W.H. foreclosure plan a bust so far

The Obama administration’s $50 billion program to curb foreclosures isn’t working, and the White House knows it. Administration officials blame the mortgage servicers charged with carrying out the mortgage modifications and refinancing under the federal program. Many of their Democratic allies on Capitol Hill back them up, but others are criticizing the White House for fumbling the execution. Whatever the reason, the program hasn’t stopped the rising tide of foreclosures: Experts predict that at least another 2 million homes will be lost this year, and the administration’s plan has so far reached only about 160,000 of the 3 million to 4 million homes it was supposed to protect over the next three years. That’s bad news for the economy — and bad news for the Democrats.

The Democrats’ political and policy fortunes rest on their ability to persuade voters that they’re fixing the economy. But experts say that rising foreclosures will only exacerbate the nation’s economic woes, pushing down home prices, slashing state and local tax revenues and imperiling consumer confidence. “Everybody understands that getting out of this broader crisis requires that we stabilize our housing market and stem the tide of foreclosures,” Senate Banking Chairman Chris Dodd (D-Conn.) said in a hearing Thursday. But in unusually harsh words for a Democrat, Dodd said that the Obama administration’s progress in stopping foreclosures has been “disgraceful” so far. “It’s just hard to explain to the working families in America how it is we could move so fast with extraordinarily complicated deals with the huge financial institutions, and we are moving so incredibly slowly, mired in paperwork, in rules, in talking to banks back home,” said Sen. Jeff Merkley (D-Ore.).

The foreclosure listing service RealtyTrac Inc. reported Thursday that the number of homeowners in foreclosure in the first six months of 2009 was up 15 percent from the same time period a year ago. The Center for Responsible Lending, a nonpartisan research and policy organization, projects at least 2.4 million additional foreclosure starts this year, causing nearly 70 million surrounding households to lose a combined $500 billion in property value. The group estimates there will be 9 million foreclosures through the end of 2012, at the cost of $2 trillion in lower home values — enough to pay for the House Democrats’ health care plan, twice. The White House realizes the stakes. Treasury Secretary Timothy Geithner and Housing and Urban Development Secretary Shaun Donovan took the 27 participating servicers to task in a July 9 letter to their CEOs, telling them to add more staff, improve training, create an appeal path for borrowers dissatisfied with the service and fulfill other measures to do more modifications, better. The servicers were told to designate a liaison with the administration who will meet with Treasury and HUD on July 28. The servicers have to tell the administration by July 23 what specific steps they’re taking to improve performance.

In addition, the administration announced that next month it will start publishing company-by-company results, including how many modifications each servicer has made and how quickly. At the least, that will give policymakers ammunition to shame recalcitrant lenders. “We think that that type of disclosure, servicer-by-servicer, will be important to spurring greater activity on their part,” Herbert Allison, assistant treasury secretary for financial stability, told Dodd’s committee. But assurances that the administration is paying attention were not enough to satisfy senators on either sides of the aisle — and Republicans are ready to make the case that slow progress on the foreclosure front is just one more example of the Obama administration overpromising and overspending. “I see these extravagant promises in just about everything that happens here, ... and then I see this terrible execution,” said Sen. Mike Johanns (R-Neb.). “The stimulus money isn’t getting out, you’re not getting on top of the foreclosure numbers, you know, and that has nothing to do with what you inherited.

Execution is what you do every day.” “I’m not happy where we are at, and I think there is a lot more to be done,” Republican Sen. Mel Martinez, whose home state of Florida has the third-highest foreclosure rate in the country, told the Treasury and HUD officials there to testify. “What’s your Plan B?” he asked later. That’s exactly what some outside experts are asking; they say that the situation requires more drastic action than the modifications the White House is pursuing. Many housing advocates argue that Obama’s plan was fatally flawed from the start because Congress refused to pass a controversial measure to allow bankruptcy judges to modify primary residential mortgages — recommended by the White House as the one stick in its plan, which is chock-full of carrots for servicers and borrowers. “You have got to have some leverage, something to hold people’s feet to the fire,” said CRL spokeswoman Kathleen Day.

“If you tell the industry this [judge] can do the loan mod if you don’t, that is going to get their attention.”

