynch & Co.

U.S. municipalities, including some in California, also benefited as AIG settled up payments due under guaranteed investment agreements, under which states, cities and other municipalities temporarily park funds raised from bond sales. California entities received a total of about $1 billion.

The potential for an AIG collapse to bring down other financial giants worldwide, because of what the insurer owed other institutions, was the major justification the government cited for the massive bailout. But until now, taxpayers haven't been told which institutions ultimately were on the receiving end of the money funneled to AIG.

"The aid received by AIG helped avoid severe financial disruptions by providing liquidity to important financial institutions and municipalities," the company said in a statement.

The company's critics, however, are likely to focus on whether AIG could have negotiated with its bank clients to pay less than demanded under the contracts, as a way to save U.S. funds.

But it was the outrage over the $165 million in bonuses paid to AIG brass that consumed the public and filled the airwaves Sunday.

Obama administration officials and top Republicans took to the political talk shows to deplore AIG's payments of bonuses and retention pay to employees of its financial products division, which had engineered the money-losing deals with the other financial firms.

Summers said the administration's hands were tied because AIG's retention bonuses were part of contracts agreed to more than a year ago, before there was any bailout.

Senate Minority Leader Mitch McConnell (R-Ky.) said on ABC's "This Week" that other companies might use AIG as a template for improper bonuses of their own.

"The message here, I'm afraid, to any business out there that's thinking about taking government money is, 'Let's enter into a bunch of contracts real quick, and we'll have the taxpayers pay bonuses to our employees,' " McConnell said. "This is an outrage."

Readers were angry after reading a Times story Sunday on the bonuses and the administration's grudging acknowledgment that most of them must be paid.

"Paying the creeps, I don't care on what level they are on, is nuts!" Rola Cook of Molalla, Ore., wrote in an e-mail. "Let 'em go to court. Let 'em sue. Let 'em go to hell!"

During CBS' "60 Minutes" program in which Federal Reserve Chairman Ben S. Bernanke was interviewed, Michael Shields of Minneapolis tried to stir up an e-mail campaign to let Bernanke know that Americans "have incurred enough pain and suffering" and want the payments stopped.

Referring to the government owning 80% of AIG's stock, he said in an e-mail to Bernanke: "As a shareholder of AIG, I am casting my vote to cease further bonus payments until such a time as AIG has paid back all existing shareholders (a.k.a. taxpayers)."

Bernanke, meanwhile, again expressed his ire over the AIG bailout, saying it had angered him the most over the last 18 months, as economic disaster followed upon economic disaster. He recalled "slamming the phone more than a few times on discussing AIG."

AIG has received $40 billion in Treasury Department bailout funds so far, in addition to about $110 billion from the Federal Reserve. On March 2, the Treasury and the Fed announced they were restructuring the bailout and also giving AIG access to as much as $30 billion more in exchange for preferred stock, should the company need it.

AIG did reduce some of its bonus payments last week under pressure from Treasury Secretary Timothy F. Geithner but said it was legally obligated to pay $165 million to the financial products employees, or else they not only could seek punitive damages but might quit. That could cause even higher losses, the insurer said, because these are the only employees with the knowledge to "unwind" AIG's complex financial deals.

Many weren't buying those arguments.

"Fine, I respect contracts. But fire them. Get rid of them. That'll soften the anger we feel toward the failed AIG management team," said Stuart Fink of Los Angeles.

Ray Hernand of Woodland Hills said the government should let AIG fail.

"I am tired of throwing good money after bad money," said Hernand, an information technology director in the entertainment industry. "If it's that convoluted, then the government should take over AIG, unravel and cancel those agreements and contracts, and let AIG die a disgraceful death."

Addressing such criticisms on television, Summers expressed sympathy but said the terms of the employee contracts must be legally observed.

"The easy thing would be to just say . . . 'Off with their heads, violate the contracts,' " Summers said. "But you have to think about the consequences of breaking contracts for the overall system of law, for the overall financial system."

Summers said Geithner used all his power, "both legal and moral, to reduce the level of these bonus payments."

But one leading academic in the national policy debates said Geithner should have reined in AIG compensation when, in his former role as the head of the New York Federal Reserve Bank, he was working with Bush administration Treasury Secretary Henry M. Paulson to negotiate the first round of bailouts.

Geithner "should be embarrassed," said Peter Morici, a University of Maryland business professor and former chief economist for the U.S. International Trade Commission.

"When the Bush White House agreed to bail out General Motors and Chrysler, it required those companies to renegotiate their labor contracts," Morici said.

"Why did Secretaries Paulson and Geithner not require the same at AIG? The threat was the same with AIG and GM. If either shut down, the economy would plummet into chaos and depression, we were told," Morici said.

Robert Gorges, a retired Ralphs grocery worker from Highland, near San Bernardino, agreed.

Auto workers, he said, "had a contract but they did the right thing, knowing their company was in bad financial trouble. They changed their contract," he said. "Not the same can be said about AIG," Gorges said in his e-mail to The Times. "Something is wrong here."

scott.reckard@latimes.com

tom.petruno@latimes.com

We're researching this issue so stay tuned

2009-03-12T07:27:00.001-07:00

With all the help homeowners have allegedly received one aspect we are trying to get a handle on.........how long are Modifications taking. A couple of months ago the answer was anywhere from one to two maybe three months. With all the continued spotlight on this issue, you would think there would be a huge service improvement. Anyway, even for us, we need to reel in the facts so stay tuned.

permission to be shared granted by Denver Business Journal

Foreclosure Hotline fields record number of calls

Denver Business Journal

The Colorado Foreclosure Hotline received a record number of calls in February, officials said Wednesday.

The hotline fielded 4,582 calls, 600 more than the previous record month in April 2008. That translates to more than 160 calls per day.

Substantial recent media coverage may have helped boost volume, officials said. News that the hotline would get some funds from a settlement with Countrywide Financial Corp.; recognition of pending state foreclosure legislation; and comments by President Barack Obama’s administration about foreclosure-mitigation programs may have prompted more people to call.

The Colorado Foreclosure Hotline is a network involving 27 HUD-approved housing counseling agencies. It connects callers with the agency nearest their property in danger of foreclosure. Housing counselors offer free face-to-face appointments, covering basic mortgage and financial information and serving as liaisons between borrowers and mortgage companies.

Four out of five homeowners who meet with a housing counselor reach some sort of positive resolution and avoid foreclosure, hotline officials said. To date, the Colorado Foreclosure Hotline has helped nearly 11,000 Coloradans.

Hot Off the Press

2009-03-11T12:44:00.000-07:00

Today we take a break from our Loan Modification discussion and direct you to a new Hot Program for Los Angeles County Homeowners "to be"

HERO PROGRAM

This must be repeated over and over

2009-03-09T07:59:00.000-07:00

as it one thing to hear what appears to be a life raft, but it's another to interpret how it can benefit you.

Learn About the Making Home Affordable Refinance and Modification Options

The President's plan was created to help millions of homeowners refinance or modify their mortgages.

Refinancing: Many homeowners pay their mortgages on time but are not able to refinance to take advantage of today’s lower mortgage rates perhaps due to a decrease in the value of their home. A Home Affordable Refinance will help borrowers whose loans are held by Fannie Mae or Freddie Mac refinance into a more affordable mortgage.

Modification: Many homeowners are struggling to make their monthly mortgage payments either because their interest rate has increased or they have less income. A Home Affordable Modification will provide them with mortgage payments they can afford.

Who is Eligible?

Please use the self-assessment tools provided on this website to see if you are among the 7 to 9 million homeowners who can benefit from Making Home Affordable. Based on your results, we will provide suggestions about what you can do next.

FIND OUT IF YOU ARE ELIGIBLE.

Borrower Q&A PDF Document" border="0" width="12" height="10">

Beware of Foreclosure Rescue Scams - Help Is Free!

Mortgage Modification Guidelines

2009-03-08T15:55:00.000-07:00

This was published on March 4, 2009, but to be sure you are not duped into getting false information, the summary as listed below are the official specs of the Housing Recovery and Loan Modifications:

Eligibility requirements for the mortgage modification program include the following:

MODIFICATION ELIGIBILTY

* Borrowers must represent that they do not have sufficient liquid assets to make their monthly mortgage payments. These assets will not include retirement accounts.

* Every borrower who seeks a modification must be screened for financial hardship. Borrowers must demonstrate a change in circumstances that causes hardship, such as a drop in income or an imminent payment increase.

* Delinquency is not a requirement, and households that are at imminent risk of default are eligible.

* Borrowers with high total debt may qualify but only after they enter government-certified debt counseling.

* The mortgage to be modified must have been originated on or before Jan. 1, 2009, and homes must be owner-occupied, 1-4 unit family dwellings that are primary residences.

* Loans must have unpaid principal balance up to $729,750 for a single-family home, $934,200 for a two-unit home, $1.129 million for a three-unit home, and $1.403 million for a four-unit home.

* New applications for the program will be accepted until Dec. 31, 2012. There is no borrower cost to obtain a modification.

* There is no minimum or maximum loan-to-value ratio.

* Borrowers in bankruptcy are not automatically eliminated from consideration for modification, and borrowers in litigation regarding their mortgage can qualify for a modification without waiving their legal rights.

* Foreclosure actions are temporarily suspended while borrowers are considered for foreclosure prevention options. Loans can only be modified once under the program.

* Eligibility for the program will sunset at the end of three years.

INCENTIVES FOR LENDERS, BORROWERS

* The U.S. Treasury will share with lenders and mortgage servicers part of the cost of reducing monthly payments.

* The lender is responsible for reducing payments to 38 percent of the borrower's monthly income through interest-rate reductions or other means. The Treasury will match dollar-for-dollar further reductions that bring payments down to 31 percent of the borrower's monthly income.

* Loan servicers that modify loans according to the program guidelines will receive a $1,000 up-front fee for each modification and a $1,000 annual fee for each still-performing loan.

* Home owners who make modified payments on time will receive a $1,000 reduction in their loan principal each year, up to $5,000.

* Lenders and investors will receive a one-time bonus of $1,500 for each loan modified before borrowers miss any payments. Servicers will receive a $500 bonus on these loans.

* The U.S. Treasury is developing additional incentives to encourage extinguishing second-lien home equity loans to reduce a borrower's overall indebtedness.

* The program sets an interest rate floor of 2 percent on modified loans. The modified rate must remain in place for five years.

* After five years, the rate increases 1 percent per year up to a cap that is intended to reflect market rates at the time the loan was modified.

RELAXED RULES ON FANNIE MAE/FREDDIE MAC REFINANCINGS

* Program targets 4 million to 5 million borrowers with solid payment histories on mortgages owned or guaranteed by Fannie Mae (FNM.N: Quote, Profile, Research) or Freddie Mac (FRE.N: Quote, Profile, Research) that were originated with a loan-to-value ratio of 80 percent or less.

* Lenders can refinance these loans with guarantees by Fannie Mae or Freddie Mac even if the loan-to-value ratio has risen to up to 105 percent. No additional credit enhancement is needed.

* Borrowers are responsible for paying lender fees, points and other closing costs.

We've mentioned this before .....but it must be repeated

2009-03-06T10:01:00.000-08:00

Over and over again as people find themselves in desperate straights and become vulnerable. Securing a Loan Modification is a process!!!!!!!! Further, it deals with most............their most important asset, so you are encouraged to seek solid and professional help. Check anyone and everyone out who claims "they can help." The bottom line, most states require any company that claims to offer such help needs to be tied to a legitimate attorney network. That is.......unless you try and do it yourself - which simply is not recommended, UNLESS YOU ARE PROFICIENT AND UNDERSTAND THE GUIDELINES, others wise you are left with a Deal that may not be a Deal after all!!!!

permission to be shared granted by CBS Marketwatch

Mortgage modification programs invite fraud

Five steps troubled borrowers can take to avoid becoming victims

By Ronald D. Orol, MarketWatch

WASHINGTON (MarketWatch) -- As her family expanded, Tracy Robinson, a homeowner in Hyattsville, Md., decided to refinance her mortgage. Along the way she and her husband took out a second mortgage and later found themselves struggling to make payments and on the verge of foreclosure.

When Robinson realized that she was in serious jeopardy of losing her home, she went to a mortgage modification specialist, Home Alliance USA, to get a modification.

Lots more
real estate

Coverage of home buying and selling, housing prices, mortgage information and home improvement.

• The house of the future
• 4 refinancing strategies for today
• Home builders ask for help
• Restoring your equity line
• Buy model now, move later

"They said we can get you a modification and we believed them," Robinson told members of a congressional bank-bailout oversight committee at a field hearing at Prince George Community College in Maryland. "We paid them $500 of $2,000 they were asking us to pay."

But the money was wasted. Robinson only was able to get her modification, after struggling for years to make her payments, when she contacted her member of Congress, Rep. Chris Van Hollen, D-Md., and sought out his assistance.

"They [Van Hollen's office] put me in touch with Chase Bank's executive resolution branch. I had never heard of an executive resolution branch," said Robinson. "More action needs to be taken not only against predatory lending but also against companies that pretend to be able to help you with your modification. These companies need to be shut down."

Robinson isn't alone in paying a mortgage "specialist" in the hopes that they would get help to modify a home loan. Government officials are busy seeking to identify and stop a burgeoning cottage industry of "loss mitigation specialists," companies that charge upfront fees, sometimes thousands of dollars, to purportedly provide assistance or mortgage relief services in modifying loans.

"Scam artists are eager to take advantage of homeowners trying to modify their loans and they will be on the prowl for vulnerable homeowners seeking assistance through the new federal programs," said Thomas Perez, secretary in Maryland's Department of Labor, Licensing and Regulation. "Typically this ends in nothing but wasted money and, worse, wasted time for the borrower."

These mortgage consultants are a growing part of a major problem for struggling homeowners around the country that face a wide variety of mortgage scams -- from deceptive modification specialists to outright mortgage fraudsters who convince some homeowners to deed over their property.

Fraudsters smell opportunity

New government mortgage-modification programs, along with millions of new troubled borrowers struggling with the economic decline, are expected to draw even more scammers, some of whom give themselves deceptive titles creating the false impression that they are affiliated with government agencies.

A recent Credit Suisse research report predicts 8.1 million homes will be in foreclosure in the next four years.

According to Mary Warlow, marketing director at Belair Edison Neighborhoods Inc., a nonprofit housing counseling agency in Baltimore, mortgage "specialists" target troubled homeowners by paying for services or finding legal documents that inform them immediately when a mortgage is near or in default.

"Before a borrower has a chance to look into their options, these 'specialists' have already identified them as being in trouble and are on the phone ready to provide their services for an upfront fee," Warlow said.

In addition to making cold calls, these companies are advertising on television and in newspapers.

No need to pay

Warlow points out that many troubled homeowners don't realize they have access to free counseling by any of hundreds of nonprofit home-counseling agencies that have been approved by the Department of Housing and Urban Development. Warlow argues that the last thing troubled homeowners need to do when having difficulty with their home loan is to pay a mortgage specialist to help them modify their loan.

"If you are having a hard time making your payments you should be saving for that, not spending money on mortgage modification people," said Warlow.

However, unlike private specialists, HUD-approved nonprofit agencies don't call homeowners -- borrowers must seek them out. Hundreds of housing counselors are trained based on HUD guidelines to advise troubled borrowers in every state. Maryland, for example, has 53 HUD-approved home-counseling organizations. See the list of HUD approved housing counseling agencies in your state here.

Acting early may be critical to get the attention of a HUD approved mortgage counselor, said Henry Sommer, director at the National Association of Consumer Bankruptcy Attorneys in Philadelphia. He says legitimate housing counselors are already overwhelmed by troubled homeowners seeking their assistance. These counselors, he said, vary in quality but are honest and aren't "trying to rip you off."

Sommer argues that borrowers that are having trouble getting the assistance of HUD approved counselors should continue to press their servicer and lender directly.

Even with new cash incentives for modification, servicers, lenders and HUD-approved counselors will likely continue to be overwhelmed, leading some borrowers into the hands of mitigation specialists, said Sommer.

"When you have more homeowners either on the verge of foreclosure or in default of their loans, you will see more of these specialist scams," Sommer said.

President's plan

Last month, the Obama administration launched a $75 billion government program seeking to help as many as 9 million "at risk" homeowners modify or refinance their mortgages to avoid foreclosure. Under one part of the plan, the government would provide subsidies to lenders as part of a program that seeks to bring down homeowners payments to below 31% of their pretax income. Read more on whether you qualify for modification or refinancing plans and how you can get help if you do.

At the same time, lawmakers on Capitol Hill are close to approving legislation that would allow bankruptcy judges to modify mortgages for troubled homeowners. Approval of this legislation would likely encourage lenders and mortgage investors to voluntarily modify mortgages as a means of avoiding bankruptcy proceedings.

The bankruptcy bill under consideration in the House also gives mortgage service companies legal protection when they modify mortgages. Servicers have been unwilling to modify mortgages for fear of mortgage investor lawsuits.

All these endeavors may eventually lead to millions of modifications -- and a burgeoning cottage industry of specialists ready to "help."

Maryland's Perez contends that federal legislators should seriously consider approving a bill that would prohibit mortgage specialists from collecting upfront fees before a loan is modified.

Already some states have taken action in that area. Maryland has approved a law that prohibits a loan specialist from collecting fees prior to providing a service if a homeowner is more than 60 days in default. Florida's "Foreclosure Fraud Rescue Prevention Act" prohibits modification specialists from charging an upfront fee to owners in or near foreclosure. Some states have issued orders halting the collection of upfront fees.

"We need to nationalize these programs," Perez said.

Such prohibitions are just one type of a number of efforts approved in Maryland and other states seeking to help troubled borrowers. Lenders in Maryland are required to wait 150 days, rather than the previous 15 days, from default to sale, according to new state laws.

What should homeowners do?

Here are five steps to take to avoid becoming a victim of mortgage-modification fraud.

Contact a HUD approved housing counselor. Homeowners may find it difficult to get their mortgage lender to talk to them about a modification. At Belair Edison Neighborhoods Inc. in Baltimore, Warlow and other HUD approved counselors' talk with lenders and loan servicing companies about how loans can be modified.
Budget. In many cases, borrowers don't believe they can meet even modified loan payments. However, Warlow said she works with homeowners to adjust their expenses to make payments. Some borrowers don't complete a full accounting of their expenses and they are surprised when they come up short. "When you list your monthly debt you don't think of everything you spend on," Warlow said. "We list everything."
Think twice before filing for bankruptcy. Warlow points out that in many cases, struggling homeowners make the wrong decision to file for bankruptcy (or file the wrong kind of bankruptcy) without understanding the consequences. Some borrowers could find a way to make payments without filing for bankruptcy, Warlow said. Others don't realize that bankruptcy will harshly affect their credit scores, limiting their ability to take out a new loan for three to five years afterwards. Homeowners should also consider waiting to see if new bankruptcy legislation under consideration in Congress is approved before taking that step, she added.
Get in touch with a pro-bono lawyer. Belair Edison Neighborhoods seeks to put troubled homeowners in touch with pro-bono lawyers trained in foreclosure intervention who can advise them. The state of Maryland has recently recruited roughly 700 pro-bono lawyers to assist struggling borrowers. "When they get a foreclosure notice with a sale date, that's when we put them in touch with a pro-bono attorney," said Warlow.
Act early. When homeowners come to see housing counselors 90 days after their delinquency notice, there is less advisers can do to help borrowers than if they approached the organization earlier. "Earlier they act the more we can help," said Warlow.

Ronald D. Orol is a MarketWatch reporter, based in Washington.

It's been a slow process but common sense is finally coming to light

2009-03-05T07:24:00.000-08:00

Now that specs of the Housing Recovery has been announced, another huge component of getting out of this mess is allowing Judges to modify mortgages directly from the bench. Like the Recovery, this is not a catch - all for everyone but certainly whatever the population is who will benefit is more that before. Read more.......

permission to be shared granted by the New York Times

House to Try Again to Let Judges Alter Mortgages

By CARL HULSE

WASHINGTON — After a brief revolt, the House is scheduled to vote Thursday on a measure that would allow bankruptcy judges to change mortgage terms to help homeowners avoid foreclosure, granting new authority some lawmakers say is central to easing the housing crisis.

The Democratic leadership said it was confident it now has the support to pass the measure, which stalled last week, because of changes won by Democrats who said they feared that homeowners might use bankruptcy to win reductions in mortgages they could still afford. The Senate, where backers of the bill have faced stiff resistance, could consider its own version later this month.

Under the legislation, judges could reduce the principal owed, reduce the interest rate or extend the length of the loan. Currently, bankruptcy courts are prohibited from rewriting loan terms on primary residences even though those homes are at the heart of the foreclosure crisis. Democrats say the legislation, which would work in tandem with President Obama’s new housing plan, could cut foreclosures 20 percent. It would apply only to existing mortgages, not future loans.

“Stabilizing the housing market is central to restoring the American economy,” the Democratic leadership said in a fact sheet distributed Wednesday to encourage lawmakers to back the measure. “We all stand to lose if we do not stop the steep decline in home prices.”

The House was originally expected to easily approve the measure last week. But some Democrats who had heard complaints from the lending community and the public sought changes. They said they did not want the program abused by consumers who were simply seeking a way out of a costly mortgage while most Americans continued to make their payments.

“Our intention was to make sure this was available but as a last resort,” said Ellen Tauscher, Democrat of California. She was joined by two state colleagues — Zoe Lofgren and Dennis Cardoza — in leading the push for revisions.

To appease Democratic critics, backers of the bill made changes to try to ensure that homeowners first sought to negotiate a voluntary loan change from their lenders before filing for bankruptcy.

As a result, the bill requires a homeowner facing foreclosure to seek a loan change 30 days before pursuing one in court and to provide the necessary personal financial information to the lender. Judges would also be required to determine whether a voluntary loan modification had been sought from a lender before the homeowner entered bankruptcy.

Judges would also have to weigh a person’s income against the payments before deciding whether an interest rate or principal reduction was called for and use federally approved appraisal guidelines in determining a home’s value. Other changes are also intended to prevent mortgage reductions in cases in which a person could afford the loan.

Courts are supposed to be able to reduce a mortgage only to the current fair market value of the house and to structure payments in a way that would require homeowners to continue to pay off their original loan to the greatest extent possible considering income.

“Some may think the changes made to the bill go too far, while others will contend that they do not go far enough,” the three California lawmakers wrote to their colleagues. “Given the ever deepening housing crisis, however, we ask you to place such differences aside — as we have done — and support this effort.”

Supporters of the bankruptcy change hoped they had made a breakthrough this year when Citigroup backed the initiative, but many other top lenders remain opposed, as do many Republican lawmakers. The bill is backed by AARP, consumer groups and other housing advocacy organizations.

It's Here!!!!! What was promised for March 4, 2009

2009-03-04T15:53:00.000-08:00

After much debate and the scorn of some, as well as the complete debacle of similar programs promoted

during 2008, The Specs of the President's Housing Recovery Plan have been announced.

While it is not a cure all, it certainly has the potential to help thousands of more homeowners than the dubious number promoted during 2008. Nevertheless, before frustration sets in.............The Program Has It's Limits, so for those who can fit into the window outlined it may be the difference in finally being able to get some sleep versus literally worrying to death.

The program has some interesting merits and you are encouraged as review so that you can intelligently communicate to your clients who may be able to benefit from the program.

Now if we can pull the plug on those programs who offered so much help and haven't delivered squat - unless, perhaps you saw the evidence. Let's get back to basics and help those we can help and stop delivering false promises to those who simply do not fit in the box.

As usual..........your thoughts are welcomed and encouraged. After all......love it or hate it.......it's our tax money.

Here's the Plan

Excerpt - "The plan is expected to help as many as 9 million homeowners restructure or refinance their mortgages and ease the rapid collapse of the housing market."

___________________________

Fred Thomas, III VP, CB

Vice President, Chief Bloggeroligist

Omega Capital Financial, Inc.

__________________________

"another" Step in the Right Direction.....

2009-03-03T08:08:00.000-08:00

This type of assistance is welcome and should have started at least a year ago. Who knows how many homes could have been saved? The only hiccup is loans must have been originated by CITI and that's the big rub with this mortgage meltdown. There is a huge population of loans which were not originated by CITI but instead were purchased by them as part of their business model. Same holds true for non-conforming loans where there is not just one investor on the mortgage.

permission to be shared granted by CBSMarketwatch

Citi unveils housing relief plan

Banking giant steps up efforts to avoid foreclosures

By Sam Mamudi, MarketWatch

NEW YORK (MarketWatch) -- Citigroup Inc. on Tuesday released details of a plan that it said will help mortgage borrowers remain in their homes.

