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Showing posts with label Mortgage Trouble. Show all posts
Showing posts with label Mortgage Trouble. Show all posts

Friday, April 19, 2013

The Check's in the Mail: Settlements for Wrongful Foreclosures

Foreclosure Defense , Mortgage Industry
The Check's in the Mail: Settlements for Wrongful Foreclosures
Some information on foreclosure defendants receiving money in the mail, which is being shared by an Assistant Case Manager at Lieb at Law, P.C., Laura Palermo:     
Recently a few clients received a check from their current or former mortgage lender. Perplexed by this, my clients were a bit hesitant to run down to the bank to cash it. They asked “what is this for?” and “are there terms attached to this check I should know about?”

I directed them to a deal struckback in January of this year between Fannie Mae and the ten major banks to settle allegations that the banks had wrongfully foreclosed on thousands of homeowners between 2009 and 2010. The result of the deal was an $8.5 billion settlement which was to be allocated among the homeowners (or now former homeowners) who were wrongfully or prematurely foreclosed on or denied a loan modification resulting in foreclosure. The foreclosures which are considered as wrongful include those which were “robo-signed” or automatically entered into foreclosure proceedings without proper review for work out options such as modification, deed-in-lieu, or short sale.

The settlement amounts range anywhere from $100 to $125,000 per qualifying person. The settlement is thought to be disbursed among hundreds of thousands of people. There is no way in which to apply to be a part of the payout, the recipients of the settlement are to be determined by the banks. The settlement has been criticized by many for being too soft on the banks as it releases them from their responsibility for these foreclosures for a relatively low price.

The first wave of checks were mailed out this week, so if you fit the description of a person who was wrongfully foreclosed on or attempted to be foreclosed on between 2009 and 2010, and you find yourself with a check in hand from your former or current mortgage lender, go ahead and cash it, there are no special terms attached to it, it is simply your pay out from a billion dollar settlement you probably didn’t know you were a part of.

I’ll leave you off with some advice from my Grandma: “Don’t spend it all in one place!”


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Wednesday, April 10, 2013

Ability-to-Repay and Qualified Mortgage Guide Issued by CFPB

Mortgage Industry , Mortgage Trouble
Ability-to-Repay and Qualified Mortgage Guide Issued by CFPB
Today, the Consumer Financial Protection Bureau (CFPB) issued a Small Entity Compliance Guide to the new Ability-to-Repay regulations, which are scheduled to commence effectiveness on January 10, 2014.

To remind our readers, the Ability-to-Repay regulations require loan originators to "make a reasonable, good-faith determination before or when [they] consummate a mortgage loan that the consumer has a reasonable ability to repay the loan, considering such factors as the consumer’s income or assets and employment status (if relied on) against:

  • The mortgage loan payment
  • Ongoing expenses related to the mortgage loan or the property that secures it, such as property taxes and insurance you require the consumer to buy
  • Payments on simultaneous loans that are secured by the same property
  • Other debt obligations, alimony, and child-support payments"

As stated within the Guide: "The purpose of this guide is to provide an easy-to-use summary of the ATR/QM rule."

Remember, ATR stands for Ability-to-Repay and QM stands for Qualified Mortgages.

So, real estate professionals, you should know that lenders will have to independently verify a borrower's Ability-to-Repay starting in January of next year and you should start now to become familiar with these new rules to effectively represent your clients. This Guide is a great starting place.
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Monday, April 08, 2013

Freddie Mac Streamlined Modification

Mortgage Industry , Mortgage Trouble
Freddie Mac Streamlined Modification

Some information on Freddie Mac's Streamlined Modification program by an Assistant Case Manager at Lieb at Law, P.C., Laura Palermo:     

           As of July 1, 2013 Freddie Mac is going to temporarily offer a new type of mortgage modification called a Streamlined Modification. The Streamlined Modification differs from the Standard Modification by way of the application process. Traditionally a delinquent mortgage holder (a.k.a. “borrower”) would have to endure a drawn-out review process which requires the borrower to submit a Borrower Response Packet which includes financial documentation and proof that they are/were experiencing a hardship. During this process the lender may request any and all documents which they feel is necessary for proof that the borrower encountered a hardship and now is able to afford a loan modification should one be granted. The modification application process can be daunting depending on the lender and the elements of the borrower’s situation.

            The Streamlined Modification does NOT require the borrower to submit a Borrower Response Packet; meaning that the lender no longer has to verify the borrower’s income or hardship.  Similar to the Standard Modification, if the borrower is eligible, the borrower will be required to successfully complete a trial period of at least three months prior to being offered a permanent modification, which will be subject to the same terms as defined for the Standard Modification.

            The eligibility requirements for the Streamlined Modification are as follows:

1.      Mortgage must be a first-lien which is owned, securitized, or guaranteed by Freddie Mac.
2.      The pre-modified mark-to-market loan-to-value (MTMLTV) ratio (gross unpaid principal balance of the current loan, including any principal forbearance as a result of a prior modification, divided by the property value) must be greater than or equal to 80 percent.
3.      Mortgage must be obtained at least 12 months prior to modification.
4.      Borrower must occupy the property as their primary residence
5.      Borrower must be at least 90, but not more than 720 days delinquent on their mortgage payment.

While this does sound like a great alternative to the Standard Modification it can be a risky move on Freddie Mac’s part. For example, the Streamlined Modification review guidelines (i.e. no verification of income necessary) are very similar to a previously common practice by lenders and servicers called a “blind modification”. The blind modifications granted borrowers with a refinance or modification without ever reviewing their finances. For some borrowers it worked wonderfully, while for others they could still not afford their payments and then would find themselves again in default with no further options for modification.

