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The headline is Martin Andelmans.  I use it, but with the following disclaimer;

I do not believe Wells Fargo is bad.  The are standing up and doing some great things in this arena.  I know this first hand.  They are lending to homeowners when others are pulling back and they account for 1 in 3 loans being made today.

With that said, I believe these stories MUST be told.  I believe the training the front line people receive, who deal with homeowners is inexcusable. 

Martin Andleman (I cut out some for space. Read the whole thing by clicking on;
http://mandelman.ml-implode.com/2012/05/husbands-suicide-yesterday-wells-fargo-to-evict-wife-tomorrow-anyway/

Just like the last VICTIM OF WELLS FARGO I wrote about, Wells Fargo claimed that Norman and Oriane Rousseau had missed a mortgage payment. But the payment HAD been made in person at a Wells Fargo branch by Cashier’s Check, and Mrs. Rousseau has the receipt for the transaction.
The Rousseaus file a dispute with Wells Fargo over the supposed missing payment. Wells Fargo “investigates” and comes back saying that the Rousseaus had stopped payment on the check. They stopped payment on a Cashier’s Check? Seriously?

I don’t want to spend too much time on this ridiculous point, so here’s how Rousseau’s lawyer explains this technical yet wholly insipid issue, and then we’ll move on…

The teller’s receipt establishes that the cashier’s check was in the custody and control of Wachovia on April 1, 2009, and the research by the Cashiering Department should have concluded that Wachovia screwed up by not applying the cash-equivalent funds to the Rousseau’s account. After delivery and acceptance to the branch office, it was Wachovia’s responsibility to safeguard the instrument; Wachovia itself effectively stopped payment on the cashier’s check.

Okay, so let’s get back to the meat of the story…

Concerned that they could not resolve the payment dispute but told they should apply for a loan modification, the Rousseaus hired a law firm and submitted a loan modification application. After that it was standard operating procedure at Wells Fargo… we lost this, and we lost that, resend this, and resend that… for almost a year.

Good Lord, Wells Fargo, could you please do something differently just once? This article is almost becoming a form letter.

Wells Fargo then of course told the Rousseau family not to make their payments, that they were being considered for a loan modification and that making their payments would immediately disqualify them.

So, they saved their payments just in case Wells decided to deny them a modification. Saved every single one just in case the bank decided to act like… well, Wells Fargo Bank.

Then Wells sent them a Notice of Default, but when they called to say they wanted to reinstate their loan, Wells said what they always say… IGNORE IT… don’t worry about it, everything’s fine, it’s just an automated sort of thing… why, you’re being considered for a loan modification.

Then Wells filed a Notice of Sale on October 28, 2010. Their home would be sold on November 22, 2010. And still Wells said… IGNORE IT… it’s just another automated sort of thing… your loan modification is still pending… and please re-submit some documents.

It was November 10, 2010… just 12 days before their home was to be sold… when the Wells Fargo representative told the Rousseau’s that their loan modification had been denied. The reason: Insufficient income.

Yeah, but you know the funny thing about that is that their income hadn’t changed a nickel since they applied for the loan modification. So, what’s the deal? Did it take Wells Fargo a year to figure out the Rousseau’s income was insufficient? Is that the story I’m supposed to be buying into?

You’re a liar, Wells Fargo. Either you knew you weren’t going to approve their loan modification, or you’re the most incompetent financial institution in the history of the world. And you don’t just do this sometimes, you do this all the time… and especially to people in their 60s or older. Why is that do you suppose?

That same day the Rousseaus found a lawyer and discovered they had a RIGHT TO REINSTATE their loan. (Nice of Wells not to tell them that, by the way.) They contacted Wells and requested a reinstatement quote… TWO DAYS LATER Wells finally gave them the phone number for RCS, the trustee.

But, RSC said that reinstatement would take two weeks and trustee sale was going off as planned in 8 days. Wells got them their reinstatement quote too… it was dated November 15, but received via email on November 17, 2010.

And it expired in two days and had to be received in Texas by November 19, 2010.
The Rousseaus had more than enough in savings to reinstate their loan, they told Wells Fargo that… but now they couldn’t get the money from their IRA in time for the 2-day deadline and Wells refused to postpone the sale.

So, the Rousseau’s home sold at the trustee sale on November 22, 2010.

Next the Rousseaus go through a series of lawyers. Finally, they get a good one and in July of 2011, the court grants an injunction contingent on them making a monthly payment of $1800.