C) said that under the Citi Homeowner Assistance program, it would preemptively contact 500,000 mortgage holders -- involving $20 billion of mortgage balances -- to try to ensure that they can pay their loans. It said it is focusing on borrowers who live in areas that are likely to face "extreme economic distress." Read MarketWatch First Take commentary.

Citi also extended its moratorium on foreclosures, saying it won't begin or complete a foreclosure sale on a home on which it owns the mortgage if the borrower wants to stay in the home, which is his or her principal residence. Citi said it will also need to be sure the borrower is working in good faith with the bank and has enough income for affordable mortgage payments.

"Under our new program we will preemptively reach out to help homeowners before they become delinquent, which is critical to avoiding the loss of a home and protecting their credit score and future borrowing potential," said Sanjiv Das, chief executive officer of CitiMortgage.

Citi stock was down about 1.5% in early trading Tuesday, at $11.04. The stock has fallen 62% this year and 20.6% over the past month.

Citi is the latest big bank to announce moves to help prevent foreclosures. In early October, Bank of America Corp. (BAC

Bank of america corporation com

BAC) reached a settlement with state attorneys general and agreed to work out 400,000 loans written by its Countrywide unit. See full story.

And at the end of October, J.P. Morgan Chase & Co. (JPM

JPMorgan Chase & Co

JPM) announced plans to expand its mortgage program to help homeowners avoid foreclosure. J.P. Morgan said it expects the program to help 400,000 families with $70 billion in loans in the next two years. See full story.

According to The Wall Street Journal, Fannie Mae (FNM

Fannie Mae

FRE) will reveal details of their own mortgage-relief plans at 2 p.m. on Tuesday.

Citi said it is also working with investors to expand the Citi Homeowner Assistance program to include mortgages Citi services but does not own.

Tuesday's announcement included details about how the program will work. A team of trained counselors in Borrow Relief Centers will contact Citi mortgage holders, focusing on areas with falling home prices and high unemployment rates. It will reach out to these customers by telephone, mail, email, social networks and external counselors.

Citi said that since 2007, it has helped about 370,000 families, representing more than $35 billion in underlying loans, avoid foreclosures.

It added that it recently streamlined its loan modification program to rework delinquent loans. This revamped program uses a simplified formula to figure out an affordable payment as a percentage of the borrower's gross income. It then reduces the monthly payment to that amount by either reducing interest rates on the loan, extending the loan's term or forgiveness of principal.

"We believe at-risk borrowers should not have to wait until they are facing potential foreclosure before they become eligible for a loan modification or a foreclosure pause," said Eric Eve, senior vice president at Citi.

Sam Mamudi is a reporter for MarketWatch in New York.

How much more talking is necessary to mandate action???

2009-03-02T07:43:00.000-08:00

I know once the meltdown occured and it became apparant that the government would be required to jump in and provide a solution, the new frustration is waiting around for all of these hearings.....although needed to take place and finally mandate the lenders/servicers simply overhaul all of the mortgages which are deemed "problem loans." In the meantime, we are running out of time watching homeowner, after homeowner, family after family, community after community destroyed as the current environment is simply to go through the foreclosure problem, as if they didn't know a huge problem exist.

permission to be shared granted by Fox Business News

In an effort to stem the rising foreclosure rate plaguing the economy, a House committee met Tuesday to learn more about the steps mortgage servicers are taking to assist homeowners.

"I am concerned there isn’t doing enough being done to modify loads and preventing foreclosures," said Rep Maxine Waters (D-Calif.), chairwoman of the Subcommittee on Housing and Community Opportunity Hearing said in her opening statement.

More than 2.3 million homeowners faced foreclosure proceedings last year, an 81% spike from 2007, according to data from RealtyTrac released last week.

And the outlook isn’t good. According to Moody’s Economy.com, of the 52 million citizens with a home mortgages, close to 27% owe more on their mortgage than their house is now worth.

The chairwoman also expressed concern over the re-default rates. “When modifying loans servicers most ensure it is more affordable than before the modify, it makes little sense to modify a loan and still have it out of the reach of the bar.” she said.

“There are millions of families out there who are struggling and have tried to contact some of the people we have here testifying today,” she said.

Nine witnesses were at the hearing, testify in two panels. The first panel included Vance Morris, director for single family asset management at the U.S. Department of Housing and Urban Development; Grovetta Gardineer, managing director of corporate and international activities at the Office of Thrift Supervision; Joseph H. Evers, deputy comptroller for large bank supervision at Office of the Comptroller of the Currency; and Patrick J. Lawler, chief economist of the Federal Housing Finance Agency.

The second panel included William C. Erbey, CEO of Owen Financial Corporation, Mary Coffin, executive vice president of Wells Fargo Home Mortgage Servicing, Michael Gross, managing director for loss mitigation at Bank of America, Molly Sheehan, senior vice president, of chase home lending at JP Morgan Chase and Steve Hemperly, executive vice president of mortgage default servicing at Citigroup (C: 1.453, 0.043, 3.05%).

"We have made much progress in the last year to develop and refine our data collection, validation, and reporting efforts, and our work in this area continues to evolve in response to supervisory needs and changing market trends,” said Evers in a prepared statement.

“We currently are working to provide additional data at a more granular level on the affordability of loan modifications as well as the types of loan modifications being implemented by the largest mortgage servicers. We continue to improve these efforts and to enhance the information we obtain, and we look forward to making the additional information available in future issues of our Report.”

The OCC and the Office of Thrift Supervision regulate some of the largest mortgage servicers in the nation.

Last week President Obama revealed an ambitious mortgage rescue plan to help up to nine million homeowners avoid foreclosure.

The plan includes $75 billion to help at-risk homeowners make payments and $200 billion from the Treasury Department to purchase preferred stock in Fannie Mae (FNM: 0.4006, -0.0294, -6.84%) and Freddie Mac (FRE: 0.401, -0.039, -8.86%).

The plan also allows four million to five million ineligible homeowners with mortgages through the two mortgage giants to refinance their home loans at lower rates.

"Our report will show that distressed borrowers serviced by Citi, who received modifications, reinstatements or repayment plans outnumbered those who were foreclosed by more than six to one in the fourth quarter of 2008, “ said Hemperly, in prepared remarks. “The number of borrowers serviced by Citi who received long term solutions, in the form of loan modifications, in the fourth quarter of 2008 increased by approximately 51% compared with the third quarter of 2008."

Citi holds about 7% of the loans in the nation and initiated a foreclosure moratorium on all Citi-owned first mortgage loans.

On Thursday the House of Representatives is expected to vote on a bill that would extend help to struggling home owners. The bill, HR 200, would allow bankruptcy judges to rewrite home loans and shield mortgage providers from bondholder lawsuits.

Black History Month Culture Celebration – 2009 Summary

2009-03-01T12:02:00.001-08:00

As most of our subscribers know we have several Blogs featuring specific information per topic. Today's post will be borrowed from our Active Rain Blog as it captures the spirit of Black History and our interpretation to inform.

Today winds up our series on Active Rainers celebrating Black History Month. Our focus was to provide tidbits of information and to communicate the spirit of why our nation celebrates African-Americans contribution to building our nation. As a diverse company, we take great pride of celebrating all cultures and our goal is not to be controversial or provide opinion, etc. .........even though that's the spirit of Blogging, but more important get you to think and engage!!!!!

A Summary of topics covered

Faubourg Tremé

In the spirit of Mardi Gras which was just celebrated earlier this week........gaining knowledge of the oldest African-American community in New Orleans.

2 Great SCHOLARS
Dr. W.E.B. Dubios & Dr. Booker T. Washington

As African-Americans moved beyond the Civil War and Reconstruction and during the turn of the 19th Century, these two leaders had similar goals but very different strategies in achieving them.

Juneteenth

Is a critical holiday within the African-American culture as it celebrates the day those Slaves in Texas became officially free.

The Emancipation Proclamation

Dred Scott

This is a remarkable piece of American History as in 1847 Dred Scott went to the Supreme Court to gain his freedom from being a Slave.

Kwanzaa

Created in 1966, this holiday speaks specifically to the African-American tradition.

Traces of the Trade

This is a remarkable documentary of a film writer who traced her family journey of being active participants of the Slave Trade.

Why Celebrate Something We Should Already Know?

The Real Great Debaters

This documentary showcased the tremendous debate skill of a remarkable group of students hailing from Wiley College in East Texas.

History of Black America - 1619

Gullah Geechee

Still active as you read this, Gullah is a tradition in the African-American community who have maintained their customs since arriving in the Sea Islands of the late 1600's.

Realtist

African-Americans were discriminated from belonging the traditional Real Estate organizations. This organization was critical in allowing African-Americans to establish a professional organization in the mid 1940's.

H.B.C.U.

As African-American's who were eventually freed, they needed institutions to allow them to prosper and develop a way of life. A critical part of their development was education. Thus Historically Black Colleges and Universities were created with the specific mandate of providing educational opportunities. Approximately 110 HBCU's are still active and represent much of the educational talent of African-Americans throughout this nation.

Dr. Carter G. Woodson

The father of Black History Month, Dr. Carter G. Woodson was instrumental in creating a period for the nation to better understand and appreciate the contributions African-Americans played in developing our nation.

We hope this series has brought you some information that you did not know before or reintroduced you to information that had escaped you. Either way, African American History Month is a time for all Americans to better understand just one culture that has made America the great nation it is.

____________________________________________

Fred Thomas, III VP, CB

Vice President, Chief Bloggeroligist

Omega Capital Financial, Inc.

____________________________________________

Black History Month - Today’s Topic Faubourg Tremé

2009-02-27T09:04:00.001-08:00

Today is another great day and as we continue our Black History Month celebration by providing tidbits or information nuggets. Our intent is the share information which celebrates African-Americans contribution to building our nation. As a diverse company, we take great pride of celebrating all cultures and our goal is not to be controversial or provide opinion, etc. .........even though that's the spirit of Blogging. Our basic our aim, in particular with our themes of highlighting various cultures is to share SOLID KNOWLEDGE that hopefully will aid your quest of learning something that perhaps you never knew, or reminding you of things you may have forgotten, but more important get you to think and engage!!!!!

Today's topic is Faubourg Tremé

Whether you celebrate Mardi Gras or not, or whether you've been to New Orleans or not – Faubourg Treme' is an excellent documentary that shares the rich history of how African-Americans helped developed the city and even though during the Slavery era many African-Americans were Freed Men who were active participants as homeowners and landowners. Most of us in Real Estate know homeownership is one key component to developing wealth as well as a legacy for your family. Interestingly, even though New Orleans (outside of the French Quarter) suffered tremendous blight and other urban issues prior to Hurricane Katrina, it was the devastating blow of the hurricane which wiped out generations of homes which had been passed down throughout all of these years.

Anyway, hope you find this information interesting, and as usual thanks for reading and chiming in with your comments J

____________________________________________

Fred Thomas, III VP, CB

Vice President, Chief Bloggeroligist

Omega Capital Financial, Inc.

____________________________________________

President's Budget finally released

2009-02-26T14:03:00.000-08:00

Here is a quick Primer

permission to be shared granted by The Los Angeles Times

Obama's budget plan: At a glance

The president outlines his $3.55-trillion budget for 2010.

By Michael Muskal
10:56 AM PST, February 26, 2009

Reporting from Los Angeles -- President Obama today proposed his first budget plan, which sets priorities for his administration. Here is a guide to understanding the document:

What did the president propose?

Today's plan calls for spending $3.55 trillion in fiscal 2010 and makes changes to increase the spending this year to $3.9 trillion.

Where does the money come from?

The money comes from federal taxes. The plan would increase a range of taxes. This document follows through on candidate Obama's pledge to allow tax cuts for the rich to expire and to cut taxes for the middle class. Couples earning more than $250,000 would see the top tax rate rise to 39.6% by 2011, with the expiration of the tax cuts put in place during the Bush administration. There also would be new limits on tax deductions, including for charitable donations.

Today's proposal would make permanent the tax cuts of up to $800 for couples that were part of the recently passed economic stimulus package.

Other changes include new taxes on offshore drilling and expansions of existing tax credits for college students and the child tax credit.

So will the budget be balanced?

No. It projects a shortfall of about $1.75 trillion this year, about 12% of the gross domestic product, and a $1.1-trillion deficit next year. Those are about twice the size of the worse deficits on record.

What are some of the budget plan's underlying assumptions?

The plan assumes that the gross domestic product, the sum of goods and services produced by the nation, will shrink by 1.2% this year and rebound to about 3.2% by next year. Unemployment will average 8.1% this year and get slightly better next year. Opponents question those assumptions and argue that the poor state of the economy makes it possible that things could get worse.

What does Obama's plan propose to help the banks?

Congress already has authorized more than $700 billion to help the financial system, and more had been expected. Today's plan could increase the aid to an additional $750 billion.

What are some of the other big-budget items in the plan?

A major initiative is healthcare. The administration wants to create a $634-billion fund to begin overhauling healthcare and to bring care to the more than 47 million people in the U.S. who are uninsured. Funding would come from new taxes on the rich, new insurance regulations and some tax crackdowns.

What about global warming?

The plan calls for at least $75 billion in revenues by 2012 from a so-called cap-and-trade system that requires companies to buy credits if they exceed greenhouse-gas limits.

What about the wars in Iraq and Afghanistan?

For the first time, costs associated with the war are put into the budget, bringing an annual $140 billion into the document. Including those war costs in the budget does have an advantage: As the wars wind down, so do the projected costs to about $50 billion after 2010, when the bulk of U.S forces are expected to leave Iraq.

What happens next?

The plan moves to Congress, where initial reaction was split.

Republicans are expected to maintain their position, established during the recent stimulus debate, that Obama is calling for too much spending, a bigger federal government and insufficient tax cuts. Democrats will be supportive, but some will question whether the plan goes far enough on healthcare and taxing the rich.

michael.muskal@latimes.com

More info can be found by visiting this link

President Obama's Speech to Congress

2009-02-25T11:39:00.000-08:00

http://www.youtube.com/watch?v=3MVtE7C-YVc

Judges are critical as part of the Loan Modification Plan

2009-02-24T07:25:00.000-08:00

but why are groups still trying to block them????

permission to be shared granted by The Dallas Morning News
Threat of judges changing mortgage terms may motivate lenders
By PAMELA YIP / The Dallas Morning News
pyip@dallasnews.com

Last week, President Barack Obama unveiled a $75 billion housing plan to bail out some of the country's most endangered homeowners.

One provision of the plan is great news, some lawyers and consumer advocates say. It would allow bankruptcy judges to modify the terms of mortgages.

Under such "judicial modifications" of home mortgages, judges would have the power to reduce mortgage loan balances for the primary residences of consumers who file for bankruptcy. They could also extend the term of the loan and reduce the interest rate "when families run out of other options," according to the Obama plan.

Legislation that would amend the U.S. Bankruptcy Code to give judges modification power is expected to be taken up by the House of Representatives this week.

Supporters of the effort say that such a change would give consumers who file for bankruptcy much-needed relief and give lenders more incentive to work with distressed homeowners before they seek help from a bankruptcy judge.

"At a time when an estimated 6,600 American families are losing their homes to foreclosure every day, we welcome the Obama administration's support for changes to existing bankruptcy laws that will allow for judicial modification of home mortgages," said Cary Ebert of Hurst, who's president of the National Association of Consumer Bankruptcy Attorneys.

"The Obama administration is the latest major player in this national debate to recognize the fact that judicial modification must be part of the solution to today's worsening home mortgage foreclosure crisis," she said.

Currently, bankruptcy judges can reduce or wipe out other types of debt for consumers, but not mortgage debt on a primary residence.

To receive judicial mortgage modification in bankruptcy, homeowners would have to first seek relief from their lender or loan servicing company

Judicial modification would be available only on mortgages that can be purchased by government-backed mortgage giants Fannie Mae and Freddie Mac, "so that millionaire homes don't clog the bankruptcy courts," the Obama plan said.

Opponents to judicial mortgage modification – which they call "cram down" – say it would raise the cost of future home loans for consumers because it would increase losses for lenders and investors in mortgage securities, who essentially provide the funds for lenders to make mortgage loans.

"These modifications will cause originators to build the price of future modifications into the upfront cost of a new mortgage, once again hurting the very consumer we are trying to protect," said Ian Wright, who's on the board of directors of the Texas Mortgage Bankers Association.

"We are disappointed to see the president endorse bankruptcy as a means to help delinquent borrowers," said David Kittle, chairman of the Mortgage Bankers Association, a national industry group.

"Our fear is that any borrower who can't be helped by this [Obama mortgage relief] program will have a hard time being helped by bankruptcy," he said. "So their bankruptcy plan will fail, they will lose their home anyway, and will now be stuck with the black mark of bankruptcy on their record, inhibiting their ability to buy or rent a home in the future."

What's really going on here is that lenders don't want bankruptcy judges to have power over tinkering with mortgage terms.

They should work extra hard with financially distressed homeowners to help them keep their homes, then.

"This is the stick part, this isn't the carrot part," said Samuel Gerdano, executive director of the American Bankruptcy Institute, which studies bankruptcy issues. "The bankruptcy judge is the stick."

Lenders participate in the Obama program on a voluntary basis, and loans are evaluated for modification on an individual basis.

But the government is offering lenders substantial incentives, and it's expected that most major lenders will participate.

The judicial modification legislation has a good chance of becoming law, Gerdano said.

"Economic circumstances have changed for the worse, and by all accounts, they're going to continue to get worse," Gerdano said. "The environment is such that politically and economically, the odds have never been better than now."

Housing Recovery Bill and those waiting for Mods

2009-02-21T10:43:00.000-08:00

permission to be shared granted by The Washington Post

Mortgage Rescue Eligibility Still Being Finalized

By Renae Merle
Washington Post Staff Writer
Friday, February 20, 2009; D01

A day after President Obama unveiled his $75 billion foreclosure prevention program, administration officials yesterday said they were still determining which homeowners should qualify.

The administration is developing a standard for lenders to use in evaluating applicants that seeks to exclude homeowners who are not in real need or are too far behind in their payments to be saved. Officials have set some conditions for eligibility, including requiring that borrowers' mortgage payments consume more than 38 percent of their income and that the property be a primary residence.

Government officials are working to finalize details before a self-imposed March 4 deadline when the program will go into effect and lenders are likely to be flooded with calls.

The program is aimed at stemming the tide of foreclosures as predictions mount that another wave of risky loans could begin defaulting later this year as a deepening recession makes it more difficult for borrowers to afford their homes.

The administration's effort includes several elements, including a refinancing initiative for borrowers with little equity in their home. A separate loan modification program gives lenders incentive payments to keep borrowers in their homes rather than foreclose on the properties.

A chief goal of the loan modification program is to address complaints of consumer advocates that borrowers are often turned away by lenders when they seek help before becoming delinquent on loans. The plan includes extra incentive payments for lenders that reach "at-risk" homeowners and modify their loans before they become delinquent.

"But what counts as an at-risk homeowner?," said Edward R. Morrison, a professor at Columbia Law School. He said policymakers should avoid setting a standard that encourages lenders and mortgage servicers to rework sustainable loans just to get payments from the government.

Administration officials involved in developing the program said they are basing their effort on a model developed by the Federal Deposit Insurance Corp. The formula to determine at-risk borrowers likely will weigh a homeowner's debt level and payment track record, officials said. But in setting eligibility standards, they are also trying to determine what documentation borrowers should provide to prove they could lose their job or face a reduction in income, they said.

Another key question facing the administration is how to calculate when foreclosure would be a better deal for lenders than keeping borrowers in their home, even with incentives. The administration will attempt to generalize the FDIC formula, known as the net present value test, and apply it to the entire mortgage industry, according to officials familiar with the effort.

"If a borrower has no means of repayment, even if you restructure the loan, then foreclosure may be the only option," said Diane Casey-Landry, chief operating officer of the American Bankers Association. "We're very interested in how they're going to develop it." The administration is canvassing the financial services industry and consumer advocates for input on this and other issues. "They want them as soon as possible, so we're scrambling," said Paul M. Leonard, vice president of government affairs at the Financial Services Roundtable's housing policy council.

Obama has pledged to spend $75 billion on loan modifications. About $50 billion would come from federal bailout funds approved by Congress to shore up the financial system, with mortgage financing firms Fannie Mae and Freddie Mac and the Department of Housing and Urban Development also contributing, administration officials said. The HUD money will be used to help fund nonprofit housing groups, the officials said. The money from the Fannie Mae and Freddie Mac will be used pay incentive fees and rate subsidies to mortgage servicers that modify mortgages that the financing agencies own or guarantee.

Even as the administration finalizes details of the mortgage modification program, officials are getting pressure from some groups to include protection for lenders and mortgage servicers that rework a loan and worry they could face a lawsuit from investors.

The Mortgage Bankers Association is also trying to persuade the administration to expand the refinancing portion of the plan. Under that program, the administration will loosen lending standards at Fannie Mae and Freddie Mac to allow millions of homeowners to qualify for refinanced loans as long as their mortgages do not exceed 105 percent of the current value of their property. But with housing prices in a free fall in parts of the country, including Florida, California and Arizona, that will not be enough for many homeowners.

"We think that 105 percent [loan-to-value ratio] should be revisited," said Steve O'Connor, senior vice president for government affairs at the mortgage bankers' group.

Help appears to be on the way.......finally

2009-02-19T07:08:00.000-08:00

But will you be included in the plan?????

permission to be shared granted by The Los Angeles Times

How the Obama plan will affect homeowners

The new programs are available to people who aren't yet behind on their payments.

By Maura Reynolds

February 19, 2009

Reporting from Washington — Here are questions and answers about the foreclosure-prevention plan unveiled Wednesday by President Obama.

Who will benefit from this plan?

The plan is designed to help two kinds of homeowners. The first are people who took out prudent mortgages with a substantial down payment and have been making their payments, but who have little or no home equity because of falling housing prices. In the second group are borrowers who are struggling to make their monthly payments but would be able to make them if those payments were reduced.

How does the refinancing program work?

Borrowers who have loans owned or guaranteed by Fannie Mae or Freddie Mac can apply to refinance them. If a borrower meets the program requirements, including that they occupy the home and can document their income, their lender may be able to offer a lower-interest-rate loan backed by Fannie Mae and Freddie Mac.

What about people with "jumbo" mortgages?

The administration plan does nothing for people with mortgages that exceed the limits on so-called conforming loans that can be bought or acquired by Fannie Mae and Freddie Mac.

How does the loan modification program work?

This program applies to borrowers who are unable to make -- or are struggling to make -- mortgage payments that exceed 38% of their monthly income. If the lender agrees to lower the interest rate or reduce the principal amount to bring the payment to 38% of the borrower's income, the government will pay half of the additional cost to the lender to reduce the payment to 31% of the borrower's income.

Isn't this just rewarding people for making bad decisions and irresponsibly getting in over their heads?

The Obama administration says the loan modification plan will exclude speculators and borrowers with high debts. Homeowners must live in the house in question, document their income and demonstrate an ability to make the new payment for an extended period of time.

How are these programs different from what was already available?

Unlike foreclosure-prevention efforts, both of the new programs are available to people who aren't yet behind on their payments. In fact, in the loan modification program, the government will pay mortgage servicers a higher incentive fee -- $1,500 instead of $1,000 -- if they modify a loan before a borrower goes into default.

What if I'm already in foreclosure?

It is up to your lender to decide whether it wants to participate in the program. The Obama plan increases the financial incentives for lenders to participate.

What if I file for bankruptcy protection?

Currently, bankruptcy law does not permit judges to modify the terms of mortgages for borrowers in bankruptcy. The Obama administration wants Congress to amend the law to give judges that power, but many lawmakers oppose the idea.

How much will the Obama plan cost taxpayers?

The administration estimates the total cost at $75 billion. About $50 billion would come from financial-rescue funds that have already been approved by Congress and would be used to subsidize loan modifications. The administration estimates the refinancing program will cost Fannie Mae and Freddie Mac about $25 billion. Those funds are already in the budgets of the mortgage giants, which were taken over by the federal government last summer.

When do the new programs take effect?

More details will be released March 4, but administration officials say the new programs will take effect immediately.

maura.reynolds@latimes.com

Economic Stimulus Bill Approved - GET OVER IT!!!

