Everyone talks about the first time homebuyer tax credit & that home prices are at record lows, thats nice, but I am interested in this headline in Newsday from today: "Mortgage rates plummet to record lows". In the article its reported that the "30-year fixed interest rate fell to 4.69 percent". That makes borrowing money so cheap. To illustrate I went to http://www.mortgagecalculator.org/ and plugged in borrowering $350,000 on a $400,000 purchase at 4.69% and than at 5.69%. This illustrates the difference in 1% interest on a 30 year loan.

At 4.69% the monthly payments are $2,323.55 and the total payment would be $836,476.53. At 5.69% the monthly payments are $2,539.60 and the total payment would be $914,256.26. To be clear, that is a difference of over $200 per month and over $77,000 paid over the life of the loan. Thats a reason to buy now.

Thank you to all who attended our course, Discovering the Home Inspection, last evening. Here, as promised you can find the Home Schematic thanks to Housemaster.

I posted yesterday about my story from a Foreclosure Settlement Conference where the Referee wanted to learn more about the safe harbor for servicers that protects servicers from liability to investors when they participate in HAMP regardless of the investors desires. Since my post, I have received some questions on the topic and feel that reading the congressional findings may help the reader to understand my position.

Congressional Findings
Servicer safe harbor for mortgage loan modifications; congressional findings. Act May 20, 2009, P.L. 111-22, Div A, Title II, § 201(a), 123 Stat. 1638, provides:


"Congress finds the following:

"(1) Increasing numbers of mortgage foreclosures are not only depriving many Americans of their homes, but are also destabilizing property values and negatively affecting State and local economies as well as the national economy.

"(2) In order to reduce the number of foreclosures and to stabilize property values, local economies, and the national economy, servicers must be given--

"(A) authorization to--

"(i) modify mortgage loans and engage in other loss mitigation activities consistent with applicable guidelines issued by the Secretary of the Treasury or his designee under the Emergency Economic Stabilization Act of 2008 [Div A of Act Oct. 3, 2008, P.L. 110-343]; and

"(ii) refinance mortgage loans under the Hope for Homeowners program; and

"(B) a safe harbor to enable such servicers to exercise these authorities.".

Yesterday Newsday ran an article about issues with fences in Southampton, which can be found by clicking here. While I found the entire article an interesting read, the part of the article that cought my eye was the definition of front yard and rear yard used by the Town. Specifically, the front yard faces the water if the house is on a pond, lake or bay. Yet, if the house is on the Ocean, the rear yard faces the water. Talk about crazy. The point is that a person interested in looking up anything in a law and more specifically in a Town Code must always look to the definitions and not assume that a provision applies until a complete understanding of the terms is achieved. Navigate carefully my friends.

TILA is a federal statute that is often ignored in a residential loan modification, but its of particular importance and should be studied at length by any person facing foreclosure. While there are many ways to utilize TILA with respect to predatory lending, which can resolve many foreclosure problems, today we are going to discuss its importance in terms of the Helping Families Save Their Homes Act of 2009. This Act amended TILA and enables servicers to make modifications of homeowner's mortgage terms without facing liability from investors if the modification maximizes the investor's value under a qualified loss mitigation plan (AKA The TILA Safe Harbor). Importantly, HAMP (primary mortgage federal modification program), 2MP (second mortgage federal modification program) and HAFA (federal short sale and deed in lieu program) have all been designated as qualified loss mitigation plans by Treasury.

To illustrate the importance of the aforesaid facts, I will share my experience this past Thursday at a Foreclosure Settlement Conference in Ronkonkoma, NY. I walked in and a discussion was had about the investor not participating in HAMP and opposing counsel said no modification was available. The Referee disagreed and said that by accepting federal monies, the servicer must participate. Opposing counsel disagreed and I perked up to support the Referee who had taken my side. I said "Not only should you offer a modification if its in your investor's best interest, but you cannot be liable to your investor if they are not happy with your decision, basically its your choice, so don't blame it on the investor". Now opposing counsel took issue with me, but the Referee wanted more, she cut him off and asked the source of my knowledge and I disclosed that I lecture on this topic to both attorneys at CLEs and to real estate agents at CEs. The Referee was intrigued and said that she was always looking for lectures on these topics as the rules keep changing and the lectures for Referees/Judges aren't often available. I responded that I was glad to learn of her interest and I wish that I knew last month because she would have been my guest at the lecture. Than the Referee asked why I hadn't invited her to the CLEs and I responded that they were in Nassau County, but that we would be having more CLEs in September in Suffolk County. The next thing I knew, the Referee's staff was handing me her card and asking for her to be invited to future classes. I than turned to my right and saw opposing counsel dumbfounded and white, he seemed confused on how our conference had turned into the Referee inviting herself to my class. I guess she agreed that TILA and Helping Families Save Their Homes Act of 2009 are immensely important to forcing a lender (servicer) to give a modification. At the end of the conference the Referee and I both said to opposing counsel that we expect a modification and we are satisfied if they don't want to call it HAMP, but its terms better be substantially similar to a Home Affordable Modification Program (HAMP) result.

To study Treasury’s position regarding the applicability of the servicer safe harbor set forth in Section 129A of the Truth In Lending Act, 15 U.S.C. 1639a (TILA), to residential loan modifications under HAMP and 2MP, the reader is directed to review Supplemental Directive 10-05, which can be found by clicking here.