Foreclosure Self-Defense For Dummies

By Ralph R. Roberts, Lois Maljak, and Paul Doroh, with Joe Kraynak

According to HousingWire, lenders are beginning more trial loan modfications than ever before.

HAMP Servicers Start 650,000 Trial Modifications

By JON PRIOR
November 10, 2009 10:36 AM CST

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Servicers have started 650,994 three-month trial modifications for borrowers under the Home Affordable Modification Program (HAMP) since its launch in March 2009, according to an updated servicer performance report by the US Treasury Department.

Through HAMP, the Treasury allocates capped incentives to participating servicers for the modification of loans on the verge of foreclosure. The Treasury began releasing progress reports after the Obama Administration set a goal of reaching 3m to 4m homeowners over the next three years.

The updated report, which measures performance through October from the Treasury, indicates:

Saxon Mortgage Services continues to lead all services by starting trial modifications for 44% of its 80,477 eligible portfolio of 60-plus day delinquent loans, an increase from 39% from the September report.

Bank of America (BAC: 15.93 +1.01%) started 136,994 trial modifications, the most on a gross volume basis, which is 14% of its eligible portfolio, an increase from 94,918 started through September or 7% of its portfolio. The bank also holds 990,628 eligible loans in its portfolio, the most for any participating servicer.

Other notable performances include: CitiMortgage starting trial modifications for 40% of its 221,916 eligible loans, up from 23% through September and the second highest percentage of the servicers; GMAC starting 35% of its 65,946 eligible loans, the third highest percentage; Wells Fargo (WFC: 28.1108 -1.02%) starting 29% of its 323,198 eligible loans, an increase from 11% through September; Litton Loan Servicing starting 12% of its 10,496 in eligible loans, up from 3%.

California leads all states with 134,609 active trial modifications. Florida came in second with 82,614 trial modifications, and Arizona rounded out the top three with 34,424 trial modifications.

According to the latest Troubled Asset Relief Program transaction report, 72 servicers receive more than $27bn in allocated cap incentives.

For more valuable help for distressed homeowners, visit our website: http://firsttimehome.us

A word of caution, like everything else, this could change in the future.

Short sales don’t hurt credit scores

Sarah Davies, vice president of VantageScore, at the Loan Modifications Conference now underway in Dallas, Texas, says restructuring plans on a mortgage, whether in the form a forbearance, modification or short sale, have a relatively insignificant effect on the consumer’s credit score.  VantageScore measures the generic consumer’s credit score and his or her likelihood of slipping into 90-plus day delinquencies on a scale of 501 to 990. If a servicer reduces a consumer’s original loan amount from 10-to-30%, the consumer’s credit score is only increased by three to 18 points, depending upon the consumer’s initial standing. Borrowers in the top-tier of credit scores, averaging an 862, receive only a three-point increase. Lower tier borrowers, in the 625 range, can receive an 18-point jump.  The credit score increases because the total amount of debt owed is reduced, and the borrower becomes inherently more reliable, Davies said. 

However, foreclosure and bankruptcy can more severely affect the consumer’s credit score. If a borrower, who maintains good credit, is foreclosed, his or her credit score can decrease by as much as 140 points. Bankruptcy for someone in good credit standing results in a reduction of 365 points from the consumer’s credit and a mark on the file for seven to sometimes 10 years, Davies said.

For more valuable information, check out the Help for Homeowners page on our website: http://firsttimehome.us

Fannie Mae has rolled out a new program under which it will offer market-rate leases for terms of up to a year to troubled borrowers who turn over the deeds to their homes. The company offered no estimates on how many borrowers it thinks might use the program. The GSE’s “Deed for Lease” effort is designed for homeowners headed toward foreclosure that do not qualify for loan modifications. They must document that the market rate rent does not exceed 31% of their gross income. Buyers of foreclosed properties are to assume the leases. Since January, Fannie has offered month-to-month leases to tenants whose landlords have lost their properties to foreclosure. Freddie Mac has offered month-to-month leases to both tenants and former borrowers since March. To date, neither effort has generated much use. Last month, Fannie said it had executed just 200 leases to date.

For more valuable information on how to stop foreclosure, check out our Help for Homeowners page at http://firsttimehome.us

Help Wanted: Wells Fargo Bank Loss Mitigation Department is seeking an experienced professional in loss mitigation or loan modification/short sale department. Must be detail oriented, capable of managing multiple tasks and processing loan modification packages. Able to document conversations with borrowers so that Senior Management is not “thrown under the bus” during litigation.

Ok, this may not be a scam but if it looks like a duck and quacks like a duck?

We just came out of a “boom” that was in part created because we sold and financed homes to families that were ill-equipped financially to meet the obligations they signed up for. If you truly have a financial hardship, your focus should be on defeating the hardship, getting your financial world on solid footing and then preparing to become a homeowner again.

Short Sale can be a good alternative to foreclosure, but don’t let someone create unrealistic expectations for you. The Internet and computers give lenders access to so much more information now than even three years ago, so very little can “slip through the cracks”.

Buying a home, should NOT be about “slipping through the cracks”, it’s about the many years of enjoyment and the memories you will have. Chances are the “crack” you just slipped through will end up the size of an earthquake fault and you’ll be doing a lot more falling than slipping.