2009-02-18T07:49:00.000-08:00

Some of you may be jumping for joy!!! while some of you may be utterly disgusted!!! Whatever your perspective - GET OVER IT!!! President Obama officially signed the Economic Stimulus bill into law today.

Here's the reality.....at least from people I talk too.............Our economy has been stuck for more than 6 months so taking the posture of criticizing any effort or doing nothing is simply A Naysayers' delight. On the other hand doing nothing, just for the sake of being cantankerous offers ZERO solution. While I am sure a better bill could have been drafted ......... the debate would have been endless.

Also, for proper disclaimer......I am a supporter of President Obama, which should not imply I approve every single thing he (his administration) presents but uhhhhh - last time I checked.......the days of micro-managing yield worse results than doing nothing. Further, that's why the public votes for a leader (c'mon don't get me started about how there was a huge chunk who didn't vote for him........my point is we gotta move forward so I don't want to spend time second guessing or talking about how bad a deal it was or how my great great grand.......will be stuck with the debt.....Aren't we stuck with some of our grandparents debt?????)

On a more serious front - my side of the business is lending and for me what is truly needed is a pragmatic approach that offers assistance to the vaccum created from the Alt-A crop of clients (which happens to be most) because our lifesyles have changed. I'm not talking about creating programs for people who can't qualify for a cup of coffee or the con artist who are still in our industry and jimmy up client's documentation to "make them look good" just to get a deal through. No, I'm talking about those potential clients who may be self-employed or who may not be your traditional client and are in between the FHA program and the Conventional - someone shout Alt-A!!!! All I'm saying is that market has been the most dissemated from the mortgage meltdown and a good majority of those type of people were not criminals, con-artist, scammers or trying to get something for nothing, but simply on a credit basis could provide the credit, could provide the down payment BUT COULD NOT PROVIDE THE DOCUMENTATION that is required on the FHA product or the current Conventional. What is needed for YOU TO CONTACT YOUR NAR, CAR, Senator, Assemblyperson, Councilperson or even the President and do some good old fashioned lobbying.

What if............the big banks who took bail out money were required to put a portion of those fund into a solid pool so we could lend to the market described?????? There still is tons of money left for those traditional clients but we need to force feed the market that has been forgotten or felt to imply.....they were the reason for the mortgage meltdown, which is pure bull. Guys, we gotta hit the streets because the clients WHO CAN QUALIFY simply are not buying or have already bought, so let's stop pretending we're going to churn that group - because in reality there is only so many of them. We must make an solid assault on the market that is not being served, WHICH DOES NOT MEAN WE THROW AWAY PRUDENT UNDERWRITING OR BASIC CREDIT STANDARDS.

Now that is a market worth cultivating and I know if done properly would provide the housing stimulus we are yearning, without all of the hype of a person getting $15 extra each week!!!!!

Chime in and ante up your 2 cents because whether you like the Stimulus Package or not, AT LEAST THERE IS DISCUSSION ON THE TABLE AND NOW OUR NATION CAN START TO TACKLE THE HOUSING MESS.............

___________________________________

Fred Thomas, III VP, CB

Vice President, Chief Bloggeroligist

Omega Capital Financial, Inc.

___________________________________

President Obama set to sign Economic Stimulus Package on Tuesday

2009-02-16T07:28:00.000-08:00

permission to be shared granted by Winston Salem Times

Obama calls plan milestone

THE ASSOCIATED PRESS

President Obama, savoring his first big victory in Congress, celebrated yesterday the newly passed $787 billion economic stimulus bill as a "major milestone on our road to recovery. "

Officials said he would sign the bill on Tuesday in Denver.

Speaking in his weekly radio and Internet speech, Obama said, "I will sign this legislation into law shortly, and we'll begin making the immediate investments necessary to put people back to work doing the work America needs done."

At the same time, he cautioned, "This historic step won't be the end of what we do to turn our economy around, but rather the beginning. The problems that led us into this crisis are deep and widespread, and our response must be equal to the task."

The bill passed Congress on Friday on votes split mostly along party lines, allowing Democratic leaders to deliver on their promise of clearing the legislation by mid-February.

"It will take time, and it will take effort, but working together, we will turn this crisis into opportunity and emerge from our painful present into a brighter future," the president said.

Obama "now has a bill to sign that will create millions of good-paying jobs and help families and businesses stay afloat financially," said Sen. Max Baucus, a Montana Democrat who was a leading architect of the bill.

"It will shore up our schools and roads and bridges, and infuse cash into new sectors like green energy and technology that will sustain our economy for the long term," he added in a statement.

Hours earlier, Mitch McConnell, the Senate Republican leader, offered a different prediction for a bill that he said was loaded with wasteful spending.

"A stimulus bill that was supposed to be timely, targeted and temporary is none of the above," he said in remarks on the Senate floor. "And this means Congress is about to approve a stimulus that's unlikely to have much stimulative effect."

Alaska Sen. Lisa Murkowski, in the GOP radio speech yesterday, contended that Democrats settled "on a random dollar amount in the neighborhood of $1 trillion and then set out to fill the bucket."

Obama, who was spending the weekend in Chicago, planned to fly back to Washington on Monday. His schedule for the week ahead includes trips to Denver on Tuesday to talk about his economic agenda and a visit to Phoenix on Wednesday to present a plan to fight foreclosures.

In a struggle lasting several weeks, legislators in both parties emphasized they wanted to pass legislation to revitalize the economy and ease frozen credit markets.

But the plan that the administration and its allies eventually came up with drew the support of only three Republicans in Congress -- moderate Sens. Susan Collins and Olympia Snowe of Maine and Arlen Specter of Pennsylvania.

Their support was critical, though, in helping the bill squeak through the Senate on a vote of 60-38, precisely the number needed for passage. Democratic Sen. Sherrod Brown cast the 60th vote in favor in a nearly deserted Senate, hours after the roll call began. He arrived after a flight aboard a government plane from Ohio.

The House vote was 246-183.

The legislation, among the costliest ever considered in Congress, provides billions of dollars to aid victims of the recession through unemployment benefits, food stamps, medical care, job retraining and more. Tens of billions are ticketed for the states to offset cuts they might otherwise have to make in aid to schools and local governments, and there is more than $48 billion for transportation projects such as road and bridge construction, mass transit and high-speed rail.

Democrats said that the bill's tax cuts would help 95 percent of all Americans, much of the relief in the form of a break of $400 for individuals and $800 for couples. At the insistence of the White House, people who do not earn enough money to owe income taxes are eligible, an attempt to offset the payroll taxes that they pay.

In a bow to political reality, congressmen included $70 billion to shelter upper middle-class and wealthier taxpayers from an income-tax increase that would otherwise hit them, a provision that the nonpartisan Congressional Budget Office said would do little to create jobs.

Also included were funds for two of Obama's initiatives, the expansion of computerized information technology in the health-care industry and billions to create green jobs that the administration says will begin reducing dependence on foreign oil.

Friday's events capped an early period of accomplishment for the Democrats, who won control of the White House and expanded their majorities in Congress in last fall's elections.

Since taking office on Jan. 20, the president has signed legislation extending government-financed health care to millions of lower-income children who lack it, a bill that President Bush twice vetoed. Obama also has put his signature on a bill making it easier for workers to sue their employers for job discrimination.

Plan's effects

A look at how the economic-stimulus plan will affect Americans.

Taxes

The recovery package has tax breaks for families who send a child to college, buy a new car, buy a first home or make the ones they own more energy efficient.

Millions of workers can expect to see about $13 extra in their weekly paychecks, starting around June, from a new $400 tax credit to be doled out through the rest of the year. Couples would get up to $800. In 2010, the credit would be about $7.70 a week, if it is spread over the entire year.

The $1,000 child tax credit would be extended to more low-income families that don't make enough money to pay income taxes, and poor families with three or more children will get an expanded Earned Income Tax Credit.

Middle-income and wealthy taxpayers will be spared from paying the Alternative Minimum Tax, which was designed 40 years ago to make sure wealthy taxpayers pay at least some tax, but was never indexed for inflation. Congress fixes it each year, usually in the fall.

First-time homebuyers who buy their homes before Dec. 1 would be eligible for an $8,000 tax credit, and people who buy new cars before the end of the year can write off the sales taxes.

Homeowners who add energy-efficient windows, furnaces and air conditioners can get a tax credit to cover 30 percent of the costs, up to a total of $1,500. College students -- or their parents -- are eligible for tax credits of up to $2,500 to help pay tuition and related expenses in 2009 and 2010.

Those receiving unemployment benefits this year wouldn't pay any federal income taxes on the first $2,400 they receive.

Health insurance

Many workers who lose their health insurance when they lose their jobs will find it cheaper to keep that coverage while they look for work.

Right now, most people working for medium and large employers can continue their coverage for 18 months under the COBRA program when they lose their job. It is expensive, often over $1,000 a month, because they pay the share of premiums once covered by their employer as well as their own share from the old group plan.

Under the stimulus package, the government will pick up 65 percent of the total cost of that premium for the first nine months.

Congressmen initially proposed to help workers from small companies, too, who don't generally qualify for COBRA coverage. But that fell through. The idea was to have Washington pay to extend Medicaid to them.

COBRA applies to group plans at companies employing at least 20 people. The subsidies will be offered to those who lost their jobs from Sept. 1 to the end of this year.

Those who were put out of work after September but didn't elect to have COBRA coverage at the time will have 60 days to sign up.

The plan offers $87 billion to help states administer Medicaid. That could slow or reverse some of the steps states have taken to cut the program.

Infrastructure

Highways repaved for the first time in decades. Century-old waterlines dug up and replaced with new pipes. Aging bridges, stressed under the weight of today's SUVs, reinforced with fresh steel and concrete.

But the $90 billion is a mere down payment on what's needed to repair and improve the country's physical backbone. And not all economists agree it is an effective way to add jobs in the long term, or stimulate the economy.

Energy

Homeowners looking to save energy, makers of solar panels and wind turbines and companies hoping to bring the electric grid into the computer age all stand to reap major benefits.

The package contains more than $42 billion in energy-related investments from tax credits to homeowners to loan guarantees for renewable-energy projects and direct government grants for makers of wind turbines and next-generation batteries.

There's a 30 percent tax credit of up to $1,500 for the purchase of a highly efficient residential air conditioners, heat pumps or furnaces. The credit also can be used by homeowners to replace leaky windows or put more insulation into the attic. About $300 million would go for rebates to get people to buy efficient appliances.

The package includes $20 billion aimed at "green" jobs to make wind turbines, solar panels and improve energy efficiency in schools and federal buildings.

About $11 billion goes to update and expand the nation's electric power grid and $2 billion to spur research into batteries for future electric cars.

Schools

A main goal of education spending in the stimulus bill is to help keep teachers on the job.

Nearly 600,000 jobs in elementary and secondary schools could be eliminated by state budget cuts over the next three years, according to a study released this past week by the University of Washington. Fewer teachers means higher class sizes, something that districts are scrambling to prevent.

The stimulus sets up a $54 billion fund to help prevent or restore state budget cuts, of which $39 billion must go toward kindergarten through 12th grade and higher education. In addition, about $8 billion of the fund could be used for other priorities, including updates and renovation of schools and colleges, though how much is unclear, because Congress decided not to specify a dollar figure.

The Education Department will distribute the money as quickly as it can over the next couple of years.

And it adds $25 billion extra to No Child Left Behind and special education programs, which help pay teacher salaries, among other things.

The stimulus bill also includes more than $4 billion for the Head Start and Early Head Start early-education programs and for child-care programs.

National debt

One thing about the president's $790 billion stimulus package is certain: It will jack up the federal debt.

Whether or not it succeeds in producing jobs and taming the recession, tomorrow's taxpayers will end up footing the bill.

Forecasters expect the 2009 deficit -- for the budget year that began last Oct. 1 -- to hit $1.6 trillion including new stimulus and bank-bailout spending. That's about three times last year's shortfall. The torrents of red ink are being fed by rising federal spending and falling tax revenues from hard-hit businesses and individuals.

The national debt -- the sum of all annual budget deficits -- stands at $10.7 trillion. That's about $36,000 for every man, woman and child in the U.S.

Interest payments alone on the national debt will near $500 billion this year. It's already the fourth-largest federal expenditure, after Medicare-Medicaid, Social Security and defense.

Environment

The package includes $9.2 billion for environmental projects at the Interior Department and the Environmental Protection Agency. The money would be used to shutter abandoned mines on public lands, to help local governments protect drinking-water supplies, and to build energy-efficient visitor centers at wildlife refuges and national parks.

The Interior Department estimates that its portion of the work would generate about 100,000 jobs over the next two years.

Yet the plan will only make a dent in the backlog of cleanups facing the EPA and the long list of chores at the country's national parks, refuges and other public lands.

When it comes to national parks, the plan sets aside $735 million for road repairs and maintenance. But that's a fraction of the $9 billion worth of work waiting for financing.

At the EPA, the payout is $7.2 billion. The bulk of the money will help local communities and states repair and improve drinking-water systems and pay for projects that protect bays, rivers and other waterways used as sources of drinking water.

Police

The stimulus bill includes plenty of green for those wearing blue.

The compromise bill doles out more than $3.7 billion for police programs, much of which is set aside for hiring new officers.

The law allocates $2 billion for the Byrne Justice Assistance Grant, a program that has financed drug task forces and things such as prisoner rehabilitation and after-school programs.

An additional $1 billion is set aside to hire local police under the Community Oriented Policing Services program. The program, known as COPS grants, paid the salaries of many local police officers and was a "modest contributor" to the decline in crime in the 1990s, according to a 2005 government oversight report.

Both programs had all been eliminated during the Bush administration.

The bill also includes $225 million for general criminal justice grants for things such as youth mentoring programs, $225 million for Indian tribe law enforcement, $125 million for police in rural areas, $100 million for victims of crimes, $50 million to fight Internet crimes against children and $40 million in grants for law enforcement along the Mexican border.

Higher education

The maximum Pell Grant, which helps the lowest-income students attend college, would increase from $4,731 currently to $5,350 starting July 1 and $5,550 in 2010-11. That would cover three-quarters of the average cost of a four-year college. An extra 800,000 students, or about 7 million, would now get Pell money.

The stimulus also increases the tuition tax credit to $2,500 and makes it 40 percent refundable, so families who don't earn enough to pay income tax could still get up to $1,000 in extra tuition help. Computer expenses will now be an allowable expense for 529 college savings plans.

The final package cut $6 billion the House wanted to spend to restart building projects on college campuses. But parts of the $54 billion state stabilization fund -- with $39 billion set aside for education -- can be used for updating facilities.

There's also an estimated $15 billion for scientific research, much of which will go to universities.

The poor

More than 37 million Americans live in poverty, and the vast majority of them are in line for extra help under the giant stimulus package. Millions more could be kept from slipping into poverty by the economic lifeline.

People who get food stamps -- 30 million and growing -- will get more. People drawing unemployment checks -- nearly 5 million and growing -- would get an extra $25, and keep those checks coming longer. People who get Supplemental Security Income -- 7 million poor Americans who are elderly, blind or disabled -- would get one-time extra payments of $250.

Many low-income Americans also are likely to benefit from a trifecta of tax credits: expansions to the existing Child Tax Credit and Earned Income Tax Credit, and a new refundable tax credit for workers. Taken together, the three credits are expected to keep more than 2 million Americans from falling into poverty, including more than 800,000 children.

States will get an infusion of $87 billion for Medicaid.

A Step in the Right Direction

2009-02-13T09:37:00.000-08:00

permission to be shared granted by the Los Angeles Times

JPMorgan, Citigroup halting foreclosures

Associated Press

JPMorgan Chase & Co. and Citigroup Inc. are halting home foreclosures while the Obama administration develops its plans to help the U.S. housing market.

JPMorgan Chief Executive Jamie Dimon said the New York company plans to halt new foreclosures for owner-occupied home loans through March 6. Dimon made the pledge in a letter to Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee, who released it on Friday.

Citigroup's foreclosure moratorium applies to all "Citi owned first mortgage loans that are the principal residence of the customer as well as all loans Citi services where we have reached an understanding with the investor" until President Barack Obama's administration has finalized the details of the loan modification program or March 12, whichever is earlier, according to a company release. New York-based Citi's action expands on a similar effort that it started in November.

Frank earlier this week called on the mortgage industry to enact such broad foreclosure moratoriums.

The administration is working on a plan to spend $50 billion on foreclosure prevention and establish national standards for modifying home loans.

"We stand ready to work with you to put the appropriate processes in place, including a national modification standard, to reduce the incidence of foreclosure and to encourage long-term, sustainable home mortgages," Dimon wrote.

Government-controlled mortgage finance companies Fannie Mae and Freddie Mac suspended foreclosure sales during the winter holidays and have halted evictions from foreclosed properties until next month. And earlier this week, John Reich, director of the Office of Thrift Supervision, urged the more than 800 thrift institutions nationwide to do the same.

Meanwhile, the administration is considering spending taxpayer dollars to cut monthly payments for homeowners on the verge of foreclosure.

Still, deciding who would qualify would be a challenge, especially as foreclosures continue to soar. More than 274,000 U.S. households received at least one foreclosure-related notice last month, according to RealtyTrac Inc.

The administration also is expected to back a push in Congress -- but opposed by the mortgage industry -- to let bankruptcy judges alter the terms of primary home loans. Earlier this week, Obama said it "makes no sense" that judges are not allowed to do so. The mortgage industry argues that this prohibition allows lenders to charge lower rates.

Loan Mod Scams - Uncorked

2009-02-12T20:38:00.000-08:00

2007 was the start of the meltdown and in 2008 a full storm brewed as we reach the mid way point of the 2nd month of 2009, look for more so called firms "specializing in helping homeowner's" via Loan Modification be exposed to the rip off - con artist they really are.

Should you have a case or know of someone who has been victimized we would be interested in speaking with them.

Tuesday's news regarding Mods

2009-02-10T07:43:00.001-08:00

permission to be shared granted by Phoenix Business Journal

Senate proposes $50B for distressed mortgages

Phoenix Business Journal

A provision in the economic stimulus plan being considered by the U.S. Senate would require $50 billion of the federal Troubled Assets Relief Program to be spent on reworking distressed home mortgages.

The mortgage modification plank is part of a compromise being forwarded by some Democrats and moderate Republicans.

The U.S. Treasury Department would be charged with working on the loan modifications. The $50 billion would come from the $350 billion remaining from the $700 billion bank and Wall Street bailout plan passed last year. Half of that money was used by the Bush Administration to buy equity stakes in banks and investment houses. Congress is laying out some new rules for how the remaining TARP money is spent.

The U.S. Treasury Department is slated to unveil some of those plans shortly, including mortgage modifications and restrictions on CEO pay.

If you're like me......YOUR TIRED OF ALL THE TALKING!!!!!!

2009-02-09T09:00:00.000-08:00

There's been talk for over 2 years about the mortgage meltdown and remedies.......yet today, instead of solutions all we can count on is MORE TALK.

The problem is the solution appears to be a "no-brainer" to most people so for those who don't mind hearing yet another plan or idea - here you go......

permission to be shared granted by Bloomberg News

HUD’s Donovan Says U.S. to ‘Accelerate’ Mortgage Modification

By Bob Willis

The administration of President Barack Obama plans to use tens of billions of dollars from its Troubled Asset Relief Program to “accelerate dramatically modification of mortgages” to limit foreclosures, HUD Secretary Shaun Donovan said during an interview on CNN.

“We will have a comprehensive, aggressive plan to limit foreclosures announced in coming weeks,” the Housing and Urban Development secretary said on CNN.

The administration is working on a plan that will create incentives such as government loan guarantees for lenders to modify mortgages, Donovan said. He said the Obama administration was considering using the mortgage modification program implemented by Sheila Bair, chairman of the Federal Deposit Insurance Corp., at IndyMac Bank as a model for its program.

The administration’s strategy to limit foreclosures and boost the housing market complements its overall plan to cushion the blow to the economy from the worst recession in a quarter century. The Senate is slated to vote early next week on an economic stimulus package totaling at least $780 billion that Obama said is needed to prevent the recession from deepening.

Donovan said the stimulus package’s goal of creating or saving 3 to 4 million jobs was a key element of the administration’s overall goal of limiting foreclosures and their effects on communities and families.

Losing Jobs

“What is really driving the foreclosure crisis is that people are losing their jobs,’ he said.

Job losses in the last 13 months totaled 3.6 million, the most since 1945, the government said last week. Job losses have fueled record foreclosures. There were 2.22 million new foreclosures in 2008, an average of 6,090 a day, according to Washington-based Hope Now Alliance.

Donovan said the stimulus plan contains a “series of pieces” to help limit foreclosures and their impact on families and communities. “Remember, we have other tools at our disposal as well that will complement our strategy,” he said, citing “tens of billions” in remaining TARP funds he said would be used to limit foreclosures.

The Obama administration has access to the remaining $350 billion in TARP funds from the original $700 billion approved for use by the former administration of George W. Bush to help rescue the financial system.

Bair last week told a conference in Washington that more than 10,000 IndyMac Bank loans had been modified, and in early December she said the FDIC had changed 5,800 loans under its plan to cut loan payments to about 31 percent of borrowers’ monthly incomes.

Know what a Cramdown is??????

2009-02-05T15:40:00.000-08:00

As the mess continues and all of the disappointment (on all fronts), Cramdowns represent the most likely solution if we are to get a handle of the mortgage meltdown.

permission to be shared granted by The Advocate

'Cramdowns' may apply to mortgages

The Advocate Staff

Posted: 02/05/2009

Proponents call it the crucial missing tool needed to get us out of the national foreclosure morass.

Critics say it could be disastrous -- pushing up interest rates on all future mortgages, even for people with excellent credit, and creating huge new losses for already-ailing banks.

Wherever you come down on the griddle-hot issue of home mortgage "cramdowns," the reality is this: Congress is poised to pass legislation empowering bankruptcy court judges to reduce the loan balances of potentially large numbers of financially distressed owners to affordable levels and to lower their interest rates and monthly payments. President Obama has promised to sign the legislation as soon as it hits his desk.

Cramdown may be an unpleasant-sounding word, but for decades, it's been part of the bankruptcy lexicon for most types of debt. If you file for Chapter 13 bankruptcy -- a court-supervised, multiyear workout plan designed to provide at least partial repayments to your creditors -- judges can reduce what you owe on credit cards, auto, boat and student loans and even second home mortgages. But under current law, they cannot cut the mortgage debt you owe on your principal residence.

That, in turn, allows lenders to foreclose on delinquent homeowners to force quick recovery of what they're owed -- part of the reason why foreclosures are so numerous. According to the mortgage industry data firm RealtyTrac, lenders filed for foreclosure on 2.3 million homes

last year, up 81 percent from 2007 and 225 percent higher than the filing rate in 2006.

For the past two years, Democratic leaders in the U.S. House and Senate have been pushing for a change in the bankruptcy law to include principal residence loans on the list of debts that can be "judicially modified" -- crammed down -- by the courts. They argued that banks and mortgage companies too often have been unwilling to offer delinquent borrowers serious modifications on loans because they have the option to pull the plug and foreclose.

Lending industry groups successfully blocked those bills by appealing to Republican allies, especially in the Senate. But in the wake of the November elections, Democratic majorities are now large enough to virtually guarantee passage of cramdown legislation, maybe as early as this month.

Though final details will depend on conference negotiations between the House and Senate, it's likely the legislation will provide that:

"¢ Only mortgages closed before the date of enactment will be eligible for cramdown protection. In other words, the focus will be on helping current owners, rather than future borrowers who become delinquent.

"¢ To be eligible, owners will need to inform their lender or loan servicer in advance of their intention to file for bankruptcy protection. That's intended to get the lender's immediate attention and prompt its best offer on a modification of the their loan terms, including principal reduction.

"¢ Should the value of the borrowers' home increase, any appreciation would be shared with the lender under a preset formula.

Though banking groups predict that huge numbers of delinquent homeowners will opt for bankruptcy to avoid foreclosure, some consumer advocates say those fears are overblown.

"This is not going to be a cakewalk" for owners seeking protection of the courts, said David Berenbaum, executive vice president of the National Community Reinvestment Coalition. Owners will need to hire a lawyer and petition for Chapter 13 bankruptcy. Then they'll be required to follow a detailed bankruptcy court-ordered household spending plan, monitored by a trustee, for a period of years. Finally, their credit scores and ability to borrow will be severely affected for seven to 10 years.

"This should only be a last resort" for homeowners, Berenbaum said, not anybody's first choice.

