I attended your seminar at UCR yesterday, and it was excellent. I hope you might be able to assist me. My husband left our home over a year ago, has not contributed anything, and I am in the process of getting a divorce. I am paying for the home loan, taxes, etc. At the advice of my attorney I’ve had the house listed for sale for nearly 6 months but it will never sell since it is turned around, and I owe more than it’s worth. I believe my husband will probably sign the deed over to me. Several months ago I called Countrywide and they said they will not consider a modification because my husband’s name is on the loan. They actually advised me to just let the house go, shortsale, or do what ever because I’ll never qualify. I have made all payments, have a FICO score of over 750, and refuse to ruin my credit since I’ve worked my entire life to pay my debts and be a good neighbor and citizen. And this is my family home; not just a house. The remaining loan is $425,000, currently have a 4.65% interest rate, and an ARM due in May 2009. My monthly payments are $2394, and I pay $2400 (a little bit extra) each month. No one so far is willing to work with me as I dont qualify for any of the modifications, etc. There is no equity in the home to refi. Like many middle class people I’ve lost thousands in our 401K, and 403B. So I dont have another $60,000 to put down for to refi. I’m not looking to have my debt erased. I plan to pay everything I owe. All I would like is a fixed affordable rate, and the loan adjusted to even perhaps a 40 yr mortgage, or whatever it takes. I am hoping that a lender will work with me. I have a beautiful family home. My current income is about $53,000 and my grown son lives in the home and contributes about $1000 a month. I have NO other debt other than the home. I keep hearing about all these measures to help people who are in foreclosure, all their debt forgiven. and they walk away not owing a dime?? Yet, I’ve made every payment, work many hours a week to pay for my home, but every door is closed in my face and I’ve paid my debts when due. Your assistance or advice will be appreciated.

Chris Miscellaneous

TODAY, president Obama unveiled his long-awaited housing plan. It’s fairly long and detailed, but the White House has provided a convenient four-page fact sheet (in PDF form) for those who are interested. Very generally speaking, there are three parts.

First, the administration will increase the number of homeowners able to refinance at current, low mortgage rates. Borrowers whose mortgages are owned or guaranteed by Fannie Mae or Freddie Mac will be able to refinance a loan up to 105% of the home’s value (up from 80%, previously). This is expected to help about 4 to 5 million households who owe nearly as much or more than the value of their homes. This seems like a reasonable step to take, though as Calculated Risk notes, it’s a bit of a lottery. Those whose mortgages haven’t been purchased by Fannie or Freddie are basically out of luck.

The second part is the one that’s grabbed headlines; the president has dedicated $75 billion toward efforts to prevent foreclosures. Chief among these efforts is a plan to reduce monthly payments for troubled borrowers. For those spending greater than 38% of their income on mortgage payments, up to 43%, the government will ask lenders to reduce interest rates to bring payments down to the 38% level. The government will then match lender dollars, one-for-one, in bringing down interest payments until the borrower is only spending 31% of income. Both borrower and lender will be eligible for $1000 payments when payments are reworked, and if the planned payments are made. If it’s necessary to reduce principle, then Treasury will provide assistance with this, as well.

This portion of the plan has drawn criticism, since many homeowners with too-large payments are those who took on irresponsible loan structures or who simply purchased too much house—who behaved irresponsibly, in other words. Ideally, officials would no doubt prefer not to help such borrowers (just as they’d no doubt prefer to let bankers who’d made bad decisions go under). But frankly, that’s not a top concern of mine. Rather, I’m interested in whether or not this is the best way to use $75 billion to halt foreclosures.

On that score, this is probably one of the better among a list of not-so-good options. Calculated Risk worries that this will only delay foreclosure, since interest payments are being reduced first, and principle written down only as a last resort (such that many who take advantage of the programme will nonetheless remain underwater). Perhaps, but by trying to leave principle alone, the government is avoiding excessive transfers of wealth to borrowers. A shared-equity plan might have been better, but this will halt some foreclosures and incent homeowners to stay in their homes longer. That’s bad for economic mobility, but good for a glutted housing market. Ending the downward spiral of price declines, defaults, and bank sales leading to further, dramatic price declines has to be a top priority.

Another question concerning the plan is whether the incentives to rework the payments are sufficient. Presumably, it’s already in the interest of lenders to reduce payments rather than foreclose, so it’s unclear whether $1000 is going to alter the balance. This, I think, is a more serious point. The housing plan passed last year to help rework problem mortgages seriously underperformed—where some 400,000 borrowers were deemed to be eligible, actual applications numbered in the tens.

The final portion of the plan involves measures to “strengthen” Fannie and Freddie and to keep mortgage credit available and fairly cheap. All told, the plan will be funded to the tune of about $200 billion.

