Fannie Mae recently launched WaysHome, an interactive video to educate homeowners about their options to avoid foreclosure, motivate them to make the right decisions, and encourage them to seek help. WaysHome is part of Fannie Mae's Know Your Options initiative to help today's struggling homeowners. Check it out at: www.KnowYourOptions.com.

Overview
WaysHome, a unique and innovative learning tool, allows homeowners to put themselves in real-life situations facing today's borrowers, make decisions, and see the consequences of their actions. Through WaysHome, homeowners can:      

• Participate in an interactive video simulation.      
• Select a character and go through the simulation "playing" that character.
• Follow characters as they encounter financial hardships and challenges that affect their ability to pay their mortgage.      
• Choose different paths based on real-life situations.
• Experience the positive outcomes or negative consequences of their choices, i.e., if they avoid taking action, foreclosure may be their only option.      
• Learn about options that may be available to help.      
• Discover the right paths to avoid foreclosure, know their options, and find their way home.

Agent benefits:
Our research shows that many homeowners still don't know about or understand their options to avoid foreclosure, and many homeowners who are seriously delinquent or in foreclosure have little to no contact with their mortgage company. WaysHome is designed to encourage homeowners to take action before it's too late.  

If you or your clients have questions or would like to order free copies of the WaysHome DVD, email ways_home@fanniemae.com.  

Most of us understand that when we borrow money to buy real estate we sign a document that requires us to pay back the money over time to the bank. Most borrowers loosely refer to that debt as a "mortgage." When our most recent market bubble burst many Americans, unfortunately, became intimately familiar with what happens when they don't make their mortgage payments - Foreclosure.

The Foreclosure process is different depending on the state in which you reside and the two different foreclosure processes have very different impacts and time lines. For instance, when JP Morgan Chase and GMAC Rescap announced they would be halting foreclosures, the decision only affected 23 states; the reason, only 23 states require court approval to amend foreclosure affidavits. These differences find their roots both in the mortgage laws our country inherited after the split from England, and later common law changes which occurred in some states after legal challenges.

Background - Title Theory vs. Lien Theory

Simply put the foreclosure process your state follows can depend on whether the state laws subscribe to the idea that a loan is simply a lien against your property "lien theory" or that a loan is a conveyance of title to the lender until the borrower pays back the loan in full "title theory." English mortage law follows title theory, therefore when our country began, the mortgage laws required title "ownership" of the home be transferred to the lender until the debt was paid off.

In 1791 attorneys in the state of South Carolina argued successfully that a mortgage, despite its wording, simply created a lien against title giving lenders the right to acquire title only after the proper foreclosure proceedings had been followed in a court of law. Thus with the Act of 1791 South Carolina became the first state in the Union to subscribe to lien theory with regard to mortgages. Since then 33 states have adopted the lien theory, while nine states continue to subscribe to title theory. Nine other states, and the District of Columbia, use an intermediary theory where the mortgage is treated as a lien unless the borrower defaults, at that time title is conveyed to the lender to pursue foreclosure.

Mortgage vs. Trust Deed

Although many Americans call the loan against their property a mortgage, many of them actually agree to a different instrument with their lenders - a Trust Deed. The differences include both the number of parties involved in the transaction, who technically holds title to the property, and ultimately how the foreclosure process will proceed.

A mortgage is an actual document that borrowers sign and convey to their lender in order to secure a debt on their home. It involves two parties, the borrower (mortgagor) and the lender (mortgagee), and creates a lien against the property that is normally recorded in public records. This lien prevents the borrower from transferring title or ownership until the debt (mortgage) is paid in full and the lien released.

The title holder during the loan period can be either the borrower or lender depending on which custom is practiced in the state where the property is located – “title theory” or “lien theory.” As discussed above, the borrower conveys title to the lender during the loan term in a "title theory" state and continues to hold title in "lien theory" states. When a mortgage is the security instrument, the lender usually has to go through a court action to foreclose. This is called a judicial foreclosure.

Unlike a mortgage, a trust deed (aka deed of trust) involves three parties – the borrower (trustor), the lender (beneficiary), and the trustee. The purpose of the trustee is to act as a neutral third party holding title until the debt is paid in full. Who is eligible to be a trustee varies from state to state although most often trustee services are provided by either a title company or an attorney. Actually, trust deed agreements include two documents, the trust deed which conveys title to the trustee and the promissory note between the lender and the borrower, outlining the terms of the agreed upon loan.