But, by December of 2011, Wells finally wore the Rousseaus down and they just couldn’t make December’s payment. They used up all their money fighting Wells Fargo, and Norm had been unemployed since the foreclosure. He was taking odd jobs as a handy man to make ends meet.
Wells Fargo immediately goes to court… gets the injunction dissolved… then proceeds with the Unlawful Detainer… the lockout is set for May 15th, 2012… at 6:00 AM.

THAT’S TOMORROW MORNING… AT 6:00 AM.

Over this past weekend, Norm Rousseau talked with their attorney who is working pro bono by the way. Basically, his lawyer tells him…

“Look… let’s face the facts here. We’ll proceed with the lawsuit. We’ll fight like hell to get you back in the home, but you have to be ready with some sort of plan so you’re not left homeless and on the streets.”

Norm found someone who has a 27-foot motorhome he can use, but after he gets it home on Saturday… it stops running… it won’t start. But, Norm Rousseau is a man in his 50s with mad skills. He goes to work around the clock taking apart the engine, doing everything he can to get it running so that on Tuesday morning he will have somewhere to house his family. He’s up all night Saturday night, but still can’t get it running. It’s too big to tow with a car.

**The story continues with details and summation of what was going on in Norms mind. It discusses the Option Arm loan that as an expert, I had trouble explaining to Loan Officers and get them to understand this complicated and sophisticated mortgage instrument and how they followed the lead of their World Savings representative Eric Cooper. Martin, annihilates him and while I was not there, many of the Option Arm loan officers were the worst the industry produced. The loan wasn’t so bad, but the creeps selling it were in most cases, slime.

The bottom line…

So, it was Sunday… yesterday… (Today is Tuesday, May 15, 2012) around 10:00 AM… and Norm couldn’t get the motorhome running. He must have realized that he couldn’t handle the shame of seeing his wife and stepson evicted with nowhere to go… living on the street. I don’t know how anyone could face that reality. I don’t think I could.

How could it be that just 12 years before they had put their life savings down on their first and likely last home? They had done everything right, but nothing was right anymore, and I’m sure to Norm Rousseau, nothing would ever be right again.

Sometime mid-morning on Sunday Norm Rousseau ended his own life. He went into his garage and shot himself. At one point he could have reinstated his loan, that’s what he had planned to do, but Wells Fargo had made that impossible… they stripped him of everything he had.

And now, his wife and stepson are to be evicted at 6:00 AM tomorrow morning. They have nowhere to go, they have no money, they are still in shock over the loss of Norm.

Rest in peace, Norm Rousseau

**I have witnessed the mass confusion surrounding homeowners asking for help in a loan modification, while it has gotten better, it is still a joke. To be so callous as to dismiss the efforts to try to stop the nonsense as interfering with the free market is wrong on so many levels.

2-13 COMPENSATING FACTORS. Compensating factors that may be used to justify approval of mortgage loans with ratios exceeding our benchmark guidelines are those listed below. Underwriters must record on the “remarks” section of the HUD 92900-WS/HUD 92900-PUR the compensating factor(s) used to support loan approval. Any compensating factor used to justify mortgage approval must be supported by documentation.

A. The borrower has successfully demonstrated the ability to pay housing expenses equal to or greater than the proposed monthly housing expense for the new mortgage over the past 12-24 months.

B. The borrower makes a large downpayment (ten percent or more) toward the purchase of the property.

C. The borrower has demonstrated an ability to accumulate savings and a conservative attitude toward the use of credit.

D. Previous credit history shows that the borrower has the ability to devote a greater portion of income to housing expenses.

E. The borrower receives documented compensation or income not reflected in effective income, but directly affecting the ability to pay the mortgage, including food stamps and similar public benefits.

F. There is only a minimal increase in the borrower’s housing expense.

The borrower has substantial documented cash reserves (at least three months’ worth) after closing. In determining if an asset can be included as cash reserves or cash to close, the lender must judge whether or not the asset is liquid or readily convertible to cash and can be done so absent retirement or job termination. Also see paragraph 2-10K.

Funds borrowed against these accounts may be used for loan closing, but are not to be considered as cash reserves. “Assets” such as equity in other properties and the proceeds from a cash-out refinance are not to be considered as cash reserves. Similarly, funds from gifts from any source are not to be included as cash reserves.

H. The borrower has substantial non-taxable income (if no adjustment was made previously in the ratio computations).

I. The borrower has a potential for increased earnings, as indicated by job training or education in the borrower’s profession.

J. The home is being purchased as a result of relocation of the primary wage-earner, and the secondary wage-earner has an established history of employment, is expected to return to work, and reasonable prospects exist for securing employment in a similar occupation in the new area. The underwriter must document the availability of such possible employment.

