Articles Posted in Modifications

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bank owned.jpgAnother tool to help Florida homeowners keep their home and avoid foreclosure will be available this summer.

Only Fannie and Freddie owned mortgages are eligible, but starting July 1, 2013, a new streamlined program is being rolled out to help modification efforts. This program will eliminate the strenuous income documentation and hardship rules that apply now. Avoid your home becoming “bank owned” by taking advantage of this new program. It will likely be of the most benefit to those who are dealing with large disorganized servicers, strategic defaulters with difficult to prove hardships or business owners who have a hard time proving income.

If you are unsure if your mortgage is owned by Fannie or Freddie, please check Freddie’s lookup site or Fannie’s lookup site. These two resources are also listed on our website’s Resources page.

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house life preserver.jpgWe are still seeing significant principal reductions for some of our very lucky clients, mostly from Bank of America and Ocwen.

An article by Drew Harwell in the Tampa Bay Times and the Orlando Sentinel and the Tampa Bay Times indicates that since March, more than 1,000 Florida homeowners have learned their principal balances were dropping by an average of $114,000. This is due to the National Mortgage Settlement of $25 billion. Five of the nation’s largest banks – Ally Financial, Bank of America, Citigroup, J.P. Morgan Chase and Wells Fargo.

I know to many this seems unfair. Those behind in their payments get huge windfalls, while those who have kept paying do not. Or someone with a different lender doesn’t qualify and no one has control over who buys their mortgages. Fannie and Freddie do not presently allow for any principal reductions.

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mortgage puzzle.jpgThere are several exciting things happening in mortgage modifications lately. The modification puzzle pieces seem to be falling into place, albeit four years after the foreclosure crisis began. We hope to take full advantage of this and get as many of our clients through a mediation this fall as possible.

First, the Attorney-General settlement is in full swing. We are seeing a number of substantial principal reductions. This money will eventually run out.

Second, Ocwen is buying lots of mortgages, or I should say the mortgage servicing rights. Homeowners who have previously been denied should try again if they learn that Ocwen has taken over their loan. We have written several blogs about Ocwen principal reductions.

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house money.jpgHere’s an example in Tampa, Florida this month for one of our foreclosure clients who wanted to keep her house and avoid the possibility of a deficiency judgment:

New monthly payment: $933.45 with escrow Old monthly payment: $1,491.35

New interest rate: 4% fixed Old interest rate: 7.75 % fixed

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Here in Florida, our foreclosure defense clients have seen two more excellent principal reduction offers in the past month – both from Ocwen. Both reductions were to the fair market value, maybe even below, and both were reduced over $100,000. Additionally, the interest rates were reduced to 4% for the remaining balance.

As I’ve reported in the past, Ocwen is buying the servicing rights for many mortgage loans, including Litton and Saxon, so when you open your mail and find your loan has been transferred once again, don’t fret if its Ocwen, as it may be a blessing in disguise.

Both of the above cases were involved in litigation with our law firm so that may also have been a relevant fact, but we really don’t know. All I can say on behalf of my clients is: Thank you Ocwen. Kudos.

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underwater house.jpgThe recent AG settlement among the states’ Attorneys General and the five largest mortgage servicers is expected to be filed any day now. Hopefully then more light will be shed on what exactly the terms are and how they will help Florida homeowners.

The Wall Street Journal reported today that Bank of America also made a side deal to avoid penalties and will be doing more principal reductions. Under the terms of the settlement, the five servicers are required to make more than $10 billion in principal reductions. There is a lot more info in the article at the link above.

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nacba.jpgThe Federal Housing Finance Agency (FHFA) that recently approved of HAMP principal reduction for Freddie and Fannie loans has rejected a proposal by the National Association of Consumer Bankruptcy Attorneys (NACBA). The Principal Paydown Plan is designed to amend the bankruptcy code to allow for payments during a Chapter 13 to go towards principal to substantially reduce the balance owed on an underwater home.

According to an email update by NACBA, many members of Congress have endorsed the Principal Payback Plan. However, despite FHFA Director DeMarco’s initial positive comments about the Principal Paydown Plan, which he said struck him as “being responsible,” and a “credible way to address the crisis while recognizing various interests mortgaged properties,” he recently wrote to Congress informing them that the agency would not be implementing the Principal Paydown Plan. FHFA concluded that few GSE borrowers have filed for chapter 13 bankruptcy and are underwater and therefore the proposal would not be all that helpful. They did, however, commit to doing what they can to help eligible borrowers in bankruptcy get the HAMP modifications they qualify for.

Personally, I see a lot of homeowners that would qualify for the Principal Paydown Plan. Moreover, until something is done about the conflict of interest of servicers, we are not going to see any widespread adoption of principal reduction for Fannie and Freddie loans.

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The Home Affordable Modification Program (HAMP) is being extended and expanded to reach more borrowers- will it be enough to help or an example of “too little too late”?

On January 27, 2012, the Treasury department announced the revisions.

First, to encourage principal reduction, the Treasury is tripling incentives and paying 18 to 63 cents on the dollar depending upon the change in the loan-to-value ratio. In the past, the Federal Housing Finance Agency (FHFA) prohibited Freddie and Fannie from using HAMP to reduce principal. Treasury now allows the incentives for Freddie and Fannie if they allow servicers to forgive principal in a HAMP modification. So if your servicer previously denied your HAMP modification, check to see if your loans are owned by Freddie or Fannie because the rules may be different now. Here’s how to do that.

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Nation Mortgage News reports today that Ocwen is on the verge of closing on two large MSR purchases: a $15 billion package of nonprime product from JPMorgan Chase, and a $26 billion deal from Saxon Mortgage.

Both could close this month. The $300 billion figure, the company says, excludes the JPM and Saxon transactions. Investment banking officials told National Mortgage News that Ocwen and JPM are discussing additional purchases. Once these two transactions are completed Ocwen will control roughly $140 billion of MSRs, most of it tied to nonprime loans.

The relevance is that we and other attorneys see Ocwen doing principal reductions. Sometimes outright and sometimes in an equity share participation arrangement. Some may only appear to be a principal reduction, but are actually a balloon. We also have been able to have a rapport with Ocwen unlike some other big players.

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conflict of interest.jpgWhy aren’t we seeing any legislation or rules addressing servicers’ inability and unwillingness to modify loans even when the modification is clearly in the best interest of the investor-owner of the mortgage? Florida foreclosure defense and bankruptcy attorneys see the conflict of interest daily between mortgage servicers and their own clients, why doesn’t the government?

Servicers say they are doing their utmost to help homeowners in need. I say Pinocchio. Uncle Sam has proposed HAMP, HARP and a few other programs. However, the servicers just shrug and pretend to comply, while pocketing trial payments and huge servicing fees. It is a well known fact that servicers get paid much more when a loan is in default and eventually forecloses. Until we address the conflict of interest and incentivize servicers to modify loans, nothing will change. Pinocchio is running this show.

In an interview on January 28, 2012, by CNN Your Bottom Line host Christine Romans, Chip Parker, a foreclosure defense attorney in Jacksonville, Florida states it’s definitely systematic. He describes how it’s a daily occurrence that a mortgage servicer such as Citi Mortgage or Wells Fargo will absolutely refuse to work with someone, even though a VA guideline requires it when the VA guarantees those loans.

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