Another significant difference is in the foreclosure process. When a deed of trust is involved, foreclosure is faster, less expensive, and less complicated than when a mortgage is the security instrument. If the loan becomes delinquent, the trustee has the power to sell the home (as conveyed in the trust deed itself). As protection to the borrower, the lender must first provide the trustee with proof of delinquency and request that foreclosure proceedings be initiated, then progress according to law and as dictated by the deed of trust. This type of foreclosure does not have to go through the court system and is commonly referred to as a non-judicial foreclosure.

Judicial vs. Non-Judicial Foreclosure

Perhaps the most vexing position to hold as a lender is to be plaintiff in a lawsuit against the unfortunate family, in financial hardship, facing the prospect of losing their family home. In many states across the country foreclosure proceedings still take place in a court of law, sometimes in front of a jury, to decide whether or not a lender can take back real estate in the foreclosure process. Limited to lien theory states, the timely and arduous process provides defaulted borrowers opportunity to defend their ownership and requires lenders to meticulously follow procedural laws.

The judicial foreclosure process begins with the lender filing a complaint and recording a notice of Lis Pendens (it's important to note both the predure and form will vary by state). The complaint will state what the debt is (amount and the real estate by which it's secured), and why the default should allow the lender to foreclose and take the property pledged as security for the loan.

The homeowner is given a notice of the complaint (NOC) either by mail, direct service, or publication of the notice, and will have the opportunity to be heard before the court. If the court finds the debt valid and in default, it will issue a judgment for the total amount owed, including the costs of the foreclosure process. After the judgment has been entered, a writ will be issued by the court authorizing a sheriff's sale.

The sheriff's sale is an auction, open to anyone, and is held in a public place, which can range from in front of the courthouse steps, to in front of the property being auctioned. Sheriff's sales usually require cash to be paid at the time of sale, however they may sometimes allow a substantial deposit with the balance paid later that same day or up to 30 days after the sale. At the end of the auction, the high bidder will be the owner of the property, subject to the court's confirmation of the sale (another key difference between judicial and non-judicial sales). After the court confirms the sale a sheriff's deed is prepared and delivered to the highest bidder, when recorded, the high bidder becomes the new owner of the property.

Non-judicial foreclosures, on the otherhand, are processed without court intervention, in accordance to the foreclosure procedures established by state statutes. When a loan default occurs, the homeowner will be mailed a default letter, accompanied by the filing of a Notice of Default (NOD). If the homeowner does not cure the default within the time-lines specified by the state where the property is located (in California the time period was 90 days from delivery of NOD prior to 06/15/2009 new laws have added 90 days to that process see ABX2 7 and SBX27), a Notice of Trustee Sale (NOTS) will be mailed to the homeowner, posted in public places, recorded at the county recorder's office, and published in area legal publications.

After the legally required time period has expired (21 days in California), a public auction called a Trustee Sale will be held the highest bidder becomes the owner of the property, subject to their receipt and recordation of the deed. Auctions of non-judicial foreclosures will generally require cash or a cash equivalent either at the sale, or very shortly thereafter.

Although each state dictates their own foreclosure procedures, all foreclosure actions follow either a judicial or non-judicial method. Which method typically depends on the legal theory (lien or title) practiced in the state and which instrument (mortgage or trust deed) is used to secure the debt. The implications of these actions can determine other key factors in the foreclosure process such as deficiency judgements or rights of redemption. For detailed information in your state consult an experienced real estate attorney licensed in your state.

charts courtesy of James L. Wiedemer - The Home Owner's Guide to Foreclosure

To all Broker and Agents;

Due to the foreclosure processing problems being addressed by XYZ, we have been advised not to list any assets or accept any offers until this is resolved.

In the interim, Agents are still responsible for managing and marketing the assets per the listing agreement.

MLS rules may require that you change the status in the MLS to “temporarily off market”. Please follow the MLS rules.

Even if an asset is under contract, we are in a holding pattern until XYZ gives further guidance.

Keep your asset manager advised if you encounter problems.

We will keep you updated on any status changes.

Thank you for your cooperation.

Anyone else get similar correspondance?

I guess I have finally figured it out why GMAC had been so "forgiving" about my shortsale, that the negotiator saw fit to keep stalling the auction date. Oh well maybe they are just nice people but the headlines this week say something severe.I really believe some benefits are coming out of this. We all know that the banks were hammered with defaulting property and it got beyond them to start pencil whipping things. I had a couple of friends my self that had loan mods in process and then the bank foreclosed on them. One of them is currently suing Chase.

What I think will happen is this...the fall REO storm may never come, except for Fannie and Freddie because well...they are sinking and have tons of stuff they they need to pay taxpayers with. Finally we can calm down and be realtors, offering our help to people.

