The FDIC Footfall on Home Loans
It takes the owner of a loan to modify that loan…the other shoe to fall is FDIC insurance. A foreclosure often nets a bank less than half of the loan’s unpaid balance, so why do they not negotiate instead of letting the home go into foreclosure? Easy answer: money. As banks buy banks and take over loan servicing, they are insured for loss through the Federal Deposit Insurance Corporation. In 1933 the Glass-Steagall Act created a temporary governmental corporation called the Federal Deposit Insurance Corporation (FDIC). The FDIC guarantees the safety of deposits up to $250,000 per depositor per insured bank. Thus bank customers are assured a certain amount backed by the federal government. However, that insurance may interfere with your mortgage negotiations. The bank may let your house go on the courthouse steps for far less than what you could have gotten in a short sale. That is not necessarily the bank being lazy. That is the bank making more money through an FDIC claim (with the added benefit of not having to go through the hassle of negotiation with the homeowner). Because of FDIC insurance, the lender, or servicer, is not highly motivated to modify the loan. That [...] 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
The Drag of Foreclosure
Home foreclosure is a drag. Nobody buys a house just to stop making payments and trash their credit. Nobody wants to spend hours on the phone trying to renegotiate their mortgage, or go through the hassle of moving if they do not have to. However, besides the physical and emotional toll foreclosure proceedings can take on you, foreclosure can be a drag in court too, literally speaking. That is not always a bad thing for the homeowner. There seems to be a double standard against the people who have not paid. Continuances are given to the plaintiffs if they do not have their witnesses in place or if they do not have all their paperwork, but if the foreclosure defendant does not come prepared, then he loses. Thus foreclosure defendants have to be Boy Scouts at every hearing—they have to ‘Be Prepared.’ However, they can use a continuance to their advantage. A continuance puts time on the homeowner’s side, and often time is what is needed to pursue an alternative resolution, such as loan modification or short sale. Foreclosure is a drag, but you can use that drag to bring the best benefit to a bad situation. Consult competent legal [...] 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
Home Is Where Your Credit Lives
Home is where your credit lives. Credit is not something you can see, feel, hear, smell, or tastes, but it can have a big effect on the tangible items of your life, like a car or a house. Your credit helps determine what (and if) you can buy, and how much a loan is going to cost you. In a foreclosure lawsuit, your credit is on the line. You will probably lose your foreclosure lawsuit, however, how much credit you lose depends on how you handle your case. If you let it go unopposed, then you give the fate of your credit score to the plaintiff, but if you launch a Foreclosure Defense, then you may wind up with a better outcome. The more credit you can retain, the better off your financial future will be. Remember, you are still going to need a place to live, and you might also need a car and / or a student loan in the near future. A Foreclosure Defense gives you time to pursue an alternative. Your credit will take a hit for a short sale or a loan modification, but generally it will be less detrimental than for a foreclosure or [...] Read More
Setting New Goals with Legal Advice
If you woke up tomorrow and your life were perfect, what would it look like? (Probably you would not have a foreclosure notice in that picture.) The next question is, What is preventing you from reaching your goal? And what are you going to do about it? You can decide NOT to play Lotto and you are guaranteed NOT to win enough money to save your home from foreclosure. Or you can launch a Foreclosure Defense to try to save what credit you can. If you do not launch a legal defense against a foreclosure lawsuit, in most cases you will wind up with a foreclosure. With a Foreclosure Defense, the idea is to wind up with something else. Foreclosure Defense is not to put off the inevitable; however, time is a positive side-effect, which you can use to pursue an alternative outcome, such as a mortgage modification or a short sale. You are not necessarily going to win Lotto if you launch a legal defense, and you are not going to get a free house. A Foreclosure Defense aims to bring you the best benefit in your circumstances. Remember, life coaches are neither covered by health insurance nor are [...] Read More
Choices in Foreclosure
Jacksonville made it to Number 8 on the list of top ten metro areas with the most foreclosure filings in February according to RealtyTrac. Overall, Florida was the top foreclosure state, with a rate three times higher than the national average. Foreclosure is a serious issue with serious choices to be made. If you choose to do nothing about a foreclosure, then you choose foreclosure. However, if you choose a legal defense, you have other options to consider. A Foreclosure Defense is not a denial of debt, but it is a way to seek another outcome, perhaps through a short sale or mortgage modification, depending on your circumstances. Seek competent legal counsel to help you review your options and pursue a strategy towards your best benefit. Read More
Time Change
A Banker’s Dozen is not necessarily the same as a Borrower’s Twelve Months. To simplify math in calculating interest, banks have a dozen months, equally divided into 30 days, giving them a 360-day year by which to divide interest on a home loan. But they charge for 365 days each year. The calculation is fine as long as both borrower and lender are aware of where the numbers come from. Mathematically, this is 1.014% more than the annual amount. So if a person were to pay $100 in interest over a year, they would pay $101.39. It does not seem like much, but if the loan amount were $100,000.00, the difference is almost $208.33 the first year. If you are still struggling with the time change to spring forward with your next mortgage payment, you may want to consider your choices. Depending on your circumstances, you may be able to negotiate a forbearance, mortgage modification, or short sale. Or you may be eligible for Florida’s Hardest Hit Fund. If you have received a foreclosure summons, your time is limited. You only have 20 calendar days to make a proper response. Seek competent legal counsel to pursue an outcome best suited [...] Read More
Foreclosure-Rescue Fraud
Just because you are facing foreclosure does not make you exempt from fraud. You may think you have hit bottom, but you will know you have hit it if you are the victim of a foreclosure-rescue scam or loan-modification fraud. The broad base of distressed homeowners has opened a market for a variety of services. Not all of them are legit. The Florida Bar has the following ten tips to help you avoid foreclosure-rescue and loan-modification scams: 1. Contact your lender directly before reaching out to a third party making promises. 2. Avoid businesses that guarantee favorable outcomes. There is no legitimate way to promise any particular outcome with respect to defaulted and under-water mortgages (mortgages in which the amounts owed cost more than the houses are now worth). 3. Avoid businesses that ask for up-front charges for loan modification or foreclosure rescue. This practice is specifically prohibited by Florida law. 4. Do not work with businesses that instruct you not to contact your lender, attorney or financial counselor and to make mortgage payments directly to them. 5. Avoid businesses that use names or symbols that mimic federal and state programs or falsely suggest they offer legal services or are [...] Read More
Bankruptcy – Not the Only Answer
Bankruptcy is not the only answer when you run out of money. Debt is a multiple-choice test. The best answer will bring you the greatest benefit in the shortest amount of time. The best answer is not the same for everybody. It depends on your circumstances—whether you are a homeowner, how much equity is in your home, if you are unemployed, if you are retired, if you are raising children or a caregiver for a family member, or if you have a medical hardship. There are a lot of different variables that can put a person in debt and/or make it difficult to get out of debt. Thus there is no single right answer for everybody. Bankruptcy is just a tool in my toolbox. Depending on your circumstances, other choices might include a short sale on your house, mortgage modification, forbearance, or assistance from Florida’s Hardest Hit Fund. In some cases, bankruptcy is the best option for the situation. Before you file bankruptcy, seek competent legal advice to help you review your alternatives, and to ensure you understand beforehand the long-term consequences of bankruptcy. Read More