Settlement Considerations

There are many factors to consider when settling with your mortgage company.  What is in your best interest?  If you don't plan on staying in your home for more than five years it is important to find out your property -- and market -- values.  It would not be in your best interest to keep your home if you plan on selling; yet, your mortgage is higher than your home's value.  For example:  in my neighborhood there were eight homes lost to foreclosure which dramatically decreased home values.  One previously valued $135K home sold at Sheriff's Sale for a scant $41K!  And, though that is the lowest sale price, it is indicative of the disparity in worth vs market value in my neighborhood.

What to do?  Have an independent appraisal done on your home to assist in decision making.  If your home is valued far lower than the mortgage balance, keep and/or sell everything that is of value within the home [appliances, etc], then turn the home over to your mortgage company and accept a cash settlement, instead.  Considering that you've reached the point of foreclosure, it's unlikely your credit is good anyway, so turning your house over to the mortgage company during a settlement proceeding should not affect you greatly.  Note that I say, "should not."  Any time you give up the rights to a home or vehicle it will affect your credit in some way.  But, in the case of settlement, you would have the option of including a consumer statement on your credit report with an explanation of the settlement.  Consumer statements generally do hold some weight with creditors.

On the other hand, if you know that you are going to be staying in your home for more than five years -- and your home valuation is reasonable -- it may behoove you to request a low interest, fixed rate mortgage and a cash settlement.  Don't be unreasonable with regards to cash settlements.  It doesn't help you in the least and will appear to the courts as if you were only seeking financial gain in the first place.  Instead, focus upon what's best for your future -- eliminating the penalties and fees accrued on your account, and the low interest/fixed rate mortgage over X number of years.  It is not unreasonable to request that the mortgage company fund your escrow for X number of years, either.

Finally, consult with your lawyer but, before doing so, be sure to know FOR SURE what you want out of your settlement for there is no going back once you sign the papers [unless, of course, you include a right of rescission clause!].

Countrywide's Foreclosure Scam: It's Not the Only Lender Ripping Off Homeowners

as seen here: 

By Alain Sherter | Jun 8, 2010

Bank of America’s (BAC) move to settle federal charges that its Countrywide unit gouged homeowners facing foreclosure should mark the beginning, not the end, of a full-blown government crackdown on mortgage lenders. That’s because the practices Countrywide is accused of — which range from raising the cost of property inspections, to lying to borrowers about how much they owed, to charging $300 to mow the lawn — are endemic among loan servicers.

“The Countrywide settlement exposes a widespread and longstanding industry practice,” Diane Thompson, an attorney with the National Consumer Law Center, told me in an email message. “The settlement offers some real hope of reining in the worst abuses in bankruptcy court — by requiring Countrywide to verify the amount owed and make sure they are charging reasonable rates — and should help reaffirm what is, I believe, already the law: You can’t put people in foreclosure who aren’t in default, and you shouldn’t overcharge homeowners in default for bogus servicers.”
Homeowners’ chief complaints in trying to stave off foreclosure run the gamut:

Charging fees for services not performed, or fines not actually due. Sometimes, lenders make extra cash by charging imaginary fees that are totally unwarranted. Mortgage documents and mathematical calculations can be complicated, so many consumers are unable to figure out when they’re being bilked. At the mercy of mortgage companies, they often overpay, even while facing foreclosure and bankruptcy.

Overstating the balance owed on a home loan. University research into recent foreclosure data found that almost half of the loans analyzed in the study included inflated balances or vague, unspecified charges. In more than 90 percent of the cases, homeowners disagreed with mortgage company calculations, believing that they were both inaccurate and too high.

Accumulating various fees or charges that are intentionally erroneous. Most of the fees mentioned in the study were relatively small, but they added up to gigantic amounts of extra profit for those companies who collect them. If a lender has, for example, 200,000 customers across the U.S. and overcharges each of them by $100, it adds up to additional revenue of $20 million — for basically doing nothing.

Failing to follow basic industry regulations. Investigators have found that some mortgage lenders are so negligent or sloppy, they don’t even comply with the most fundamental rules and regulations. A lender is required, for example, to show documented proof that they’re the actual mortgage holder before attempting to collect payments from a homeowner.

B of A will pay $108 million to settle the FTC suit, without admitting any fault. That’s a fairly trivial penalty given the scale of the offense.        “The size of the judgment is justified in light of Countrywide’s callous conduct, which took advantage of consumers         already at the end of their financial rope,” FTC Chairman Jon Leibowitz said.

Despite the small fine, however, the agreement gives regulators leverage to identify similar violations at other lenders and servicers. And Countrywide isn’t an aberration. In February, just to cite one example, customers of OneWest Bank (aka IndyMac) sued the California company for allegedly pushing them into foreclosure by illegally raising their mortgage payments after they’d declared bankruptcy.
As the FTC noted in announcing the settlement, it files such complaints when it has “reason to believe” that the law is being broken. That’s a fairly low legal standard for pursuing a case, since a court doesn’t need to find a lender guilty of anything to stop it from cheating borrowers. And yet such orders have the full force of law of behind them.
To their credit, the feds have launched a task force — StopFraud.gov — aimed at rooting out predatory lending, foreclosure scams and other crimes. They also created a unit within the Justice Department to promote fair lending. Some states are also moving to protect homeowners. California lawmakers have proposed a bill that prohibits lenders and loan servicers from foreclosing until after a borrower has been rejected for loan modification.
The problem is the magnitude of the crisis, which dwarfs the government’s response. Although foreclosures appear to have plateaued, the number of borrowers at risk of losing their homes remains at levels unseen since the Great Depression — in April, one out of every 387 U.S. housing units received a foreclosure filing, while banks repossessed more than 92,000 properties. A related issue is that lenders still routinely ignore federal guidelines for people seeking mortgage relief under the government’s flagship Home Affordable Modification Program. Nearly 40,000 borrowers complained about loan servicers failing to comply with HAMP, according to a recent report.
Meanwhile, the Countrywide settlement covers a whopping 200,000 customers. The obvious question: How many additional homeowners are getting ripped off by other lenders?