The shortsale will be a mainstay for sometime and banks must be more efficient at it. We agents have much to learn about shortsales... pricing property CORRECTLY so the BPO is close to MLS price (two of my shortsales as representing the buyer recently exploded this way. Buyer walked because of too high an asking price). We need to cooperate to get the job done and not be greedy as to how much comission we make. I shop property based on what my client wants...not how much do I make on it. Had an office collegue ask me about my shortsale today and when I told her that we may need to cut into the comission split to pay the jr lien holder that the first afforded only so much to.She quickly told me that she will not work for less than 2.5 % because she has done alot of work with that buyer. Guess customer service does not come into play here because she was not willing to make it necessarily happen for her customer if they turned out they wanted to see it.

As always what we need to do is to offer SERVICE. Make sure the seller cannot qualify for a mod first and then if they appear to qualify, help them get one; list the property in case of failure. Some because of job status, will never qualify but we must outreach to homeowners and comfort them as much as possible and work on the BEST SOLUTION FOR THE HOMEOWNER not our pockets.

REO's will exist and I am convinced that they will always goto the well connected realtors. I have noticed some asset companies give assets entirely to one person : Ocwen/Altisource and Goodman and Dean are good examples of this. Unfortunately, this does not mean they are good at customer service. I saw on a particular website the names of REO brokers that were rated by normal homeowners needing their services and they were not rated favorably at all. Also had another REO agent tell me last week that I "needed to educate my buyer" about how the bank works. Seems like the bank has him by the _______...and I will not say it. I wanted to make slight changes to the addendums as they were very favorable to the sellers and I have a duty to protect my buyers. I told him everything in real estate is negotiable. He would not even explore the points I raised.

Asset companies and banks will continue to need us realtors to guide them. We are the experts in our field and need to be open to ever learning more about our profession. The mistakes made are not going away overnight.

I believe the major banks facing this crisis will be forced to more diligent in the future. Even in my state,California which is non -judicial...the state attorney general called on GMAC to explain their procedures for foreclosure.

Someday I do want to sell REO as well and do a five star job at it that will make an asset manager smile and confident, but lets see here...people still will leave estates (probate) and I do not think divorce is going away (divorce sales)..well I know , I guess I should go help Mr and Mrs Frank Mc Court and maybe Tiger get rid of some of that property.

Talk to you later my friends,

John

Well it seems that now some of the big banks are freezing foreclosure procedures due to their inavility to comply with local laws and regulations that protect the home owners or delay the foreclosure procedures, it seems that some lenders have rush the foreclosure procedures and broke the laws. First started wtih GMAC, then Chase, now Bank of America.

There are several issues with this new moratorium, first there will be more banks adding to this list, and this mess might not be sorted out until March or May of next year, that might be done on purpose because the GSE are pushing for the lender to take action on the late loans, see the news on Wells Fargo last week. http://www.dsnews.com/articles/wells-fargo-puts-stop-to-short-sale-extensions-2010-10-01. Also the OCC ordered the Largest Servicers to review their foreclosure process. This might not affect us because they are liquidating their inventory little by little to avoid a really hard crash and decline of propery values, lets face it, with low prices, low interest and no one is buying, it is hard to say if it is because they are not lending or because there is very little confidence from buyers, but also at the end of the day we all need shelter, so it makes sense to purchase now, and I have seen several potential buyer not been able to qualify for a home mortgage loan.

The other problem I see is the rumble from lawyers and previouse owners, who will try to sue the lenders for not been in compliance with the federal and local laws and regulations of the foreclosure procedures, etc. I did a cash for key on Saturday, and the borrower just kept asking me if my client was following the right procedures, if they were going to join Bank of America and Chase with this issue, etc.

It is going to be interesting to follow this new moratorium, because of the political impact and the possible impact it might have in the business. I think if the foreclosure process was not done correctly, then what would they do, if the house is already sold, can the courts reverse the sales, etc, then we will have the issue of the current owner. Most likely this would be ratified with money, how much? morally the prevoius borrower was in default, but I am sure there could be damages, etc. Would the courts and the credit bureus wipe out the "Foreclosure" from their records so maybe if their finances have change they can get a loan, would the lender try to work something where they can put the previous owner with a new loan or similar loan to the previuos one in one of their houses.

As REO agents I think is important for us to do as many Cash for Keys as possible, this way the previous owner has agreed to relinquish his/her home to the bank, but I am sure there are some loopholes there too. Well maybe the new assignments from the bank would be more like deed in lieu with a lot of legal terms to protect the bank, and I hope we can have the right documents to protect ourselves just in case,

As of July 1, 2010 PNC REO is using offersubmission.com for buyer agent's to submit offers directly to asset manager, by passing the listing agents. I think this will bring more transparency to transactions. With this buyer's agents wont blame LA for not presenting offers, and they will be responsible to submit a complete offer. in the other hand the buyer must pay $300 at closing for the service. This will definitely expedite the offers and counteroffers, and will level the playing field for buyer and their agents. I will keep you posted how it works for me soon.