Despite the potential risk, I have high hopes for the Streamlined Modification program as it will present many delinquent borrowers with the opportunity to bring their mortgage current and out of delinquency without having to incur as many fees. Also, this may present many borrowers who are ineligible for Standard Modification due to their inability to prove hardship or verify their income to keep their homes.  For further information on the new program check out Freddie Mac’s news brief, click here. 
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Saturday, April 06, 2013

Mortgage Modifications - Supplemental Directive 13-02

Mortgage Industry , Mortgage Trouble
Mortgage Modifications - Supplemental Directive 13-02
On Friday, 4/5/13, Treasury issued new directives to the mortgage modification process.

To read the Supplemental Directive, click here.

Of note in this directive was a change in the categories for denial that give rise to a servicer's (lender's) inability to conduct a foreclosure sale following a denial. To clarify, a servicer cannot conduct a sale within 30 calendar days of a Non-Approval Notice to theoretically give the borrower an opportunity to correct their submission. The traditional five categories for Non-approval were:
(1) ineligible mortgage, (2) ineligible property, (3) offer not accepted by borrower/request withdrawn, (4) previously modified under HAMP Tier 2, and (5) borrower not a natural person.

However, what does ineligible mortgage or ineligible property really mean?

To clarify this confusion this directive deletes these categories and replaces them with the following clear reasons for denial of a modification:
(1) loan originated after January 1, 2009, not a first lien, or unpaid principal balance above program

limit, (2) loan paid off, or charged off and borrower released from liability for repayment, (3)
property condemned or more than four dwelling units, (4) loan subject to involuntary transfer to
a non-participant,

This change is another step in improving the Making Homes Affordable Program. By providing clearer understandings to borrowers and lenders for the framework to achieve a mortgage workout, the parties can intelligently negotiate a resolution.
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Tuesday, April 02, 2013

Mortgage Modifications: Introducing The Hope Loan Port

Foreclosure Defense , Mortgage Industry
Mortgage Modifications: Introducing The Hope Loan Port

Some information on a great new system for mortgage modifications which is being shared by an Assistant Case Manager at Lieb at Law, P.C., Laura Palermo:            

            Applying for a loan modification can be a very frustrating and trying process. For some people it can take years for their application to be properly reviewed and decided on. That’s why I was delighted to hear about the new platform in use by many of the big Lenders, the Hope Loan Port. I learned about the new system while trying to submit a loan modification application to Bank of America on behalf of one of my clients. I was informed by the lender that they are no longer accepting third party submissions via fax and instead, the new preferred method is the Hope Loan Port.

            Upon visiting the Hope Loan Port website ( https://www.hopeloanportal.org/ ) I learned that the website has been created as a “neutral, national, non-profit, e-commerce platform” as a way to provide more transparency and productivity to the process of foreclosure alternative review (i.e. loan modification, short sale, or deed in lieu).

            In order to access and use the Port you must first register as a Counseling Agency.  There are two types of counseling agencies that can register for this platform, the government sponsored not-for-profit agencies which are affiliates of the National Foreclosure Mitigation Counseling Program, and there are for profit counseling agencies, such as law firms. The registration requires you provide your company information and designate one person from your company to be the contact person. The contact person is in charge of managing and maintaining user profiles and the account. After submitting the company and contact information you must agree to the terms and conditions of the site, and then wait for verification.

            About 24 hours after submitting the information we received an e-mail stating that our company was verified by the Port along with our login information minus our password which was supposed to arrive in a subsequent e-mail. We waited for two days and still did not receive our password. I contacted the website by using their “Contact Us” tab and submitting an e-mail requesting the password information be re-sent. Finally, a few hours later I received the password and was able to log in to the actual portal.

            In order to submit a case you must first input information about the Borrowers, the first step requires you to disclose the loan information including the loan number, borrower names, and property address. The second step requires you to disclose financial information including gross and net income, rent, unemployment, monthly expenses etc. From there, you enter the information found on the Request for Mortgage Assistance (RMA) including if borrower would like to sell or keep the property, if the property is listed for sale, if the property is owner occupied, reason for hardship etc. After completing this information you must then upload the supporting documents including the signed and dated RMA, bank statements, pay stubs, profit and loss statement, 4506-T, rental income information, and any other supporting documents based on the Borrower’s situation. Upon submission the Lender gains access and then can review the file and inform you via the portal of information or documents still needed. The Counselor is able to view the pending status and communicate with Lender throughout the review process.
            The website is not entirely user-friendly but they do offer and encourage training webinars.  It still has its glitches to work out as well but overall I feel this is a step in the right direction for the modification application process. Many Borrowers and counselors who have applied for a modification can tell you that it is by no means an easy process. Much of the time spent on the modification application is wrapped up in the submission and re-submission of documents and following up with the Lender to ensure receipt and review of those documents. It is my hope that the Hope Loan Port will eliminate a lot of this back and forth and will also de-mystify the process by creating and maintaining more transparency during the application review.  

            I am interested to see how they will further adapt the website to be more user/Borrower friendly. At this point in time only Counseling Agencies and the Mortgage Lenders or Insurers may access and use the portal. I am curious to see if eventually they will develop an access point for Borrowers so they may submit their modification application online on their own. 

Laura Palermo will keep us in the loop as this program gets perfected, but in the interim, this is an exciting new program that will hopefully help to organize the chaos now existing in the loan modification process. Go check it out!

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