 

56,258 Notices of Default (NODs) were recorded in CA during Q1 of 2012, the lowest level since the Q2 of 2007 when 53,943 NODs were recorded.

NOD filings peaked in the first quarter of 2009 at 135,431.

NOD filings were more concentrated with prices below $200,000.

Banks who foreclosed the most in Q1 of 2012; BofA 10,419, Wells Fargo 7,577, Bank of New York 5,380, and JP Morgan Chase 5,343.

The trustees who pursued the highest number of defaults last quarter were ReconTrust Co (mostly for Bank of America and Bank of New York), Quality Loan Service Corp (Bank of America), NDEx West (Wells Fargo), and Cal-Western Reconveyance Corp (Wells Fargo).

•When the lender filed a Notice of Default, homeowners in California were a median nine months behind on their primary mortgage.

•The borrowers owed a median $17,897 on a median $319,418 mortgage.

•Probability of going into default was highest in Tulare, Sacramento, and San Joaquin counties.

•Out of 8.7 million homes and condos in California, 1.45 million have received a foreclosure proceeding over the past five years, but 835,000, or 9.6 percent, have actually been lost to foreclosure.

•Foreclosure re-sales accounted for 33.5 percent of California resale activity

•Foreclosure re-sales varied greatly by county, from 9 percent in San Francisco County to 55.2 percent in Yuba County.

•Short sales made up an estimated 20.2 percent of the state’s resale activity.

•At formal foreclosure auctions last quarter, an estimated 33.4 percent buyers were investors, up from 23.2 percent a year ago.

Source: Dataquick and DS News

Ever since the President mentioned in his State of the Union address this past January, that “every” responsible homeowner should be able to refinance”, the buzz began.

HARP 3?

Well, sort of. Nothing has passed. It’s all conjecture at this point. Here are the facts;

HARP

Home Affordable Refinance Program (HARP) was launched in 2009 as a means to stimulate the economy and answer the cry of millions of homeowners who were witnessing modifications taking place for underwater borrowers who were late, but cried foul when they discovered there was absolutely no help for borrowers who were paying on time. Mortgage rates were falling but few homeowners were able to refinance as they had lost too much equity in their homes.

HARP helped!

Not a lot, but approximately one million homeowners were able to take advantage of the program that allowed underwater borrowers, paying on time, who had a Fannie Mae or Freddie Mac loan and were no more than 125% negative equity, to refinance.

In November 2011, HARP 2.0 was born

This updated version removed ALL LOAN TO VALUE requirements. In theory, so long as the lenders cooperated, it matter not that you owed 400K on a 100K valued home. So long as you were paying on time and your loan was backed by Fannie Mae or Freddie Mac, you were supposed to be able to refinance. You don’t need an appraisal, proof of income, minimum credit score, proof of assets, etc. Oh, let’s not forget a critical factor; the loan had to be “originated” prior to June 1, 2009.

This program was barely launched and talk of HARP 3 began!

HARP 2 is not taking off like gang busters yet as many of the Conduits (Banks) that are required in order to facilitate the process are expressing concern about what happens if they cooperate, allow the refinance to go “on their books” and Fannie Mae or Freddie Mac claim a year, or two, or longer down the road, that the Conduit failed to notice something about the borrowers income and therefore they must now “buy the loan back”. When this happens this is very costly to the banks and they want to avoid this. One way to avoid this is to simply refuse to participate in the program in the first place, or limit most of their cooperation to their own loans and not take on any other competing banks negative equity loans. For example, Wells Fargo may assist a borrower who is currently making payments to Wells Fargo, but they will not help a borrower who is making their payments to BofA.

The best thing a borrower can do is shop around and not rely solely on what their current lender tells them. If you have been turned down by your own bank know that there are other banks that only exist to do mortgages (Meaning they do not take deposits from the public) as well as there are loan brokers who have received a bad rap, but a lot of the remaining ones are quite good at what they do, who may also help.

HARP 3.0: Help for Non Fannie Mae or Freddie Mac Loans

Many borrowers who want to refinance do not have a Fannie Mae or Freddie Mac loan and that is what HARP 3 is supposed to address.

During 2002 to 2007 a huge segment of the market obtained loans that did not get sold to Fannie or Freddie. Sub-Prime loans, for well qualified borrowers, WERE ACTUALLY CHEAPER than a Fannie of Freddie backed loan. Sounds crazy, but it’s true. It’s just how the metrics worked out. In addition, millions bought homes using what is referred to as Alt-A loans. These loans often had reduced paperwork requirements and in some cases, were known as the “Stated Income” loans, or liar loans.