The good:

To the Listing Agent:

• No more wasted time receiving, entering and submitting unacceptable offers on behalf of other agents
• No more telephone calls from cooperating agents seeking status of offers.
• Reduced paperwork
• You will still see all of the offers received on your listings in real-time, and you will always know what offers have been accepted, rejected or countered.
• Increased marketability of properties for faster sales and quicker commissions.
• The only offer you ever need to deal with is an accepted offer.

To the Buyer’s Agent:

• Agents receive an immediate confirmation that their offer has been received 7 days a week, 24 hours a day.
• Agents receive notification of acceptance/rejection or a counter-offer by the next business day.
• Buyer’s Agents negotiate online directly with a decision-maker for the selling financial institution.
• Agents can include comments regarding the property or the buyer and be assured that the decision-maker considers them when evaluating the offer.
• Agents download all of the required addendums themselves once an offer has been accepted. :

BUYER PAYS $300 FEE AT CLOSING”

Re-blogged by 1 agent

• I posted this blog on some public websites and ws surprised at how many people were unaware of this option for distressed homeowners that is quick, clean, and relatively hassle free.

An Interesting Alternative to Foreclosure: A Deed in Lieu of Foreclosure (edit/delete)

I think this is a good option for banks and homeowners. Wouldn't you enjoy not having to kick someone out of their home?

Today I was doing a few more drive bys, and I noticed sooo many for sale signs and foreclosed properties literally in just one street. Then about 2 blocks down only a few signs were visible.

Sometimes I think these mortgage companies prefer to hit one specific area and just wipe them out all at once. Is there an advantage for them when they do this?

Are they trying to get rid of the current homeowners to bring in a whole new different type of community?

If this is the case, then how are the realtors supposed to market these homes when their clients come to the neighborhood and see all these signs up?

I have been happily sitting in a rural/resort area on Lake Oconee and have counted blessings that the subprime was not nearly as devastating as in other parts of the country. What I have feared was coming is starting to show up now though. Alt-A & Option Arm loans made in 2006 - 2007 & on are starting to make their way to the legal ads. This area has many upscale, gated, golf communities on the waterfront and a large proportion of those are 2nd/vacation homes. This month, I have seen more than ever before being advertised in the foreclosure papers and I don't think it's stopping anytime soon if the BPO orders are any indication.

Florida is by far the closest to my kind of market as so many homes there are not primary residences- lots of vacation homes, condos & the like. There is virtually NO help for this market as there is no incentive for loan mods and these are not homeowners that will be put on the street - they are investors who bought a 2nd home and now can't keep up with the payments or refinance because the payment has gone up while the value has gone down. I can't help but think that the 2nd home market will be on the ropes for some time to come. Not much finance-not many qualified buyers with enough cash to buy the mid-level homes coming to market & priced too high for investor flipping. I think it may be a rocky ride for a while.

Is anyone else seeing this type loan predominate? LPS analytics has a report that paints a pretty grim picture of where 'prime' loans may be going as well as 'mini-jumbo'. Owners are hanging on but the question I ask is 'how long can they last?"

Thanks to Brian Roberts for bringing this to my attention. This is a re-blog so, to see the original posting, follow this link…..

http://blog.ml-implode.com/2010/05/predatory-loan-modifications/

Body of Article below…..

Predatory Loan Modifications

May 4th, 2010 • Related • Filed Under

Filed Under: Featured Post • Foreclosure • General • big banks • law • litigation • loan mods

Tags: Foreclosure • Predatory Lending • Predatory Loan Modifications

“Yes Virginia……………… there is a Predatory Loan Modification.”

For three years, the US has been subjected to all manner of communications from the government, the media, and lenders about loan modifications. For two years, I have, with increasing frequency, been reviewing actual loan modifications granted to borrowers, and loan modification offers. Over the past six months, I have been doing exams with paperwork included about loan modifications. And March 30, I wrote an article about the results of the HAMP loan modifications.

With what I have learned and know, it is time to finally put words to paper (or to the internet) about what is really going on. If attorneys and homeowners are going to fight to save homes, it is time to present to all the facts concerning the loan modifications efforts and offers. Many have seen portions or parts of the whole, but few have actually put it all together. Some have actually used the term Predatory Loan Modification, but they have applied it to companies that were trying to scam homeowners, by offering to negotiate loan modifications for homeowners, but with no real intent. It was those companies that resulted in SB-94 in California being enacted, with a lot of help from the banks, and that put loan modification companies out of business, and stopping large number of attorneys from engaging in loan modification efforts.