By itself, the plan is unlikely to turn the tide. In combination with the stimulus, the bank rescue, and the collapse in home construction, it has a chance. Still, what would have been really nice to see would have been a comprehensive plan to get borrowers out of ownership without forcing them into bankruptcy or rushing waves of new foreclosures to market—an own-to-rent programme, for instance. Defaults are an immediate concern, but for the long-term health of the economy, lingering debt is going to be an issue. If foreclosure rates slow, but households continue to battle to get their heads above water by drastically cutting spending to pay down debt, recovery will be a long time coming.

You may visit this site by clicking here; http://www.economist.com/

Chris Miscellaneous

“I have an interest only mortgage loan @ 6.5 fixed until 2015. At that time who knows what the new rate will be. I am current on my mortgage and I have never been late. I recently retired and now i am on a fixed income. My question? Would I qualify or do I qualify for a loan modification to receive a lower non-interest only loan. Of course, I paid in 2006 450,000. for the home, and like with any of the house the value is lower lower lower!!!. I put 100,000. down at that time–foolish me!! and I still don’t have any equity now. Please answer—- I feel with the market so low, If I am paying on time why should I not qualify. Thank you”

Chris Miscellaneous

Below is an article I read that is extremely interesting. If you want rates to rise, then simply ignor this.
I try not to speak in absolutes. Rarely are the claims that something is “alway’s”, or “never” actually accurate. Not “all” brokers are bad. Nor, are “all” bankers good. Banks saw over the last twenty years, that honest brokers could offer better service and lower rates to the American home buying public, period. Year after year, they watched their market share dwindle. They had no choice but to offer their programs on a wholesale basis. Born was the broker. They were just as professional, but offered lower rates. They did not have all the huge salaries of middle management to contend with. Because of all of their overhead and huge benefits packages, banks rates are typically .25% to as much as .75% higher than a mortgage lender or broker who is in the business for the right reasons. Meaning, long term as opposed to the people who advertise on the radio to get you to; “refi now”! If your professional mortgage originator who desires to create relationships with his clientle for a long peroid of time is pushed out of the business, the banks will raise rates due to lack of competition. Whenever I show a loan officer who works on the retail side of Chase, Countrywide, B of A or other, what are commonly referred to as “Direct Lenders” or “Banks”, they are amazed at how much better of an interest rate could be offered to the borrower. I say this and I am the Executive Vice President of a direct lending mortgage banker! I see the rates everyday! I couldn’t work for one of the big banks knowing my customers are paying more than is necessary. Greed. Too much of it is a terrible thing.
The big banks want the public to be afraid of anyone other than themselves offering loans. Yet they created these programs in the first place and pushed them hard on the American public. Now, they want to blame you and everyone else for today’s challenges. The hypocrisy of it all amazes me.
Let’s not throw the baby out with the bath water. Many people did many wrong things over the last eight years. I pray we do not allow a few large lenders to dictate to the rest of America how they will finance their homes. Stricter guidelines? I’m all for it. Getting rid of the individuals who over stated income and pushed higher margins and longer pre-pays for gain? Absolutely. Just don’t loose sight of the fact that these big banks created the programs and paid their sales representitives HUGE BONUSES for selling this product through their wholesale and correspondent channels. To claim innocence and act holier than thou, is highly offensive to those of us who know the truth.

Please read this article:
By Paul Muolo

THIS JUST IN: On Friday Colonial Bancgroup of Alabama closed near its 52-week low of 55 cents a share. What does this have to do with mortgage banking? Colonial is one of the few remaining warehouse providers to non-depositories. If Colonial finds itself in financial hot water, you can scratch yet another warehouse provider off the list. Non-bank mortgage originators that depend on warehouse money are praying that the bank will receive TARP funding and that liquidity will not be an issue. According to recent press reports, in late January Colonial divulged that it must raise $300 million in equity in order to receive a $550 million capital injection through the Treasury’s Troubled Asset Relief Program. The bank is now the subject of lawsuits by shareholders who have seen the value of their holdings fall dramatically…

Meanwhile, National Association of Mortgage Brokers chief Marc Savitt is hoping for a meeting with the White House concerning the future of loan brokers who are being cut off at the knees by both wholesalers and mortgage insurance companies. All this is happening in the midst of a refi boom. The NAMB chief, as well as many brokers, believe there is a bank-led conspiracy to put them out of business, thus eliminating a competitor. This past week National Mortgage News broke a story that The PMI Group was banning broker-sourced loans from its coverage menu. It’s the first MI to do so.

