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Are there any property tax assitance programs out there? I have only seen programs available for the elderly and disabled. I’m behind on my property taxes and need assistance. I’m a single parent trying to make ends meet. Please H.E.L.P

Chris Miscellaneous

By now, most know that you should not pay someone up front for help with a loan modification. In California, we even passed a law that prohibits this (SB-94).
However, I’m not so sure we’re doing what is in the best interest of the homeowner.

One of the greatest challenges homeowners who are asking for a modification face, is the qualifications of the unknown individual who determines their fate.  This person does so, by reviewing your income and expenses, against the prospect of the borrower re-defaulting and of course, the effect of the borrowers current negative equity position.
Loan officers, both in the broker world and banking world, as well as some Realtors, are pretty good at determining income and expenses. After all, its what they do when helping a buyer determine how much they can afford.
Today, those that are left in the profession, are getting pretty good at understanding the guidelines of income qualififcation. I assure you, its not that easy. Mistakes in determining income happen all of the time. If it happens with people who do this for a living, do you suppose it is also possible that borrowers attempting modifications on their own could be subject to a mistake? Is it possible that a well meaning HUD counselor could make a mistake?  Trust me when I tell you  that the training they receive, is woefully inadequate.  There are some good ones, thats for sure.  They usually have some extensive mortgage background, but I struggled for years training loan officers on how to determine income the way that an underwriter would.  They made mistakes often as did the underwriters.  Today, throw in the fact that you have people with little experience making these decisions and you can begin to understand why the system is so broken.
Are deductions determined properly?
Did they factor the 2106 expenses correctly?
Are there any non-reportable deductions on the paystubs?
Does line 31 of a schedule C show a gain or a loss?
Have I made my point? If not, I could continue!
I am worried for the borrowers who continue to get denied a modification after going through a long “trial period” and then being foreclosed on in record time since the bank may pick up where they left off when they approved them for a “trial” modification in the first place. For many of you, this was the day of sale, or within a week of the sale. In addition, your credit is ruined, as the lender reported you late each and every month you paid your “trial” payment on time, since it was not the payment you had originally agreed to when you took out the loan. What this means is that once your permanent modification is denied, you may have a Realtor knocking on your door offering you cash for keys to get out, before you get the denial letter in the mail.  And, your going to have an even harder time renting the best placeses, due to your credit being destroyed. 

I am not a doom and gloom kind of guy, but I am suprised at how badly this is going to date and just how tolarant the non-profit arena is to the vast failures occuring. How many more people can we tell to try for a modification through our seminars, without also telling people of their “other” options?  As the Executive Director of HELP, I’m frustrated for you and I find myself wanting to modify how I counsel, due to the emotional and financial damage this process is causing many of you.
I don’t receive any money from HUD. I don’t have any agenda, other than to become known as a guy who will tell the truth, which is this, each and every one of us must determine just how much in love with our homes we are and if we can afford to keep them.
If you cannot, please take action sooner than later and please do not allow someone to offer you false hope, or try to make you feel guilty. In my humble opinion, this is far worse than telling you , bluntly, that if you can’t afford your home, you should consider other options, for your credit will repair far faster than your equity and renting is not the end of the world. The banks cannot afford to simply give money away on an individual basis. They will only do this in what the industry calls; “Bulk sales”.  Please, do not count on a principle reduction.

To illustrate why this process can take so long and better explain the numbers, I have cut and pasted a section of my friend Martin Andlmans post, which pokes fun at the sheer volume of hours it would take to take care of all those who are currently in need of help as well as those who are predicted to come:

 

“Goldman Sachs forecasts 14 million foreclosures in the next three years… others peg that number even higher… a lot higher actually, but no matter… everyone agrees there are going to be many millions of foreclosures to come. To put that kind of a number into perspective, if there were 14 million foreclosures, and each of those people needed say 10 hours of hope and change type counseling, that would be 140 million hours of said counseling, which, assuming a 24-hour work day, 365 days a year, translates into just a scosh over 383,561 years… for one person, of course, so that’s a silly comparison.

To be more realistic, let’s say you had say… 10,000 people providing said counseling, 24 hours a day, 365 days a year… why then it would only take a smidgeon over 38 years… which should provide everyone with a lot more confidence that the president’s plan may still prove itself effective.”