Predatory loan modifications come in many disguises and may include the actual offer, or just the negotiations of the loan modification. The purpose of the modification is to whether now or in the future, to cause the borrower to lose the home. It has no other purpose than that. I shall endeavor to explain many different ones, and then I shall offer an insight into where the next “Battle for California” and the rest of the US must take place.

Same Rate – Higher Payment-Taxes Included

Throughout 2008, this was the most common Predatory Loan Modification. It was seen quite often with Sub-Prime loans, but other loans as well. It is still seen today.

The modification featured an interest rate which was the same as the current rate, but a higher monthly payment. The payment increased because arrearages were packed onto the back of the loan which resulted in the payment increasing. To add insult to injury, taxes were included as well.

The net effect of this “modification” was to induce the borrower to walk away from the home because they knew that the payments could never be made. Those that did accept the modification would end up losing the home anyway, since they could not make the payments.

Forbearance Disguised as a Loan Modification

A common practice used in 2008 and also today is to present a borrower with a letter identifying a “loan modification” offer. The terms of the offer are for a period of time, usually from 4 months to a year, whereby the borrower will usually bring in a lump sum to pay a portion of the arrears, and then over a period of time, make higher monthly payments to “catch up” a portion of the arrears and at the end of the term, bring the loan up to date. The lure of this program is that it implies that successful completion would result in a loan modification.

The fact of the matter is that I have NEVER seen one of these plans result in a successful modification. Once the payments are made, the lender denies the modification and demands the arrearages. When the borrower can’t pay, the lender forecloses. With this program, the borrower has “proven” that he could make the payments, so there is no need to modify, in the minds of the lender.

America’s Servicing Company, aka Wells Fargo, is famous for this program.

Option ARM Loan Modification

This is a different loan modification that I have seen offered numerous times, often by First Federal of Ca. The client is in an Option ARM mortgage.

First Federal contacts the borrower, offering to modify the loan. The modification will put the borrower into a 30 or 40 year fixed rate mortgage. The problem is that the interest rate will be 5.5%. In fact, they told a friend that 5.5% was the lowest that they could go by law. This was a portfolio loan that they owned.

Review of the loan revealed that at the time of the offer the borrower was in a loan with a 2.45 Margin. With the Index at 1%, this meant that he was paying a 3.45% interest rate. First Federal would modify his loan to 5.5%, over 2% higher than what he was currently paying. Of course, it resulted in the borrower declining the offer.

BTW, under the FDIC program, the borrower could have been offered down to 3%, and not 5.5%. Glad to see First Federal gone, but since OneWest took them over, it will be just as bad.

Lower Rate – Two Year Term

This is a common offer. With it, the interest rate will be lowered for a two year term, and as low as 2%. However, after two years, the modification ceases and the loan program returns to its original terms. Of course, this only delays the inevitable.

World Savings Modification

World Savings had a “wonderful” modification program. They would contact a borrower and offer a modification for $299. The offer generally dropped the interest rate by .5%. This lasted for one year. At the end of the year, World would contact the borrower with another modification offer. This offer would cost the borrower $499, and would last a year.

HAMP

Surprised to see HAMP in this list? Why should you be? The lenders and Treasury administer the program.

HAMP modifications offer to qualified borrowers a modification of the loan terms. The terms allow for an interest rate as low as 2%, for five years. After the fifth year, the rate will increase by 1% yearly, until it reaches the Freddie Mac rate at the time of the modification. This is usually about 5%. There it stays until the loan is paid off. Other terms are available with the modification, but to keep things simple, I shall not bother with those terms.

Sounds great with this modification, but here is the catch. I recently evaluated the HAMP program and found that the Mean Debt Ratio for all loans as of Feb 2010 was 59.8%. For March, this Debt Ratio was 61.3%. For the non-lending reader, this means the following:

• If a homeowner has a $10,000 per month Gross Income, and he has a great accountant and tax guy, he is in a 33% bracket for Federal and State Taxes, Social Security, Disability and other Deductions.

• After deductions, his income is $6,667 per month, take home pay.

• Subtract out the 61.3% Debt Ratio and he has $537 per month to live on.

• From the $687, he must cover food, fuel, utilities, medical insurance, clothing, phone, cable and other miscellaneous expenses. And, if he has several children, these expenses continue to mount.

Take into consideration now that the Mean Debt Ratio is the midpoint. 50% of all HAMP mods are over that Debt Ratio, and 50% are under. Subprime loans were for the most part a 50% Debt Ratio, and HAMP is approving them at 61.3% and above. Plus, how many are between 50% and 61.3%, we do not know.