“Liar Loans” received their name due to the fact that a W-2 wage earner with an easy to verify pay check stub did not have to provide this information and could simply “state” their income on a loan application. Many lied and stated that they made more than they did in order to buy their “dream home”. Many of these people sadly are also suffering from amnesia when asked about why they lied on their loan application and are claiming they had; “no idea their loan officer did this to them”! In fairness, in my opinion, both borrowers and loan officers are guilty in many cases.

A sub-prime or Alt-A loan was a good product at the time and a lot of good borrowers took those loans, are paying on time and cannot refinance due to a loss of equity. HARP 3, if it passes, or comes to fruition is for them.

Also, again, during approximately 2002 to 2007, before conforming loan limits were raised in “high-cost areas”, homeowners who bought or refinanced were relegated to “non-conforming” loans, that is, their loans were not purchased by Fannie or Freddie. Today, they would have been.

HARP 3 would help some jumbo homeowners to refinance

In conclusion, we don’t know what the future holds in regards to HARP 3, but we do know that millions of borrowers are have been paying on time and could certainly use the relief of a lower mortgage are hoping and praying it comes to pass. Many of them are the “responsible” homeowners the President referenced in his January address.

Your buyers have an additional way to buy with ½% down on FHA. $400K needs only $2K down payment.

Thank you PRMG and Essex. These two mortgage banking operations have agreed to promote and fund the HELP Down Payment Assistance program. All lenders can participate; they simply set up a “broker relationship” with one of these two lenders. Here are the basics;

California FHA owner occupied only

No non-owner occupied co-borrowers

NOT limited to 1st time buyers

MUST be within 120% of HUD median income for the County.

Min FICO 640. 640 to 679 Max DTI 45% 680 & > is 48.9%

Must have AUS Approval

2nd Trust Deed is fixed for 15 years at 8.25% No cost associated with 2nd

½% Down and 1 month reserves required from borrower

No Foreclosures. Short sales subject to standard FHA guidelines

Free four hour online class, Financial Sense To White Picket Fence; The Four “B’s”: Budgeting, Borrowing, Buying & Beyond and answer 20 questions for each video. Access videos here;

www.freehomeownershiphelp.org

Purchase study guide here; http://www.amazon.com/Financial-Sense-White-Picket-Fence/dp/0692013261/ref=sr_1_1?ie=UTF8&qid=1334245661&sr=8-1

Douglas Smith wrote a great article for Origination News and I believe it is a worthy read and applicable in most business environments. The original article is here;
http://www.originationnews.com/blogs/maven/grooming-tomorrows-leaders-1029873-1.html

Just over 2,300 years ago, a wise father hired the greatest scholar of his age to tutor his young son in the ways of the world. Aristotle spent the next few years instructing the young man in literature, architecture, music, politics and the art of warfare. Armed with this knowledge, the student, barely in his 20s, set out to conquer the world. It took him just 11 years. He became known to history as one of the greatest leaders, visionaries, strategists and administrators who ever lived. He was Alexander the Great.

Just like there is no such thing as a “born” salesperson, there are no born leaders. Alexander was not a born leader; he was a trained leader. In the last 28 years, I’ve had the chance to meet and work with hundreds of managers and leaders in the mortgage industry—some very talented—and I can tell you that not one of them was born to lead. Effective leadership, like effective selling, is an acquired skill, acquired through time, experience and training.

It’s no secret that the mortgage industry as a whole isn’t getting any younger. More managers and company leaders are retiring every month, and some are just moving on to other opportunities. Who will lead this industry into the next 10 years? What are mortgage company owners and senior managers doing today to groom their next generation of leaders for tomorrow? Most importantly, who will be equipped, mentored and ready (like Alexander) with the skills and aptitude to lead your company and your branch offices as you grow and expand over the next several years?

Most mortgage companies promote their leaders and managers from within. Is that the best approach? Not always. Does being a successful loan originator equip a person to be a successful branch manager? Absolutely not. But let’s surrender to the fact that the “promote our own” philosophy isn’t going away anytime soon, and that perhaps 80% of the appointments into every type of supervisory or management position in every mortgage company are internal. That being the case, mortgage companies need to step up to the plate and start preparing their best talent to lead one day, and that day may be sooner than you think.

For the purposes of this conversation, let’s focus on priming good, quality loan originators for the role in running a branch office. Rather than just waiting until a position opens up one day and saying to your top-producing originator: “So, do you want to manage the branch?” let’s be much smarter and more intentional in prepping and selecting your next leader. Here are some ideas for doing just that:

1. Identify an originator with an ability and interest in leading. You can tell when someone enjoys the opportunity to help, coach, give advice or positively influence others. These are often the originators who volunteer to head small projects or lend their guidance to support new company initiatives. Whether they realize it or not, the call of leadership is inside them. Identify these prospects early on. They may not be the best producers, but they may your best candidates for a future role in management. Remember that history has shown us that in many instances the best producers often make the worst managers.