**Okay, if you read this far, I’m proud of you! This is Chris again.
The PMI companies, the Banks and the established non-profits, seem to be positioning themselves in an alignment that is based on their collective desire to obtain tax payers money and eliminate compitition. Pretty scary! If you are going to borrow money, fight for the rate you deserve. If your in the business, direct your business to a secondary mortgage banker who is working on extremely thin profit margins. Once this recession is done in the next eighteen months, or so, you’ll all thank me!!! If not, we’ll all be working for one of four or five banks that are doing their best to use fear to eliminate the compitition.
This is my humble, researched opinion.

Chris Miscellaneous

“Now more than ever there is a need for affordable housing. There is no better way to jumpstart America’s troubled economy.”

Judith A. Calogero, the newly elected CEO of the New York Housing Conference, a coalition of nonprofits and for-profit organizations dedicated to preserving and producing affordable housing.

Chris Miscellaneous

If I foreclose on a property (2nd residence) will I be liable for the property taxes that year I didn’t make any mortgage payments or does the bank take on that responsibility?

Chris Miscellaneous

I have been in contact with my lenders regarding a loan modification.  My interest only loan was going to go up Dec 2009.  After several calls back and forth, they told me I can get a modification for a principal and interest loan but my payments would be 2300.00, which I couldn’t afford.  So I kind of left it at that.  I called back earlier this month and found out that my loan had been modified to another interest only loan for five years.  My payment went from $2,260.00 to $1,976.76 and my interest rate went from 7.5 to a 6.5.  I really wanted a principal and interest loan, but they said I could get it, but my payments would be high.

My question is, should I just take the new interest only amount or continue to fight for a reasonable payment with a principal and interest loan?

starrlights Miscellaneous

Hello Chris, and to your wonderful panel;

I attended your Jan. meeting and it was like a hope-full light which shown through some thick dark clouds.   Thank you Chris, and all the experts who are participating for your caring stewardship, it is much appreciated.

I have 4 investment homes plus the house I live in.  In about the 4th quarter of 2006, 3 of my houses had become  vacant all together and needed major repair & maintenance, along with paying the property taxes and insurances, which wiped out my reserves, plus I took out of credit cards to supplement the expenses.  My action plan was aimed at repairing the homes and getting them up and rented as quickly as possible.  Then the thought was that I would sell 1 to 3 of them and pay back the credit cards, put some of the monies on reserve, and use some of it to put my daughter through college (which she started on Sept. 07).

Dampend by my Dad’s illness, and passing away early last year, repairing the houses took longer then expected, and so once it came time to consider selling them the value of the houses just took a steady dive.  And so instead of riding about $400,000 positive on equity I’m now riding about that much negative.  Plus I have the added expense of having to cover the credit card debt.

In May 08, I let go paying the mortgage on one of the houses to see what impact that would create overall.  I thought that this house would go into foreclosure about 5 months later, but instead the lender, barely, last month approved a short-sale for about $165,000 less then I bought the house for - but then the person who put in the offer backed down.

With the help of a not so experienced realtor (since I could not find a more experience realtor who was willing to assist with all this), we have pursued short-sales on the other investment homes.  For the most part, the lenders say that they will not consider a short-sale unless the houses are in default at least 3 months.  Therefore, starting last month I stopped paying the mortgages on the other investment homes.  But, I am leaving on (and carrying the expense of) the utilities and yard maintenance, so far on the vacant properties.

I guess that at this point the outcome I’d like is to wipe the sleight as clean as possible, or as you said in today’s posting - bow gracefully and back away, without getting deeper into debt; nor incurring a major tax burden, even if it means me going into bankruptcy (which at this point I don’t really know much about).  Ideally, I’d like to keep my current home, especially since I have my elderly Mom living with me.  But that loan payment is due to go up about $1000 in a couple of years, and so I would need to do a loan modification on it, in order to keep it.

At this point I have an appointment to speak with a Springboard debt counselor, in about 2 weeks (they said they won’t meet with people if you are filing for bankruptcy, only for debt management), since I understand it to be a requirement for filing for bankruptcy.  Prior to positioning myself in this mess, my credit has always been real good; but this thing is wipeing me out down to the roots, I’m just hoping that I’m still breathing when I land.  Could you please tell me if there is anything more that I can do at this point, such as talking (face-to-face) with some experts (such as yourself Chris, a real estate and/or bankruptcy lawyer)?

In added graditude, I’ll say that one of the hardest things I have found, in this investment learning trip, is to find individuals who can see, and play the whole picture (real estate, escrow, lending, law (foreclosure, short-sale, bankruptsy), Taxes, investing, etc.), your brilliant set-up not only creates this individual, it puts it out there for the rest of us to benefit from.  Thank you once again for this brilliant set-up.  I look forward to your responses.