The borrowers are going to face a decision relatively early in the payment process. Do they continue to make the loan payment, and end up having to stop making payments on all consumer debt? Or do they abandon the home, and pay consumer debt? Or do they just file bankruptcy and walk away from everything.

The end result is that most if not all of these modifications will likely fail.

Modification Negotiations That Are Denied at the Last Moment

For the purpose of this article, this is the last Predatory Loan Modification that I will present for review. It is one that I am constantly hearing about.

This Predatory Lending Modification never gets offered. It is all about the process of the modification, attempting to fulfill the requirements of the loan modification process. Common complaints of the process include the following:

• Lost paperwork and faxes

• Never enough paperwork

• Unkept promises

• Paperwork never sent to the borrower

• Trial modification offers but never payment offers for the trial

• Trial modification payments made but the modification is denied

• Modification denied before a trial can start

• Trial payments made, but then the “investor” denies the modification.

The end result is that trial modifications are either never entered into, or if they are, then they are denied at the last moment and foreclosure quickly occurs from there. The common theme in these attempts is a lack of “intent” to do a modification.

The continuing stories being told about the lack of cooperation among lenders and servicers to offer loan modifications led me to pursue the reasons for such behavior. There had to be a common cause, if it could be found. Eventually, I found the root causes and it was dependent upon two different issues.

Advances

The first limiting factor in whether a servicer will offer a loan modification is based upon the concept of “Advances”. When a borrower misses a payment, the servicer must “Advance” that payment to the Trust to ensure the payment stream. Only at such time as the loan is determined to be unrecoverable can the “Advances” stop.

The only way that the servicer can recover the advances is one of three ways:

• Offer a forbearance whereby the borrower brings in money upfront for arrearages, then makes a few payments, and then brings in the rest due. (This is America’s Servicing Company’s initial offer.) Of course, if the borrower had that type of money, then they would not be in foreclosure.

• Check the Pooling and Servicing Agreement to see if arrearages can be “tacked” onto the end of the loan and the servicer can recover the advances upfront. If not, they foreclose. ( I have a copy of a Deposition that the servicer foreclosure expert declares just that.)

• Foreclose, and sell the property where they take the advances right off the top of the proceeds.

When the modification is requested by the borrower, the servicer will immediately check to see if there is any ability to recover the advances other than foreclosure. If not, they decide to foreclose. But, what is even worse, the servicer will engage in trial modification actions, usually providing a trial modification whereby the borrower will make payments to the servicer. These payments are less than what is owed, so they are placed into “suspense” whereby the payments are not credited to the account. When the lender denies the loan and forecloses, the payments are kept to offset the advances until the home is finally sold.

This benefits the servicer by allowing them to collect payments, and uses up time until the foreclosure can occur, but also denies the borrower the ability to hire an attorney to aggressively fight the servicer. Furthermore, it removes from the borrower money that will be needed to find a new place to live. (There is possible legal actions to consider which I will address further on.)

The second limiting factor is whether the servicer can in fact offer a loan modification to a borrower.

The Pooling and Servicing Agreement (PSA)

The PSA governs what can and can’t happen with regard to the servicing of a loan. It specifically details what can occur when a loan is in default or is facing default. Loan modification is one option covered.

Dependent upon the wording of the PSA, a loan modification may not be possible. It may not be authorized or it may restrict the ability to offer a modification by stating that such a modification may be offered, only if the loan is purchased back from the investor for the full balance due. Obviously, a servicer will not purchase back a defaulted loan that is “underwater” so they will refuse the modification, saying that the PSA does not allow for modifications.

The servicer knows immediately what the PSA says with regard to loan modifications. Do they immediately deny the modification? No, instead they engage in “sham” negotiations, requesting paperwork, financials and other documentation while wasting time until they can foreclose on the property. Often, they are accepting trial payments, knowing full well that the modification will be denied. Again, it is simply a way of recovering money.

What to do?

At this point, hopefully the reader and the attorney will begin to understand what I mean by Predatory Loan Modifications. I have attempted to show the issues with these modifications, and have spent several months attempting to determine an effective way to fight the servicers. Along the way, I have learned much, and I have also seen some actions filed against servicers, but because the attorneys did not understand the entire lending and modification process, gaping holes were left in the arguments.

The key to fighting the servicers on the modification issue is to attack the modification process, and show lack of intent to engage in a loan modification. In the case of Indymac/One West, you walk into court backed up by a PSA stating that the servicer could not do a modification without buying a defaulted and underwater loan from the lender. Then, you present a quote from Sheila Bair, head of FDIC, saying that Indymac PSA’s do not allow for loan modifications.

