Another Secret Mortgage Lenders Don’t Want You To Know

October 14, 2009

Almost all the lenders have obtained bailout funds from the federal government and have signed a mortgage modification participation agreement in return stating that they will seek to negotiate in good faith with any homeowner in distress that needs assistance to refinance their home mortgage or to modify their mortgage loan to an amount they can afford. These signatory agreements are posted on a government website for your viewing and use in negotiation with a listed lender. The banks and lenders won’t tell you this and don’t want the public to know. The list of participating lenders and their signatory agreements can be used to as a tool in your negotiations. Download it and become informed.

The greatest obstacle that most homeowners face in a foreclosure is lack of knowledge and how to apply it.  Don’t fear foreclosure. Get the right information and take action. You can win, force the lender to cooperate and keep your home or sell it if you chose via a short sale or other means.

Roy Landers is an attorney and real estate broker with a litigation law practice representing homeowners in foreclosure, mortgage modifications and mortgage refinancing. He publishes a free consumer advocacy newsletter and offers a free report “How To Fix a Foreclosure” at www.landerslaw.com/foreclosures.


How To Fix A Foreclosure

October 13, 2009

 

Thousands of foreclosures are being filed by mortgage lenders across the nation as a result of the subprime loan fiasco and adjustable rate interests going up and creating higher mortgage payments than home owners can afford.

How do I stop foreclosure is a common question asked by thousands of homeowners seeking relief from the burden of having too much mortgage and not enough money.  Housing counseling agencies have more work than they can handle while foreclosure notice sale signs continue to add to the workload.

Home owners in trouble have to fend for themselves and work through a maze that they are ill prepared to deal with. The availability of how does foreclosure work information is a precious commodity in the present mortgage mess.

The following steps on how to fix a foreclosure is provided in hopes that it will help someone understand the foreclosure process, take action and gain some relief and possibly save a home that they have worked hard for and are laboring to keep.

(1) Begin with the proper mindset. Don’t panic. Although it’s an emotional situation, you must keep your wits about you, develop a game plan and execute it. Begin with the understanding that mortgage lenders do not want the property back. They are in the lending business not the real estate business. If they foreclose on the property several negative things might happen to them:

  • They may have to buy the loan back from the investor pool they sold the loan to in the first place. Most lenders package loans, along with yours, and sell them into the secondary market for investment purposes. When they have to foreclose on a number of loans often times they are forced to take back the loans they sold and this creates tremendous pressure and loss of profits to a lender.
  • When the lender takes back the property it lessens the amount of money available to lend to other borrowers because they have to inventory the property and pay for maintenance and management fees.
  • The property they take back usually has no equity left in it so they are already upside down with the property.
  • Congress is putting pressure on lender foreclosures causing them to lessen their foreclosure efforts.
  • Lenders are now being sued by home owners who allege the loans were bogus or fraudulent in the first place and therefore they should not be held responsible for the loan. This puts pressure on the lender to renegotiate or modify the loan.

(2) Gather your documents – get your facts together before you contact the lender. Review the property loan documents and have an understanding of what your obligations were to begin with and what the lender agreed to. It’s possible the lender hasn’t done what it agreed to do. This is huge in negotiating and getting what you want. Make a budget and determine what you can actually pay as opposed to what you are paying. If there has been a change in your circumstances that affects your ability to pay such as job loss, divorce or medical bills these are very important for the lender to known.

(3) Determine whether renting or continuing to make a mortgage payment is the best route for you. You can obtain help with this decision by contacting a local housing counseling agency in your area that assists with foreclosure counseling at  http://www.hud.gov/offices/hsg/sfh/hcc/hcs.cfm.

Just click on your state and local links inside the website. Housing counseling should always be sought. It’s free, valuable and may save your home. Don’t hire a lawyer or loan modification services unless absolutely necessary.

(4) Be sure to contact the right department when you contact your lender. The department you want to insist on talking to is the “loss mitigation” department. Do not attempt to negotiate with the “collection department”. Their job is to collect and they will only be attempting to get you to pay your mortgage. Loss mitigation is where you will be able to negotiate to get your plan of action accepted.

(5) Know your options and be prepared to use them. It is not possible to go in depth with all the options available in this article. You can get more detailed information on these options by contacting a local housing counseling agency or contact the author of this article via the information provided at the end of this article. Your options may be:

  • Modification – this option can be used to modify your present loan payments to an amount you can afford to pay. Usually the loan term is increased several years (usually 10-30-40 ) allowing more time to repay the loan with a lower monthly payment amount
  • Forbearance agreement. The lender will agree to stop payments for a few months until your financial circumstances are better. The payments that are not made during this period of time are tacked on to the back end of the mortgage loan
  • Refinance. If you have a lot of equity in the property and have had a good payment record with the lender, the lender may refinance the property to a lower interest rate or a fixed rate for a longer time period, which could lower your monthly payment
  • Offer a deed in lieu of foreclosure. Here you just sign the deed over to the bank and walk away. You’ve avoided a foreclosure being on your record. Be sure to get in writing that the bank will not seek to obtain any additional expenses or payments from you should you take this avenue.
  • Sell the property through a short sale. You can sell your property, even for less than what its worth, through this process as long as the bank agrees. If you have a buyer willing to buy your property and the bank approves the sale this will avoid a foreclosure. You will not be subject to any penalty for any difference between the mortgage amount and the selling amount.

(6) Have a last resort plan. If your lender is not willing to work with you there are some last resort techniques you may want to consider.