Though resigned to the probability that some form of mortgage cramdown will be enacted, financial industry leaders continue to warn of dire consequences. Allowing "judges to unilaterally change mortgage contracts will increase costs for all future borrowers in the form of higher rates, greater fees and larger down payment requirements," said Steve O'Connor, senior vice president of government affairs for the Mortgage Bankers Association.

Cramdown advocates answer that lenders are blowing smoke about rate hikes and that there is no statistical evidence that rates increase when consumers get the right to file for bankruptcy protection on a particular type of debt.

The best possible scenario coming out this whole controversy: that lenders and delinquent borrowers begin talking about serious modifications far earlier in the process than they've done so far. That way fewer people have to file for bankruptcy, fewer lenders get crammed down, and fewer people lose their houses.

-- Kenneth Harney's e-mail address is kenharney@)earthlink.net.

More on Loan Mods........Citicorp - a step in the right direction.....

2009-02-04T10:19:00.000-08:00

permission to be shared granted by Bloomberg News

Citigroup Expands Use of FDIC Mortgage-Relief Program (Update1)

By Bradley Keoun

Feb. 4 (Bloomberg) -- Citigroup Inc., the U.S. bank forced to curb executive pay and slash stock dividends as a condition of its $346 billion bailout, now has to expand the use of a government mortgage-relief program to meet regulators’ demands.

Citigroup will use the Federal Deposit Insurance Corp.’s “mod-in-a-box” loan-modification formula any time it makes long-term changes to a mortgage, the New York-based bank said yesterday in 43-page report. Previously, such efforts were mostly limited to borrowers 60 days past due. The FDIC’s formula seeks to prevent foreclosures by reducing mortgage payments.

FDIC Chairman Sheila Bair insisted on Citigroup’s cooperation last November, when the bank sought $20 billion of bailout funds and $301 billion of asset guarantees on top of an earlier $25 billion infusion. President Barack Obama wants more aggressive efforts to stem foreclosures, and may force banks to increase lending when they take government money.

“They seem to just try to coerce the industry into” the loan-modification program, said David Watts, a strategist at analysis firm CreditSights Inc. “They’re saying, ‘We want you to do this program, and we’re going to make sure you do it by helping you, possibly with money and possibly with a big fat stick.’”

Citigroup, which lost a record $18.7 billion last year, is under pressure to cut costs now that it has to pay $3.41 billion a year in dividends on the government’s preferred stake. The bank had to reduce its common-stock dividend to 1 cent from 16 cents as a condition of the second infusion. Chief Executive Officer Vikram Pandit in January announced a plan to overhaul the bank by splitting off insurance and consumer-finance businesses.

FDIC’s Plan

Bair says the FDIC’s loan-modification protocol will help stabilize the housing market and mitigate loan losses. Under the program, unveiled Nov. 20, participating banks and mortgage investors must slash borrowers’ payments to as little as 31 percent of their monthly income by reducing interest rates, extending the loan term or deferring principal.

Banks are leery because they say foreclosures sometimes can minimize write-offs, especially in a market where housing prices are falling. They also worry that mandating loan-modification programs may undermine contract law and prompt undeserving borrowers to seek relief.

Andrew Gray, an FDIC spokesman, said the program calls for loans to be modified if they’re 60 days overdue or a default is “reasonably foreseeable.”

“We view the adoption of that protocol as a loss-mitigation technique, because it’s designed to maximize the value of the distressed assets,” Gray said.

Citigroup’s Lending

Mark Rodgers, a spokesman for Citigroup’s mortgage operations, declined to comment. He declined to provide data on how many more loans might be eligible for the program under the expanded terms.

In the report on lending practices, Citigroup said it was “adopting the FDIC’s streamlined modification program where the borrower is at least 60 days delinquent or where a long-term modification is appropriate.”

Since the start of the housing crisis in 2007, the bank has “worked successfully with approximately 440,000 homeowners to avoid potential foreclosure on combined mortgages totaling approximately $43 billion,” according to the report.

Citigroup on Jan. 8 bowed to pressure from U.S. Senators Richard Durbin and Charles Schumer and agreed to support “cram- down” legislation that allows bankruptcy judges to cut borrowers’ mortgage principal.

Breaking Ranks

The industry groups American Bankers Association and Mortgage Bankers Association criticized Citigroup for breaking ranks and issued press releases panning the proposal. Citigroup “seems to be alone in an industry that has historically fought hard against such measures,” Paul Miller, an analyst at FBR Capital Markets in Arlington, Virginia, said in a Jan. 25 report.

The legislation would encourage more borrowers to file for bankruptcy and harm lenders “not only through principal writedowns but also through duration extension at artificially low yields,” Miller wrote.

Obama’s administration is holding meetings on how to spend the second half of the U.S. Treasury’s $700 billion in bailout funds. Obama also will require banks that take bailout funds to boost lending, House Financial Services Committee Chairman Barney Frank said Feb. 2 on ABC television.

“Encouraging banks to lend more to help support the economy is akin to making the same mistake twice,” Deutsche Bank AG analyst Mike Mayo said in a Jan. 26 report. “It was excessive lending that helped cause the loan problem in the first place.”

U.S. Bancorp

So far, the FDIC’s mortgage-modification program has been used mostly on loans held by failed banks and financial companies that were seized by regulators or benefactors of government assistance. In November, Minneapolis-based U.S. Bancorp had to implement the program on loans that were acquired from two failed California banks, Downey Savings and Loan and PFF Bank & Trust, under an FDIC loss-sharing agreement.

The housing-finance companies Fannie Mae and Freddie Mac, which were put under government control last September, are deploying methods similar to the FDIC’s program. Last week, the Federal Reserve adopted a “homeowner preservation policy” for mortgages acquired in the rescues of Bear Stearns Cos. and American International Group Inc.

In November, after a week in which Citigroup’s stock price plunged 60 percent, then-Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben S. Bernanke agreed to provide a second round of bailout funds to the bank.

Bair initially withheld her approval for the deal, demanding that Citigroup agree to implement her agency’s mortgage- modification program.

To contact the reporter on this story: Bradley Keoun in New York at bkeoun@bloomberg.net.

Mod candidates - I've written about this over and over

2009-02-03T09:01:00.000-08:00

It is indeed a simple process and some even feel they can do it themselves, but the best advice is to secure solid professional representation, however YOU MUST BE AWARE.....not paranoid, or lacking trust in others as this function is still basically unregulated, although desparately needed by the millions in financial hardship.

permission to be shared granted by the Sacramento Bee

Mortgage-modification pitches may carry big risk

jwasserman@sacbee.com

They leaflet endangered neighborhoods and plant signs at shopping centers. Increasingly they're pitching on TV. Desperate for a loan modification, they ask? Call now.

For thousands now struggling with mortgages there's a more important question: Whom can you trust?

Diane Mathews of Sacramento surrendered to a phone pitch a few months ago. She paid a firm $3,500 upfront to intervene with her loan servicer about a risky mortgage.

"They said we were on a list of people with bad loans and they wanted to help us. I was skeptical, but they hounded us. They literally hounded us," she said months later, still in the same bad predicament.

"I finally relented," said Mathews. "I felt desperate."

Thousands of Californians, and Sacramento-area residents in particular, will sympathize.

As soon as they default on a mortgage – or before – the calls begin. Often, the firms seek $1,500 to $4,000 upfront to help them out of jams with housing-boom loans.

Nationally, there's been an explosion of questionable companies getting into the game, government authorities say, and rising numbers of consumer complaints. This, they note, is for services that consumers can do themselves or get free from nonprofit loan counselors approved by the U.S. Department of Housing and Urban Development.

"It's similar to after a hurricane hits," said Tom Pool, spokesman for the California Department of Real Estate. "The bogus contractors come and collect money for repairs and don't do anything. These people are on their last dollar, anyway, and these loan-modification companies are having them draw on their credit cards with false promises."

"We have a lot more consumers coming to us having paid $1,500 to $2,000 to a firm that was clearly committing to things that were beyond their scope of authority," confirmed Martha Lucey, president of Fresno-based By Design Financial Solutions. The nonprofit loan counselor has 11 California offices, including one in North Highlands, that offer free help with loan modifications.

Pool said DRE has shifted staffers to investigate 250 cases of loan-modification offenses. Many involve former real estate agents. It also has filed a growing number of cease and desist orders statewide.

California Deputy Attorney General Angela Rosenau said she has worked almost entirely on loan-modification scams since fall 2007. She is blunt with consumer advice.

"In terms of somebody that's trying to do a loan modification, they themselves are in the best position to be able to do that. It's not very likely that a third party is going to be in much better position to make that happen.

"And paying them to do it is not necessarily going to advance your cause much more," she said.

DRE's Pool said the bottom line is loan modifications are entirely in the hands of lenders, not third parties.

"Some lenders are more aggressive in allowing loan modifications and others aren't ramped up or staffed to handle the number of requests so they go unanswered," he said.

Indeed, the difficulties struggling borrowers are having in dealing with lenders makes a perfect ad pitch for third-party intervention. Borrowers continually complain that lenders are unresponsive before they default, sometimes lose their paperwork and make them endure long waits on the phone. It's little wonder they seek help.

For those who believe they can't do it themselves, there are safe options. There are attorneys, firms cleared by DRE and legitimate operators who play by the rules and get clients by word of mouth.

Experts say a request for advance fees is always the first alarm bell that consumers should heed.

Pool said many firms – sometimes out of ignorance, sometimes with intent to defraud borrowers – illegally ask for upfront fees.

The DRE says this is what borrowers should know:

• If your lender has issued a notice of default against you (after you missed numerous payments) loan-modification companies cannot collect an advance fee, even if they have a real estate license.

• Lawyers are exempt and can charge an upfront fee if they are rendering legal services and operating under the scope of their licenses.

• If you haven't yet received a notice of default you can be charged an advance fee. But:

• The firm must provide an agreement for you to sign that explains what services will be performed, when they will be performed and what they will cost.

• And before you sign it, that agreement must have been sent to the Department of Real Estate for review and permission to collect upfront fees. Those fees must then be held in a trust account and only be spent on agreed-upon services.

Some in California believe all that's too complicated.

Last month, state Sen. Ron Calderon, D-Montebello, introduced legislation, Senate Bill 94, to ban upfront fees altogether. Calderon is chair of the Senate Banking, Finance and Insurance Committee.

In a statement accompanying the introduction, he said, "Borrowers facing financial ruin are misplacing their trust in so-called consultants" who often leave clients worse off.

The bill must pass the Senate and Assembly and be signed by Gov. Arnold Schwarzenegger before the end of 2010 to become law.

In the meantime, it's buyer beware, say regulators.

"To the extent that it's a solicitation by an attorney or someone in the real estate business," said Rosenau, "check with the California Bar Association or the Department of Real Estate to be sure it's a licensed individual with a clean record. It never hurts to check with the Better Business Bureau," she added.

Mathews wishes she had.

After she paid her $3,500 last year, months went by and nothing happened. She called DRE and learned her helpers had lost their real estate license.

She didn't want to believe it, she said, recalling sincere promises of a principal reduction and waiver of prepayment penalties. She also remembered the desperation those promises played on.

"It felt like, 'What can I do?' "

You've heard it before......but it's worth repeating

2009-02-02T08:01:00.000-08:00

Make sure you have solid lender contact or have a professional who has the credentials to deliver results.......

permission to be shared granted by MSNBC

Mortgage Modification Works, But Be Careful, Expert Says

WTVJ-TV

MIAMI -

Thousands of South Floridians battling to save their homes are trying to get their mortgages modified by their lenders, but there are a few things you need to know when hiring a company to do it.

The ads are everywhere. Foreclosure assistance companies are promising to modify your mortgage, lower your payments and save your home.

“That's the reason why I’m here, because of them,” resident Calvin Ford said. “I'm still here in this house.”

Broward bus driver Calvin Ford refinanced with an adjustable mortgage when rates were low. But when the rates increased, he ran into trouble.

“I kept struggling with it,” he said. “I kept working overtime to try to pay the bills to keep everything going and it kept going downhill. Once you get behind, it's hard to catch up.”

Across South Florida, thousands are searching for help.

Ford turned to Truman Foreclosure Assistance. Their job was to get the bank to reduce his payments.

“We really push for our clients,” Shoshanna Itzkowitz of Truman Foreclosure Assistance said. “We really push to make sure that they get the best lower modification that’s possible. You really can’t get that on your own. You really have to be well-versed in the mortgage business. You have to be well-versed with lenders and how to deal with then and how to get through and most people aren’t.”

Your loan can be modified in several ways:

Lowering the interest rate

Extended the life of the loan

Converting to a fixed rate

Negotiating a repayment plan for money owed

Ford had his taxes and insurance taken out of escrow for a year and reduced his payments from $1,700 to $1,200 a month.

Ultimately, he will have to make up the difference, but the change allowed him to remain in his home for now.

Modifications can work, but be on guard. Over 300 complaints of fraud have been filed with the state attorney general’s office.

Itzkowitz said do a background check.

“Check with the Better Business Bureau,” Itzkowitz said. “Have them check with the local chamber of commerce.”

A reputable firm will want you to outline your financial situation first, she said.

“If a company doesn't do a financial worksheet immediately, its a big no-no,” Itzkowitz said. “That’s a huge red flag.”

Itzkowitz said don't send money or personal details, including tax returns and bank statements, without the worksheet being done and getting pre-approved for assistance.

“If someone is not pre-approved and they don't have the money to cover what they loan modification will be in the future, the lender will say, ‘No,’” she said. "We off the bat will say no, I’m not going to take your money for a service that we can’t provide for you.”

Get references and read the contract thoroughly, she said.

“There is so much that can be put into fine print,” Itzkowitz said.

Make sure the loan modification firm has an attorney in good standing with the Florida Bar Association.

A new law says you don't have to pay the modification firm in full until their work is completed.

Sometimes the simple things just are not simple

2009-01-27T06:07:00.000-08:00

The mortgage meltdown wasn't bad enough, as the concept of modifying mortgage loans seemed like a very simple and practical solution, yet after the debacle homeowners faced in 2008, there is still a quagmire that is being battled on the political front. Bankruptcy judges should be allowed to help all parties mitigate the mortgage resolution - otherwise, what we have will continue to be the standard - lenders, borrowers, servicers haggling over what is deemed an appropriate payment. In our opinion just cut through the bull and allow judges who have been rightly appointed or selected to do their job.

permission to be shared granted by Associated Press

Fight building over judges redoing mortgages

By LARRY MARGASAK Associated Press Writer

Click photo to enlarge

In this Jan. 20, 2009 file photo, bank repo, foreclosure... ((AP Photo/David J. Phillip, File))

WASHINGTON—Most congressional Democrats say the quickest way to save homeowners like Troy Butler of Saginaw, Mich., is to let them declare bankruptcy and allow judges to dictate new mortgage terms.

Easy, except the lenders that would absorb the pain—and lose control of any deals to ease the terms—do not want to get dragged into bankruptcy court by millions of overextended borrowers.

Butler, 40, is a laid-off General Motors worker who has filed for bankruptcy. But the bankruptcy court has no authority to change the terms of his $90,000-plus mortgage that is more than double the value of his home.

A bill to give judges authority to alter loan terms for primary residences may be the quickest way to arrest the housing market's collapse. Most Democrats in the House and Senate support that plan. President Barack Obama told Democratic leaders Friday he also backs it, according to a Senate aide who was not authorized to be quoted by name.

But 10 groups representing the lending industry and other businesses are fighting back fiercely. Several have engaged portions of their lobbying machines to stop the legislation. The groups spent $83 million in lobbying on multiple issues in 2008, a figure that shows the power of the banking and investing industry and their business supporters.

One Democratic backer of the bankruptcy proposal, Rep. Maxine Waters of California, said the banking industry "has owned this Congress far too long."

Butler, the GM worker, and an industry lobbyist see things much differently.

"I'm living from day to day, hoping to make it through the day. I worry about my family, where we're going to live, how we'll survive," said, Butler, who has a disabled wife and two children, ages 15 and 11.

The chief lobbyist for the Mortgage Bankers Association, Steve O'Connor, said new homebuyers would end up paying higher interest and bigger down payments if lenders are saddled with the risk that a judge could change mortgage terms.

"We're going to defend the industry" against "bad public policy," O'Connor said.

The association's 23-member government affairs team is trying to persuade lawmakers to kill the bankruptcy legislation. The team includes six lobbyists and nine policy experts who double as lobbyists, said O'Connor, senior vice president of government affairs.

The bankruptcy solution would not cost taxpayers money, as would mortgage modification programs that could become part of the government's huge economic bailout package. But it certainly would harm the bottom line for lenders and investors holding mortgages.

The lending industry has voluntary programs in place to change mortgage terms. But Butler's lawyer, Peter Bagley, said it was a nightmare trying to contact his client's lender.

First, he was told the application for a loan modification would take at least 30 days to process. Bagley then called someone with authority to stop any sale of the home, but only received voice messages that the mailbox was full. The application never arrived.

The key to passage of the bankruptcy bill is the Senate, where Democrats need 60 votes to stop a possible filibuster. Ten Democrats—all still in the Senate—would not back the plan in a vote a year ago.

Sen. Dick Durbin, D-Ill., the chief Senate sponsor of the bill, said Obama persuaded him in a White House meeting Friday to remove the bankruptcy proposal from an economic recovery package—to ensure it doesn't jeopardize the stimulus bill. But Obama pledged his support for the bankruptcy solution, Durbin said.

Obama said he would work with Durbin to attach the proposal to other "must pass" legislation—with the hope that supporters of the overall bill would not vote against it because of the bankruptcy provisions.

Of the 10 organizations that asked the House Judiciary Committee to oppose the bill, the largest is the U.S. Chamber of Commerce. It spent $57.9 million on lobbying in 2008, according to the Center For Responsive Politics, an organization that tracks lobbying expenditures and political donations.

The Mortgage Bankers Association, which represents 2,400 member companies in the real estate property industry, spent $3.8 million and the American Bankers Association totaled $6.8 million.

Worth repeating

2009-01-26T08:30:00.000-08:00

We've mentioned this issue several times before.........but it's worth repeating over and over and while Loan Modification is a legitimate process to deal with getting your mortgage payments back on track - there are still scammers and others who simply taint what basically is a simple process. Of late, regulations are being presented to ferret our those who simply do not have the resources, let alone the expertise to handle such transaction, but in the meantime the most sage advice is to stay alert and make sure you are dealing with someone who is credible

permission to be reprinted granted by MSNBC

MSNBC.com

Mortgage Modification Works, But Be Careful, Expert Says

WTVJ-TV

updated 7:51 a.m. PT, Mon., Jan. 26, 2009

MIAMI -

Thousands of South Floridians battling to save their homes are trying to get their mortgages modified by their lenders, but there are a few things you need to know when hiring a company to do it.

The ads are everywhere. Foreclosure assistance companies are promising to modify your mortgage, lower your payments and save your home.

“That's the reason why I’m here, because of them,” resident Calvin Ford said. “I'm still here in this house.”

Broward bus driver Calvin Ford refinanced with an adjustable mortgage when rates were low. But when the rates increased, he ran into trouble.

“I kept struggling with it,” he said. “I kept working overtime to try to pay the bills to keep everything going and it kept going downhill. Once you get behind, it's hard to catch up.”

Across South Florida, thousands are searching for help.

Ford turned to Truman Foreclosure Assistance. Their job was to get the bank to reduce his payments.

Your loan can be modified in several ways:

Lowering the interest rate

Extended the life of the loan

Converting to a fixed rate

Negotiating a repayment plan for money owed

Ford had his taxes and insurance taken out of escrow for a year and reduced his payments from $1,700 to $1,200 a month.

Ultimately, he will have to make up the difference, but the change allowed him to remain in his home for now.

Modifications can work, but be on guard. Over 300 complaints of fraud have been filed with the state attorney general’s office.

Itzkowitz said do a background check.

“Check with the Better Business Bureau,” Itzkowitz said. “Have them check with the local chamber of commerce.”

A reputable firm will want you to outline your financial situation first, she said.

“If a company doesn't do a financial worksheet immediately, its a big no-no,” Itzkowitz said. “That’s a huge red flag.”

Itzkowitz said don't send money or personal details, including tax returns and bank statements, without the worksheet being done and getting pre-approved for assistance.

Get references and read the contract thoroughly, she said.

“There is so much that can be put into fine print,” Itzkowitz said.

Make sure the loan modification firm has an attorney in good standing with the Florida Bar Association.

A new law says you don't have to pay the modification firm in full until their work is completed.

Now that we have a new President.........

2009-01-23T06:01:00.000-08:00

permission to be shared granted by Tampa News

After Bailing Out Banks, Don't Forget Homeowners

The Tampa Tribune

The federal rescue of the nation's financial industry has perplexed the average taxpayer, who cannot find out how the money has been spent or see how it's helping anyone in the neighborhood.

Congress and our new president can and must do better.

The Hope for Homeowners program, for example, has been a total bust. It was launched three months ago with the promise it would help up to 2 million homeowners avoid foreclosure. So far, it has helped only a few hundred families.

Banks, despite getting billions in bailout cash, have been more interested in building up cash reserves, buying up competitors, and refinancing rock-solid mortgages than in spending time helping their most troubled customers.

Exactly what's going on is hard to tell because the banks aren't required to say.

The Associated Press asked a number of banks several simple questions about the bailout money they've received: How much have you spent? What did you buy? How much of it did you save? What's your plan for spending the rest?

Not one single bank gave a helpful answer. Congress needs to add some accountability standards so the public can better understand who's benefiting from the bailouts.

At the layman's level, much of it doesn't add up. The other day the Treasury bought $20 billion in preferred stock in Bank of America. The stock is supposed to pay the government an 8 percent dividend at a time when the 30-year mortgage rate is less than 5 percent.

Borrowing at 8 and lending at 5 doesn't appear to be a great way to attract private investors to the bank, as the falling price of its stock indicates.

Several better ideas should be tried. One is to set up what officials call a "bad bank" run by the government to buy the bad assets of private banks. It would be expensive, but at least the process would be transparent.

Along with creating a bad bank, the government should hire thousands of work-out officers to help the banks' customers renegotiate loans, either with good private banks or the bad federal bank.

A recent column offering advice to homeowners trying to refinance at today's low rates urged them to be persistent: "Mortgage lenders have cut staff and are getting lots of calls, so you may have to be patient."

U.S. Rep. Kathy Castor of Tampa has proposed hiring a multitude of counselors, who would work at the front-lines of the credit crisis where some families are battling just to stay in their homes and protect their life savings.

The Treasury's Troubled Asset Relief Program may have been necessary to help the big economic players save their own assets. The next step is for a Troubled Homeowner Relief Program that really provides some relief.

The only approach that makes sense, and doesn't unfairly reward terrible decisions, is one like Castor described. The loan counselors would investigate each situation individually and apply consistent standards to the infinite number of personal situations.

They would help banks minimize losses, help families avoid foreclosure and give taxpayers some real bang for their bucks.

Change is Here - Are you ready? Will you support?

2009-01-21T05:16:00.001-08:00

Yesterday was a remarkable day for our country as our 44th President was officially sworn in. Many, many people as estatic of Barack Obama becoming our leader and will support the "Change" he has spoken about during the past 2 years. On the other hand, some perhaps are disappointed for whatever reason as they do not like his politics, ideals, vision or other reasons............but the facts are in..........he is the President for ALL AMERICANS and I don't know about you but I am eager to support him. In my lifetime.......and I'm not 20!!! there has never been this type of excitement for our highest office, let alone the unprecedented enthusiasm from all over the spectrum. Anyway, like running our businesses, now Change has been declared OK - but it's up to us to execute the strategies which will make us prosperous, while serving our clients.

Across the World People Celebrate King Day 2009

2009-01-19T05:19:00.000-08:00

Today our nation celebrates the life of Dr. Martin Luther King, Jr. This years celebration has drawn significance due to President elect Barack Obama also being sworn in tomorrow - January 20, 2009.

Interesting, as Dr. King's work get appreciated more and more, this year many more groups and people are embracing the ideals of "King Day" and that is a Day of Service.........or you commiting a portion of day helping your local community or group.

In addition to services, there will be parades, rally's and other commemorative gestures and millions here and internationally celebrate Dr. King's life.

We say Happy Birthday Dr. King

2009-01-15T08:16:00.000-08:00

Good Wednesday -

Today is the official birthday of Rev. Dr. Martin Luther King, Jr. who would have been 80 if he had been alive. While the nation will celebration the federal holiday this coming Monday, January 19th, we are proud to say Happy Birthday.