AMWT Loan Modification, Miscellaneous, Short Sale:Seller, Tax Issues, Training Classes

This is a plea from RC’sHELP’s Founder, Chris Sorensen

Did I get your attention? Good. Please stop and take the time, if you have not already done so and learn about the major problem occurring right now, with respect to property taxes.
You must fully understand Prop. 8
You have to understand Prop. 13
You have to know the difference between the assessed value and the acquisition price.
You have to know what the Assessor has control over and what he does not. He cannot change what is being re-paid on the bonds.
Which brings me to ask my fellow professionals to please learn how and why Senator Henry Mello and Assemblyman Mike Roos came up with the legislation in the first place.
Here, read this:
http://en.wikipedia.org/wiki/Mello-Roos

The problem?
Homebuyers today are receiving a shock when their new lenders are advising them that their house payment is going to go up, in some cases, hundreds of dollars a month because of our industry’s ignorance. Since that vast majority of the homes that are being sold today are in the first time home buyer range, this is causing devastating effects.
I have had loan officers who loose opportunities to work with borrowers because the Realtor was able to receive a lower fee quote from a competing company. (Yes, even the household names are making this grave error) At first glance that sounds great, the bad news is that the competing lender didn’t calculate the taxes properly, which caused them to come in THOUSANDS cheaper than the honest and educated loan officer.
This is being under-reported because the borrower does dot get this terrible news until months after close. We the professionals have all been paid and the idiot loan officer continues to undercut all honest, knowledgeable originators and gets most of the business!!! Only caring Realtors can put a stop to this. Learn and then require your loan officer to learn the facts as well.
The HELP program is intended to raise the bar for professionals and educate the public so they will be able to tell the difference. The cream shall rise to the top.

Chris Miscellaneous

Congressman Barney Frank, Chairman

This is Chris Sorensen’s opinion;

I have heard much about the HOPE program and I thought I would underscore to the readers here, what has been painfully obvious to those of us who are in the trenches so to speak, that the program to date, has been a flop!
It does not matter who is to blame. What matters is that it is too expensive and too complicated for the borrower and lender alike. The lender having to write down too much and the borrower having to have a permanent equity partner, was more than either party was willing to digest.
I have included a link to the instructional page from the House Financial Services Committee, on how to avoid foreclosure at the bottom of this posting.
In my strong opinion, YOU THE PEOPLE deserve expert advice like what you are getting here! It is not that the counselors who work for the HUD approved non-profits are not good. They are. However, in my experience, based upon many conversations from homeowners, you are being grossly under-served. There is simply not enough qualified counselors.
We attempt to take a “holistic” approach to the problem. 1. What happened. 2. Where are you now. 3. What is your best course of action. and 4. Setting up an action plan.
Note, I did not stress that keeping your home is the most important thing. For many, it is not. Quite frankly, the way that you got into your home, set you up for failure. In blunt terms, you never qualified to begin with. My belief is that there are times when people should be told the truth, even if it hurts and show them a path that will allow them to transition as smoothly as possible all the while cooperating with the lender who, for the sake of the taxpayers, needs to get as much out of their asset (Your home), as possible. Typically, this means a short sale over a foreclosure, or at least an attempt with one. This of course pre-supposes you do not qualify for a note modification.
Far too often today, I have to listen to well meaning HUD approved non-profits wanting to talk about the evil, “for profit” side of the business that got us here in the first place. While I could not agree with them more, that Countrywide and other large institutional lenders and Wall Street firms created financial vehicles that were abused by all, I have to say, so what/now what? Let’s help these poor people. To point the finger does very little good for the general public. I watched first hand many, many lenders who provided us in the industry, daily rate sheets and advised us to sell higher margins and longer pre-pays in order for these large household named lenders to make more and pay the originators more. Everyone has blood on their hands and no one, for the most part is innocent. Including, at times, you the home buyer! Let’s face it, not everyone was confused when they saw their income being over stated on their home loan application!!!
In fairness, many were. Those are the ones I cry with and for. Those are the ones I and the HUD approved non-profits need to help the most. The rest need to simply work with the lenders and bow out gracefully. No blame, you simply took advantage of a time in our market where everyone was a homeowner regardless of their qualifications. Heck, at peak approximately 70% of Americans were homeowners. HUD staff testified before Congress in 07 what a wonderful thing this was. Today, I’m sure they would say something completely different.
Bottom line, everyone cannot be saved. Get together with us or someone you trust and create a plan that works for your unique circumstances. All of these broad brush stroke programs are great, but you deserve a program that has been designed specifically to you and your loved ones circumstances.
Modify? Short sale? Foreclosure? BK? Tax implications on debt relief? This is far too complicated and far to great of a problem, to try to sell one size fits all.
Here is the link I mentioned earlier:
http://financialservices.house.gov/TheForeclosure%20Prevention%20Guide%2010%2015%2008.pdf

Chris Miscellaneous