Andrew Jakabovics, a housing expert with the left-leaning Center for American Progress, believes revisiting bankruptcy is a political nonstarter. But he says there are other sticks the administration could consider, including taking away the tax advantage enjoyed by the trusts that hold mortgage-backed securities if the investors refuse to allow modifications. “That’s a pretty big stick,” he said. And while it was the Senate that killed the bankruptcy measure, the White House took flak for not spending a single cent of its political capital on getting it through the upper chamber. Economist Mark Zandi — whose advice congressional Democrats relied upon during the stimulus debate — has argued that the Obama plan was too complicated. His recommendation for a Plan B: a simple program that covers any homeowner who took out a mortgage between 2005 and 2008 that was clearly unaffordable when it was made, with straightforward criteria to determine that. Zandi and others argue that the modifications should focus on reducing struggling homeowners’ outstanding principal on homes that have lost much of their value. A major criticism of the Obama housing plan was that it failed to aggressively encourage principal write-downs, focusing instead on reducing homeowners’ monthly payments, largely through interest rate cuts.

But other experts say there’s not a whole lot the administration can do directly on the housing front anymore — and that might be the worst news of all for the White House. Nicolas Retsinas, director of Harvard University’s Joint Center for Housing Studies, said that while the Obama plan was well-crafted for the issues at hand in February, the cause of foreclosures loan modification has changed. Now they are less about the creative, variable-rate loans that buried many homeowners and more about an unemployment rate that has even those with fixed-rate loans struggling to keep up. “The issues have changed, and in some ways the solutions haven’t kept up with the problems,” Retsinas said. “The most effective intervention would be to put people back to work.”

Lawsuit Seeks to Block Home Foreclosures in Minn.

Filed at 2:48 p.m. ET
MINNEAPOLIS (AP) -- A group seeking to stop home foreclosures in Minnesota sued the federal government Tuesday, saying a program meant to help struggling homeowners refinance their mortgages fails to give them proper notice or the right to appeal when they're rejected.
The Home Affordable Modification Program, set up earlier this year, reduces monthly mortgage payments for at-risk borrowers. The Obama administration has set aside $75 billion for the program to try to prevent 3 million to 4 million foreclosures. But Mark Ireland, an attorney with the Foreclosure Law Relief Project, said the government has failed to establish clear procedures.

''The government does not require its loan servicers to tell a homeowner the specific reason why they have been denied a loan modification,'' Ireland said. ''Decisions are made under a cloak of secrecy and there is no formal way to challenge these decisions.''

The lawsuit, which seeks class-action status, was filed in federal court in Minneapolis. It asks for an injunction against all foreclosures until the federal government puts safeguards in place.
Ireland said the group hopes housing advocates in other states file similar lawsuits.
Its suit names the U.S. Treasury Department, the Federal Housing Finance Agency and struggling mortgage lenders Fannie Mae and Freddie Mac, which have been under federal control since September and are playing a key role in the government's effort to modify and refinance home loans.
Treasury Department spokeswoman Meg Reilly said she was checking on whether the agency wanted to comment on the lawsuit.
The two named plaintiffs are a Brooklyn Park woman and a Woodbury man who both depleted their savings after they were laid off. They now have new jobs and steady incomes, the lawsuit says, but they've been rejected without explanation for loan modifications through HAMP that would have let them get and stay current on their mortgage payments.
The federal government and major lenders have moved to address some of the concerns the lawsuit raises because similar problems are common across the country.
Officials summoned mortgage executives from 25 companies to meetings in Washington on Tuesday with top staffers from the departments of Treasury and Housing and Urban Development. On Monday, the Mortgage Insurance Companies of America announced a ''second look'' program to help homeowners who have been turned down for loan modifications.
And last week, the Government Accountability Office issued a report saying the Treasury Department needs to take actions to make HAMP more transparent and accountable.
Ireland welcomed those moves but said hundreds of homeowners who could have gotten into the federal program have been foreclosed on in since it was announced.

''The smart move is to stop the foreclosures, get everything in order, and once you have the procedures and policies and the ability to appeal adverse decisions, then start the program up again,'' he said. Ireland said the group's lawsuit applies to about 85 percent of all mortgages in Minnesota. It follows another involving HAMP that led South Carolina's Supreme Court in May to temporarily halt thousands of pending foreclosure sales to give the homeowners more time to take advantage of the new federal program.

Mortgage Help Loan

Where Home Prices are in Free Fall

July 27, 2009

Before the housing crash extended beyond foreclosure-ridden exurbs, the average homeowner used to (foolishly) believe that his neighborhood was immune. Today, even underwater homeowners merely take heart in knowing that other neighborhoods in the same city are worse off.