Interestingly, even though Dr. King's birthday has taken new enthusiasm over the years, many forget or did not know that at his time of death, there was much controversy over his positions and philosophies, and has history has demonstrated he has become more understood in death than in life.

CLICK BELOW TO HEAR SPECIAL 2 MIN. CLIP

dr-king-i-have-a-dream-edited-1152009

_______________________________

Fred Thomas, III - VP, CB

Vice President, Chief Bloggeroligist

Omega Capital Financial, Inc.

_______________________________

More Mod news

2009-01-14T08:38:00.001-08:00

MSNBC provided a very good article which highlights some of the changes headed towards the Loan Modification game. This is a solid perspective and as lenders/servicers continues their horrific level of successfully helping those in need, the hope is this sort of common sense measure is adopted.

permission to be shared granted by MSNBC

MSNBC.com

Bankruptcy system takes on the mortgage mess

Federal trustees help private entity land role as delinquent-loan middleman

By Mike Stuckey

Senior news editor

Aiming to keep overextended borrowers in their homes, judges and trustees in the federal bankruptcy court system have helped a small Kentucky firm set up a nationwide service intended to speed the modification of troubled mortgages.

But the court system’s unusual support for the private project, which some supporters believe could also help stem a surge in bankruptcies, has divided debtor attorneys, some of whom believe their colleagues have gotten in bed with the enemy and others who say it is just one potential tool to clean up a giant mess. It could, however, make millions for its creator.

The idea behind the “Debtors Counsel Loss Mitigation Web Portal” is simple, owner Joseph C. Smith II told msnbc.com in an interview. Attorneys representing troubled borrowers can use a single Web site to communicate with many mortgage servicers and lenders about changing the terms of loans. The servicers and lenders, in turn, can consolidate their work on such requests.

“It’s not rocket science,” said Smith, who has been working in loan modification and loss mitigation since 2003, after quitting the mortgage industry to escape its “corrupt practices.”

As the nation braces for a second straight year in which home foreclosures are expected to reach well above 2 million and bankruptcies over 1 million, one of the toughest problems remains the inability of many troubled borrowers to get viable modifications of mortgages they can no longer afford.

The mortgage industry, eager to avoid legislation allowing bankruptcy judges to rewrite home mortgages and to maintain the flow of taxpayer bailout funds, says it is working hard to modify as many loans as possible.

Bankruptcy and consumer attorneys dispute that, maintaining that servicers are notoriously hard to reach and generally show little interest in negotiating new loan terms. Often that’s because the loans are held in securitized trusts with many different investors and agreements that virtually forbid modifications, they say. Disappointing results from other efforts to modify loans, such as the federally backed Hope Now Alliance, support their claims, they say.

‘What are you going to offer?’
Enter Smith and his portal. “The commitments on both sides are very clear cut,” he said, explaining that debtors’ attorneys enter the information about the borrower and the loan, and the servicers agree to respond in seven days. The system impartially tracks what both sides do.

“It’s a very interactive process that’s able to happen out of this very quickly,” said Smith. “That really is what it boils down to. Is there something viable here to work with? What are you going to offer?”

Backers of the portal said that in addition to helping borrowers and servicers, it could lubricate Chapter 13 proceedings, which can be used to halt foreclosure, by letting trustees and judges know what concessions mortgage servicers are willing to make. In best-case scenarios, they said, the portal could help keep some debtors in their homes and out of bankruptcy altogether.

But some debtor lawyers said they shouldn’t have to use a private, for-profit middleman to deal with mortgage servicers. And they questioned how Smith was able to get officials in the court system, along with some well-known debtor lawyers, to help him create, test and then publicize the portal on court Web sites and e-mail lists.

“I really think that is a waste of my time, and I think it’s unnecessary,” said Andy Miofsky, an attorney from Granite City, Ill., who handles hundreds of bankruptcy cases a year. “There is nothing, nothing, nothing in the world that prevents a mortgage servicer from calling me.”

“It reeks to high heaven,” said April Charney, a legal aid lawyer in Jacksonville, Fla., who specializes in foreclosure defense. “Why does this portal have special relationships with all of these servicers, and how did they get that? Why do we have to have a private business connected up in what is supposed to be a public business, the bankruptcy system? … How did they get this nationwide deal?”

Creator says opportunity knocked
Smith, the portal operator, said there was nothing nefarious about it. Members of the National Association of Chapter 13 Trustees approached him in July with the idea, which originally was suggested by Southern California bankruptcy attorney Erik Clark. Clark and Debra Miller, a Chapter 13 trustee from South Bend, Ind., who heads up the trustees’ mortgage committee, confirmed Smith’s account in interviews with msnbc.com.

“Our job as Chapter 13 trustees is to help make the system work better,” said Miller, one of more than 200 Chapter 13 standing trustees across the nation. The trustees are the watchdogs and administrators of the bankruptcy system, collecting payments from debtors and distributing the money to creditors under plans approved by the court. Although appointed by the Department of Justice with salaries set by Congress, the trustees are not federal employees, and their offices are funded via fees, not tax dollars.

The bankruptcy system’s potential role in helping to end the mortgage meltdown is the subject of hot debate in Washington. By law, mortgages on primary residences are the only debts that bankruptcy judges are not allowed to adjust unilaterally in working out repayment plans. A number of lawmakers would like to change that, and legislation to allow such “mortgage cram-downs” could be passed soon.

While “cram-downs” have been adamantly opposed by the mortgage industry, many observers believe they could serve as a huge incentive for servicers to modify loans on their own, rather than taking their chances on what a judge might do in bankruptcy proceedings. Smith and others see great potential for his portal to accommodate these loan workouts too.

“For me, if this thing works, we may have less bankruptcies,” said George Stevenson, a Chapter 13 trustee from Memphis, Tenn. “I live in a community, and I see people coming through my court every day that are poor and struggling” and threatened with losing their homes. He said he’s in favor of “anything to assist these people.”

Intended to gauge lenders' good faith
While Clark, the attorney who first suggested the portal, is also hopeful that it will break logjams in the system and lead to loan modifications, he said that was not his primary motivation. Time after time, he said, he has heard servicers and their attorneys tell judges, reporters and Congress that debtors and their lawyers are to blame for a lack of loan modifications. “I was tired of being the whipping boy for this,” Clark recalled. “I said, ‘Let’s call their bluff!’”

Within a few weeks of hearing the idea, Smith’s eight-person firm, based in Newport, Ky., had a demo site up and was seeking feedback from servicers, judges, trustees and attorneys. In mid-October, the portal had a test run in two bankruptcy court districts in Tennessee and one in California.

By Christmas, Smith was announcing the site would go national on Jan. 1, plans that were disseminated in e-mail from trustees and through links on official court Web sites. Reviewing the product and helping spread the word to his fellow jurists was U.S. Bankruptcy Judge Raymond T. Lyons of Trenton, N.J.

And the portal got a nice boost from consumer bankruptcy expert O. Max Gardner III of North Carolina. Gardner, who schools attorneys on the finer points of bankruptcy practice for $7,750 a head in four-day “boot camps,” sent out e-mail and a press release about it to hundreds of bankruptcy attorneys in December.

As of late last week, Smith said, about 700 debtor lawyers had signed up to use the portal, as had many of the biggest names in the mortgage business: Bank of America, Countrywide, Wells Fargo, Citi and others that did not want to be publicly named. The service was operating in all 50 states. There is no charge to debtors or their attorneys and just $25 per case to the servicers with discounts for volume.

Saying “I thank my lucky stars” for being in the right place at the right time to score what may be the business opportunity of a lifetime, Smith made no apologies for the help he got from the bankruptcy system. In fact, he said, it was a big gamble. “In six months, we have gone from concept to national rollout with no funding, no commitment to funding, no knowledge that we would ever get funded,” he said. “If the servicers had turned to us and said, ‘We’re not interested,’ my total investment would have been my total loss.”

‘Like manna from heaven’
Instead, Smith said, “The expectation is probably pushing 70,000 to 80,000 (cases) a month … through the system when this is all said and done.” At $25 each, that’s as much as $2 million a month, “sort of like manna from heaven,” he said.

Several Chapter 13 trustees said they didn’t believe the site would generate anywhere near that much traffic. And they, Judge Lyons and some debtor attorneys said they see no problem with helping Smith develop, test and publicize it.

“It seemed like something that would be helpful to homeowners trying to save their homes,” Lyons told msnbc.com. “I learned about this and I forwarded it on just to circulate the information. In no way am I touting a particular vendor.”

Miller, the Indiana bankruptcy trustee, agreed. “What I saw was there was something lacking in the system, and there was someone willing to step up and fill that gap at no cost,” she said.

Officials at Department of Justice who appoint and oversee the Chapter 13 trustees declined to comment on the matter.

In an e-mail to msnbc.com, Gardner, the North Carolina bankruptcy expert, said the message he sent publicizing the site was only “for informational purposes,” adding, “I have not used the site so I cannot confirm whether or not it works as advertised.”

A graduate of Gardner’s boot camp, David Baker, a bankruptcy attorney from Boston, told msnbc.com that he is using the site and “I’m certainly going to put as many of my clients through it as I can in hopes that we accomplish something.”

Baker, too, was unconcerned about the help Smith got from trustees and judges in bringing the Web site to life. “Trustees are in private enterprise,” he said. “It doesn’t bother me that the courts would encourage this at the same time, because courts are always looking at ways to reduce their workload. … I don’t see much difference between this and private mediators.”

Can securitization obstacles be overcome?
But Charney, the Florida legal aid attorney, said her work has proven that, because of securitization issues, the true ownership of many currently troubled mortgages cannot be determined, which means that deals with lenders cannot be made.

“Maybe they’re using this data to access a workout, but if you’re in my world you know there’s no workouts to be had,” she said. “I don’t want my client giving out financial information to the other side, and that’s what you’re doing with this portal.”

Clark, who first envisioned the portal, said the idea has exposed a conflict in the debtor bar between “ideological” attorneys like Charney who “believe we are in pursuit of justice” and those like himself who work with “hundreds of actual, living breathing debtors a month” who need practical solutions now.

“I think April quite frankly has misconstrued the purpose of it,” Clark said. “I never said this is going to modify a whole bunch of loans. This is going to shine the light on the real problem because the mortgage industry has no intention of modifying these loans.”

Even with that expectation, Clark said he was surprised by the industry’s response so far. “I thought the servicers would at least pretend to be cooperative,” he said. “They haven’t lived up to the seven days at all.”

But Smith provided statistics to msnbc.com that he said indicate otherwise. In the two-state test, Smith said, 470 loans were submitted for review. Of those, 60 resulted in workouts, a term that can cover a number of solutions, and 30 were rejected. He could not say what happened with the others, though he said some of them also may have resulted in workouts.

The 60 workouts included “short sales, surrenders and repayment plans as well as modifications,” he wrote in an e-mail. “There were a number of straight modifications (re-amortization of delinquent amount) and term modifications. … Both resulted in decreases in payments. There were conversions to fixed rate loans. I did not hear or see anything leading me to believe of significant interest reductions or principal reductions.”

Praise from a lender
Peggy Slattery, director of default specialty servicing with GMAC Residential Capital, had high praise for the portal. “This is basically a low-cost but an effective communication tool,” she told msnbc.com. In the pilot program, her firm got 17 requests for loan modifications via the portal, “all successful,” she said. All seven requests received since the system went national also appear to be headed for solutions, she said.

Contrary to fears of debtor attorneys, Slattery added, GMAC can even make deals on securitized loans. “If we need approvals, we’ll go and get the approvals and respond,” she said.

The numbers defy the experience of Miofsky, the Boston attorney who handles hundreds of defaulting mortgages a year. He predicted the portal will change nothing.

“Why don’t you just ask me how many loan modifications I’ve been offered" in 30 years of practice, he said. “To date, I’ve had one.”

The Current Loan Modification Programs simply are not working!!!!!!

2009-01-13T08:46:00.000-08:00

This has been one of the biggest debacles in our lifetime. It seems so simple - people/homeowners are struggling to make mortgage payments - The remedy is simply to modify or adjust their payments to more affordable terms.........yet we keep hearing nightmare, after nightmare or what should be very basic and very simple. The old slight of hands trick has to stop. "Announcing a program to help distressed homeowners.......................oh......but not you.......those people over there"

permission to be shared granted by the Charlotte Observer

Mortgage relief is reaching few who need it

Modified mortgages gain notice on Capitol Hill and Wall Street but might not be the answer, critics say.

By Christina Rexrode
crexrode@charlotteobserver.com

Posted: Tuesday, Jan. 13, 2009

Monica and Harold McKenzie of Kannapolis fell behind on their mortgage after Monica lost her job. They want to keep their home, which recently had repairs made to its storm-damaged roof, paid for by insurance. GAYLE SHOMER – gshomer@charlotteobserver.com

Harold and Monica McKenzie were thrilled when they heard about a legal settlement requiring their mortgage lender, Countrywide Financial, to make its loans more affordable for hundreds of thousands of customers.

They thought the settlement might help them keep their Kannapolis house, where they live with their two daughters and pet Chihuahua. The couple had stopped making their $1,300 monthly mortgage payment in the spring, six months after Monica lost her machine operator job.

But the McKenzies don't qualify for the loan workouts announced in October by Countrywide's owner, Charlotte's Bank of America. That's because they have a mortgage with a fixed interest rate of 6.25 percent, insured by the Federal Housing Administration. The settlement is only for certain nontraditional loans: subprime and option adjustable-rate mortgages.

Loan workouts, or mortgage modifications, are generating buzz among lawmakers and in the financial industry, where proponents say they will help people avoid foreclosure and aid an economic recovery. The latest effort was a Senate bill last week that would let bankruptcy judges modify certain mortgages.

But the experience of the McKenzies shows that the modifications reach only a fraction of the borrowers who might need them. About 133,000 loans were modified in the third quarter, according to a government report in December that examined more than 60 percent of all U.S. mortgages outstanding. That was an 83 percent increase from the first quarter but represented only about 6 percent of delinquent loans.

Modifications are steps a lender takes to help struggling borrowers make their payments, such as extending the life of a loan or slashing the interest rate. They can be hard to implement, since most mortgages are entangled in a web of securities, investments and second liens, which can have competing interests. And homeowners who are current on their loans can resent the loan workouts, saying they unfairly bail out the financially irresponsible.

The McKenzies bought their house, at the end of a quiet cul-de-sac, for $146,000 at a foreclosure sale in 2004. They painted the kitchen green, filled the living room with puzzles and family photos, and hung outside a flag with the letter “M,” for “McKenzie.”

“It's not anybody's fault that we're behind but mine,” said Harold McKenzie, 56 and a supervisor for a transportation company. “But I'd like to get somebody to try to work with me.”

Countrywide says its hands are tied, and that it is simply following the government procedures for modifying FHA-insured loans.

Few takers for modifications

Banks have always been able to modify mortgages, but the practice is becoming more common as more homeowners fall into financial trouble. In addition to Bank of America, JPMorgan Chase, Citigroup and the FHA have also rolled out formal programs for modifying mortgages.

But some consumer advocates think the banks aren't modifying enough loans. They also criticize the limitations of the loan workouts, including that they come too late for the masses who've already lost their homes.

Lenders might be more willing to modify loans with the threat of so-called cram-down legislation on the horizon. On Thursday, Citigroup shocked the banking industry when it said it would support such legislation, which would let judges – not just banks – modify certain mortgage loans. Banks have long opposed the idea, saying it will make it difficult for them to accurately value their assets and lead to higher interest rates for future borrowers.

Last Tuesday, N.C. Attorney General Roy Cooper and his counterparts in 21 other states sent letters to Congress in support of such legislation. “Voluntary loan modification measures have failed,” the letter said, citing the small number who have signed up for the government's Hope for Homeowners modification program.

In its first three months, the federal program received 373 applications. It's meant to help 400,000.

Lawrence Summers, a top economic adviser to President-elect Obama, informed congressional leaders Monday the incoming administration will “implement smart, aggressive policies to reduce the number of preventable foreclosures.” He didn't give many specifics.

Guy Cecala, publisher of Inside Mortgage Finance, said he expects the government to introduce some kind of plan to help the newly unemployed make their mortgage payments.

“Why would you just come up with a way to help people who made bad financial decisions in the past?” he said. For example, the government could allow homeowners to take out government loans to pay their mortgages, and not require them to pay back the loans immediately.

“Unemployment as a major nationwide problem is only a recent phenomenon that the mortgage industry hasn't really had to come to grips with yet,” Cecala said. “They're still battling bad loans.”

Other critics of mortgage modifications say they are delaying the housing market's correction and keeping the economy from recovering. Fifty-five percent of homeowners who got their mortgages modified in the first quarter of 2008 had re-defaulted six months later, according to the December federal government report.

Michael Widner, an analyst at Stifel Nicolaus, says the modification programs don't address “the basic housing oversupply problem.” Instead, they “keep borrowers in homes they fundamentally can't afford rather than having them relocate into currently vacant homes they can.”

Most of the recent loan workout programs aim for borrowers to spend a maximum of anywhere from 31 percent to 40 percent of their before-tax income on mortgage and related costs. That might be an improvement for some families, but can still break budgets. Some lenders modify mortgages only for people who are already behind on payments, which can encourage borrowers to default. Others help only people who are current on payments, which leaves out those closest to foreclosure.

Still seeking a solution

The McKenzies attribute their mortgage problems to Monica losing her $24,000-a-year job at a company that makes light sockets, not to a pricey house or exotic loan. The average rate for a 30-year fixed mortgage is around 5.1 percent, but the McKenzies can't refinance into a lower rate because their mortgage defaults have damaged their credit score. Harold also has a bankruptcy from 1997, and both have had unpaid bills on their records. “Let he who is without sin throw the first stone,” Harold McKenzie said.

He said he makes about $24,000 a year in his transportation job, and also pulls in a $30,000 annual pension from the Navy, where he served 24 years.

The McKenzies say they started asking Countrywide about a loan modification early last spring, before they missed any payments. “It's like you're talking to a recorder. They're sitting there reading some words that say, ‘We can't do this because of this,'” he said. “You never talk to the same person twice.”

When the McKenzies first defaulted in May, Countrywide raised their monthly bill by a couple of hundred dollars to make up for the missed payments. They'd like Countrywide to reduce their interest rate while Monica is unemployed, or maybe tack the missed payments on to the end of the loan. Even that, they admit, would be difficult to pay, but at least it would be within reach. Monica has worked some temp jobs at warehouses but hasn't found anything permanent.

Countrywide spokeswoman Jumana Bauwens noted the company has to follow “specific processes” when modifying loans insured by the FHA, which provides insurance to lenders in case of default.

She added: “Countrywide has been working with the McKenzies to try to find a solution that meets their short- and long-term needs.”

The McKenzies could try to sell the house and rent somewhere cheaper, but they want to build equity. They say they held off on repairs for Monica's car and on getting their heat fixed. A couple of months ago, they asked their older daughter, who just turned 20, to pay the light bill.

“That killed me,” said Harold McKenzie. “I always told them they wouldn't have to pay anything as long as they were living with me.”

Last week, Ebony got laid off from her job answering phones at a car dealership.

The McKenzies say the missed mortgage payments have strained their marriage and health. They've tried to hide the problems from their 10-year-old, but she still asks if they'll have to move.

“I say, ‘No, baby, we're not,'” Monica McKenzie said. “All her friends are down the street.”

This is the kind of political Smoke & Mirror crap

2009-01-12T09:34:00.000-08:00

that makes you sick to your stomach. After duping Congress into thinking the initial bail out money was to be used primarily to assist with the foreclosure crisis and help homeowners obtain affordable Loan Modifications, Bush is still stalling and playing the "oh I didn't know game........."

permission to be shared granted by CNN

Obama asks for TARP funds - White House

The president-elect asks President Bush to tell Congress he seeks access to $350 billion in remaining bailout funds.

Colin Barr, senior writer

NEW YORK -- President-elect Barack Obama is asking Congress for access to $350 billion in remaining federal bailout funds, the White House said Monday.

Obama asked President Bush to notify Congress of Obama's intent to use the remaining balance under the Treasury Department's $700 billion Troubled Asset Relief Program, or TARP, according to the White House press office.

"President Bush agreed to the President-elect's request. We will continue our consultations with the President-elect's transition team, and with Congress, on how best to proceed in accordance with the requirements of the statute," Bush spokeswoman Dana Perino said in a statement.

A Democratic source in Congress had told CNN this weekend that the Bush administration may soon request the funds.

News that Obama was seeking the funds came just hours after Bush, speaking at his last regular White House press conference, said Obama hadn't made any request for the funds.

"I told him that if he felt he needed the $350 billion, I would be willing to ask for it," Bush said Monday. But Obama "hasn't asked me to make the request," Bush told reporters.

Under the bailout legislation approved by Congress in October, the administration must formally notify Congress that it wants to access the second installment of $350 billion. Unless Congress passes a resolution rejecting the request within 15 days, Treasury can begin tapping the funds.

Even with the news that Bush will request the funds, the money won't be available until the Obama administration is in office. Inauguration Day is Jan. 20.

How the new administration plans to spend the second half of the TARP funding has emerged as a major issue on Capitol Hill.

Lawmakers on both sides of the aisle have expressed unhappiness with the way Treasury Secretary Henry Paulson has used the first $350 billion. They object to how Treasury made direct investments in banks with few strings attached and no process for tracking how the banks are using the money.

Leading Democrats in Congress have made clear that reducing foreclosures will be among their chief priorities for the use of the second half of TARP funds. On Friday, House Financial Services Chairman Barney Frank, D-Mass., introduced a bill that promises $50 billion of foreclosure relief and toughens terms on companies getting taxpayer money.

On Sunday, Senate Democrats met with members of Obama's economic team and emerged optimistic about plans to reshape the rescue of the financial services industry.

"The Obama administration wants to re-brand this process," said Sen. Christopher Dodd, D-Conn., chairman of the Senate Banking Committee. "They realize that if we're going to be effective in assisting our credit markets, to get them unclogged and moving again, this program has to be far better run than it has been."

Despite criticism of how the first half of the TARP money was deployed, Bush defended his administration's approach. He said he was concerned in the fall that the U.S. was headed for an economic meltdown worse than the Great Depression, but now he sees signs that "financial markets are beginning to thaw."

CNN senior congressional correspondent Dana Bash, congressional producer Evan Glass and CNNMoney.com senior writer Jeanne Sahadi contributed to this report.

Schumer pack on the war cry!!!

2009-01-10T09:58:00.000-08:00

permission to be shared granted by MoneyMarketing

US lenders push for court control of mortgage modification

Lee Jones | 08-Jan-2009

US mortgage lender Citigroup, along with several other large providers are in talks with the US Attorney to allow judges to modify mortgages in bankruptcy court.

The Wall Street Journal has revealed that Citigroup has not definitely confirmed that it is fully behind the "cramdown" legislation, but it is keen to be a leading voice in the matter before Barack Obama takes office in two weeks.

The Democrats brought the idea for judges to take control of repossessions before Congress on Tuesday. The party wants judges to be able to cancel some of all of a mortgage debt in an attempt to curb rising repossession rates across the USA.

The WSJ says the move may come on it’s own, or may be part of a larger stimulus package.

New York Democrat Senator Charles Schumer told the WSJ: "We think it would be great to put this on the stimulus, and the bank support will make it all the easier to accomplish that.”

Hispanics hardest hit as meltdown continues - what happened to the Mods????

2009-01-09T08:59:00.000-08:00

permission to be shared granted by HispanicNews.com

Pew: U.S. Hispanics Among Most Affected by Mortgage Crisis

Richard Kaplan--HispanicBusiness.com

The deepening recession continues to affect the American consumer and has had a particularly harsh impact upon U.S. Hispanics. A host of new statistics reveal missed mortgage payments, reduced remittances to relatives abroad, and curtailed holiday spending, according to just-released research by the Pew Hispanic Center.

In a new national survey of 1,540 Latino adults, The Pew Center discovered that almost one-in-ten Hispanic homeowners surveyed have skipped a mortgage payment or were not able to make the full payment in the last year. In addition, more than one-third of Hispanic homeowners (36%) say they have fears their homes may face foreclosure. Among immigrant Latinos, more than half (53%) expressed such worries. In 2008, 3 percent actually received a foreclosure notice from their bank.

Reinforcing the conclusions of previous studies, the Pew survey also found that in the last year Hispanic immigrant have been remitting significantly less money to relatives and others in their countries of origin. More than two-thirds (71%) said they had sent smaller sums in 2008 than the previous year.

