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Tuesday, April 09, 2013
Monday, April 08, 2013
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.
Saturday, April 06, 2013
At our course at Chase Plaza this past Friday, 4/5/13, on Mortgage Mania we referenced the Consumer Financial Protection Bureau (CFPB) and its increasing function of regulating mortgages under the Conforming Loan Limit.
To receive the latest and greatest regulatory updates, each real estate professional should sign-up for email updates on their site, by clicking here.
The best way to add value to your clients is being in the know. So, sign-up NOW!!!
To receive the latest and greatest regulatory updates, each real estate professional should sign-up for email updates on their site, by clicking here.
The best way to add value to your clients is being in the know. So, sign-up NOW!!!
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.
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.
Thursday, April 04, 2013
On April 3, 2013, the US Department of Housing and Urban Development kicked off Fair Housing Month with the launch of a national media campaign.
HUD's press release states: "The campaign, titled “Fair Housing Is Your Right. Use It,” includes English, Spanish, and Chinese radio and print public service advertisements (PSAs) that feature examples of actions which violate the Fair Housing Act and let the public know what to do if they experience housing discrimination."
To read the full press release, click here.
To see video from the campaign, click here.
To see the Public Service Announcements, click here.
While Fair Housing is nothing new, it will be on consumers mind this Fair Housing Month, so its important for brokerage managers to be more vigilant in reminding their agents to respect protected classes in housing. Also, remember that your local municipality: State, County, Town and Village may have additional Fair Housing statutes to protect citizens as the national Fair Housing Act is merely a floor of protected rights, not a ceiling. Also, agents in NYC should pay careful attention because the NYC Human Rights Law is the most protective of its kind in the nation.
HUD's press release states: "The campaign, titled “Fair Housing Is Your Right. Use It,” includes English, Spanish, and Chinese radio and print public service advertisements (PSAs) that feature examples of actions which violate the Fair Housing Act and let the public know what to do if they experience housing discrimination."
To read the full press release, click here.
To see video from the campaign, click here.
To see the Public Service Announcements, click here.
While Fair Housing is nothing new, it will be on consumers mind this Fair Housing Month, so its important for brokerage managers to be more vigilant in reminding their agents to respect protected classes in housing. Also, remember that your local municipality: State, County, Town and Village may have additional Fair Housing statutes to protect citizens as the national Fair Housing Act is merely a floor of protected rights, not a ceiling. Also, agents in NYC should pay careful attention because the NYC Human Rights Law is the most protective of its kind in the nation.
Wednesday, April 03, 2013
Curious what your house should be worth based upon market
trends? Go to the Federal Housing Finance Agency and use the House Price
Calculator. This cool calculator projects what a given house purchased at a
point in time would be worth today if it appreciated at the average
appreciation rate of all homes in the area.
Click here to give it a try.
On January 30, 2013 22 NYCRR 202.16a
was amended. What does this mean? How will this affect your divorce? And why am
I writing about this? The answers are: Keep reading, keep reading, and this is
important. In that order.
22 NYCRR 202.16a is the counterpart
to DRL §236(B)(2)(b) and it requires the plaintiff in a matrimonial action to
cause the defendant to be served with a “notice of automatic orders” which informs
the parties, inter alia, that neither
party may in any way dispose of any property without written consent of the
other party or by order of the court, except in the regular course of business,
for customary household expenses, or in order to pay reasonable counsel fees in
the divorce. We’ll refer to these prohibitions as “automatic orders”.
This is a terrific directive as it
ensures that your soon to be ex-spouse will not sell your vacation home without
your written consent during your divorce. You love that home, it has the
biggest pool on the block, your kids learned to swim in the pool and your
friends are openly jealous of what you modestly call your “vacation home”
(truth: it’s a castle). You are not ready to part with it. So what happens if
your unloved one (we’ll kindly refer to the unloved one as your “soon to be ex”)
during your divorce sneakily sells the house for half its value (possibly
accepting the other half of the payment as a promissory note, transfer of
stocks, benefit to his/her business, or cash, as this is just the type of
transaction a sneaky person will undertake)? Your soon to be ex will earnestly
explain to the court that this is really his separate property, he purchased it
with his own money, his name is solely on the deed, and besides, the real
estate market is terrible and he sold it for the best price he could, the
proceeds were used to pay off debts, and there is simply no money from the sale
proceeds to share with you. But you know in your heart that your soon to be ex
is doing what he best does-suavely talking his way out of yet another questionable
and downright unethical act. What is your remedy?
Until the recent amendment of the
law, your remedy was unclear, as the courts were divided on the appropriate
remedy for a violation of the automatic orders. Some courts ruled that the
violation of the automatic orders is not subject to a punishment of contempt of
the Court (see Buoniello v. Buoniello,
No. 35948/09 [Sup. Ct. Suff. Co., May 7, 2010]), while other courts held that
the automatic orders are in fact orders of the court and a violation of the
automatic orders may be subject to contempt of the court (see Sykes v. Sykes, 2012 N.Y. Slip.
Op. 22049 [Sup. Ct. N.Y. Co. February 29, 2012]).
As of January 30, 2013 the
following provisions have been added to the body of the automatic orders:
1.
“Upon service of the summons in every
matrimonial action, it is hereby ordered that…” (body of the automatic orders
follows, see 22 NYCRR 202.16a) (This clearly designates the directive
prohibiting transfers during the divorce as “Orders”).
2.
“These automatic orders shall remain in full
force and effect during the pendency of the action unless terminated, modified
or amended by further order of the court or upon written agreement between the
parties.” (This clearly sets forth the timeframe of the applicability of the
orders).
3.
“The failure to obey these automatic orders may
be deemed a contempt of the court.” (Our favorite new provision in the
automatic orders.)
The recent amendment will serve to
resolve the courts’ division on the appropriate remedy for a violation of the automatic
orders. Now all the courts will have
contempt of court at their disposal to punish violators of the automatic
orders. Now your soon to be ex will think twice before sneakily selling your
vacation home during the divorce. And if he doesn’t, then jail may be his new
home. Thank you Administrative Board of the Court for your recent amendment to
22 NYCRR 202.16a. We love it! May justice reign uniformly in the Matrimonial
Parts of the Supreme Courts of the State of New York.
Tuesday, April 02, 2013
In Sunrise Check Cashing and Payroll, Inc. v. Town of Hempstead, the State's Highest Court ruled that "a zoning measure that prohibits check cashing establishments in a town's business district is invalid, because it violates the principle that zoning is concerned with the use of land, not with the identity of the user".
While the Court does state that adult entertainment and pawnshops can be regulated based upon their negative secondary effects on the surrounding communities, check cashing is not a similar category. The court did therefore provide for the possibility that adverse secondary effects could justify zoning, but said that such effects were not proven in this case regardless.
While the Court does state that adult entertainment and pawnshops can be regulated based upon their negative secondary effects on the surrounding communities, check cashing is not a similar category. The court did therefore provide for the possibility that adverse secondary effects could justify zoning, but said that such effects were not proven in this case regardless.
This opinion is important for commercial real estate professionals because it provides support for occupants' discretion in their business enterprises and is very pro-business while reducing barriers to entry.
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!
Monday, March 25, 2013
Lieb School will be closed through April 1, 2013 in honor of the above holidays.
Registration and Enrollment may both occur during our closure by going to Lieb School's website.
Registration and Enrollment may both occur during our closure by going to Lieb School's website.