Martin has a way of putting things that definitely make a point. HELP will continue to be here for you and we will continue to direct you to those we believe can best serve your needs. If I could stress one thing in this post today, it would be this; Please go into this process with the proper expectation and with full knowledge of all the pros and cons of the path you have chosen.

Chris Miscellaneous

My modification was denied after making 4 trial payments. They said we didn’t make enough money. I resubmitted my modification and now it is in their “quality control” section. I’m waiting for a response. Can you help in the meantime?

Chris Miscellaneous

One of my clients was just told by BofA on his Fannie loan for his investment property that it is a blanket policy that Fannie won’t mod. for an investment home, is this true? Are there any verifyable accounts in which this has happened? Thanks.

khseallen Miscellaneous

I must admit, I am pleasently surprised that the private sector is paying this money back as fast as they are.

From the US Treasury:

Treasury Welcomes PNC’s Plan to Repay TARP Funds

WASHINGTON — The U.S. Department of the Treasury today released the following statement regarding PNC’s announcement to repay taxpayers for the assistance provided by the government:

“We are pleased that PNC Financial Services is moving ahead with plans to pay the taxpayers back in full. Government policies have helped restore our financial system and economy to health, giving banks such as PNC an opportunity to replace Treasury investments with private capital and reducing the burden of debt on future generations.

“Once Treasury receives PNC’s repayment, it will have recovered nearly 70 percent of taxpayer investments in the banking system. Also, this repayment means that of the $376 billion in total TARP funds that have been disbursed since 2008, only $203 billion will be outstanding today, and Treasury will have recovered $170 billion of taxpayer investments in the banking system.”

Chris Miscellaneous

I have been lamenting about this for almost two years now. Please, have me come to your office and teach on this. Please, if you are a Realtor, get HELP Certified. The public is just now getting their 1099-C’s and calls from collection companies who bought the debt for pennies on the dollar and are prepared to make your life miserable. Here is a story that came out today, 2-3-10 on this very subject. This is one time when I take no joy in being right:

Mortgage lenders pursue homeowners even after foreclosure  (From CNN Money)

http://finance.yahoo.com/news/Mortgage-lenders-pursue-cnnm-3107909798.html?x=0

By Les Christie, staff writer , On Wednesday February 3, 2010, 3:21 pm
As terrible as it is to lose your house to foreclosure, at least it’s a relief to put your biggest financial headache behind you, right?

Wrong.

Former homeowners may still be on the hook if there’s a difference between what they owed on their mortgage and what the bank could sell it for at auction. And these “deficiency judgments” are ticking time bombs that can explode years after borrowers lose their homes.

It can even happen to people who got their bank to approve them selling their home for less than it is worth.

Vanessa Corey, for example, short sold her Fredericksburg, Va., home in April 2008. She and her husband built the house in 2004, but setbacks, both personal (divorce) and professional (housing bust), made it impossible for the real estate agent to keep her home. So she negotiated the short sale and thought that was the end of it.

“My understanding was that the deficiency was negotiated away,” she said. “Then, last November, I got a letter from a lawyer telling me I owed my lender $65,000. I had to declare bankruptcy. There was no way I could pay it.”

Many homeowners are now in the same boat. And not just those who took out bigger loans than they could afford or who did so called “liar loans” where they didn’t have to verify their income.

Because of falling home prices, borrowers who always paid their mortgage but who have run into unforeseen circumstances — like unemployment or a job transfer — can no longer sell their homes for what they owe. As a result, they are being forced to short sell or foreclose and are getting caught up in deficiency judgments.

“After the banks foreclose, it’s very common now to have large deficiencies with houses not worth the balances owed,” said Don Lampe, a North Carolina real estate attorney.

Lenders mostly declined comment. Although Corey’s lender, BB&T did indicate it was pursuing more deficiency judgments.

“They follow the rise and fall of foreclosures,” said the spokeswoman, who would not discuss Corey’s account.

Can they come after you?

Whether banks can and will pursue deficiency judgments depends on many factors, including what state the borrower lives in and whether there’s a second mortgage or other liens. But if borrowers ignore the possibility of deficiencies, it could haunt them.