2. Give away small leadership duties. Potential leaders need to learn how to lead. If you have a booth or space reserved at an upcoming home show or other event, let the originator spearhead the project, assemble the schedule and handle the arrangements. Or perhaps, let the originator lead a team meeting every so often or plan the launch of a new LOS system or loan product. Don’t wait to make someone a manager before they start building their management experience.

3. Engage them in formal training. There are many, top-quality leadership courses, seminars and programs offered by mortgage industry training companies and local colleges and universities on management and leadership. As a perk, talk to the originator about attending one of these at least once a year. Formal training will accelerate their exposure to what management is all about.

4. Provide the resources. Along with formal classroom and instructor-driven training, there are countless books and CDs on the art and science of being a good leader. (Amazon.com currently lists over 73,000 of them.) Encourage the originator to look for and purchase these, and gladly offer to reimburse him or her for the expense.

5. Hire a coach. As a personal performance coach myself, I have helped dozens of loan originators get ready to take on the role of management. A good coach can help the originator avoid common mistakes, find the right resources, and get a positive start in their new role. Of critical significance, a good coach can help the originator mentally evolve away from the job of making loans and into the job of managing people.

6. Become a mentor. If you see someone with the potential for leadership, work closely with that person and share valuable lessons and strategies on how to run an efficient, organized and profitable branch office. Open up the books. Share your company’s business plan. From time to time, invite him or her to provide input on important financial, operational or hiring decisions. Ask: “What would you do if the decision were yours?”

7. Get the originator “plugged in.” Successful branch managers are successful because they are well informed and well connected by being well networked. Your management candidate should be actively involved in your local mortgage, lender, builder and real estate associations. You may also want to consider having him or her enroll for membership in an area networking group or business leadership circle (found through your local Chamber of Commerce or on line). Encourage the originator to serve on committees, get experience delivering small group presentations, and start making strategic contacts. Organizations and associations are perfect and pre-existing grounds for all of this.

Mortgage companies that are growing are constantly looking for good managers to run their branches. In today’s world, most are having a tough time finding the right people, or if they do, pay tens of thousands of dollars in bonuses and incentives to pull managers away from their current companies and bring them on board. Perhaps by starting to invest in your own people today, you can create the next class of managers and leaders for your organization as it continues to grow in the years to come.
By Douglas Smith writing for Origination News.

In April 1968, at the urging of President Lyndon Johnson, Congress passed the federal Fair Housing Act, Title VIII of the Civil Rights Act of 1968, only one week after the assassination of Martin Luther King, Jr.

The primary purpose of the Fair Housing Law of 1968 is to protect the buyer, or tenant, from discrimination. It makes it unlawful to refuse to sell, rent to, or negotiate with any person because of that person’s inclusion in a protected class.

Protected class is a term used in United States anti-discrimination law. The following characteristics are considered “Protected Classes”:

Race – Federal: Civil Rights Act of 1964
Color – Federal: Civil Rights Act of 1964
Religion – Federal: Civil Rights Act of 1964
National origin – Federal: Civil Rights Act of 1964
Age (40 and over) – Federal: Age Discrimination in Employment Act of 1967
Sex – Federal: Equal Pay Act of 1963 & Civil Rights Act of 1964
Familial status (Housing, cannot discriminate for having children, exception for senior housing)
Disability status – Federal: Vocational Rehabilitation and Other Rehabilitation Services of 1973 & Americans with Disabilities Act of 1990
Veteran status – Federal Vietnam Era Veterans Readjustment Assistance Act of 1974
Genetic information – Federal: Genetic Information Nondiscrimination Act

And much, much more…

HUD is the primary enforcement agency and you may view additional updates and information by clicking here; http://portal.hud.gov/hudportal/HUD?src=/program_offices/fair_housing_equal_opp/FHLaws/yourrights

There are few things that are less tolerated than discrimination. Take some time to update yourself with HUD’s link above, you will learn a thing or two I am certain.

There are some times when sound underwriting decisions are in conflict with Fair Housing Laws

If a lender considers a women’s maternity leave as a reason for denial, they have violated the Fair Housing Laws. However, conversely, if they approve the borrower and they in fact do not go back to work and subsequently become delinquent on their mortgage, the lender may be in jeopardy of having to deal with other regulators for poor underwriting. This is a tough area.

