Bankruptcy Mediation Promotes More Meaningful Negotiations

Bankruptcy has long-term consequences you need to know and understand before you file.  However, sometimes Bankruptcy is the only way to have a meaningful conversation with your mortgage servicer. In Foreclosure Mediation, typically the bank’s representative appears by phone and does not have the authority to negotiate anything other than a HAMP modification (which the borrower is entitled to anyway without the added mediation fee).  It is difficult to negotiate if there is only one outcome possible. Bankruptcy is a way to make the bank put their money where their mediation is.  A Bankruptcy Mediation is different because it requires the representative to appear in person and to have authority to make a deal.  Bankruptcy Court has more teeth with monetary consequences for the bank if they do not comply with the rules. Even if you are having trouble communicating with your mortgage servicer, Bankruptcy is not for everybody.  Seek competent legal counsel to discuss all your personal and financial goals, and what legal choices are available to you.   Read More

Mortgage Modifications Update

Earlier this month, a California appeals court said homeowners could sue Wells Fargo for improperly denying permanent mortgage modifications.  That opinion could have a positive affect for homeowners nationwide. The Home Affordable Mortgage Program (HAMP) was started to help distressed homeowners avoid foreclosure by modifying home loans for lower monthly payments.  A HAMP modification has a three-month trial period that gives the lender opportunity to verify the borrower’s information, and to test if the borrower can make the modified payments. For many borrowers, the scenario runs like this:  they pay the three monthly trial payments and comply with the requirements only to be denied at the end.  Unless your paperwork is super-specific, most banks say thank you for your trial modification payments, and we will take payments four and five as well, and THEN turn you down. However, the California court said that if the bank does not turn you down within the three-month trial period, they have to give you the permanent loan.  The opinion states that the modification agreement is a contract (even if the bank did not sign)—thus if the borrower does A, B, and C, then the loan servicer has to do D. This federal case […] Read More

Trouble in River City…And Beyond

Trouble starts with T that rhymes with P that stands for Mortgage-Backed Securities POOL.  In the real estate bubble, the water was fine…and then it went toxic. It takes the owner of a loan to modify that loan.  Only the owner has the authority to say, Why yes, I will take a lesser amount and negotiate the terms of that lessness. The problem with the mortgage loans that flooded into securities pools is that they lack single ownership.  The loan is owned by a lot of different investors, none of whom have the authority to make a decision which affects everyone else in the group.  Thus when a distressed homeowner sits down to a foreclosure mediation, there is no one at the table with him. Oh sure the bank sends a representative, but that person is usually authorized only to accept a HAMP modification, which the homeowner is entitled to anyway (without the expense of mediation). Mediation that starts with M that rhymes with “slim” that stands for your chances of getting a true negotiation.  A negotiation is not a negotiation if there is only one outcome possible. Mediation is great in theory, except foreclosure cases do not do so […] Read More

Second Look at HAMP with Expanded Eligibility

Are you employed but still struggling to make your mortgage payments?  HAMP may be able to help, even if it could not in the past. HAMP is the Home Affordable Modification Program that modifies home loans for lower monthly payments.  As of June last year, the Federal Government expanded the program so that more homeowners would be eligible.  If your first look at HAMP turned you down, you may want to take a second look. As on their website, HAMP eligibility now includes: Homeowners who are applying for a modification on a home that is not their primary residence, but the property is currently rented or the homeowner intends to rent it. Homeowners who previously did not qualify for HAMP because their debt-to-income ratio was 31% or lower. Homeowners who previously received a HAMP trial period plan, but defaulted in their trial payments. Homeowners who previously received a HAMP permanent modification, but defaulted in their payments, therefore losing good standing. For more information about HAMP, go to http://www.makinghomeaffordable.gov. Read More

Fuzzy Photos of Foreclosure Mediation

Foreclosure mediation—you ever seen one of these work?  You may have fuzzy photos, but there are better portraits of the Loch Ness monster than a clear picture of success through foreclosure mediation.  In theory it is great; in practice it is…. The problem is no person on the planet has authority to negotiate.   The loan servicer is supposed to send a representative with full signing power, but with mortgage-backed securities, the loan ownership is so ambiguous that there is no one who can make decisions beyond HAMP (Home Affordable Modification Program).  Bigfoot’s autograph has more signing power than the loan servicer’s representative. Furthermore, the homeowner is entitled to HAMP anyway.  Homeowners should not have to spend their time and money (half of the mediation fee) on foreclosure mediation when they are already entitled to the result. Not much of a negotiation if there is only one outcome, and even less value for the homeowner if has to pay for what he was already entitled to. Read More