If you live in the leafy, mansion-filled Bel Air neighborhood of Los Angeles, where sales prices have declined 31% at the median to $1.5 million, you're probably comforted by the fact that you don't live in Glassell Park in East L.A. In that part of town, buyers counting on neighborhood improvement when they bought in the fringe area have seen median sale prices plummet 50% to $225,000 in the last year.

It's the same story to the south, in San Diego. Sales prices are down 25% in University Heights, but homeowners there can say, "Better here than Horton Plaza." In that downtown, marina neighborhood, median sale prices are off year-over-year by 56%, to $612,500.

Behind the numbers
Forbes looked at the 25 largest cities in America to determine which neighborhoods witnessed the biggest year-over-year price drops, according to data from Trulia.com, an online real-estate marketplace and data firm. A neighborhood had to be within the city limits, have at least 10 sales, and prices had to be above $150,000. Otherwise, our list would be a rundown of markets barely on life support, such as Briggs, Detroit, where prices over the last year are off 96% to a median price of $2,500.

What's your home worth?

Mod Loan Center.com is here to help you. Just call us today at 561-214-4580 for a free consultation. Have you received you NOD(Notice of Default)? Are you in pre-foreclosure? Do you behind on your mortgage affecting your credit credit history?

We can Help. Mod Loan Center a loss mitigation servicing company.
Call Mo Kings 561-214-4580

Critical considerations for mortgage modification programs

Wed, 2009-07-22 15:53 — Don Iannitti

There can be no denying the fact that the government is not in favor of forcing homeowners out of their homes, even when they are in default and facing foreclosure. Legislative bodies around the country, as well as Fannie Mae and Freddie Mac, have all taken action to stall the foreclosure process in an effort to keep more borrowers in their homes. From the early days of this crisis, the federal government hoped that lenders would begin to actively modify existing mortgages to meet this goal. While programs advanced by the U.S. Department of Housing and Urban Development (HUD) did not attract the attention of mortgage lenders, changes in the way the industry is approaching this problem—and the high risk of class-action lawsuits against those institutions that do not act—are leading more lenders to consider moving forward with mortgage modification programs.

In the end, lenders who can effectively modify mortgages for borrowers in default will be in a position to get those borrowers back on track, keep them in their homes and revitalize the income streams from these deals. With housing prices continuing to fall across the country, refinancing these mortgages is often not an option, making loan modifications the most viable strategy. But, there are a number of challenges lenders will face with this plan.

The first challenge involves attempting to modify the mortgage without giving away too much of the revenue promised by the borrower in the original deal. When lenders were offered the opportunity to refinance troubled borrowers into Federal Housing Administration (FHA) loans last year, the fact that they would have to agree to accept the proceeds of the new mortgage as payment in full of their preexisting senior loan and release their lien made the offer unappealing for many lenders as that meant that the outstanding principal balance owed would not be fully paid. Unfortunately, loan modification programs will also involve lenders leaving some money on the table. While specific features of the various programs will vary, most lenders will find that they are waiving prepayment and restructuring fees associated with mortgage modifications.

The second challenge lies in finding a way to give borrowers a deal they can still afford. By far, the most significant factor involved in borrowers getting into trouble has been their inability to pay the monthly mortgage loan payment after an adjustable-rate mortgage loan ticked up. In an effort to keep these borrowers on track, some lenders are modifying loans such that the borrowers' monthly payments (including principal, interest, taxes and insurance) fall between 31 percent and 38 percent of gross income. Lenders are doing this by reducing interest rates, extending amortizations, and/or forbearing the principal owed on the loan.

Finally, and perhaps most significant to the long-term success of the lender’s modification of a loan, lenders must deal with the fact that many of the loans they will attempt to modify have already been pooled into mortgage-backed securities that have been sold off to investors. This means that it would be prudent for the lender to determine whether investor approval is required for the loan modification. If investor approval is required, then the lender must ensure that it satisfies all of the criteria necessary to obtain approval of the modification. (Note, too, that the approval of junior lien holders may be required to modify a loan.) For the protection of the lender and the investors in these securities, proper documentation and regulatory disclosures are critical during this process.

There are three essential types of documents that must be part of any loan modification program. They include consumer disclosures, investor-related documents and the loan modification documentation.

Like any mortgage transaction, there are disclosures that must be presented to the borrower at prescribed times. The modification process changes the process somewhat. A new Regulation Z disclosure is ordinarily required when an existing obligation is satisfied and replaced by a new obligation undertaken by the same consumer. However, a workout of a delinquent loan will not require a new Regulation Z disclosure unless the rate is increased or the new amount financed exceeds the unpaid balance plus earned finance charges and certain insurance premiums.