On April 5, 2012 as reported in Housing Wire;

The Department of Housing and Urban Development reached settlements Thursday with Magna Bank and Home Loan Center, resolving allegations that they denied mortgages to women because they were pregnant and on maternity leave.

The settlement agreement signed by Nashville, Tenn.-based Magna Bank requires the bank to pay one woman $14,085 for allegedly requiring her to return to work before her loan application was approved.

Irvine, Calif.-based Home Loan Center agreed to pay a Las Vegas woman $15,000 for denying her application to refinance her mortgage because she was on maternity leave.

In conclusion, to answer the question the title of my post asks; yes, it is fair. In fact, it is more than fair, it is necessary. But, that does not mean that there will not be times when one must seek additional guidance from HUD, or a Fair Housing Attorney. This is cheap insurance to ensure compliance and promote a worthy law so righteously fought for and won after bloodshed and decades of massive pain.

New York and California’s regulators are finally looking more closely at LENDER-FORCED PLACED INSURANCE. The two largest companies that steal money from homeowners with the help of the banks and the cooperation of the insurance regulators are Assurant Inc. and units of QBE Insurance Group Ltd. This is not a statement of fact just my extremely strong personal opinion based on being an industry expert and dealing with scores of homeowners whose lives have been devastated by the actions of these companies. Their actions are only allowed due to individuals more concerned with making a dollar than doing what is right. 

A personal note from me to those who profit from this practice;

If you work for a bank, an insurance company that participates in this practice, or are a government regulator that has rationalized the existence of this practice, you should all be ashamed of yourselves and know that you are the worst society has produced. You steal through white collar crime and act with impunity and cause the regular America citizen to lose faith in their fellow man.

Back to my post…

When you bought your home you agreed to maintain insurance. If it lapses, the lenders force places insurance at what can only be described as A SCAM premium. If you’re normal policy was $850 for the year, they’ll charge you up to NINE times this amount! Then, the banks will take the money out of your accounts, add the amount to your loan balance, increase your mortgage payments and if all else fails, begin foreclosure proceedings. THIS MUST STOP. I AM DISGUSTED AT THE COZY RELATIONSHIP ENJOYED BY THE INS CO, THE BANKS AND THE INS COMMISSIONER FOR DECADES.

They (Banks and Ins co) donate to the Commissioners campaigns and they know that you won’t do any research when voting, or vote at all in most cases, because you’re too lazy to care. This way they get to put “their guy” in office and not have to worry about taking advantage of the public. This has been one of the most corrupt government/industry scams I’ve ever witnessed and it has gone on for years.

According to www.opensecrets.org Assurant Ins spent $915,000 in 2011 alone for lobbying your elected officials. Assurant’s Political Action Committee spent $359,240 in 2010. This is on top of the lobbying.

Because many homeowners ran into trouble in the real estate crisis, force-placed insurance premiums in the U.S. rose to an estimated $5.5 billion in 2010 from $1.5 billion in 2004. (Wall Street Journal- LIZ RAPPAPORT/LESLIE SCISM)

NY regulators discovered that up to 4 out of 10 homeowners were forced into paying these rip off insurance policy’s “mistakenly”. Mistakenly? Are you kidding me? We’re talking about people’s homes.

Have you ever had to try to unwind something like this? I am an expert. IT IS NOT EASY. For the average Joe, this is their worst nightmare and it has forced many into foreclosure.

Some homeowners have alleged in lawsuits that they were charged at least nine times more for force-placed coverage than they previously paid for their homeowners’ policy. The higher rates are justified, the insurers say, because the properties are high-risk. Insurers also have said that regulators approved most of their rates on such policies. WELL OF COURSE THEY HAVE. HOW MUCH DID YOU DONATE TO THEIR CAMPAIGN?

Mark Kunzelmann, a homeowner in North Palm Beach, Fla., alleged in a federal-court lawsuit filed in the Southern District of Florida against Wells Fargo & Co. last year that he was overcharged for force-placed insurance after he and his wife mistakenly let their homeowners’ property coverage lapse.

The San Francisco bank allegedly charged him $10,000 for seven months of coverage. He says he got rid of the force-placed policy by reinstating his own coverage, which costs about $2,500 a year. Wells Fargo denies wrongdoing. (Wall Street Journal- LIZ RAPPAPORT/LESLIE SCISM)

If this has happened to you, pass this post on or write your own. In addition, forward this to those I attack. Together, through education and the Internet, we can begin to shed light on these relationships that have abused the public for far too long. Take action NOW. It’s NOT just about you.

I am trying to get your attention. I hope my headline is successful.

