Phony Counseling:
This scam has several variations. In all of them the con artist takes your money and doesn't perform any meaningful service. Here is how it works.
1. The con artist requires that you pay him an up-front fee (usually $1500 to $3000).
2. He then "advises" you not to contact your lender, credit counselor, housing counselor or attorney.
3. Sometimes, he then requests that you make your mortgage payments to him while he "negotiates"
4. At some point, he disappears with your money.
Saturday, January 24, 2009
Mortgage Loan Modification - Red Flags To Watch Out For
If you have received a foreclosure notice or are having problems paying your mortgage contact your lender and / or attorney immediately. There are many con artists who prey on customers facing foreclosure. Avoid any person / company that does any of the following:
* guarantees to stop the foreclosure process – no matter what your circumstances
* instructs you not to contact your lender, lawyer, or credit or housing counselor
* collects a fee before providing you with any services
* accepts payment only by cashier’s check or wire transfer
* encourages you to lease your home so you can buy it back over time
* tells you to make your mortgage payments directly to it, rather than your lender
* tells you to transfer your property deed or title to it
* offers to buy your house for cash at a fixed price that is not set by the housing market at the time of sale
* offers to fill out paperwork for you
* pressures you to sign paperwork you haven’t had a chance to read thoroughly or that you don’t understand.
* guarantees to stop the foreclosure process – no matter what your circumstances
* instructs you not to contact your lender, lawyer, or credit or housing counselor
* collects a fee before providing you with any services
* accepts payment only by cashier’s check or wire transfer
* encourages you to lease your home so you can buy it back over time
* tells you to make your mortgage payments directly to it, rather than your lender
* tells you to transfer your property deed or title to it
* offers to buy your house for cash at a fixed price that is not set by the housing market at the time of sale
* offers to fill out paperwork for you
* pressures you to sign paperwork you haven’t had a chance to read thoroughly or that you don’t understand.
Friday, January 23, 2009
Another View About Mortgage Loan Modification
Bill Schmick, writing on www.iberkshires.com makes an interesting argument that mortgage loan modifications may be doing little more than postponing inevitable foreclosures and exacerbating the mortgage crisis. He sees the real problem being lenders' refusal to agree to principal reductions.
Plans whereby lenders reduce payment amounts for a period of time or tack missed payments onto the end of the loan may not be helpful because the borrowers have a reduced amount of time to pay back the loan after the reduced payment period has lapsed. Also, everyone involved, is betting that housing prices will rebound to a higher price than the borrower originally paid for the house.
Half of the modified loans eventually go back into default.
Finally, the National Association for the Self-Employed (NASE) estimates that 1,279,800 small-business owners have missed one to three mortgage payments by mid-November of last year. That was before a wave of resets on their mortgages was about to begin in the fourth quarter of 2008. At the same time, the economy has taken a nosedive that has really walloped the small-business owner.
When a small business fails, it affects not only the business owner but the 5-20 employees who lose their jobs. Since small business is the engine that powers our economic growth, a crisis in that part of the economy could greatly eclipse the damage caused by the subprime crisis.
Plans whereby lenders reduce payment amounts for a period of time or tack missed payments onto the end of the loan may not be helpful because the borrowers have a reduced amount of time to pay back the loan after the reduced payment period has lapsed. Also, everyone involved, is betting that housing prices will rebound to a higher price than the borrower originally paid for the house.
Half of the modified loans eventually go back into default.
Finally, the National Association for the Self-Employed (NASE) estimates that 1,279,800 small-business owners have missed one to three mortgage payments by mid-November of last year. That was before a wave of resets on their mortgages was about to begin in the fourth quarter of 2008. At the same time, the economy has taken a nosedive that has really walloped the small-business owner.
When a small business fails, it affects not only the business owner but the 5-20 employees who lose their jobs. Since small business is the engine that powers our economic growth, a crisis in that part of the economy could greatly eclipse the damage caused by the subprime crisis.
Mortgage Loan Modification - Here is why it is so hard to modify a mortgage
President Obama, congressional leaders and various regulators, lenders and community groups are proposing more aggressive measures to try to stop the rising pace of home foreclosures.
No matter what measures are enacted, these programs will likely encounter the same financial and legal hurdles that have slowed public and private foreclosure preventions for the past year.
Here are some of the roadblocks lenders and homeowners have faced as they try to work out more affordable loans that will slow the foreclosure rate and keep more people in their homes:
Read More
No matter what measures are enacted, these programs will likely encounter the same financial and legal hurdles that have slowed public and private foreclosure preventions for the past year.