Consistency and Follow-Through

Sunday I worked through the night on my binder.  I am supposed to get together with the HUD investigator sometime this week and hand it off to him and I want to assure that the binder is pristine.  Quite frankly, despite the fact that I know that it is well-prepared, I am stressed out.  What made it worse was that someone close to me was browsing through the binder while I was printing some supporting documents and began peppering me with questions.  I don't know if the person is just slow or I wasn't making myself clear but then, how difficult is it to comprehend the following:  "I have not yet received the corrected loan modification documents."  "I didn't just stop making payments to GMAC.  I had a true hardship and made attempts to make a partial payment for one month but was refused.  The next month GMAC refused, and then the next month.  After three months of missed payments, I received a notice of foreclosure." ?  So, all day I have been more and more stressed and, now, am working on my second all-nighter in a row. Thankfully, I know that, despite my stress level, my past actions of consistency and follow-through will tide me over until I'm feeling normal again. 

There is a difference between consistency and follow-through, in case you're scratching your head in wonder.  Documenting your calls and placing your paperwork in a binder on a regular basis is consistency.  Follow-through is making that phone call tomorrow to the loan servicer or escrow account manager; leaving a message if need be, and then calling again the next day if they don't return your call.

Homework: 

• grab a pencil and paper
• draw a line down the middle
• consistency/follow-through
• list the things in your life that you do well under each [are you a promise keeper? that is follow-through!] 
• on the other side of the paper, make the same columns
• list ONE or TWO things that you would like to improve upon in your life
• keep that list with you and/or in a place where you can see it every morning before you start your day [bathroom mirror is great!]

Give yourself some positive reinforcement.  This is a difficult time in your life!  The self-assessment of your positives is your daily "pat on the back."  The second list is a reminder to yourself that you have a goal.  Soon, although you won't actually have that piece of paper in front of you 24/7, your subconscious will be processing your goal and devising ways to help you reach it.

Peace, all.

It Starts .............

My first set of financial documents - the ones requested by my mortgage company and its law firm - was completed and sent in September, 2008.  It included my previous year federal taxes, a pay stub, the completed hardship documents, and proof of the robbery, roof replacement, boiler replacement, gas leak, and all other relevant information related to my case.

This is now one of the critical components to my HUD case - the fact that I have proof that I provided all of the documents to my mortgage company - upon the date requested.

Whether you are just beginning a loan modification or are in the middle, do your best to keep track of the date/time of all documents and when they are sent.  If you can, when sending by snail mail, get a return receipt so that you have a signature proving it was received.  If by email, get a confirmation that it was received.  If by fax, hold on to that confirmation page - staple it together with the originals!!


Foreclosure magistrates are well aware that there is "something" going on with mortgage companies and, if you get to the point of foreclosure, will be more than willing to work with you in mediation to come to a resolution if you can prove that you have been jerked around by the mortgage company :)  Also, by keeping those documents, you will be able to get yourself in on the class action against the mortgage companies in the future.

DOCUMENT!  DOCUMENT!  DOCUMENT!

The HAMP Scam - You Can Survive It!

The newest scam mortgage lenders are perpetuating on unsuspecting buyers is costing buyers their homes. Home Affordable Modification Program, otherwise known as HAMP, is a US Treasury program designed to help at-risk homeowners.  When done properly, HAMP is a fantastic program!

Unfortunately, lenders have found a way to screw homeowners - while lining their pockets with government funds.

Each homeowner that signs up for the HAMP program generates $1000.00 for the lender. The homeowner is required to make 3 [three] trial payments to satisfy the program requirements before the loan modification is approved. During this time, Lender "loses" the homeowner's paperwork which makes it impossible for the homeowner to complete the modification within the allotted time period. Therefore, an extension is granted, which is considered a new modification -- which means another $1000.00 for the lender!!!

SCAM, SCAM, SCAM.

The lenders are not discriminating based upon gender, race, disability, et-al. They will screw anyone over.  It's like a mortgage orgy!

So, how do you avoid it?  Keep a copy of every piece of paper you send your mortgage lender and when it is sent.  By this I mean, don't send by regular mail.  Send so that someone has to sign for it!  Or, fax it and get the fax transmittal.  Or, if you are emailing paperwork, request a confirmation email and save that email.

The best way to beat the Mortgage Monsters is to DOCUMENT, DOCUMENT, DOCUMENT.  For three years I have been keeping a journal - a timeline, if you will - of every phone call to and from anyone having to do with my mortgage.  You should, too.

YOU ARE NOT ALONE!!!

For more information on loan modifications, visit FinancialStability.gov