Mediation In Lieu of Foreclosure

Foreclosure Mediations are often a waste of time…except when they are not. Many Foreclosure Mediations have ended in a HAMP (Home Affordable Mortgage Program) modification, which the homeowner is entitled to anyway without the time and expense of mediation.  While Foreclosure Mediations are no longer mandated in Florida, homeowner distress—mental and in real estate—continues to thrive in mediations and other legal procedures. In many cases there are no good answers, but when your home and financial future are at stake, it may be worth looking at your legal options.  And every now and then a resolution stands out that is better than the rest.  Every now and then, instead of a HAMP modification, a Foreclosure Mediation results in a Deed-In-Lieu of Foreclosure. A Deed-In-Lieu of Foreclosure (DIL) is defined in layman’s terms by the Florida Bar as “a cancellation of your mortgage if you voluntarily transfer title of your property to your mortgage company.  Usually you must try to sell your home for its fair market value for at least 90 days before a mortgage company will consider this option.”    However, once the process is begun, generally it has to be completed within 90 days of initiation.  While a DIL […] Read More

HAMP – Good If You Can Get It

The aim of HAMP (Home Affordable Modification Program) is to lower your monthly mortgage payments in order to make them more affordable and sustainable in the long run.  You may find an albino jackalope faster than you can get a permanent HAMP modification, but they are good if you can get them. While HAMP has not reached as many borrowers as projected, the success of the Loch Ness modification is higher than that of loans modified by Fannie Mae and Freddie Mac prior to 2009, and HAMPs are currently out-performing non-HAMPs as reported in the recently published “Nightmare on Mainstreet.” Furthermore, as of June 1, 2012, HAMP is expanding homeowner eligibility to include the following:   1. Homeowners who are applying for a modification on a home that is not their primary residence, but the property is currently rented or the homeowner intends to rent it. 2. Homeowners who previously did not qualify for HAMP because their debt-to-income ratio was 31% or lower. 3. Homeowners who previously received a HAMP trial period plan, but defaulted in their trial payments. 4. Homeowners who previously received a HAMP permanent modification, but defaulted in their payments, therefore losing good standing.   There is […] Read More

Adjustment in the Legal System

Some plans work better than others.  Whether you are plotting a route to Minneapolis or what to do about your unpaid mortgage, two things apply:  (1) more than one choice is available, and (2) not all choices are equal, meaning one option may be better suited to meet your needs and goals than others. On a statewide scale, the court system from time to time comes up with strategies to handle the foreclosure crisis.  Managed Mediation was not one of their better plans. In theory, mediation is not a terrible idea.  Mediation is often a way for two parties to work out a conflict without having the matter decided for them by a judge.  It can be very good, like for Therapeutic Divorce. In practice, however, Managed Mediation for Foreclosures only had a single outcome:  HAMP (Home Affordable Mortgage Program).  Though the loan servicer was supposed to send somebody with full signing authority for whatever deal was made, typically the lender’s representative sent someone only authorized to offer HAMP.  Not much of a negotiation if there is only one outcome. Furthermore, homeowners are entitled to HAMP anyway without having to pay their half of the mediation fee.  Homeowners should not […] Read More

Full Authority in Foreclosure Mediation

“Help me, Obi-Wan Kenobi,” Princess Leia says from a projected image.  It is a one-way communication, effective in that it reaches its intended recipient, the Rebel Forces are gathered, and the galaxy far far away is saved from the evil Empire.  Hooray for Princess Leia, but she was not trying to mediate a home foreclosure. Banks notoriously send a representative who lacks full authority to settle.  If the foreclosure mediation proceeds beyond a HAMP modification, the bank’s representative has to opt to “phone a friend.” In the midst of the mediation, if the bank’s representative has to call someone else to get permission, then that person on the phone is at a disadvantage.  He has not necessarily heard the borrower’s position or the mediator’s comments or the back and forth.  How can the guy on the phone make a good decision when he is not necessarily aware of all the mediation’s proceedings? The purpose of mediation is to help get parties to settle a matter, but you cannot negotiate with someone who only has the authority to offer one option.  Full authority in foreclosure mediation is our only hope.   Read More