Here are some of the roadblocks lenders and homeowners have faced as they try to work out more affordable loans that will slow the foreclosure rate and keep more people in their homes:
Read More
Mortgage Loan Modification For Chase, Washington Mutual, and EMC Customers
Chase announced on January 17, that they plan to modify $1.1 Trillion dollars worth of mortgages which are currently tied up in mortgage backed securities or investor owned loans. They estimate that the modifications may stop up to $70 Billion in mortgages and 400,000 homes from going into foreclosure.
Chase will also offer the same programs for WAMU and EMC customers. Chase owns EMC, the former mortgage arm of Bear Sterns and purchased Washington Mutual (WAMU) in December 2008.
Here are some numbers to call for help:
Chase (800) 548-7912
Loss Mitigation (877) 838-1882 ext 52195.
The Number you will be directed to after you give your loan number: (866) 665-7629 (business hours are 11AM-8PM M-TH, 8AM-12PM F)
Chase Home Finance (800) 848-9136 (customer service) (858) 605-2181 (delinquency customer service)
Chase Home Finance-New Jersey(800) 446-8939*Chevy Chase Bank(800) 933-9100*
Web: https://chaseonline.chase.com/chaseonline/logon/sso_logon.jsp?fromLoc=ALL&LOB=COLLogon
For SUBPRIME ONLY (877) 838-1882 ext 52195. The Number you will be directed to after you give your loan number: (866) 665-7629 (business hours are 11AM-8PM M-TH, 8AM-12PM F)
Subprime Letter of Authorizations Fax: 1-877-287-7559.
Subprime Workout Packages Fax: 1-888-219-7813.
For Prime Loans: 1800-446-8939
Prime Letter of Authorization & w/o packages Fax: 614-422-7259
Chase Home Finance (800) 848-9136 (customer service)
(858) 605-2181 (delinquency customer service)
Chase Home Finance-New Jersey(800) 446-8939*
Chase Manhattan Mortgage
(800) 446-8939 (Ohio Servicing Center)
(800) 526-0072 (Florida Servicing Center)
(800) 527-3040 x533 (Florida Servicing Center)
Chevy Chase Bank (800) 933-9100
Web: https://www.chevychasebank.com/htm/payment.html
Chase will also offer the same programs for WAMU and EMC customers. Chase owns EMC, the former mortgage arm of Bear Sterns and purchased Washington Mutual (WAMU) in December 2008.
Here are some numbers to call for help:
Chase (800) 548-7912
Loss Mitigation (877) 838-1882 ext 52195.
The Number you will be directed to after you give your loan number: (866) 665-7629 (business hours are 11AM-8PM M-TH, 8AM-12PM F)
Chase Home Finance (800) 848-9136 (customer service) (858) 605-2181 (delinquency customer service)
Chase Home Finance-New Jersey(800) 446-8939*Chevy Chase Bank(800) 933-9100*
Web: https://chaseonline.chase.com/chaseonline/logon/sso_logon.jsp?fromLoc=ALL&LOB=COLLogon
For SUBPRIME ONLY (877) 838-1882 ext 52195. The Number you will be directed to after you give your loan number: (866) 665-7629 (business hours are 11AM-8PM M-TH, 8AM-12PM F)
Subprime Letter of Authorizations Fax: 1-877-287-7559.
Subprime Workout Packages Fax: 1-888-219-7813.
For Prime Loans: 1800-446-8939
Prime Letter of Authorization & w/o packages Fax: 614-422-7259
Chase Home Finance (800) 848-9136 (customer service)
(858) 605-2181 (delinquency customer service)
Chase Home Finance-New Jersey(800) 446-8939*
Chase Manhattan Mortgage
(800) 446-8939 (Ohio Servicing Center)
(800) 526-0072 (Florida Servicing Center)
(800) 527-3040 x533 (Florida Servicing Center)
Chevy Chase Bank (800) 933-9100
Web: https://www.chevychasebank.com/htm/payment.html
Mortgage Loan Modification - Fixes for Common Credit Problems
Homeowners with financial trouble wanting to refinance their mortgages to better rates may be pleased to know there are still options out there for them. There are strategies available to help overcome challenges such as inadequate income, excessive debt, negative equity or poor credit.
Inadequate income and excessive debt are two sides to the same coin. Lenders consider a borrower's Debt to Income (DTI) ratio.to make sure that a borrower can pay back the loan. If you've suffered a loss of income, overstated your income on your original loan application, are self-employed or have taken on additional debts, you're most likely to be among the many homeowners who face this type of problem. You can change this ratio by earning more money with a second job, or, by paying down other debts such as credit card or other consumer debts. When you are in the process of getting or refinancing a loan, do not borrow more money as this can damage your DTI ratio. Lenders normally look for a DTI ratio no greater than 38%.
Negative equity means that you owe more on your house than it is worth. Lenders consider your loan to value ratio (LTV). Most lenders require an 80% LTV. You can try to lower the amount of your loan through a lump-sum payment, or by gradually making extra principal payments.