If the rate is increased based on a variable-rate feature that was not previously disclosed or if a new variable-rate feature is added to the obligation, a new disclosure will be required. The lender will also not have to worry about providing a new notice of right to rescind under Regulation Z for a modification of a closed-end mortgage by the original creditor. However, the right of rescission will apply to the extent the new amount financed exceeds the unpaid principal balance, any earned unpaid finance charge, and amounts attributed solely to the cost of the transaction.
Lenders subject to state regulation governing mortgage lending will also be required to provide state-specific disclosures. The bottom line is, depending on the terms of the loan modification, other disclosure obligations under Regulation Z and applicable state law may be triggered. A lender may want to engage legal counsel to ensure that all required federal and state disclosures necessary to complete a loan modification are provided to the borrower.

If investor approval of the modification is indeed required, the lender should ensure that any investor-specific documents required to be included in the loan modification are, in fact, provided to the borrower and/or included in the modification package. Finally, the modification must be documented just like any other mortgage transaction. Depending upon the circumstances and applicable law, this may involve modification of both the promissory note and the security instrument. The loan modification agreement is generally always recorded.

Lenders that can effectively implement a loan modification program will fare better than those that choose to proceed with foreclosure and then take on the responsibility of maintaining properties or try to dispose of them at a loss in a weak housing market. However, before proceeding with a loan modification, lenders must be prepared to meet any documentation and investor-specific requirements for the modification to be a success.

Loan Home Center

CIT Expects Loss of $1.5 Billion, May Seek Bankruptcy

July 21 2009 (Loan Mortgage Help Blog) -- CIT Group Inc., the 101-year-old commercial lender seeking to avoid collapse, said it expects to report a loss of more than $1.5 billion for the second quarter and may need to file for bankruptcy if it’s unable to tender for notes maturing next month.

CIT’s “existing liquidity” isn’t enough to repay the $1 billion of floating-rate notes maturing on Aug. 17, the New York-based lender said today in a regulatory filing. CIT, which announced a $3 billion rescue financing from its bondholders yesterday, has asked holders of the August notes to swap their claims for 82.5 cents on the dollar.

“The company is right on the precipice,” said Ricardo Kleinbaum, a credit analyst at BNP Paribas SA in New York. “We have a coercive tender where bondholders are being asked to participate and cross their fingers there isn’t a bankruptcy down the road. It’s not clear what the end game will be.”

CIT, led by Chief Executive Officer Jeffrey Peek, was brought to the brink of failure after reporting $3 billion of losses in the last eight quarters. The company turned to its bondholders for funding after it was unable to obtain a second government bailout. CIT, which hasn’t had access to the corporate bond market in more than a year, said today it needs to repay $7 billion of unsecured debt through June 30.

Pre-tax items contributing to the quarterly loss include a $693 million goodwill and intangible assets impairment expense, an approximately $500 million provision for credit losses and a $185 million loss on a $1 billion sale of receivables that were “sold for liquidity purposes,” CIT said in the filing.

Denied FDIC Backing
The lender, which converted to a bank in December and received $2.33 billion in funds from the U.S. Treasury, has been denied access to the Federal Deposit Insurance Corp.’s Temporary Liquidity Guarantee Program to sell U.S.-backed debt.

“Late in the second quarter of 2009, our available liquidity dropped below the level necessary to operate our business,” CIT said in the filing. “Even if the offer is consummated successfully, we will require significant additional funding during the remainder of 2009 and beyond to operate our business.”

As part of the terms of its loan from bondholders, CIT has to get the creditors to approve a restructuring plan by Oct. 1, the company said in the filing. The loan pays 10 percentage points more than the three-month London interbank offered rate, with a 3 percentage-point floor for the borrowing benchmark and Loan Modification.

Bondholders providing the financing include Boston-based hedge fund Mod Loan Center, Baupost Group LLC, Capital Research & Management Co., Centerbridge Partners LP, Oaktree Capital Management LLC, Pacific Investment Management Co. and Silver Point Capital LP, people familiar with the deal said yesterday.

Telephone and e-mail messages left with CIT spokesman Curt Ritter weren’t returned.

Stock Falls

CIT declined 27 cents, or 22 percent, to 98 cents as of 4:15 p.m. in composite trading on the New York Stock Exchange. CIT, once the biggest independent commercial finance firm in the U.S., sold for more than $61 a share in February 2007.