Struggling Homeowners, Professionals & HUD Counselors PLEASE READ THIS;

I’VE BEEN BEGGING YOU TO STOP MODIFYING PEOPLE WHO CAN’T AFFORD THEIR HOMES SINCE 09. WHY? BECAUSE YOUR HELP IS BURYING THEM IN DEBT & THEY’RE LOSING THEIR HOMES REGARDLESS.

The Board of the Housing Opportunity Collaboration of the Inland Empire (HOCIE) and many others around the country, including the infamous NACA (Neighborhood Assistance Corporation of America) have a heart of gold, but are seemingly unwilling to listen to sound underwriting advice.  Instead, it was full steam ahead with a; “save the dream” and “save homeownership at all cost” agenda that the banks LOVED and so they continued to fund their activities while lobbying lawmakers to make private sector professional assistance illegal.  It’s worked beautifully.

LPS (Lender Processing Services) REPORTS 47% OF NEW FORECLOSURES WERE PREVIOUS FORECLOSURES. *See page 13 of the most recent Mortgage Monitor report*

YOU’RE HURTING BLACKS AND HISPANICS MOST.

The Make Home Affordable Program reports monthly what the average over all debt percentage is for a borrower AFTER they receive a modification. Currentlyit’s 60%!  It has been around 63% over the last year. *See page 5 of the most recent Make Home Affordable report* Historically, banks/underwriters knew a back end ratio greater than the low 40’s was simply not sustainable. And yet, under the guise of helping to retain homeownership, banks, with the help of HUD counselors are putting people into modifications that based on statistical data, ARE HIGHLY LIKELY TO FAIL. Why would they do that? Read on…

The banks analysts are in my opinion, smart. They know many will not be able to sustain their payments unless there is a dramatic increase in household income. For most, this is not likely.  Most HAMP modifications, as well as the look-a-likes, have an interest rate that will rise beginning on year 5, if the borrowers income does not go up commensurate with the payment increases, they only postponed the inevitable.

On a $250,000 loan, with a 2% interest rate fixed for five years with a 30 year amortization, a typical modification will see this rate rise to 3% on year 6, 4% on year 7 and 4.75% on year 8 today.  Once it reaches the 4.75% it will remain fixed for the remainder of the term.  The principle and interest payment in this example would go from $924 to $1,304, THAT’S A 141% PAYMENT INCREASE FROM YEARS 5 TO 8. IF THE AVERAGE BACK END IS ALREADY AT 60% JUST HOW IN THE WORLD DO YOU BELIEVE THEY’LL BE ABLE TO HANDLE THE PAYMENT INCREASE? In many cases they won’t and are not and the banks know this in my humble opinion. So why are the banks doing this?

If the banks can stagger the losses and keep the cash flows going, the investors continue to keep a favorable rate of return, the banks don’t have to foreclose and have more unsold inventory, or more homes to care for. They can take the properties back, or encourage a short sale later when the market is better. This is nothing more than managing a large portfolio of high risk loan pools.

I don’t blame the banks. It’s just good business to do this. I blame those who are taking money from them and have the public trust and burying people in debt that they’ll eventually have to get out from under anyway. Worse, the longer they wait, the less chance they’ll be able to participate in homeownership at these favorable rates and prices.

The National Home Builders reported that for every 1% increase in future interest rates, we’ll lose approximately 4-5 million American buyers, the majority of which are minorities. As they make less, on average, they’ll be the first ones cut out of the housing market as rates rise. Again, under the guise of helping, we are putting minorities in a position that will financially set them back for decades and in many cases permanently harm them to a degree that they’ll never recover from.

Homeownership for most Americans is the greatest chance at financial independence, but not when the home has gone down by 50% and must go up 100% just to break even, especially when the borrower, based on proven metrics, can’t afford the debt.

I teach HELP Professionals WE MUST NOT stand idly by and do nothing. Realtors, Realtist, agents & others must knock on doors and somehow reach more homeowners and get people to listen. Sitting in a home you can’t afford and are going to lose eventually is only hurting YOU, no one else. A loan mod that puts a Band-Aid on a gunshot wound is silly.

The National Home Builders reported that Whites score 20 points above Blacks & Hispanics on the affordability index due to making more on average. Further, the Bipartisan Policy Center reports that homeownership rates among African Americans & Hispanics fell more sharply in 2010 than among white non-Hispanics, with a 44.3% homeownership rate among black households in 2010 compared to 45.2% in 1990. The center’s latest report found that there is now a 28% point gap in homeownership between white & black households, wider than the divide in 1990. A separate study from the Pew Center found that between 2005 & 2009, Latinos lost two-thirds of their median household wealth while blacks lost more than 50%.