You can use funds from a savings or retirement account, sale of another asset, income tax refund or bonus to make your lump sum payment. You can also achieve a gradual reduction in principal by making bi-weekly payments or by making extra payments to principal. If you are going to make extra principal payments, you must indicate that the payment is to be applied to principal by writing that instruction on your check. Most mortgage agreements provide that unless you specify that a payment is for principal, it will be first applied to interest.
If your mortgage is insured by the Federal Housing Administration, or FHA, you might be able to qualify for a so-called "streamlined" refinance that doesn't require an appraisal. Mortgage insurance, which protects the lender from loss if you default on your loan, also may be a way to overcome insufficient equity.
If you have a second loan and the lender refuses to subordinate, you might want to combine both of your loans into one new loan. If you obtained your second loan through the same lender as your first and as part of your purchase-money financing, you may be in a better position to combine the two loans than if you obtained your second loan later on. In that case, you'll be subject to more strict guidelines because your refinance will be considered a cash-out, rather than a conventional rate-and-term refinance.
Inadequate income and excessive debt are two sides to the same coin. Lenders consider a borrower's Debt to Income (DTI) ratio.to make sure that a borrower can pay back the loan. If you've suffered a loss of income, overstated your income on your original loan application, are self-employed or have taken on additional debts, you're most likely to be among the many homeowners who face this type of problem. You can change this ratio by earning more money with a second job, or, by paying down other debts such as credit card or other consumer debts. When you are in the process of getting or refinancing a loan, do not borrow more money as this can damage your DTI ratio. Lenders normally look for a DTI ratio no greater than 38%.
Negative equity means that you owe more on your house than it is worth. Lenders consider your loan to value ratio (LTV). Most lenders require an 80% LTV. You can try to lower the amount of your loan through a lump-sum payment, or by gradually making extra principal payments.
You can use funds from a savings or retirement account, sale of another asset, income tax refund or bonus to make your lump sum payment. You can also achieve a gradual reduction in principal by making bi-weekly payments or by making extra payments to principal. If you are going to make extra principal payments, you must indicate that the payment is to be applied to principal by writing that instruction on your check. Most mortgage agreements provide that unless you specify that a payment is for principal, it will be first applied to interest.
If your mortgage is insured by the Federal Housing Administration, or FHA, you might be able to qualify for a so-called "streamlined" refinance that doesn't require an appraisal. Mortgage insurance, which protects the lender from loss if you default on your loan, also may be a way to overcome insufficient equity.
If you have a second loan and the lender refuses to subordinate, you might want to combine both of your loans into one new loan. If you obtained your second loan through the same lender as your first and as part of your purchase-money financing, you may be in a better position to combine the two loans than if you obtained your second loan later on. In that case, you'll be subject to more strict guidelines because your refinance will be considered a cash-out, rather than a conventional rate-and-term refinance.
Mortgage Loan Modification -Is now the Best Time To Refinance?
Mortgage rates are now at a 51 year low. The treasury department plans to make more money available for mortgage loans. This video shows why you might want to consider refinancing now.
Mortgage Loan Modification Companies -- Saviors or Scam Artists?
In a recent CNBC website posting, Diana Olick says the following about mortgage loan modification companies "[They] have sprung up like crabgrass in the midst of the foreclosure crisis, many of them run by former subprime mortgage brokers or real estate brokers who don’t have much work these days."
These companies charge an upfront fee to help cash-strapped borrowers navigate the red-tape of lender / servicer loan modification program, to get a payment that they can afford. Some companies are legitimate, while others are scams.
How can you tell the difference? You need to exercise due dilligence.
First, find out who is running the company. State Real Estate Commissions in California, Colorado, and a host of other states allow only those companies run by licensed mortgage brokers or attorneys to charge in advance for their services. You can find out both your states regulations, and whether a provider is permitted perform loan modification services by contacting your real estate commission.
Also, find out if the person with whom you are working is a licensed mortgage broker, or attorney. You can do this by contacting the mortgage broker licensing authority in your state for mortgage brokers, and your state supreme court for attorneys.
See if there is any State or Federal actions pending against a company. In California alone, there are over 250 active investigations of mortgage loan modification companies and several have already been shut down.
Before signing any contract, make sure that all of the fees, charges and services to be provided are clearly spelled out. If you don't fully understand the contract, don't sign it.
These companies charge an upfront fee to help cash-strapped borrowers navigate the red-tape of lender / servicer loan modification program, to get a payment that they can afford. Some companies are legitimate, while others are scams.
How can you tell the difference? You need to exercise due dilligence.