Like consumers across the country, U.S. Hispanics curtailed their purchases in the holiday season. In addition, Hispanics adjusted their expenditures in a myriad of ways to reflect their current economic concerns. The majority (71%) reported they were eating out less. In addition, 28 percent noted that they had given financial assistance to friends or family, while 17 percent said they had received a loan from relatives or friends.

Such recalibration of economic behavior reflects widespread worries held by American workers over the worsening employment situation. The latest data from the U.S. Bureau of Labor Statistics reveals that the unemployment rate in November for Hispanics (8.6%) and in particular Hispanic youth 16-19 years old (27.0%) surpassed that of the general population (6.7%).

Such high unemployment rates show that Hispanic workers are at "particular risks during economic downturns, suffering negative effects sooner, more severely, and for longer duration" than their non-Hispanic white counterparts, said Texas Tech University economists Bradley Ewing, James Wetherbe and Angel Reyes.

Indeed, the Pew survey shows that Hispanics hold a more negative view of their own current personal financial situation than the general U.S. population. More than 76% of Hispanics and 84% of foreign-born Hispanics say their current personal finances are in either fair or poor shape, while 63% of the general U.S. population say the same.

Today’s Mod Perspective

2009-01-08T08:03:00.001-08:00

Seems like every day we get a new twist on the Loan Modification………it's merits and otherwise. Anyway, we're presenting one we've found a bit interesting. You decide.

Permission to be shared granted by Seeking Alpha

Let's Study the Data on Loan Modifications

by: Tom Lindmark January 08, 2009

Tom Lindmark

This is a curious post that I came across at the WSJ Real Time Economics site (strange only because I can't find a link to follow to the author). Otherwise it's fascinating. It is short, so let me post the whole thing.

Global Response: Writing Time's Curious Capitalist blog, Barbara Kiviat says that the data on loan modifications is sorely lacking. "Rod Dubitsky, the head of asset-backed securities research at Credit Suisse who probably knows more about loan modifications than anybody else (you decide on your own what this says about our policymakers), thinks it's ridiculous that no one has sorted all this out yet. He's been pushing for a coordinated national effort around modifications since at least early November. He also wants banks that have rolled out their own programs — like JP Morgan Chase, Bank of America and IndyMac (under the direction of Bair's FDIC) — to release standardized data about what, specifically, they're doing. He wants disclosure around the type of modification (e.g., interest-rate reduction, extended amortization), the documentation that was used to determine how much a homeowner can pay, other loss mitigation options that were considered (for example, HUD's Hope for Homeowners program) and the math that shows the decision that was made is the best one, assumptions about future home prices, and a lot of other things… And that's how we get around to chipping away at unemployment. In talking with Dubitsky, he made a remark about the government needing a "data swat team." He pointed out that there are quite a few unemployed Wall Streeters who, guess what, know something about mortgage securities and sifting through data and building computer models. I liked what he was getting at: evidence-based public policy. Fascinating thought, no?"

If you noticed in my recent post about Barney Frank's continuing fascination with Sheila Bair and her mortgage modification schemes, the above thought deserves more airing. There is a lot of talk about modifications and cramdowns around and, without going into the merits or demerits of either one (other posts on this blog have beaten the subject to death), the idea of getting some data on which to make a decisions seems like a good one. Perversely, the FDIC has been one of the least informative on the performance of their IndyMac loan modification program while aggressively pushing the concept on the entire industry.

We are about to spend tons of money on this. Since there is probably some pretty good data available right now why not try and figure out if it is going to be wasted.

Servicers have another incentive to Shape Up

2009-01-07T12:06:00.000-08:00

Hopefully as we are in our first week of 2009 - Servicers and Lenders will get with the program............

permission to be shared granted by CBS Marketwatch

Democrats bring up bill to let judges adjust mortgages
President-elect Obama was sponsor in 2008, said it is priority for 2009
By Ronald D. Orol, MarketWatch
Last update: 5:08 p.m. EST Jan. 6, 2009
WASHINGTON (MarketWatch) -- A Democratic plan to change bankruptcy law so judges could adjust the terms of mortgages is officially back.
Sen. Richard Durbin, D-Ill., in the Senate and Rep. Brad Miller, D-N.C., in the House on Tuesday re-introduced complementary legislation designed to reduce foreclosures by giving judges the authority to eliminate some mortgage debt.
Bankruptcy law currently permits modifications to mortgage loans on second homes and family farms. This measure would allow bankruptcy judges to also modify primary mortgages.
The provision would also give borrowers more time to for repayments, which would make their mortgages more affordable. Judges would also be permitted to replace variable interest rates with a more affordable rate.
The bills are a continuation of an effort launched by Durbin in 2007. Last year, Democrats in the House and Senate introduced similar legislation seeking to grant bankruptcy judges the authority but the measure failed to pass on several occasions due to GOP opposition.
The measure almost was approved when lawmakers in September squabbled over provisions to include in a $700 billion bank bailout fund. The provision was attached to several versions of the bailout bill, but it was removed before the financial crisis response package passed.
Nevertheless, it has a strong chance of being approved in 2009. President-elect Barack Obama co-sponsored Durbin's bill in 2008 and has said that it would be a priority of his in 2009. A Durbin spokesman said the Illinois senator is seeking to attach the measure to Obama's stimulus package, which is likely to be approved by February.
Henry Sommer, a director at the National Association of Consumer Bankruptcy Attorneys in Philadelphia, said he believes that the measure is likely to pass quickly, particularly with Durbin's support. Sommer added that the circumstances since the bill failed last year have changed, making it more likely it will be approved this year.
He argues that it will be more difficult for financial institutions owning mortgage securities to complain about having to absorb losses from a mortgage modification because many of them have received large cash infusions from the Treasury as part of the $750 billion bank bailout package. So far, Treasury has used $177.5 billion of the fund to buy large minority stakes in financial institutions.
"Durbin has a close relationship with Obama, the composition of Congress has changed and it is now clear that voluntary programs are not working," Sommer said. "Durbin has a close relationship with Obama."
A voluntary foreclosure prevention program, Hope for Homeowners, was approved in the summer but hasn't had the participation mortgage experts had hoped it would have, Sommer said.
However, Dwight Smith, partner at Alston & Bird LLP in Washington, argued that Obama may be hesitant to commit political capital to having the measure approved, particularly with GOP opposition. "If the Obama administration really wants bipartisanship on economic legislation, then the Republicans would have some leverage," said Smith.
Giving bankruptcy judges' authority to eliminate some mortgage debt may also complement another program under consideration. Federal Deposit Insurance Corp. chairwoman Sheila Bair is pushing to have Congress allocate $24.4 billion of the $700 billion bank bailout funds to modify loans, a program she believes could avert 1.5 million foreclosures.
Sommer argues that having both programs in effect would give borrowers more leverage. "Servicers would have the incentive to pass more helpful mortgage modifications because they know the borrower could go to a bankruptcy judge instead," Sommer said.
Bankruptcy judges have been prohibited from modifying mortgages since a 1993 Supreme Court decision banning the action. In the 1980s courts disagreed about whether modification was permissible, making it possible in some circumstances.
Durbin originally introduced his measure, Helping Families Save Their Homes in Bankruptcy Act, in October 2007. End of Story
Ronald D. Orol is a MarketWatch reporter, based in Washington.

Reminder - Today's Show

2009-01-06T10:17:00.000-08:00

Realfaqs talk radio show live from your computer or cell phone
Join us this Tueday - 1/6pm
3pm - PST, 5pm - CST, 6pm - EST. The show will be 1hour.
click here to access

Today's show will feature an exclusive interview with Mrs. Vanessa Campbell of East Texas (Longview) as there is much anticipation and discussion about the upcoming Inauguration celebration. Vanessa is a long-time political activist and recently attended the DNC convention as a representative from Texas. As she stated, "I'm looking forward to bein present at the Inaguration not just for myself!!!! but for my parents and other ancestors, as well as those from my hometown who never thought this day would be possible."

14 Days before the Dream is realized and Barack Obama is sworn in as the 44th U.S.A. President

Today's Sponsor

This special show is sponsored by Omega Capital Financial, Inc.
"serving consumers across the nation with their real estate related needs"

www.omegacapitalfinancial.net

Save $500

SUPPORT OUR SPONSOR
GET YOUR BAILOUT TODAY. There is no need to wait until January 20th to start saving money. Interest Rates have dropped significantly and you can save up to $500 towards your appraisal on your Purchase or Refinance transaction. ONE COUPON PER TRANSACTION. Discount is credited at the closing of your transaction and will be properly documented on your settlement statement. Check in advance to insure we are licensed in your state info@omegacapitalfinancial.net

Offer Expiration: Application must be received no later than January 31, 2009 and FUNDED BY February 15, 2009.

Forward email

This email was sent to fredt@omegacapitalfinancial.net by fredt@omegacapitalfinancial.net.

Update Profile/Email Address | Instant removal with SafeUnsubscribe™ | Privacy Policy.

Email Marketing by

Omega Capital Financial, Inc. | 100 N. Brand Blvd., Ste. 200 | Glendale | CA | 90213

You Don’t Have to Wait until after Jan. 20th & beyond to grab your bailout

2009-01-05T09:06:00.001-08:00

OK – 2008 is history and we are rolling into 2009 as today celebrates our first Monday of the new year. In addition to whatever goals or resolutions you set, here are a couple of practical strategies you can employ regarding most homeowners biggest monthly debt or bill – YOUR MORTGAGE PAYMENT.

Refinance into today's lower interest rates – You simply do not get something for nothing!!!!!!! If your current interest rate is Fixed and higher than 6.000% or you have an adjustable rate mortgage which is resetting higher than 6% AND YOUR CREDIT IS GOOD AND YOU CAN DOCUMENT YOUR INCOME and YOUR LOAN TO VALUE IS SUFFICENT (amount owed:value of home) you should be grabbing Fixed Rates which are in the high 4's. Bottom line it can represent a handsome monthly savings or allow you to knock off years from your mortgage obligation (25 yr, 20 yr, 15 yr, 10 yr, etc.). For those needing to consolidate or tap the equity in your property Cash Out Refinances are available and IF YOUR LOAN TO VALUE (amount owed:value of home) IS HIGH you should be looking at an FHA loan which allows cash out up to 95% (the key tradeoff in doing an FHA loan is every participant must pay Mortgage Insurance Premium). Additionally there is a myriad of other programs designed to assist homeowners which were announced during 2008 but they have nuances and we will cover them in another Blog.

Loan Modification – For those homeowners who want to keep their home but who are delinquent or who have an adjustment coming due and a financial calamity is imminent. Perhaps one of the most misunderstood processes in the mortgage arena, as well as the most manipulated by scam artist, unprofessional and untrained people who claim to have some level of expertise. This process wasn't invented in 2007 & 2008 as it has been around since mortgages were invented!!!!!! however prior to the mortgage meltdown it was a very obscure process offered on a voluntary basis (by the lender). The trick to getting your lender to approve your Loan Modification request is you must be able to document a financial hardship occurred which created you becoming delinquent with your payments and you must be able to document your financial hardship has been corrected and even though your income may have been reduced or other factors – you can make agreed monthly payments as agreed. There is a process so you must strap in and just like any financial transaction it takes time to complete. Contrary to what some have written about……the process is voluntary (even though lenders/servicers have been feeling the public pressure to do the right thing.) and lenders may charge a fee, even if it's part of the modification payment – so the notion that it is Voluntary and 100% Free is FALSE. The most important piece of this process is how you initiate or commence this process with your lender/servicer. YOU CAN COMPLETE THIS PROCESS YOURSELF…………however BEWARE. There is a simple reason why most homeowners will opt for a trained professional to assist them – SO THEY CAN HOLD SOMEONE ACCOUNTABLE (just as in any financial or legal matter).

Short Sale – For those homeowners who DO NOT WANT TO KEEP THEIR HOME and there is little or no equity AND YOU WANT TO CORRECTLY DISPOSE OF THE PROPERTY VERSUS SIMPLY WALKING AWAY. Again, this process is voluntary on behalf of your lender/servicer but it is a process and while YOU CAN COMPLETE THIS PROCESS YOURSELF…………however BEWARE. There is a simple reason why most homeowners will opt for a trained professional to assist them – SO THEY CAN HOLD SOMEONE ACCOUNTABLE (just as in any financial or legal matter).

Bottom-line, if done correctly the measures mentioned above can allow you to save a couple of hundred dollars a month OR MORE on your mortgage payment, and/or ALLOW YOU TO SAVE THOUSANDS IN INTEREST PAYMENTS (over the life of the loan), so you don't have to wait until Jan. 20^th to try and see if you will get a bailout or what for some magic to occur – YOU SIMPLY HAVE TO BE PROACTIVE.

(of course if you currently have a Fixed Rate in the mid to low 5's and you can make your mortgage payments as agreed, then whatever Bailout that is forthcoming will be welcomed news as there is no need for you to Refinance or seek a Loan Modification/Short Sale)

Fred Thomas, III VP/CB

Vice President – Chief Bloggeroligist

Omega Capital Financial, Inc.

Who Didn't get a Piggyback loan when the market was hot???

2009-01-02T09:15:00.000-08:00

What was a great leveraging tool to pay as little down as possible or get as much equity has possible is one of the core reasons loan modifications have proven difficult, as the way the mortgages were packaged and sold is like a maze with no exit!!!!

permission to be shared granted by Bloomberg news

‘Piggyback’ Mortgages May Cut Modifications, Fed Says (Update1)

By Jody Shenn

(Bloomberg) -- Attempts to loosen terms on hundreds of thousands of delinquent home loans may be hindered by so- called piggyback second mortgages that gained popularity during the U.S. housing boom, Federal Reserve researchers said.

Most of the piggyback loans, often used in place of down payments or mortgage insurance, are held by lenders different from the holders of the home loans, making it more difficult to secure approval needed for modifications, according to the study published in the December Federal Reserve Bulletin. Less than a fifth of the first mortgages and piggyback loans made in 2005 and 2006 were held by the same lender at year’s end.

Advocates for more loan modifications, including Federal Deposit Insurance Corp. Chairman Sheila Bair, say using them to prevent foreclosures will help limit losses at mortgage holders and curb the worst housing slump since the Great Depression.

Separation of the piggyback debt from the mortgages “means that for those loan transactions in which defaults occur, loss mitigation problems are likely to be more difficult,” Fed economists Robert Avery, Kenneth Brevoort and Glenn Canner wrote in the study.

Home prices in 20 U.S. cities tumbled 18 percent from a year earlier in October, the fastest rate on record, depressed by mounting foreclosures and slumping sales, according to an S&P/Case-Shiller index released today. Between August 2002 and April 2006, year-over-year price increases exceeded 10 percent every month.

Servicers ‘Overwhelmed’

Other challenges to reworking delinquent debt include limits imposed by contracts governing mortgages packaged into securities, the lack of incentives for good loan performance at third-party mortgage servicers and the soaring workloads at the companies managing outstanding loans.

“The servicers have been overwhelmed,” Federal Housing Finance Agency Director James Lockhart said today during an interview on CNBC.

Also, at least 14.9 percent of new mortgages granted for purchases of one-to-four family properties in each of the past four years were made to real-estate investors, landlords or second-home buyers, according to data in a separate section of the Fed report.

Only Owner-Occupied

Many of the “streamlined” modification programs announced by companies including Bank of America Corp., JPMorgan Chase & Co. and Fannie Mae only apply to owner-occupied properties. The programs promise changes to borrowers’ interest rates, loan amounts or other terms.

The Fed economists at the Board’s Research and Statistics Division applied computer models to data provided by lenders under the Home Mortgage Disclosure Act to identify piggyback transactions.

Home purchases involving piggybacks fell to 389,154 last year, from a peak of 1.06 million in 2006, about the same level as the prior year, according to the study. Almost 9.9 million new first mortgages, including refinancings, were issued in 2006.

The prevalence of piggyback mortgages, along with traditional home-equity loans, during the housing boom may also limit refinancings as borrowers find they own more than their homes are worth. Refinance applications are at the highest since 2003 because of lower loan rates, according to the Mortgage Bankers Association.

Subprime, Alt-A

Lenders were less likely to retain piggyback loans when the associated first mortgages were “higher-priced” loans, such as subprime and Alt-A loans, according to the study. The higher-risk loans are defaulting at the fastest pace, according to Bloomberg data.

The government has been seeking more modifications and lower rates to help curb a yearlong recession. The average rate on a typical U.S. fixed-rate mortgage fell to 5.22 percent yesterday, the lowest since 2005, from as high as 6.46 percent in October, according to Bankrate.com data.

In November, the Federal Housing Administration adjusted its Hope for Homeowners program created this year to give holders of second mortgages immediate payment for releasing their liens. The initiative allows lenders to refinance troubled loans into guaranteed debt if they forgive some of the borrowers’ balances.

To contact the reporter on this story: Jody Shenn in New York at jshenn@bloomberg.net

2008 was quite a year

2008-12-31T08:04:00.000-08:00

Here's to you and a great 2009

click button to hear special message

“You don’t get something for nothing”

2008-12-30T07:50:00.001-08:00

The loan modification scene is ripe with chaos – almost like driving in a huge metropolitan city (New York, Rome, Peking, etc.) but the facts remain securing a Loan Modification is a process and if you want it done right – it is a pay for play proposition. It may be admirable to think companies or non-profits will provide some type of benevolent gesture but those are long odds and for most too risky – when your most important investment is in jeopardy. At the same time just because there are slackers, liars, con types or others who too are involved in the process and are supposed to be a part of the solution – yet they are not – doesn't mean those who have established a track record or provide true professional service should be dismissed as part of the problem.

Here is an excerpt of a recent post you may find interesting.

Permission to be shared granted by ProPublica

Helpers or Hucksters? A Look at 'Mortgage Mod' Firms

By Paul Kiel, ProPublica

It seems like a gruesome business: A homeowner is floundering, in real danger of foreclosure. The mortgage mod salesman swoops in and offers salvation -- for a fee (typically thousands of dollars) -- by helping renegotiate loans. Whether that salvation ever comes is another matter.

Such offers, as the Washington Post reported over the long weekend, is a growing business and one worrying federal and state regulators because homeowners should be able to get loan modification help from nonprofits, which charge nothing or next to nothing for the service. One HUD official told the Post the department is "extremely concerned about the huge proliferation of for-profit companies making a buck on these people."

It's unclear from the piece just how many of these types of firms exist. The Post focuses on a handful of examples from around the country. The names suggest a range of approaches, some sounding like venerable public-spirited institutions, some like consultancies: LoanMod.com of Michigan, U.S. Homeowners Assistance of California, U.S. Housing Assist of Nevada, and Mortgage Analysis and Consulting of Virginia.

Their justifications for their business also range. The chief of LoanMod.com argues that companies like his exist because nonprofit groups aren't cutting it (they're not "as efficient as the regular market"). The heads of U.S. Housing Assist and Mortgage Analysis, by contrast, say they're not in it for the money. One says he returns the fee if his firm can't help the homeowner, the other says his organization is a nonprofit in everything but name -- helping homeowners (for a fee), he says, is "a mission and a duty."

If these firms are representative, they seem to mostly be run by former mortgage brokers. One argues that his former contacts as a broker have helped him work out loan mods for his customers, but the piece doesn't offer evidence either way as to just how successful these types of firms are in getting the job done. Getting a loan modification at all often proves very difficult due to the complexities of securitization.

The Post reports on a few examples of very unhappy customers, such as a Virginia man who paid $7,000 to Mortgage Analysis, because, he says, "I was blind." Eventually, some of that money was returned and "in the end, with the help of a nonprofit legal group, he was able to get into a new loan -- at no cost -- through a Federal Housing Administration program." Mortgage Analysis responds that most of that money was spent on an auditor and that the firm "did not profit from the interaction."

None of what these firms do is illegal, the Post reports, with the exception of states like Maryland that prohibit charging an upfront fee for such a service. Laws seem to vary from state to state, as do whatever state agencies might regulate such a business -- all adding to a foreclosure situation that is already maddeningly complex.

Paul Kiel is a reporter for ProPublica.

About the Blogger…….

Fred Thomas, III is CB (Chief Bloggeroligist)

Vice President of Omega Capital Financial

Watch the Smoke & Mirrors!!!!!

2008-12-29T07:51:00.001-08:00

Mortgage Modification Can Be Trying, Chaotic

PLEASANTON (CBS) ―Click to enlarge

Loan Modification……if done properly and with the proper representation can be one of the most legitimate strategies to allow homeowners get back on track in managing their mortgage payments. However, you must proceed with caution as there are many people/businesses that will prey on those who may appear somewhat gullible. Also, of note are the many agencies and companies who are mandated to help homeowners, and who continue to present the good ole smoke & mirrors by puffing up their numbers to appear as if they are achieving some level of "success."

Permission to be shared granted by CBS 5

Hope Now, the mortgage industry's alliance intended to help struggling homeowners, announced Monday it's helped almost one-million home-owners get loan modifications this year. But, advocates for homeowners say the group is inflating its success.

Homeowners who've tried, say it can be trying - and time consuming - to get a bank to agree to change the terms of a home loan.

Tammy Yanak-Schoonover of Pleasanton knows firsthand. She's lived in her own home in Pleasanton for 20 years. But a divorce, and putting herself through college and grad school, left her with little equity. Last year, her mortgage jumped from $1,800 to $4,200, something the school guidance counselor said she just can't afford.

So, she asked her bank, Downey Savings and Loan, for help in the form of a loan modification. What she got was a nightmare. She said she "made a lot of phone calls, trying to get somewhere, one person passing me to someone else … left hand not knowing what the right hand was doing."

Yanak-Schoonover is not alone. The F.D.I.C. estimates 4.4 million homeowners could end up defaulting on their mortgages between now and the end of 2009.

"It's chaos," said Kevin Stein a director at the California Reinvestment Coalition, a group that helps homeowners in distress. "We have this crazy, byzantine system for dealing with loan modifications."

Stein said homeowners who do try to get lenders to change the terms of their loans get the run-around: "You call one person, they don't return your call, you wait on hold for minutes, for hours, for someone to respond, and if you call back that person is no longer there."

Stein also says loan servicers may have a financial interest in NOT modifying loans. "Servicers are not reimbursed for the cost they incur in working with a borrower to modify his or her loan," said Stein, "but servicers ARE reimbursed for the cost they incur on foreclosing on a homeowner."

When servicers do agree to change the terms it's not always for the better, said Stein.

Tom Davidoff, a professor at the Haas School of Business, shares that view. "When lenders say 'yes' to a loan modification, they're not being very generous," said Davidoff. "They're not reducing the payments by much, or they're not reducing the principal by much, or both.

In fact, a government report recently found more than 50% of people who get modifications end up re-defaulting.

Banks may give homeowners more help in the coming year because of public pressure and the mounting problem, according to Davidoff.

Downey Savings eventually did agree to modify Yanak-Schoonover's loan.
Her monthly payment will go from $4,200 a month to $1,700 - but only for 3 years. And during that time she'll only be paying interest.

Then her loan will go up, again, every year, for the next 3 years. It's not perfect - but at least she'll stay in the home while she prepares for higher payments down the road.

About the Blogger…….

Fred Thomas, III is CB (Chief Bloggeroligist)

Vice President of Omega Capital Financial

It's almost the end of 2008 - Have you gotten your Loan Modification completed?

2008-12-27T12:12:00.000-08:00

permission to be shared granted by consumerwatch.com

Navigating the Mortgage Modification Maze
Getting a home loan altered is no easy task

By Broderick Perkins

Living in a Bubble?

Home loan modifications are designed to save homeownership, but they've also created another mortgage maze pitted with "buyer bewares."

Both government-sanctioned counseling agencies and local community service agencies concede they have been swamped by demand for loan modifications. The demand has opened the floodgates of loan modification services now offered by real estate agents, mortgage brokers, attorneys, government agencies, lenders, and other professionals.

The demand stems from a proliferation of federal, state and local foreclosure relief and bailout efforts from both government and the lending industry. Mortgage modifications have been around for years, but those recent efforts have raised the profile of the mortgage workouts as an alternative to foreclosures, short sales, auctions, and bankruptcy
.

However, homeowners seeking mortgage modifications are at the mercy of lenders, because the workouts are voluntary and often without regulatory standards.

Caught in the lurch, homeowners are finding it tough to know when a modification will work and how to best obtain one.
What is a mortgage modification?

A home loan modification, granted only upon the existing lender's approval, permanently reworks some of the terms of an existing mortgage in order to make the loan more affordable to the homeowner.