If you or someone you know is facing foreclosure, we CAN help! We won’t guarantee you can keep your home but we CAN help you find the best solution for you and your family.

We can be reached via email: homeownerinfo@verizon.net

Foreclosure can be a traumatic experience, but it doesn’t mean life as you know it is over. If you are thinking someday you would like to experience all those “good” feelings you had as a homeowner, now is the time to “preheat the oven” and get prepared for that time when you can become a homeowner again, if you do I know things can taste just as sweet “the second time around”.

Here are some simple steps you can take starting today that will help you become a home buyer sooner and with less turbulence.

2) Carefully review your credit report- Unfortunately foreclosure doesn’t happen in a vacuum and chances are you have other debt on which you have fallen behind, or had go to collection or charge off. Anything that is incorrectly reported, dispute through the bureaus (you will need supporting documentation to get them removed). If you have items that went to collection or were charged off, start negotiating with the creditors NOW!, work out a payment plan or if they agree to settle for less, get them to agree to report as “paid in full”

4) Establish new credit and pay it on time! There is NO bigger dealbreaker than late payments after a foreclosure. We’re in a “credit crunch” so obtaining credit after a bankruptcy is not as easy as it once was. Try a secured credit card! There are more than 49 million web pages devoted to the topic. It works like a savings account, you deposit $500 with the bank and they give you a Visa/MasterCard with a $500 limit. If you have to use it, keep the balance owed at 30% or less than the available credit (it will help your scores).

5) Open a savings account - Ability to save is an important criteria for lenders when they analyze your loan application. Having two or three thousand dollars in savings can make the difference in your home loan approval.

Current lending guidelines (FHA) require at least three years from the bankruptcy discharge date (if you can establish it was due to circumstances beyond your control). Follow these simple steps, “preheat the oven” and when you are ready to dig in, the results will be that much sweeter.

By the way, in three years you may qualify for the perks being afforded to First Time Home Buyers like down payment assistance, special programs etc.

For more information about what Lenders Look for in a Loan Application, visit our website: http://firsttimehome.us

IT’S TOO IMPORTANT…DO IT RIGHT!

We can be reached by email: homeownerinfo@verizon.net

For most of his life, Jon had wanted to be a chef. After four years of culinary school he was offered the position as executive chef at a local fine dining steak house. The money was good, so he and his fiance decided it would be a good time to become First Time Home Buyers. They have saved a little bit for a down payment and after months of house hunting they found a nice little ranch style house that came with a payment they could afford.

When the Real Estate bubble “burst” and people had a lot less disposable income, the restaurant business took a big hit and Jon’s restaurant closed. Now relying on just one income Jon and his fiance knew they could no longer afford to make their house payment.

They had heard stories of the thousands of families just like them that had gone into foreclosure and felt their situation was hopeless. They ignored the notices and certified letters that came in the mail. The quit answering their home phone, and just “circled the wagons”. Eventually they received a notice of default and later the notice of trustees sale and their home went back to their lender.

They had moved in with Jon’s parents until he could get a new job. Well decent jobs in the restaurant business were few and far between. Even though he had a culinary degree Jon was applying for everything he could find, including a job in an ice cream store more than 50 miles away.

After a job hunt that lasted nearly nine months, Jon finally got an interview for a position with Amtrak as a chef on their cross country routes. It was a great opportunity with a lot of potential for advancement.

Jon “aced” the interview and the second interview with Amtrak’s executive chef. All that was left was the background check, which he was told would take about a week and then he could begin his training. Jon and his fiance began making plans to get an apartment and filled out rental applications in anticipation of this new phase in their life.

Three days later, Jon received a call from the HR department to let him know he had not passed the background check and would not be offered the position.

It seems Jon’s credit scores were now well below the minimum acceptable for the position, To add “insult to injury” the apartments where they had applied also called to let them know they were being denied due to their low credit scores. As much as they wanted to “break out” their poor credit was throwing up roadblocks at every turn.

If Jon had investigated his options, he would have discovered that a loan modification might have even let him keep his home. If not, the impact of a short sale on his credit would have been a lot less than the Foreclosure.

Foreclosure and the damage it does to your credit, goes far beyond how long it will take before you can buy another home. Like Jon, it jeopardizes your ability to get new employment. If you have a security clearance, it can jeopardize your current job. We’re in a credit crunch so buying a car becomes next to impossible and if you’re lucky enough to get approved, it will cost you hundreds if not thousands of extra dollars in interest. Auto insurance companies check your credit and make their decision to insure based, at least partly, on your credit.

Every aspect of your life becomes more expensive when you have poor credit. Jon might have been able to avoid some of the pain, if he took action rather than ignore the warning signs.

I would like to tell you there is a happy ending to this story, but Jon and his fiance are still living at his parents and Jon does have a job as a night manager at a fast food restaurant. They’re still trying to get on their feet, but everything in their life is more expensive which makes it that much harder.

Don’t let it happen to you. Consult a professional and find out the best option for you.

IT’S TOO IMPORTANT…DO IT RIGHT!

Contact us: homeownerinfo@verizon.net