CIT has about $10 billion in bonds and loans maturing through 2010, according to data compiled by Bloomberg. The floating-rate notes due in August fell 2.5 cents to 85 cents on the dollar, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority.

The cash shortage has forced CIT to cut back its lending. In the quarter ended June, CIT’s loans to small businesses plunged 88 percent to $65.7 million and the company fell to 15th in the category from first a year earlier, according to the La Canada, California-based Coleman Report. CIT finances about 1 million businesses from Dunkin’ Brands Inc. to Eddie Bauer Holdings Inc.

Customers Draw Down
Since late June, CIT has “experienced a significant increase in the draws” on its financing commitments, which has “significantly degraded the company’s liquidity position,” the lender said in the filing.

The drawdowns exacerbate CIT’s liquidity constraints, said Randy Marshall, a New York-based managing director at Protiviti, a consulting and auditing firm.

“This, combined with the stress from the bondholders and the inability to access the credit markets, is really an extremely difficult situation for an organization that, historically, hasn’t had a big deposit base and relied on the credit markets,” Marshall said.

Effect of Bankruptcy
CIT has said a bankruptcy would put 760 manufacturing clients at risk of failure and “precipitate a crisis” for as many as 300,000 retailers, according to internal documents.

CIT’s bankruptcy warnings are the “elephant in the room,” said Richard Morris, a partner concentrating in workouts and restructuring at Herrick, Feinstein LLP in New York. “These questions and concerns are going to be on the minds of every analyst. From a securities point of view, you have to say this.”

Credit-default swaps protecting against a CIT default for five years climbed 6.5 percentage points to 47 percent upfront, according to broker Phoenix Partners Group. The cost implies that traders have priced in a more than 90 percent chance that the lender will default within the next five years, according to a standard pricing model.

Loan Mortgage Help Center Blog - loan Modification - Loss Mitigation - Credit Card Debt Solutions

Nevada, Arizona, Florida post top state foreclosure rates

July 20, 2009,

40years ago Moon Landing! More than 6 percent of Nevada housing units (one in 16) received at least one foreclosure filing in the first half of 2009, giving it the nation’s highest foreclosure rate during the six-month period. A total of 68,708 Nevada properties received a foreclosure filing from January to June, an increase of 23 percent from the previous six months and an increase of 61 percent from the first half of 2008.

Arizona registered the nation’s second highest state foreclosure rate in the first half of 2009, with 3.37 percent of its housing units (one in 30) receiving at least one foreclosure filing, and Florida registered the nation’s third highest state foreclosure rate, with 3.08 percent of its housing units (one in 33) receiving at least one foreclosure filing.

Other states with foreclosure rates ranking among the nation’s 10 highest were

California (2.94 percent),

Utah (1.46 percent),

Georgia (1.42 percent),

Michigan (1.34 percent),

Illinois (1.31 percent),

Idaho (1.26 percent) and Colorado (1.25 percent).

loan modification

Loan modification Requirements

July 14th, 2009
Are you eligible for a loan modification?

Every lender has different criteria for the loan modification requirements. This is a moving target and so can be your situation. One day you have a job to show you can afford the mortgage and the next day, you no longer have a job.

The main things the lender will look at:
1. Can you pay the mortgage now but not the past due?
2. You will have to show documentation that you have a job or proof of your income.
Is there equity in the house?
3 If you bought your house within the past 3-5 years, most likely it has gone
down in value. You want to know what the market value is on the property.
What are the terms of the existing mortgage?

They look at the subprime loans first since they are the most defaulted mortgages and they don't want to take back more properties.The bottom line is, they want to know when they can start seeing payments coming in. They will want documentation of all the paperwork that is needed to prove your income. If you are self-employed, you will need to provide tax returns and profit & loss statements.

They will want to see what your monthly income and expenses are. You can disqualify yourself if you don't do this correctly. They will also want to know what was the reason for you to fall behind. Well this can be easy for challenging for some people to put on paper. If you don't know how, you need to learn.

Some people think that if you are a landlord, you don't qualify for a loan modification. NOT TRUE! I have gotten loan modifications rental properties. There is a special way you will have to structure it to qualify for the loan modification.

There are some programs you will not qualify for a loan modification. The Obama plan that everyone is talking about is focused on the owner occupied properties and not for the landlords who have properties. Go to your lender's website to see if you are eligible for a loan modification with them. Keep in mind, the programs change daily so if you get a NO today, you may get a YES tomorrow if you are persistent!

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