The strategy is typically designed for homeowners struggling to pay their mortgage, not for those who can pay their mortgage or are eligible for a refinanced loan.

Modifications are generally lender fee-free and involve the lender or loan holder lowering the interest rate and or changing an adjustable-rate mortgage (ARM) to a fixed rate mortgage (FRM) with a 30-year term. Some form of mandated homeownership counseling generally comes with the deal.

Less common loan modifications include adding missed payments to the loan balance and extending the term of the loan. Least common is getting the lender to reduce the principal or wipe out any second mortgages.

A mortgage modification is not a refinanced mortgage — a brand new loan written to pay off the old home loan.

"A mortgage is one of the most complex transactions there is. A loan modification is also a gray area for a lot of people. So of course people need someone to walk them through the process to tell them this is what you need and this is what you don't need," said Ginna Green, spokeswoman for the California office of the Center for Responsible Lending in Oakland.
Is a loan modification for you?

Greg Pennington, a San Francisco-based mortgage banking consultant and counselor with Parker-Pennington Enterprises, says a loan modification isn't for everyone.

A loan modification may not be viable if:

• The modified loan comes with payments you still can't afford.

• Your current interest rate is already low and there's no room for the lender to lower it further.

• You can make the new payments, but the mortgage balance is greater than the value of your home and you don't plan on staying put long enough to reverse the loan-to-value imbalance.

• You have not already missed payments on your mortgage or can't show financial hardship due, say, to job loss, pay decrease, illness or interest rate increase.

• You have other properties, investments or assets that could be liquidated to cover your mortgage debt.

• A short sale (The lender forgives a portion of the debt owed if you can find a buyer), bankruptcy, auction sale, refinance or other approach, short of a foreclosure, is a better option.

"You can do a loan modification and not be aware of where you stand. You can get a loan modification for a home you don't want to be in," said Pennington.

A financial, housing or credit counselor can help you determine your best option. Just be prepared to hold down the fort for the 60 to 90 days or more it could take to complete the modification, due to potential complications and document processing times.

There are three basic ways to approach a mortgage modification, according to advice from consumer advocates.
The HUD-approved counseling method

Consumer advocates widely advise homeowners to contact the lender at the first sign of mortgage trouble, and that remains true. However, when it comes to specifically seeking a loan modification, they further advise getting to a U.S. Department of Housing and Urban Development (HUD) non-profit counseling agency before approaching a lender about a modification.

Counseling agencies are generally hardwired to lenders and know what documents you'll need to both determine the viability of a loan modification and to be in sync with a given lender's underwriting requirements. They can also help you prepare your loan modification appeal so it reveals you are in financial trouble and can't afford the current mortgage, but can afford the terms of a modified loan that fits.

"We have direct links to lenders, can save them hours on the phone with the lender, and protect borrower information from unscrupulous people. And nonprofits receiving money from Congress must provide the work free. Others generally charge a fee," said Marcia Griffin, president of the non-profit HUD-approved HomeFree-USA.
The private loan modification route

Because both nonprofits and lenders have been inundated with calls for aid, it may be prudent to hire a private loan modification service to get a foot in the lender's door. Consider the following useful tips if you hire a private loan modifier:

• Shop around. A growing number of real estate agents, mortgage brokers, real estate attorneys and other real estate professionals are offering loan services. Comparison shop for the best deal and the most competent service. Get referrals to private or for-profit loan modification services from family members, friends, co-workers, professionals and others you trust.

• Make sure your choice has a clean record. Consider legal and real estate professionals offering loan modification services only if they have current, unblemished licenses. Also check their record with the Better Business Bureau and their respective trade or professional group.

• Avoid paying advance fees. Get performance-related service instead. Never pay an advance fee if your lender has already recorded a notice of default. You could be throwing good money after bad. It's illegal in California for "foreclosure consultants" or any real estate licensee to collect a fee after a notice of default has been recorded.

• Check your state for similar regulations. Make sure to familiarize yourself with any other rules governing private loan modification services and state rules specific to lenders granting modifications. You won't know if the modification service is adhering to the law if you don't know the law.

• Carefully examine any contract or terms of service before proceeding. If you don't understand the terms or aren't satisfied with what's promised, don't sign. Get help. That could mean reconsidering waiting for a HUD-certified counselor.

"Work with a local company that isn't outsourcing work that you'll never see to Florida, Los Angeles, Texas or Mexico," says Robert Aldana, a San Jose real estate agent who is also president of San Jose-based Home Resolution & Credit Services Inc.
The do-it-yourself way

A do-it-yourself loan modification is not for most homeowners. Attempt it only if you have a sufficient mortgage or consumer financing background, or if you understand that only the lender can give final approval, and if you exercise great caution in choosing the educational materials.

"Can you do it yourself? Sure you can. You can also sell your own home, fix your own roof or replace the engine in your car. But should you?" asks Aldana.

If you choose to go the do-it-yourself route, the following resources may help.

The FDIC offers for free its IndyMac program "FDIC Loan Modification Program Guide — 'Mod in a Box'." The program information specifically targets lenders, but contains a homeowner sample agreement, instructions, frequently asked consumer questions and other useful materials.

The PMI Group, Inc. recently launched an the free Mortgage Options Assessment Tool on its HomeSafePMI web site. According to PMI, the tool "enables homeowners to organize, calculate, and produce reports on their current financial situations prior to meeting their lenders or counselors to discuss solutions to foreclosure."

Otherwise, a plethora of good, bad and ugly do-it-yourself loan modification kits, manuals, guides and courses have cropped up, often with Internet marketing. They represent an unregulated, untested and unstandardized compendium of loan modification information and advice.

Some of it is free for the asking, some requires payment for books, manuals, software and other materials. Many services request your personal information. Whenever any offer requires you to provide personal or private information, be aware of the offer's privacy policy and any terms of service.

Pay particular attention to what the service will or won't do with your information, especially when it comes to sharing it with third parties. When information is shared with affiliates and third parties it's also crucial to learn those affiliates' privacy policies and terms of service.

---
Broderick Perkins parlayed 30 years of old-school journalism into a digital real estate news service, the DeadlineNews Group, offering "News that really hits home!"™. The Silicon Valley bootstrap includes the Web site DeadlineNews.Com and the back shop Deadline Newsroom. Contact him at news@deadlinenews.com.

Special Day after Christmas Sale

2008-12-26T08:14:00.000-08:00

To help the ailing economy.
To provide more peace throughout your community and the world.
To provide more opportunity for those who are alert and ready to take advantage of.......

December 25, 2008

2008-12-25T08:12:00.000-08:00

Twas the night before Christmas and not a Loan Mod in sight

2008-12-24T16:35:00.000-08:00

homeowners were wide awake waiting for the lender to open the gate........

2 Days to Christmas and not a Mod in the house......

2008-12-23T07:26:00.000-08:00

Seriously though, Loan Modification and Short Sale transactions have become the most misunderstood process during the past 6 months.

The big hitch is media, lenders and other industry types touted this process to slow down the foreclosure crisis. unfortunately, reality has set in and most have been severely disappointed at the results.........so far.

The key to benefiting from these programs is to understand it is a lengthy process and yes, your home appears in imminent danger of being lost so each day that goes by where you don't get a response pushes the panic button even further. To be on the safe side the most sage advice is to make sure your lender has been contacted (by you or your representative) acknowledging you will be attempting to resolve your mortgage issues, versus locking yourself in a room and not responding to telephone calls, mail or other communication hoping the problem will go away by itself.

A Great Idea that has left millions dying on the vine....

2008-12-22T08:20:00.000-08:00

Yep - we're talking about all those programs designed to motivate lenders/servicers to modify those mortgage identifying as being problem loans or where borrowers simply could not keep up the payments. This morning we're featuring a clip courtesy of marketplace morning report.

permission to be shared granted by Marketplace Morning Report

Monday, December 22, 2008

Mortgage renegotiations: Do they work?

Mortgage statistics come out this morning that include numbers of homeowners renegotiating their mortgages. But are the loan modifications effective? Dan Grech reports why these loans have been criticized for not working. Dan Grech

The truth is finally coming out

2008-12-19T08:18:00.000-08:00

When the housing crisis was finally acknowledged earlier in the year, it was much with great fanfare as lenders/servicers and others involved in managing homeowners mortgage payments allegedly agreed the slam dunk solution was simply to utilize provisions these companies have always held - that is Modifying mortgages so they would be affordable.

The sad truth is with all the hype, the news and other commentary, THE PLAN HAS NOT WORKED -

permission to be shared granted by consumerwatch.com

Foreclosures Rising Despite Prevention Programs

Voluntary industry guidelines a failure, bankruptcy lawyers charge

Much-hyped foreclosure prevention programs relying on voluntary loan modifications are failing to reach a significant number of troubled homeowners and are often backfiring when they do so, according to newly updated research released today by the National Association of Consumer Bankruptcy Attorneys (NACBA).

That puts pressure on President-elect Obama and Congress to clear the way for court-supervised loan modifications that will prove more beneficial for homeowners, the lawyers group asserted.

The findings released today by NACBA come on the heels of a dire new projection from Credit Suisse that over 8 million foreclosures (are now) expected over the next four years in the U.S. That level accounts for 16 percent of all mortgages — including 59 percent of all subprime mortgages and more than 11 percent of all other mortgages, including Alt-A, options ARMS and even those in the prime category. The new forecast from Credit Suisse is up sharply from the two to six million foreclosure range cited in previous estimates from industry sources.

The new data presented today from a study by Professor Alan White, Valparaiso University School of Law, found that:

• Less than 10 percent of the time do the voluntary programs result in a reduced principal loan balance with more than half of modifications capitalizing unpaid interest and fees into larger and more drawn out debt on the back end of the mortgage; and

• Only about a third (35 percent) of voluntary mortgage modifications reduce monthly payment burdens for homeowners, with nearly half (45 percent) actually saddling distressed homeowners with increased payments under the modifications.

In one case cited by the lawyers group — the Hope for Homeowners Act FHA refinancing program passed by Congress with much fanfare earlier this year on the strength of forecasts that 400,000 homeowners would be aided — there have been only 312 applications to date and no mortgage modifications whatsoever have taken place.

This is consistent with the most recent estimates from the National Association of Attorneys General that "nearly 8 out of 10 seriously delinquent homeowners are not on track for any loss mitigation outcome ... up from 7 in 10 in previous reports.”

“Court-supervised loan modification is urgently needed to deal with this problem. We call on the incoming Obama administration and the new Congress to adopt this solution without delay. The American home mortgage foreclosure crisis has gone from the danger zone to the full-blown crisis stage," said Henry Sommer, NACBA president.

"The number of foreclosures is growing rapidly and is reaching well beyond the subprime world to the American middle class. Despite a proliferation of voluntary programs, we are not seeing evidence of a meaningful number of sustainable loan modifications,” Sommer said.

Professor White said that American homeowners are carrying $10.5 trillion in mortgage debt, a number that has risen by 250 percent in the past decade.

"While banks have written down more than half a trillion in mortgages and mortgage-related securities, homeowners have gotten little or no relief," White said. "Empirical evidence from mortgage servicer reports to investors shows that for the most part, the necessary deleveraging of homeowners is not happening."

When NACBA, NCLC, Consumer Federation of America (CFA) and the Center for Responsible Lending (CRL) called on Congress in April 2007 to move aggressively to stem the growing flood of home foreclosures, it was estimated that some 2 million homeowners were at risk of foreclosure. And, at the time, the financial services industry accused the organizations of being overly pessimistic about the likely toll of foreclosures. However, it turns out we were low-balling quite significantly the number of foreclosures, Sommer said.

As of September 2008, a full 1.2 million homeowners with subprime loans already had lost their homes to foreclosure. Another 1.7 million families with subprime loans are seriously delinquent and at risk of losing their homes in the very near future, NACB said. Credit Suisse now estimates that 8.1 million mortgages will be in foreclosure over the next four years, representing 16 percent of all mortgages. Credit Suisse finds that the problem has spread from subprime loans to Alt-A, option ARMs, and even prime loans.

Loan Modification is a personal thing

2008-12-18T07:29:00.000-08:00

As previously communicated on this blog any homeowner who is paying a mortgage (lender/servicer) can negotiate directly in attempting to get modification. As a matter of fact some lenders/servicers prefer this method and many proactively contact homeowners via express packaging (UPS, FED EX, DHL, etc.) to get your attention before any one else . Here's the problem - but first, we must admit as the basic mortgage origination cycle as slowed to a crawl, many professionals who serviced their clients have either added or totally resorted to adding Loan Modification/Short Sale transactions to their business. That in itself is not bad but the trick is filtering out the opportunists from those who have the expertise, trust and platform to achieve the results being represented.

While it is true homeowners may contact their lender directly and attempt to get their loan modified or their short sale approved - several basics considerations must be weighed:

Are you comfortable speaking with your lender/servicer - Can you get through or will you be given a toll free number that just rings and rings and goes into abyss?
Do you have the parameters of what represents a fair negotiation or do you simply want any offer that "sounds good"?
Do you have the time it takes to contact and negotiate your lender/servicer?
Do you have a grasp of what your lender/servicer is being communicated? Do you understand the technical language?

The point is........just like in most legal issues - YOU ARE FREE TO REPRESENT YOURSELF VIA PRO PER.........but are you willing to take that chance rather than consult with an Attorney? YOU ARE FREE TO ATTEMPT TO HEAL YOUR OWN WOUND OR CREATE WHATEVER REMEDY YOU THINK WILL HEAL YOU but are you willing to take that chance rather than consult with a Doctor? For most, your home represents your most important investment and while in any environment there are scam artist, paraprofessionals or the like, it's nothing like having solid professional representation to protect your interest.

permission to be granted shared by Mercury News

You are your best mortgage negotiator

Drew Voros, Business editor

LAST WEEK it was revealed that Bernard Madoff, former chairman of Nasdaq, is being charged as the brains and salesman of one of Wall Street's — and perhaps the world's — biggest Ponzi schemes, $50 billion and counting.

This is not a corporate paper Ponzi play: Essentially one man, his reputation and incredible investment returns sucked in the rich and famous, charities, pension funds and banks around the globe.

In the light of the day, the only thing the victims invested in was a Ponzi scheme where new money raised went to pay returns to earlier investors. When investors dried up during this fall's market meltdown, Madoff's house of straw came crashing down.

New York's high society was particularly mauled by this crime, proving that the rich are as susceptible to scams as the middle class and poor.

More disconcerting to me, though, are scams that are proliferating on a smaller scale, playing on the fears of homeowners facing financial ruin.

Who says you cannot squeeze water from a rock? All you have to do is watch the newest breed of questionable businesses: loan modification negotiators.

A couple of months ago, these were the companies that were going to keep you out of foreclosure by negotiating with your mortgage company. A couple of years ago, these were the companies that could help you buy a home no matter what your credit score by negotiating with mortgage companies. All this, they pitch shamelessly, for the reasonable sum of $3,000, which is around the average house payment.

Preying on truly the most vulnerable, these companies purport to "help" homeowners with their mortgages.

One radio ad for a modification firm warned listeners to "beware of mortgage brokers posing to be loan-modification experts.''

Fact is, the only expert when it comes to your loan, is the company that services or owns your mortgage, or in other words, your mortgage broker.

"Beware of radio ads posing as loan-modification experts" is my slogan.

Need mortgage help? Going to miss payment? Can't handle the mortgage reset? Want to ask for a lower interest rate?

Call the company you send your mortgage payment to every month and ask them for help. It is truly that simple. Be honest with your problems, be ready to provide bank statements and income verification, and expect a road with obstacles. Redoing a mortgage can be complicated depending on who actually owns yours.

Although a good one-third of all mortgages have Fannie Mae or Freddie Mac as their owner, millions of mortgages have been spliced and diced into mortgage-backed securities, others may be part of a bankrupt portfolio like Lehman Bros.

Countrywide, the nation's largest mortgage-servicing company, or even your local bank may be the owner. Only your mortgage company can tell you.

If you are finding one brick wall after another, the next step is to call the federal government. It has a few programs, certainly not enough, that may be able to help you stay in your home. The number to call is 1-800-CALL-FHA.

Do not pay anyone to make a phone call you can make yourself.

Drew Voros is the business editor . His column appears on Wednesday and he can be reached at avoros@bayareanewsgroup.com

More Finger Pointing

2008-12-17T07:32:00.001-08:00

I don't know about you but I'm sick of the partisanship (you not me, them not us)...........if help for struggling homeowners is the battle cry, then exercise common sense and make it happen.

permission to be shared granted by Washington Post

HUD Chief Calls Aid on Mortgages A Failure
Congress Blamed For Shortcomings

By Dina ElBoghdady
Washington Post Staff Writer
Wednesday, December 17, 2008

Secretary of Housing and Urban Development Steve Preston said the centerpiece of the federal government's effort to help struggling homeowners has been a failure and he's blaming Congress.

The three-year program was supposed to help 400,000 borrowers avoid foreclosure. But it has attracted only 312 applications since its October launch because it is too expensive and onerous for lenders and borrowers alike, Preston said in an interview.

"What most people don't understand is that this program was designed to the detail by Congress," Preston said. "Congress dotted the i's and crossed the t's for us, and unfortunately it has made this program tough to use."

The criticism comes as Congress prepares to weigh in with further plans to help distressed borrowers facing foreclosures, which are at the root of the financial meltdown. This week, House Speaker Nancy Pelosi (D-Calif.) demanded that the Treasury Department use some of the money from the $700 billion emergency rescue package to help at-risk homeowners.

One of several federal and state foreclosure prevention initiatives facing difficulties, HUD's Hope for Homeowners program has been especially hamstrung. For instance, a program launched by the Federal Deposit Insurance Corp. on behalf of IndyMac Bank customers has modified more than 3,500 mortgages in two months of operation.

Rep. Barney Frank (D-Mass.), who helped steer the HUD program through Congress, said some of the federal bailout money should be used to revamp it. Frank acknowledged the initiative has its problems, but he blamed them on the Bush administration.

"That's partly their fault," said Frank, chairman of the House Financial Services Committee. "The administration was critical of the program and kept putting pressure on us to make it cheaper and more restrictive. . . . If it hadn't been for the Bush administration's opposition, we would have written it in a better way in the first place."

The goal of the program, run by the Federal Housing Administration, was to allow borrowers who owe more than their homes are worth to refinance into more affordable 30-year fixed-rate mortgages insured by the government.

But part of the problem is that the program's success hinges on the lenders' willingness to participate.

Congress originally allowed the FHA to insure new loans for only 90 percent of a home's value. With home prices plunging, borrowers who have little or no equity in their homes and cannot otherwise come up with the remaining 10 percent qualify only if the lender forgives this balance. Lenders balked.

Late last month, Congress granted HUD permission to increase the amount that's insured and the department decided to guarantee up to 96.5 percent of the value of new loans. Preston in the interview praised that change. But its impact remains unclear.

"Getting the lenders to agree . . . has been our biggest challenge," said Peyton Herbert, director of foreclosure services at HomeFree USA, a housing counseling firm in Hyattsville. "They want dollar for dollar what's owed on that loan or something close to it. That's the fly in the ointment."

The list of impediments goes on. Borrowers who participate in the program must pay hefty fees and high interest rates, and they must split any increased value with the federal government when the home is sold.

"You're paying a premium to borrow the money already, and that ought to be enough," said John Taylor, chief executive of the National Community Reinvestment Coalition. "To me this falls into the category of, we want your firstborn."

A further hindrance: The mortgage payment must exceed 31 percent of a borrower's income as of March, which does not help people who have since fallen into trouble.

Add to that the fact that borrowers must also provide two-years of financial records and sign a statement that they did not give false or misleading information on their original loan application and the bar gets even higher. It becomes even more difficult to attract borrowers who took out loans without verifying their income.

"How do you do that?" Preston said. "That was legislated."

For all those reasons, FHA Commissioner Brian Montgomery said he got an earful from agitated lenders, housing counselors and real estate agents at a seminar last month in Atlanta designed to educate housing professionals about the Hope for Homeowners program.

"What we thought would be a civil and cordial exchange with the several hundred people gathered turned into an almost rock-throwing episode," Montgomery said.

He said Capitol Hill lawmakers were hampered by a philosophical divide within their ranks when they cobbled the program together and that led to a compromise that made little sense.

"There were two philosophies on the Hill: Let's throw the barn door open and help as many people as we can regardless of the reasons. Or we need to make them pay because they should have known what they were doing," Montgomery said. "They found some middle philosophical ground, but that philosophical middle ground made [the program] unworkable."

Montgomery complained that any minor adjustment to the program must be passed through an oversight board, which further slows the FHA's response time.

Frank called Montgomery's assessment of Congress's handling of the legislation "dishonest."

As for oversight, he said the board is made up of Bush appointees. "Shame on them if that's the problem."

Frank acknowledged, however, that concessions had to be made to make the program palatable to the American public. This is why borrowers who take part in it must share any gains from appreciation in home values with the government.

"You're not going to get a program approved that helps people refinance loans on their homes and then allows them to turn around the following year and make a profit on that home," Frank said.

Frank provided a letter he wrote to Treasury Secretary Henry M. Paulson Jr. in late November urging him to use the bailout money Congress approved for rescuing the financial markets to reduce the upfront and annual fees, because these are reducing use of the Hope for Homeowners program.

In another letter to Paulson, Preston, Federal Reserve Chairman Ben Bernanke and FDIC Chairman Sheila C. Bair, Frank made a few more suggestions and praised HUD's decision to increase the proportion of loans that the FHA can insure to 96.5 percent from 90 percent.

But yesterday, he said the FHA's leadership in these trying times has been a "disappointment."

Montgomery said Frank's ire at his agency is misdirected. "Barney Frank may have a beef with some of the Republicans," he said, "but he shouldn't have a beef with us."

This should have been done First!!!!!

2008-12-16T07:40:00.000-08:00

Since Paulson decided to pull an arbitrary hat trick and not use a portion of the first leg of the bailout to assist homeowners, Congress is in the process of titled the table and putting some strong demands if there is to be a second round.

permission to be shared granted by CBS Marketwatch

Bill to help homeowners will be ready in January

Treasury would be required to modify some mortgages if it wants $350 bln

By Ronald D. Orol, MarketWatch

WASHINGTON (MarketWatch) -- House Speaker Nancy Pelosi said Monday she is directing a key lawmaker to write legislation that would specifically require Treasury to take steps to help homeowners avoid foreclosure if it wants access to the second $350 billion in government bank bailout funds.

"It was very clearly spelled out in the initial legislation that funds would be used for mortgage foreclosure forbearance," Pelosi said at a news conference.

Pelosi asked House Financial Services Committee chairman Barney Frank, D-Mass., on Monday to write a bill that would require Treasury to modify some mortgages if it wants access to a government bank bailout fund.

Steve Adamske, a spokesman for the House Financial Services Committee, said Frank has begun work on the bill Monday and expects it to be ready sometime in the first week of January.

The legislation could be expedited should Treasury seek out the funds earlier. Adamske added that Frank is considering a number of foreclosure mitigation conditions on the funds, including a provision that could make some of the funds available to modify mortgages in a way that could help millions of homeowners avoid foreclosure.

Adamske added that the Frank bill may also include provisions to expand a Hope for Homeowners program that will refinance mortgages for borrowers who are having a hard time making their payments, but can afford a new loan insured by the Housing and Urban Development's Federal Housing Administration.

The measure may also press Treasury to allocate the funds to buy individual mortgages and mortgage backed securities. When Congress and the Bush administration approved a $700 billion bank bailout fund on Oct. 3, lawmakers expected the Treasury department to use the capital to buy mortgage backed securities and individual mortgages. But after markets continued to plummet, Treasury Secretary Henry Paulson chose instead to use a provision in the new law to buy large minority stakes in financial institutions as a means of quickly injecting confidence in the banks.

Any mortgage mitigation provision may be formed based on a proposal introduced by Federal Deposit Insurance Corp. chairwoman Sheila Bair. Bair is seeking $24.4 billion of the funds for a mortgage modification program she believes could avert 1.5 million foreclosures.

Ronald D. Orol is a MarketWatch reporter, based in Washington.

Are we on the way to Mortgage Recovery?

2008-12-15T07:50:00.000-08:00

Quietly in 2007 and heating up to become a full blown crisis for all of 2008.......so far, has been the depth of our foreclosure crisis. I'm sure some families have been helped through the Loan Modification or Short Sale process but countless more, who are trying to access the system have not been successful. There is an onslaught in the industry as what should be a simple solution has turned into a quagmire that few could predicts.