At that point, you are not done. You show the Deposition from an Indymac foreclosure expert that states their key determining factor is whether OneWest can recover “advances” from a PSA, and if it is not possible, they foreclose without regard for anything else.

Finally, you back up your arguments showing the communications between the servicer and the borrower, and showing that their modification actions were “sham” negotiations.

Oh, by the way, I have two court rulings, one in California and one being a 5th Circuit decision that states if a lender engages in loan modification negotiations with no intent to actually do a modification, it is fraud.

Think you can make a Court take notice with this type of an argument?

Summary

I have now presented the case for Predatory Loan Modifications and how this is the next stage in the “Crusade for Homeowners”. No longer can the fight be regarding TILA/RESPA where homeowners lose daily. Lenders know how to fight that. Nor can it be the foreclosure process, which only delays a foreclosure.

I propose that you fight the lenders based upon three significant issues:

• Fraud in the origination of the loan at various levels, and using an Agency/Assignee Liability argument to implicate both the lender and the broker. My Predatory Lending Exams show the way.

• Fight the Foreclosure Process so as to delay the foreclosure and to allow time to present actions based upon Predatory Loan Modifications. (BTW, were you aware that CA CC 1095 in California requires that in any Assignment of Deed of Trust signed as Attorney In Fact requires that the party being acted for be disclosed, or the document is void? I see this error quite often.)

• Fight the Lack of Intent in Loan Modification Negotiations.

Now, as a personal and “shameful” plug for LFI, I would wager to say that you have seen nothing like this presented before. That is because most so-called audit firms have not got a clue about what they are doing. They simply buy TILA/RESPA software so as to determine if the disclosure requirements were met. They have NO UNDERSTANDING of Predatory Lending and what can be offered by competent persons doing such exams.

Furthermore, these people have not stepped into a courtroom, testified in front of a judge, or attended a Settlement Hearing. They cannot know what is important and what is not.

None of these firms have ever thought of the concept of Predatory Loan Modifications.

I spend my days and nights, thinking and living what is happening. I have had to make the hard decisions, and I understand what others are going through. Therefore, this is more than just about being a business.

The reality is that using the same arguments that attorneys are using now, foreclosure arguments and TILA/RESPA, we are only delaying foreclosures. And the banks are winning. Now is the time to consider different tactics, including those regarding Predatory Loan Modifications.

Also, we need to put together cohesive Class Actions which are based upon easily identified classes that have sympathetic Class Members. I have two in mind right now, if the right firm will step up to the plate. (Yes, I do understand the issues regarding Class Actions, and I have tailored the Actions to meet those concerns. If you are an attorney that is interested in my proposals, please call. I WANT to talk with you.)

If anyone personally and professionally knows city and county politicians who have “cajones”, please call me. The cities and counties across the country are facing increasing budgetary concerns. I have been attempting to show cities and counties in CA that they have lost tremendous amounts of money from transfer taxes and recording fees, but the politicians just have no clue as to what I am referring to. What I propose is that with the right politician leading the way, we have the cities and counties attack the MERS and Securitization process regarding the avoidance of Assignments. The cities and the counties have the resources to fight this together that individual attorneys do not have. This could lead to millions in fee recovery, and better yet, a good ruling would then allow all attorneys to “piggy-back” off the lawsuits, and maybe could expose the issues with Securitization and Legal Standing.

A final thought about another tactic that I discussed with an attorney last week, and his comments were favorable. Even the lenders have limited resources. I know this because I regularly get comments from attorneys where they have gone to court and the lender’s counsel has failed to show.

Why not conduct an action whereby attorneys from all 50 states target one lender per month. Imagine the first week of a month, 500 lawsuits filed against a single lender for Predatory Lending. Lenders do not have the resources to react in a timely manner to such an action. Some lawsuits are bound to slip by to the next stage. Sure, like Countrywide, the lender might try to have them all consolidated into one action. But, that takes time, and Predatory Lending Actions do not easily offer the opportunity for consolidation. It may be wishful thinking, but at this point, why not try it?

(Patrick Pulatie is the CEO of Loan Fraud Investigations. He can be reached at 925-238-1221, patrick@loanfraudinvestigations.com. His website is www.loanfraudinvestigations.com. Articles written by him can be viewed on www.iamfacingforeclosure.com. Patrick is not an attorney and does not give legal advice.)

Hamp and Hafa ProgramsI've reviewed much of the Hamp and Hafa Programs and honestly, it seems tough to use it if the homeowner has a 2nd lien(2nd Mtg) on the home, or has already moved out, or is unemployed.