The greatest opportunity to reverse the trend is to get some of these folks who are not making a payment to short sell, short sell and then lease back and begin the healing process so they may buy while the prices and rates are artificially low. Otherwise, many will NEVER be a homeowner in their lifetime as rising interest rates will lock them out.

This is an opportunity to make a difference. If you’re a HUD counselor, or other professional who cares deeply, please call me. Have me come to your office and go over the numbers with you. Unwittingly for years, you’ve been only helping the banks and the investors. The banks, with the help of the Feds in a; “throw the baby out with the bath water “ action, made it virtually illegal for anyone in the private sector who is honest to help homeowners with sound advice.

I applaud the love and kindness shown to those in need. However, the lack of understanding of the manipulation that is occurring is hurting those you wish to help the most.

*Chris Sorensen’s opinion only. I am not speaking on behalf of HELP’s Board of Directors* I offer my strong opinion here due to my concern that the disparity between the haves and the have nots cannot and must not continue to grow at is current trajectory.

Because of the complexity of the mortgage market and this agreement, which will be performed over a three-year period, borrowers will not immediately know if they are eligible for relief.

The settlement *MAY* provide assistance for:

•Homeowners needing loan modifications now, including first and second lien principal reduction. The servicers are required to work off up to $17 billion in principal reduction and other forms of loan modification relief nationwide. (There is approximately 11 Trillion is lost equity just to put this settlement amount into perspective. Chris)

•Borrowers who are current, but underwater. Borrowers will be able to refinance at today’s historically low interest rates. Servicers will have to provide up to $3 billion in refinancing relief nationwide.

•Borrowers who lost their homes to foreclosure with no requirement to prove financial harm and without having to release private claims against the servicers or the right to participate in the OCC review process. $1.5 billion will be distributed nationwide to some 750,000 borrowers.

TIMELINE

•Over the next 30 to 60 days, settlement negotiators will be selecting an administrator to handle the logistics of the settlement and monitor compliance. •Over the next six to nine months, the settlement administrator, attorneys general and the mortgage servicers will work to identify homeowners eligible for the immediate cash payments, principal reductions and refinancing. Those eligible will receive letters. •This settlement will be executed over the next three years.

WHERE YOU CAN GO FOR HELP

For loan modifications and refinance options, borrowers may be contacted directly by one of the five participating mortgage servicers. Keeping in mind the timeline above, you may contact the banks directly if you need additional information:

•Ally/GMAC: 800-766-4622
•Bank of America: 877-488-7814 (Available M-F 7am – 9pm CT and Saturdays 8am CT – 5pm CT
•Citi: 866-272-4749
•JPMorgan Chase: 866-372-6901
•Wells Fargo: 800-288-3212 (Available M-F 7 a.m. to 7 p.m. CST)

Loans owned by Fannie Mae or Freddie Mac are not impacted by this settlement. You may visit the following websites to learn if your loan is owned by either Fannie Mae or Freddie Mac:

http://www.fanniemae.com/loanlookup

http://www.freddiemac.com/mymortgage

For borrowers who lost their home to foreclosure between Jan. 1, 2008 and Dec. 31, 2011, a settlement administrator designated by the attorneys general will send claim forms to persons eligible for cash restitution.

CONSUMER ALERT!

Scammers are already at work trying to capitalize on the national mortgage settlement to access your personal information—or worse, your money. The Attorneys General have already received reports of scammers in Alabama calling borrowers claiming to be one of the major banks involved in this settlement and offering a cash payment to consumers if they simply provide the routing number to access their bank account. If you receive an unsolicited call from one of the major banks, you can identify a scam in several ways:

1.Does the caller identify themselves as representing your loan servicer? Or do they ask you to provide the name of your loan servicer? If they ask you for the name of your servicer, they may be a scammer.
2.Does the caller offer to provide your personal information to assist you in identifying your account? Or do they ask you to provide that? If the caller is from your loan servicer, they will be able to tell YOU your personal information because they will have it. You should never provide your personal information (including bank account numbers, social security numbers, etc.) to an unsolicited caller—no matter what they promise you.
3.Does the caller offer to speed your settlement relief for a fee? They are definitely a scammer! Neither the banks nor the Attorneys General will charge a fee to speed your settlement.
4.If you think the caller may be legitimate, ask for their contact information, tell them you are going to call your bank’s hotline (located above) and confirm, then call them back. Chances are if they’re a scammer, they won’t want you to check on them and they won’t provide their contact information.

Visit The National Mortgage Settlement site for more information;

http://www.nationalmortgagesettlement.com/