“Once they have a judgment, they can pursue you anywhere,” said Richard Zaretsky, a board-certified real estate attorney in West Palm Beach, Fla. “They can ask for financial records, have your wages garnished and, if you fail to respond, a judge can put you in jail.”

In the case of foreclosure, lenders can pursue deficiencies in more than 30 states, including Florida, New York and Texas, according to the U.S. Foreclosure Network, an organization of mortgage law firms.

Some states, such as California, are “non-recourse” and don’t allow deficiency judgments. But, even there, if the original loan was refinanced, some or all of it may be subject to claims.

Deficiency judgments on short sales and deeds-in-lieu can happen in many more places. In these cases, extinguishing the debt is often a matter of negotiating with the bank.

But even when lenders are willing, many borrowers may not be aware that they have to ask for release. So, if you are pursuing a short sale, be sure your attorney asks the bank to release you from any further obligation.

“People shouldn’t have a false sense of security that a deficiency judgment may not be later sought,” Zaretsky said.

He expects many will be filed over the next few years, based on the fact that banks have sold many of these accounts to collection agencies and other third parties, at discount.

“The parties who bought those notes wouldn’t have paid money for them unless they had the intention of acting,” Zaretsky said.

Ticking time bomb

What can be scary is that the judgments don’t have to be obtained immediately. Lenders or collection agencies may wait until debtors have recovered financially before they swoop in. In Florida, the bank can wait up to five years to file. Once the court grants a judgment, the lender has 20 years there to collect, with interest.

It doesn’t have to be a large amount of debt for a lender or collection agency to come after borrowers. Richard Varno and his wife short sold their Nashville home back in 2004 after he lost his job.

It wasn’t until 2008, when the second lien holder asked him for $25,000, that he realized he still was liable.

“I told them, ‘Hey, you guys released the title,’” he said. “As far as I know, I’m off the hook.”

He wasn’t. Releasing title does not necessarily end the debt. It’s complicated because of variations in state law, but, generally, a mortgage has two parts: a pledge of collateral, represented by the home, and a promise to pay off the loan.

Lenders may release property liens in order to facilitate short sales without releasing borrowers from their obligations to pay under the promissory notes. The secured debt can convert to an unsecured one after the sale.

Zaretsky had one client who was so relieved to have arranged a short sale that he signed every paper his real estate agent shoved at him, even a confession that clearly stated he still owed the debt.

“He had no idea what he was doing,” said Zaretsky. “All the lender had to do was go to court to convert the confession into a deficiency judgment.”

Lenders are also very inconsistent. One of Zaretsky’s short-sale clients was ready, willing and able to pay, but the bank did not even ask; another lender always reserves the right to pursue the deficiency.

Strategic defaults

Sometimes lenders go after borrowers walking away from their homes if they have other assets, according to Florida real estate attorney Larry Tolchinsky.

“Banks are pulling credit reports to see if it’s a strategic default,” he said. “If you’re behind on all your other payments, you’re okay. But if you’re not, they’ll come after you.”

If borrowers have any doubts about their risks, they should seek legal advice. Or, at least, call non-profit organizations such as NeighborWorks for advice. According to Doug Robinson, a NeighborWorks spokesman, its counselors always try to negotiate away deficiencies when they facilitate short sales or deeds-in-lieu.

“We don’t favor any short-sale contracts that leave any deficiency that can be pursued,” he said.

Robinson himself knows what can happen. He paid off a deficiency after his own New Jersey house went through foreclosure 11 years ago.

Chris Miscellaneous

I WAS ON 3 MONTH TRIAL WITH ALS WITH THE HAMP PROGRAM. I RECIEVED A LETTER STATING I WAS DENIED DUE TO I HAD RESERVES IN MY SAVINGS,ON MY HARDSHIP LETTER I TOLD THEM IT WAS FROM HOME EQUITY LOAN..THEY ADVISED TO PUT MONEY BACK INTO ACCOUNT .WHICH I DID , I OWED RELATIVE  MONEY AND  I PUT MONEY BACK INTO EQUITY ACCOUNT. I WAS GIVEN 30 DAYS, WHICH EXPIRE ON FEB 26.2010..WAITING TO SEE..

rmartinez Miscellaneous

Chris, I have a client who did a short sale back in July with another agent, they want to make sure everything was reported to the bureaus correctly and get it back on track, also if there is anything on there that shouldn’t be that they can get removed so they can purchase again in 2 years. Do we have any affiliates in the credit repair line that you can recommend?