First, find out who is running the company. State Real Estate Commissions in California, Colorado, and a host of other states allow only those companies run by licensed mortgage brokers or attorneys to charge in advance for their services. You can find out both your states regulations, and whether a provider is permitted perform loan modification services by contacting your real estate commission.
Also, find out if the person with whom you are working is a licensed mortgage broker, or attorney. You can do this by contacting the mortgage broker licensing authority in your state for mortgage brokers, and your state supreme court for attorneys.
See if there is any State or Federal actions pending against a company. In California alone, there are over 250 active investigations of mortgage loan modification companies and several have already been shut down.
Before signing any contract, make sure that all of the fees, charges and services to be provided are clearly spelled out. If you don't fully understand the contract, don't sign it.
Thursday, January 22, 2009
Mortgage Loan Modification With The FHA Hope For Homeowners' Program
The Housing and Economic Recovery Act of 2008 created a new, Federal Housing Administration (FHA) mortgage insurance program called the HOPE for Homeowners Program (also referred to as the H4H Program). Under the Program, a borrower facing difficulty paying his or her mortgage will be eligible to refinance into an affordable FHA-insured mortgage.
Here is how it works. You are eligible if you have not intentionally defaulted on your mortgage or any other debt; you have not been convicted in State or Federal Court of fraud within the past 10 years; you did not willfully or knowingly furnish materially false information to get your current mortgage.
There are some special conditions that you must agree to in order to get the FHA loan. You must agree to share the equity and future appreciation with the FHA; That you cannot take out a second mortgage, home equity loan or home equity line of credit for five years except under special circumstances to make emergency repairs; and, that you will pay a 3% up-front mortgage insurance premium and a 1.5% annual mortgage premium on your current principal balance of the new mortgage. The annual premium is included in your monthly payments. Here is an example of how the program will work.
This is an example of how the unique equity and appreciation sharing elements of this program work. Keep in mind that this is only one example, and your actual experience will depend on many things, including how much your home increases or decreases in value. Additional examples and details about how the equity and appreciation in your home is calculated can be found at www.hud.gov.
Suppose that your home, at the time you refinance into an FHA mortgage is worth $200,000. You owe $180,000 and have $20,000 in equity. You and FHA would share this $20,000. The way it would be split depends on how long you stay in the house.
If you sold during Year 1, FHA would keep 100% or $20,000 and you would get nothing.
During year 2, FHA would keep 90% or $18,000 and you would get $2,000.
During year 3, FHA would keep 80% or $16,000 and you would get $4,000.
During year 4, FHA would keep 70% or $14,000 and you would get $6,000.
During year 5 FHA would keep 60% or $12,000 and you would get $8,000.
After year 5, FHA would keep 50% or $10,000 and you would get $10,000.
In addition to this equity sharing, you will have to share any future home price appreciation with the FHA. This means that, if your home has gone up in value between the time you receive your FHA mortgage and the time of your home sale (or other disposition), you will share the amount of this increase with the FHA (less closing costs and a portion of any improvements you have made).
Here is how it works. You are eligible if you have not intentionally defaulted on your mortgage or any other debt; you have not been convicted in State or Federal Court of fraud within the past 10 years; you did not willfully or knowingly furnish materially false information to get your current mortgage.
There are some special conditions that you must agree to in order to get the FHA loan. You must agree to share the equity and future appreciation with the FHA; That you cannot take out a second mortgage, home equity loan or home equity line of credit for five years except under special circumstances to make emergency repairs; and, that you will pay a 3% up-front mortgage insurance premium and a 1.5% annual mortgage premium on your current principal balance of the new mortgage. The annual premium is included in your monthly payments. Here is an example of how the program will work.
This is an example of how the unique equity and appreciation sharing elements of this program work. Keep in mind that this is only one example, and your actual experience will depend on many things, including how much your home increases or decreases in value. Additional examples and details about how the equity and appreciation in your home is calculated can be found at www.hud.gov.
Suppose that your home, at the time you refinance into an FHA mortgage is worth $200,000. You owe $180,000 and have $20,000 in equity. You and FHA would share this $20,000. The way it would be split depends on how long you stay in the house.
If you sold during Year 1, FHA would keep 100% or $20,000 and you would get nothing.
During year 2, FHA would keep 90% or $18,000 and you would get $2,000.
During year 3, FHA would keep 80% or $16,000 and you would get $4,000.
During year 4, FHA would keep 70% or $14,000 and you would get $6,000.
During year 5 FHA would keep 60% or $12,000 and you would get $8,000.
After year 5, FHA would keep 50% or $10,000 and you would get $10,000.
In addition to this equity sharing, you will have to share any future home price appreciation with the FHA. This means that, if your home has gone up in value between the time you receive your FHA mortgage and the time of your home sale (or other disposition), you will share the amount of this increase with the FHA (less closing costs and a portion of any improvements you have made).
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