  • File for bankruptcy. A chapter 13 bankruptcy filing stops a foreclosure immediately. It will give you time to work out a possible payment plan to save your home if that is your goal.  A chapter 7 can accomplish the same thing.
  • Have your loan documents reviewed by an attorney who has experience in predatory lending practices. If the loan documents reveal fraud or other inappropriate circumstances a lawsuit can be filed and injunctive relief sought to stop the foreclosure until the court makes a determination on the merits of the case. 
  • Allow the foreclosure to proceed. (Just walk away). This is the very last choice. In some states you may be subject to what is called a deficiency judgment, which means you will have to pay the lender the difference between what it obtained from the sale of the property and what was owed. Seek the advice of an attorney or local housing counselor before you take this action.
  • Sources of government help to refinance a loan having payment difficulties or when seeking a mortgage loan modification. www.financialstability.gov. www.makinghomeaffordable.gov. www.treasury.gov. www.whitehouse.gov.

Roy Landers is an attorney and real estate broker with a litigation law practice representing homeowners in foreclosure, mortgage modifications and mortgage refinancing. He publishes a free consumer advocacy newsletter that can be obtained at www.landerslaw.com/foreclosures.


Using Bankruptcy To Fight A Foreclosure

September 21, 2009

Homeowners in distress and in jeopardy of losing their homes need all the tools they can get access to in order to save their homes from foreclosure and bring the mortgage lender to the bargaining table in the loan modification process. One of those tools is the filing of a bankruptcy when necessary.

Bankruptcy should always be used as a last resort after other avenues of trying to work with the lender or loan servicer have not produced positive results. It is a powerful weapon against the foreclosure process and stops any foreclosure dead in its tracks. Once the bankruptcy is filed, under federal law, the foreclosure is automatically stopped immediately. Therefore if a foreclosure sale is scheduled the next day, or within the next hour for that matter, the sale is automatically stopped.

The power in this is that it brings to a halt the whole foreclosure process and gives the homeowner some breathing room and ability to negotiate a loan modification with the lender who now faces the possibility of having to wait several more months before anything can be done regarding the home.

In addition, under the federal bankruptcy rules, if the homeowner has a second trust deed the law allows for the second trust deed to be completely stripped from the debt of the homeowner. That means the second trust deed just disappears. It never has to be paid.

If the lender committed any violations of the lending laws such as the Truth in Lending Act (TILA) or Real Estate Settlement and Procedures Act (RESPA) – these will be explained in another blog- the bankruptcy filing homeowner can also file within the bankruptcy court what is called an adversary proceeding. This type of case is the same as filing a claim in the state court or other court proceeding making claims that the lender violated a law or committed a fraud. The power in taking this steo is it more often times than not brings the lender to the bargaining table to negotiate a loan modification, which is the ultimately goal of most homeowners experiencing foreclosure.

Finally, if the lender agrees to modify the loan while in bankruptcy, the homeowner, should he or she chooses, can then voluntarily dismiss the bankruptcy without fear of losing the home or can continue with the bankruptcy to deal with other debt in an appropriate manner.

The ends and outs of this process can be obtained Free. Contact us at www.landerslaw.com for details.  I hope this information is helpful and would appreciate your comments.


Hope For Homeowers With New FHA Loan Modification Program

September 16, 2009

The Obama administration has come up with yet another program for distressed homeowners in jeopardy of losing their homes. As of August 15, 2009, homeowners whose principle homes are financed with FHA insured backing or Fannie Mae or Freddie Mac purchase loans may qualify for up to 30% reduction of their mortgage being placed as a silent second trust deed.

For example if your loan is $500,000 it may be possible for $150,000 of that loan to be converted to what in effect becomes a second trust deed. This amount would reduce the amount of the loan mortgage monthly payment because the payment would then be based on the sum of $350,000, thus substantially reducing the amount of the monthly mortgage payment required before.  No payments are required on the $150,000 that becomes the second trust deed and the amount remains static for the remainder of the loan period never to be paid off until the maturity date of the loan.  In addition the $150,000 doesn’t accrue interest.

For many homeowners in distress and struggling to meet their monthly mortgage payments, this could be a huge relief and even make the difference between a family losing a home or keeping a decent roof over their heads.

Details can be found at www.makinghomeaffordable.gov.  Let me know if this information is helpful or if you have any comments.

Renegade Roy,

The Foreclosure Fighter


Truth In Lending Act Rescission – A Powerful Weapon In Fighting A Foreclosure

September 19, 2008

So many people are losing homes needlessly to foreclosure because they don’t know about the power of rescinding a mortgage note under the federal truth in lending act. If someone refinanced a home within the last three years and the lender did not properly disclose under this act, the borrower can cancel the contract without anyone’s permission and demand his/her money back from the lender.

The great thing about this law is that it stops a foreclosure in its tracks. By operation of law the contract is treated like it never was in existence. What’s the point? Well if somebody is facing foreclosure and uses this law, the lender is in big trouble because the law requires them to respond within 20 days and they almost never do it in a timely manner.  This puts the borrower in a position of power negotiation to negotiate a modification of the loan perhaps from a high interest rate adjustable loan to a 30-40 fixed year rate at a much lower payment. This is one way to bring the lender to the table and get what you need.

If they don’t it’s entirely possible that the borrower can get the home free and clear if handled properly. Legal counsel should be sought for this process but this tactic is changing things all over the country.

The law is found at 15 U.S.C. 1635.  This is a tool that’s beginning to level the playing ground in the foreclosure battlefield.  Check it out. If the lender has failed to disclosure proper interest rates, finance charges, a right to rescind in a timely manner, these all allow for a rescission.

Would love to have comments on this or perhaps someone is already enjoying the benefits of this powerful law. Share your experience.


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