Todd Bruce Miscellaneous

I was interviewing Mr. Bruce Norris for my radio show on KTIE 590AM http://www.590ktie.com/ (You can listen to me from 5am to 6am Mon, Tu & Wed.  Write and tell the management you like Roger and I.  They’re a small station so they get very excited if you write in!  ienewshour [at] ktie590 [dot] com ) and he said something that is very true.  People are getting upset because the government keeps getting involved and not allowing the market to correct itself and by doing so and by helping people that may not have acted responsibly, we’re delaying things and causeing more and more people to consider walking away from thier mortgages.

Look, for the purpose of this post, we need to recognize this; if the comments below from Bloomberg’s article come to fruition, people who are paying their mortgage are going to get upset.  At some point, even I’m going to begin to feel like an idiot paying my mortgages from my dwindling savings.  I can prove a hardship.  Not a problem.  If we’re now going to offer principle reductions and continue to delay a recovery, I might as well jump on the band wagon and follow my governments advice.  Fall behind, box yourself into a corner, do the math and determine that it will be your grandchildrens 18th B-Day before you have equity again and walk away.  Or, at least threaten to.  For sure, I need to stop making my payments.  Once thats done, they actually pay attention to you.  Then if we all hold out, we may get a principle reduction.  However, this will most likely lead to a financial meltdown, but why should I be the only idiot paying my mortgage?

There is a HUGE difference between those who have had an illness, a death, a job loss and someone who took out 300K, lived high on the hog and stopped making their payments.  Yet these are the ones that keep getting a modification or principle reduction.  Why?  Because there is no fairness to this process.  I’ve watched too many who are struggling in their small homes get nothing and just as many who are upside down 300 to 600k get a break.  If we don’t stop this madness I assure you there will be greater challenges ahead.

Here are a few soundbites from Bloomberg today:

 

For HAMP to succeed, the program will have to be changed to include principal reductions on mortgages to offset value declines, according to Karen Weaver, global head of securitization research at Deutsche Bank AG in New York, and Laurie Goodman, the New York-based senior managing director at Amherst Securities Group.

Principal Reductions

In its current version, HAMP lowers mortgage payments to about a third of borrowers’ income by reducing interest, lengthening repayment terms and deferring principal repayments.

“If the other measures in HAMP aren’t working, the government will have to look at principal reductions,” said Brian Bethune, chief financial economist at IHS Global Insight in Lexington, Massachusetts.
One in Four

One in four U.S. homeowners holds a mortgage with a balance higher than the property’s value. The number of borrowers with so-called negative equity reached 10.7 million, or 23 percent, at the end of the third quarter, according to a Nov. 24 report by First American CoreLogic, a Santa Ana, California-based real estate research firm. Government programs to help underwater borrowers exclude jumbo mortgages that aren’t eligible to be purchased by Washington-based Fannie Mae and Freddie Mac of McLean, Virginia.
The government spent $230 billion to support HAMP and other housing programs in the 12 months ended Sept. 30, according to the Congressional Budget Office in Washington. The Federal Reserve has pledged to spend $1.25 trillion buying mortgage- backed securities in an effort to reduce fixed-mortgage rates. That program is set to end this quarter.
Currently, 6.5 million households are either in default or at least one payment behind on their mortgages, according to the Center for Responsible Lending based in Durham, North Carolina.

If enough of those are seized by lenders, it could lead to a “double-dip recession or at least to a slower recovery,” said Julia Gordon, senior public policy counsel for the research and policy group, in testimony before the House of Representatives Committee on Financial Services last month.

Chris Miscellaneous

Its a mouthful and its intended to continue to create stability in the Residential Mortgage Backed Securities Market as well as the Comercial MBS Market. I believe the performance of this Private-Public venture will be a potential sign of things to come and therefore I am watching the results. Of course, today, they are not good. However, in fairness, this is no surprise and the strategy is to buy and hold. Nonetheless, we should pay attention to these reports as a potential early indicator of things to come.

Here is a link to the report:
http://www.financialstability.gov/docs/External%20Report%20-%2012-09%20FINAL.pdf

Chris Miscellaneous