The bottom line question is when will normalcy return? If you're a fan of 60 minutes or happened to catch the program on 12/14, Scott Pelley did an interview that indicates we are not even in the middle of the storm!!!! It is predicted the zillions with Option Arms and other Alt-A products will lead the onslaught for 2009, 2010, 2011 and beyond. There is a prediction the environment will remain for at least 5 more years.

permission to be shared granted by CBS News

IF YOU ARE ABLE TO ACCESS CLICK THIS LINK AS IT HAS VIDEO
http://www.cbsnews.com/stories/2008/12/12/60minutes/main4666112.shtml

IF NOT HERE IS THE WRITTEN TRANSCRIPT

A Second Mortgage Disaster On The Horizon?

(CBS) When it comes to bailouts of American business, Barney Frank and the Congress may be just getting started. Nearly two trillion tax dollars have been shoveled into the hole that Wall Street dug and people wonder where the bottom is.

As correspondent Scott Pelley reports, it turns out the abyss is deeper than most people think because there is a second mortgage shock heading for the economy. In the executive suites of Wall Street and Washington, you're beginning to hear alarm about a new wave of mortgages with strange names that are about to become all too familiar. If you thought sub-primes were insanely reckless wait until you hear what's coming.

One of the best guides to the danger ahead is Whitney Tilson. He's an investment fund manager who has made such a name for himself recently that investors, who manage about $10 billion, gathered to hear him last week. Tilson saw, a year ago, that sub-prime mortgages were just the start.

"We had the greatest asset bubble in history and now that bubble is bursting. The single biggest piece of the bubble is the U.S. mortgage market and we're probably about halfway through the unwinding and bursting of the bubble," Tilson explains. "It may seem like all the carnage out there, we must be almost finished. But there's still a lot of pain to come in terms of write-downs and losses that have yet to be recognized."

In 2007, Tilson teamed up with Amherst Securities, an investment firm that specializes in mortgages. Amherst had done some financial detective work, analyzing the millions of mortgages that were bundled into those mortgage-backed securities that Wall Street was peddling. It found that the sub-primes, loans to the least credit-worthy borrowers, were defaulting. But Amherst also ran the numbers on what were supposed to be higher quality mortgages.

"It was data we'd never seen before and that's what made us realize, 'Holy cow, things are gonna be much worse than anyone anticipates,'" Tilson says.

The trouble now is that the insanity didn't end with sub-primes. There were two other kinds of exotic mortgages that became popular, called "Alt-A" and "option ARM." The option ARMs, in particular, lured borrowers in with low initial interest rates - so-called teaser rates - sometimes as low as one percent. But after two, three or five years those rates "reset." They went up. And so did the monthly payment. A mortgage of $800 dollars a month could easily jump to $1,500.

Now the Alt-A and option ARM loans made back in the heyday are starting to reset, causing the mortgage payments to go up and homeowners to default.

"The defaults right now are incredibly high. At unprecedented levels. And there’s no evidence that the default rate is tapering off. Those defaults almost inevitably are leading to foreclosures, and homes being auctioned, and home prices continuing to fall," Tilson explains.

"What you seem to be saying is that there is a very predictable time bomb effect here?" Pelley asks.

"Exactly. I mean, you can look back at what was written in '05 and '07. You can look at the reset dates. You can look at the current default rates, and it's really very clear and predictable what's gonna happen here," Tilson says.

Just look at a projection from the investment bank of Credit Suisse: there are the billions of dollars in sub-prime mortgages that reset last year and this year. But what hasn't hit yet are Alt-A and option ARM resets, when homeowners will pay higher interest rates in the next three years. We're at the beginning of a second wave.

"How big is the potential damage from the Alt As compared to what we just saw in the sub-primes?" Pelley asks.

"Well, the sub-prime is, was approaching $1 trillion, the Alt-A is about $1 trillion. And then you have option ARMs on top of that. That's probably another $500 billion to $600 billion on top of that," Tilson says.

Asked how many of these option ARMs he imagines are going to fail, Tilson says, "Well north of 50 percent. My gut would be 70 percent of these option ARMs will default."

"How do you know that?" Pelley asks.

"Well we know it based on current default rates. And this is before the reset. So people are defaulting even on the little three percent teaser interest-only rates they're being asked to pay today," Tilson says.

That second wave is coming ashore at a place you might call the "Repo Riviera" - Miami Dade County. Oscar Munoz used to sell real estate; now his company clears out foreclosed homes.

"Business is just going through the roof for us. Fortunately for us, unfortunately for the poor families who are going through this," Munoz explains.

"I wonder do you ever come to houses where the people are still here?" Pelley asks.

"Absolutely," Munoz says. "That's really a sad situation. I'd rather not meet the people."

Asked why not, Munoz says, "It’s not easy to come in and move a family out. It's just our job to do it for the bank. It's just the nature of what's going in the market right now."

Munoz says his company alone gets about 20 to 30 assignments per day. "And we're one of the few companies right now who are hiring. We have to hire people because the demand is so high," he tells Pelley.

People who've been evicted tend to leave stuff behind. The next house is usually much smaller. Banks hire Munoz to move the possessions out where, by law, they remain for 24 hours. Often the neighbors pick through the remains.

Once the homes are empty the hard part starts - trying to find buyers in a free-fall market.

Miami real estate broker Peter Zalewski talks like a man with a lot of real estate to move. "We have 110,000 properties for sale in South Florida today, 55,000 foreclosures, 19,000 bank owned properties. Sixty-eight percent of the available inventory is in some form of distress. They need someone to clean it up."

Asked what the name of his company is, Zalewski says, "It's called Condo Vultures Realty."

What does that mean?

"That in times of distress, and in times of downturn, there's opportunity. And you know, vultures clean up the mess. A lot of people seem to think they kill, but they don't actually kill, they clean," he says.

The killing, in Miami, was done by the developers back when it seemed that the party would never end. They sold hyper-inflated condos at what amounted to real estate orgies-sales parties for invited guests who were armed with option ARM and Alt-A loans. "There were red ropes outside. They had hired cameramen, and they had hired photographers to almost set the scene of a paparazzi," Zalewski remembers.

"They were hiring fake paparazzi? To make the customers feel like they were special?" Pelley asks.

"You were selling a lifestyle," Zalewski says.

Asked what roles these exotic mortgages played, Zalewski says, "They were essential. They were necessary. Without the Alt A or option ARM mortgage, this boom never would've occurred."

It never would have occurred because without the Alt As and the option ARMs, many buyers never would have qualified for a loan. The banks and brokers were getting their money up front in fees, so the more they wrote, the more they made.

"They stopped checking whether the income was even real. They turned to low and no-doc loans, so-called 'liar's loans' and jokingly referred to as 'ninja loans.' No income, no job, no assets. And they were still willing to lend," Tilson says.

"But help me out here. How does that make sense for the lender? It would seem to be reckless, in the extreme," Pelley remarks.

"It was," Tilson agrees. "But the key assumption underlying, the willingness to do this was that home prices would keep going up forever. And in fact, home prices nationwide had never declined since the Great Depression."

On the way up, everyone wanted in. No one expected to feel any pain. People like acupuncturist Rula Giosmas became real estate speculators.

Giosmas says she bought about six properties in this last five-year period as investments. She says she put 20 percent down on each. Now they're all financed with option ARM loans.

Asked what she understood about the loans, Giosmas says, "Well, unfortunately, I didn't ask too many questions. I mean in the old days, I would shop around. But because of the frenzy, and I was so busy looking to buy other properties, I didn't really focus on shopping around for mortgage brokers."

"But if you're investing in real estate, you're buying multiple properties, you should be asking a lot of questions," Pelley remarks. "Why didn't you ask?"

"I was busy. I was really busy looking at property all the time, all day long," she replies.

She also acknowledges that she didn't read the paperwork. Now she’s losing money on every property.

"You know that there are people watching this interview who are saying, 'You know, she was just foolish. She was greedy and foolish. She was buying small apartment buildings and wasn't paying enough attention to how they were financed,'" Pelley points out.

"My full-time job is I'm an acupuncturist. So, this was just a side thing," she says.

Giosmas says she was misled and she hopes to renegotiate her loans. But many other buyers have simply walked away from their properties. One Miami luxury building was a sellout, but when 60 Minutes visited, a quarter of the condos were in foreclosure.

Zalewski says one of those condos was originally purchased in October 2006 for $2.4 million. Now he says the asking price from the lender is $939,000.

And there are tough years to come because, just like the sub-primes, the Alt-A and option ARM mortgages were bundled into Wall Street securities and sold to investors.

Sean Egan, who runs a credit rating firm that analyzes corporate debt, says he expects 2009 to be miserable and 2010 also miserable and even worse.

Fortune Magazine cited Egan as one of six Wall Street pros who predicted the fall of the financial giants.

"This next wave of defaults, which everyone agrees is inevitably going to happen, how central is that to what happens to the rest of the economy?" Pelley asks.

"It's core. It's core, because housing is such an important part. We're not going to get the housing industry back on track until we clear out this garbage that's in there," Egan explains.

"That hasn't cleared out yet. We haven't seen the bottom," Pelley remarks.

"It's getting worse," Egan says. "There are some statistics from the National Association of Realtors, and they track the supply of housing units on the market. And that's grown from 2.2 million units about three years ago, up to 4.5 million units earlier this year. So you have the massive supply out there of units that need to be sold."

"What with the housing supply increasing that much, what does it mean?" Pelley asks.

"It means that this problem, the economic difficulties, are not going to be resolved in a short period of time. It's not gonna take six months, it's not gonna 12 months, we're looking at probably about three, four, five years, before this overhang, this supply overhang is worked through," Egan says.

In the next four years, eight million American families are expected to lose their homes. But even after the residential meltdown, Whitney Tilson says blows to the financial system will keep coming.

"The same craziness that occurred in the mortgage market occurred in the commercial real estate markets. And that's taking a little longer to show. But there are gonna be big losses there. Credit cars, auto loans. You name it. So, we're still, you know, we're maybe halfway through the mortgage bubble. But we may only be in the third inning of the overall bursting of this asset bubble," Tilson says.

"Does that mean that the stock market is gonna continue plunging as we've seen the last several months?" Pelley asks.

"Actually we're the most bullish we've been in 10 years of managing money. And the reason is because the stock market, for the first time I can say this, in years, has finally figured out how bad things are going to be. And the stock market is forward looking. And with U.S. stocks down nearly 50 percent from their highs, we're actually finding bargains galore. We think corporate America's on sale," Tilson says.

The stock market will still have a lot of figuring to do with more troubling news on the horizon. The mortgage bankers association says one out of 10 Americans is now behind on their mortgage. That's the most since they started keeping records in 1979.

A Tough Week For Loan Modifications & the Economy

2008-12-12T07:42:00.000-08:00

As the economy spiraled out of control earlier in the year, everyone hailed the TARP (Troubled Asset Recovery Program) hailed by Secretary Paulson as one remedy to help those in trouble with their mortgage payments.
But.......after this week's news of Mod's going back into default even though the terms/payments had been adjusted - everyone is shaking their head and wondering:

Our borrowers simply belligerent and all of a sudden refuse to pay their bills?
Are mortgage lenders/servicers creating a solid payment for the homeowners TO SUCCEED OR TO FAIL?
Is the economy worse than everyone expected, thus further impacting those in need of Mod assistance?

These are just several questions to ponder and while you're at it - you gotta also wonder how Congress/Senate quickly approved the Bailout for Wall Street and the Banks, yet would not approve A Loan for the Big 3?

You Won't Believe This But We'll Share It Anyway

2008-12-11T07:51:00.000-08:00

The two largest companies who purchased mortgages from most lenders (Fannie Mae & Freddie Mac) recently testified that the government's increased pressure to modify mortgage negatively impacts their survival.
Hey they better wake up and understand that 100% of Nothing is Zero and if they don't get serious about modifying mortgages that make it more affordable for homeowners instead of throwing a token reduction - more properties will be lost cause you can't pay want you don't have.

permission to be shared granted by The Washington Post

Modifying the Mortgage Giants
Fannie, Freddie Tilt From Profit Goals Toward Public Mission to Buoy Market

By Zachary A. Goldfarb
Washington Post Staff Writer
Monday, December 8, 2008; D01

After the government announced last month that Fannie Mae and Freddie Mac would take new steps to modify tens of thousands of mortgages to make them more affordable, some executives expressed concerns that the moves could weaken their already struggling companies.

Fannie Mae's chief executive, Herbert M. Allison Jr., acknowledged these fears in a staffwide message. "As we take further steps to aid homeowners, some employees are asking about the potential cost to the company of modifying loans to help distressed borrowers," he wrote. "Our challenge is to keep families in their homes and support the mortgage markets."

In the long-running contest between profits and public policy at Fannie and Freddie, public policy is winning.

Fannie and Freddie have always had to strike a balance between the imperative of profit-maximizing, shareholder-owned institutions and the public mission of firms charged with ensuring affordable housing. But since the government seized the firms in early September, the balance has shifted.

"We're tilting toward the public mission of the company to safeguard homeowners," Allison said in an interview.

Last week, sources said the Treasury Department was strongly considering a plan to use Fannie Mae and Freddie Mac to dramatically force down what Americans pay for home loans. The plan would require that Fannie and Freddie buy 30-year, fixed-rate mortgages if they have a 4.5 percent interest rate, the lowest in history. In turn, the Treasury would purchase these loans from the companies.

Allison, Freddie chief executive David M. Moffett and the federal regulator who hired them, James B. Lockhart III, must walk a fine line. Taking steps to support the housing market and help borrowers could cost the firms, depriving them of revenue and forcing them to assume even riskier investments. And the Treasury has put taxpayer money on the line for up to $200 billion in losses at the companies.

But doing too little could delay a housing recovery as more homes fall into foreclosure and people have trouble getting home loans. That could also hurt the bottom line. "If housing prices continue to fall, losses will mount at Fannie and Freddie," Lockhart said. "There's no doubt that the sooner we can get stability to the mortgage market, the better off they will be."

There are other questions -- for instance whether the companies will eventually resume their traditional rivalry as private enterprises or remain under government control indefinitely. The unusual hybrid nature of Fannie Mae and Freddie Mac dates back 40 years when they were chartered by Congress to supply financing to the mortgage market and support affordable housing.

With the government still insisting that the firms pursue both a public policy agenda and profitability, executives have yet to resolve how far they should tilt toward the former. Using identical language, the companies said in recent financial disclosures that the various goals "create conflicts in strategic and day-to-day decision making that will likely lead to less than optimal outcomes for one or more, or possibly all, of these objectives."

In the past three months, Fannie and Freddie have announced they are modifying tens of thousands of mortgages, suspending foreclosures and evictions during the holiday season, canceling fees to back home loans and expanding their purchases of mortgages and mortgage-backed securities.

The moves are in part a reversal of what Fannie and Freddie were doing before being taken over. This summer, the companies were raising fees and buying fewer mortgages with the goal of conserving cash and building up their financial cushion to withstand billions in losses in the mortgage market meltdown.

More broadly, in the latter years of the housing boom, Fannie and Freddie often put shareholder profit first, moving into riskier areas of the mortgage business in search of higher returns.

Within weeks of the government's takeover, several senior executives at both firms left as the new chief executives installed their own teams. More recently, Freddie's treasurer, Timothy Bitsberger, who, a source said, privately argued that the company shouldn't expand its portfolio of mortgages in the face of a collapsing market, resigned. Bitsberger, a former Treasury official and Wall Street trader, declined to comment.

Other executives with experience in the mortgage market would also like to leave because the companies are no longer the high-flying finance houses they once were, according to current and former executives. But these senior employees are staying because the companies have put in place cash retention programs and there are no jobs to be had on Wall Street.

One source of tension inside the firms was the decision by their new chief executives to cancel a planned increase in the fees that Fannie and Freddie charge when they buy mortgages from lenders, bundle them, guarantee them against default and then sell them to investors. The fees would have been passed on to borrowers, increasing the cost of home loans. Some at Fannie and Freddie argued the fees were necessary given the losses the companies were facing.

"They were thinking about it from an economic standpoint. They made a strong case that it would maximize their profits," Lockhart said. "On the other hand it would have been the wrong thing to do for housing market."

Lockhart urged that the fee increase be canceled, and the companies ultimately closed ranks around this position.

What the companies ought to be doing under government control has at times been perplexing. Initially, the Treasury tapped Fannie and Freddie to help run a program buying troubled assets from banks and other financial firms, according to two people familiar with the matter. Then, the Treasury abandoned the effort in favor of injecting capital into banks.

No initiative has been more illustrative of the shift at the companies than their efforts to prevent foreclosures. When the government took over Fannie and Freddie, neither Lockhart nor Treasury Secretary Henry M. Paulson Jr. mentioned combating foreclosures as a goal.

At the time, the government wanted Fannie and Freddie to pump cash into the mortgage market with the hope of reducing interest rates. The accelerating crisis in the financial markets this fall made that very difficult by undermining Fannie and Freddie's efforts to obtain affordable financing.

Last week, in an acknowledgment that Fannie and Freddie couldn't fix the home loan market by themselves, the Treasury and Federal Reserve announced a $500 billion program to buy mortgages, which has already helped lower mortgage interest rates.

Weeks before that announcement, with the firms' efforts to buy mortgages running into trouble because of the financial crisis, Fannie and Freddie's agenda was already focused on preventing foreclosures.

In mid-November, Lockhart made a high-profile announcement that Fannie and Freddie would establish a new program to modify mortgages. The program targets borrowers who are three months late on their payments. These borrowers would have their mortgages modified so that their monthly payment equals 38 percent of their income -- by extending the loan term to 40 years, reducing the interest rate and even delaying payment on part of the principal.

The program had critics inside and outside government. The Federal Deposit Insurance Corp.'s chairman, Sheila C. Bair, who has tussled with the Bush administration over her desire to use part of the government's bailout fund to modify mortgages, said at the time that Fannie and Freddie's plan "falls short of what is needed to achieve wide-scale modifications of distressed mortgages."

Bruce Marks, executive director of the Neighborhood Assistance Corporation of America, called the plan just "symbolism."

"Very few people will qualify," he said, "and the people who do qualify will pay such a high percentage of their income for their mortgage payments that they will have very little left for the basic necessities."

Marks held a protest with 100 people in October outside Fannie's Wisconsin Avenue headquarters, and Allison invited him inside, talking with him for an hour in the first of two meetings. Although critical, Marks credited Allison with being open-minded. "He was not afraid to ask the questions, to push the issue and to voice his opinion," Marks said.

In late November, Lockhart, Allison and Moffett made their first pilgrimage to the office of Rep. Barney Frank (D-Mass.), chairman of the influential House Financial Services Committee.

Frank, who had complained that the administration was not doing enough to help struggling borrowers, had invited the three men to learn how they would address foreclosures. Sitting side by side, Lockhart, Allison and Moffett explained what they were doing but added that other firms owned most of the country's distressed mortgages and needed to take big steps, too.

Fannie and Freddie are now considering additional steps, including reducing the amount of income applied toward a mortgage and modifying loans before they become delinquent, according to people familiar with the companies' plans. "We're not going to be bound by past policies, traditions and habits," Allison said. "And we're going to take a very open and unfettered look at how we're operating."

Are Lenders/Servicers going through the motion in completing Loan Mods?

2008-12-10T07:30:00.000-08:00

You gotta ask yourself that question and wonder if the Mods were done correctly in the first place perhaps so many who received a Mod would wind up back into default. C'mon who in their right mind would go through the Mod process and only further jeopardize their house within the same year? Lenders/Servicers are going to be forced to use better judgement and start making Loan Mods based on what the client can afford (based on the documentation presented) instead of continuing down to road of setting up homeowners with an offer, although perhaps better than their current mortgage payments, still far from what makes financial sense as the spirit of the process is to get the homeowner back on their feet so bottom line - payments can be received on time........Each and Every Month!!!!!!!

permission to be shared granted by The Boston Globe

Reworked mortgages not working

Even after help, homeowners end up back in default

Representative Barney Frank threatened to tie up financial industry rescue money unless some is used to modify troubled mortgages.

By Jenifer B. McKim Globe Staff

More than half of delinquent borrowers who had their mortgages reworked earlier this year to avoid foreclosure were behind on their new loan payments after just six months, a federal regulator said yesterday.

John C. Dugan, US comptroller of the currency, told a housing forum yesterday that data his agency is collecting show the increase in repeat defaults by homeowners is "remarkably high."

"Put simply, it shows that over half of the loan modifications seemed not to be working after six months," Dugan said.

The findings raise several major questions for government and lending industry executives as they struggle for a fix to the nation's foreclosure crisis: Are lenders not doing enough to modify loans so delinquent borrowers can afford them? Or, are too many borrowers just not cut out to be homeowners and shouldn't be bailed out of their debts?

Dugan said his agency is asking lenders and their representatives why these redefault rates are so high. But many housing advocates and industry specialists said they already know: Lenders are failing to give troubled homeowners affordable long-term fixes. In fact, lenders were more likely to offer a modified loan that resulted in a higher, not lower, monthly payment, according to a recent report by analysts at the financial services company Credit Suisse.

Ask LaWanda Fils. This single mother was behind on payments on her Dorchester two-family home when she asked for help from her lender, Option One Mortgage Corp. The solution Option One offered didn't seem to make sense - she would pay $800 a month more, after rolling in past-due principal, taxes, and insurance. Desperate to save her home, Fils agreed to the deal anyway in February.

Two months later, she defaulted and now is again facing foreclosure.

"I think it is more for them to pat themselves on the back to say at least they tried," said Fils. "It's not feasible and it doesn't work and they end up having people falling behind."

Option One declined to comment.

Loan modifications can take several forms. Lenders can either reduce the mortgage's interest rate, which results in a lower payment; they can write off some of the unpaid principal, which could either lower monthly payments or lower overall debt; or they could postpone some of the debt or extend the life of the loan, which may lower payments in the short term, but drive costs over the life of the loan higher.

A loan modification can result in a higher payment if lenders roll back into the note unpaid principal, as well as interest and escrowed taxes, according to Faith Schwartz, executive director of Hope Now, a private sector alliance of mortgage servicers, counselors, and investors that is coordinating loan modifications.

"They tried to help them, but they could have foreclosed as the alternative," Schwartz said. She added lenders should examine the federal data to see which approach works and which doesn't. "It doesn't mean they didn't get a lower rate."

Even some professionals in the lending industry are mystified at why so many companies are charging delinquent borrowers more in a modified loan when they clearly could not afford the original, lower amount.

"I don't know why a lender would enter into that kind of agreement knowing what the outcome would be," said Kevin Cuff, executive director of the Massachusetts Mortgage Bankers Association. "Why would it not go into foreclosure? Why would it not fail?"

The new federal data did not distinguish among types of loan modifications. It showed that of borrowers receiving loan modifications earlier this year, 39 percent were 30 days in arrears after three months, and 51 percent after six months.

Dugan said 60 days in arrears is a more reliable indicator of homeowners who will ultimately lose their homes. On that measure, the results were equally dismal: More than 35 percent were 60 days past due on their mortgage payments six months after getting help.

It's clear the type of help can determine the outcome. Credit Suisse's analysis revealed that 44 percent of modifications that included higher payments redefaulted within eight months. Meanwhile, among those who had some of their principal permanently forgiven, 23 percent had redefaulted within eight months, while just 15 percent of those with adjustable rates whose rates were decreased or frozen had defaulted.

Even an increasingly popular proposal floated by the head of the Federal Deposit Insurance Corp. to refinance as many as 2.2 million troubled homeowners into affordable, fixed-rate mortgages estimates as many as a third, or about 700,000, could fall behind again by the end of 2009.

US Representative Barney Frank said that even with significant default rates, the majority of those who are helped stay in their homes and slow the bleeding in neighborhoods struggling from abandonment and blight.

Frustrated with the pace of help to homeowners, the Newton Democrat yesterday threatened to tie up the remaining half of the $700 billion financial industry rescue money unless the Bush administration provided some of it for modifying troubled loans.

Other specialists said the problem is as much the homeowners. Paul Willen, an analyst for the Federal Reserve Bank of Boston, said too many borrowers simply cannot afford to own their homes.

"Many of the people in the foreclosure process are in deep, deep trouble. They are not a modified loan away from financial happiness," said Willen. "Many people who are heading into foreclosure don't need a modification, they need an exit strategy."

Jenifer McKim can be reached at jmckim@globe.com.