These 3 very REAL reasons occur in a majority of the short sales I've witnessed or have been involved with. Nonetheless, I’ve posted this information because there are those that MAY benefit and I wouldn’t throw any program out the door without reviewing the specifics of your sellers NEEDS!!

Now, little about "Hamp", this program is for loan modifications and generally involves the maximum payment of 31% of the sellers total income before taxes to be paid towards your loan. Once these numbers are established, proof of ability must be supported and then there is a 3 month test period to see how able the owner is to pay, dosnt work if unemployed, and it dosnt work in many cases. But, again, I would’nt throw anything away without review against their particular needs.

If the Loan modification fails or if an application to skip the loan modification is requested and accepted, then you can move right into a Hafa short sale program.

HAFA:The Good:

1-Homeowners will be released of all responsibility with a satisfaction of lien from the lender.(This is excellent,(many short sales may still hold owners liable for the deficient amount that the lender lost)

2-There is a "pre-aproved" short sale Listing along with the Minimum sales value. (Saves time, easier for buyers to buy!!!-The pre-aprovals are done in 10 days-YAY

3-Homeowners are given $3000.00 towards relocation from the lender at closing.( An excellent aide to families moving to their new home)

4-If the homeowner had attempted a Hamp Modification, then all the same docs and info will be used, no repetitive docs.-( This saves time!)

HAFA: The Bad:

1-The property can't be sold to a relative, friend or anyone with a close relationship to the seller.Must be an ARMS LENGHTH transaction, therefor a 90 day period must occer before an investor may re-sell.

2- The buyer may not re-sell the property for less than 90 days after closing. Nor can they rent the home back to the previous owner.

3-The difference between the remaining amount of principal you owe and the amount they receive from the sale must be reported to the Internal Revenue Service (IRS) on Form 1099C, as debt forgiveness. In some cases, debt forgiveness could be taxed as income. The amount paid to you for moving expenses ($3000) may also be reported as income. It is suggested that they contact the IRS or their tax preparer to determine if you may have any tax liability.I understand the 1099 will be issued.

4-If you have a real estate license you can’t earn a commission by listing your own property

5- The seller must also be able to deliver marketable title free of any other Jr. liens. They will allow up to three percent (6%) of the unpaid principal balance of each subordinate lien, in order of priority, not to exceed $6,000 in aggregate for all subordinate liens, to be deducted from the sale proceeds to pay subordinate lien holders to release their liens. They require each subordinate lien holder to release you from personal liability for the loans in order for the sale to qualify for this program.

6-The seller must live "IN" and maintain the property, HOA dues and or maintenance fee's. The seller will, in most cases be making payments up to a total of 31% of his gross monthly income

In the end, these programs may help some people… but it’s going to take a savvy realtor to help make it happen!!

Regards!!-- HOPE THIS IS HELPFULL!!!!!

Rose Mencia, Broker

Sundance Realty South Florida, Inc., 1926 Hollywood Blvd. suite 212, Hollywood, Fl. 33020 cell: 786-208--6804

An asset manager can mean many things depending on what industry you refer to (and no, we’re not referring to your computer operating system’s asset manager in this blog post). Even in real estate, it can mean different things — someone who manages rental property can sometimes go by the title of asset manager.

For the purposes of buying and selling real estate (and the sub-plot of understanding foreclosures in the secondary market), an asset manager is neither someone who collects rent on a property or sorts out the different processes that Windows is running. An asset manager is the person that controls a bank’s REO listings and properties.

(And if you didn’t know, REO stands for Real Estate Owned — it’s the term given to properties that have gone through foreclosure, failed to sell for cash at the foreclosure auction, and reverted back to the lender.)

Now, why should you know what an asset manager is? More importantly, why should you find out who asset managers are?

Simple — they’re the people that you can negotiate with if you want to buy these properties. And because these properties come in such wildly varied states — some in good shape, some in bad; some in pricey neighborhoods, some in cheap homes; some are mansions, some are tract homes — getting in touch with an asset manager will help you zero in on the exact type of home you want, all while educating you on just what it would take to pry that home out of their hands.

How can you figure out who is an asset manager at particular bank or lender? Thanks to the internet, we’ve got a number of ways to determine these things. You can try searching on a professional networking site like LinkedIn or you can go with the more direct approach and use Jigsaw to figure out who holds that title at a specific bank.

Update: For clarification, please note that this post is designed to
help you learn who the major players are as you educate yourself on
the process. However, it's best to work with the REO agent whenever
you involve yourself in a potential transaction. Not only are REO
agents experts in bringing a deal to close, the asset managers will
probably thank you -- they're often juggling 200+ case files at once,
which means they've got a lot on their hands!

Search for foreclosure homes www.bestreohomes.com