June 30, 2008

Bankruptcy & Short Sale

Our Chapter 7 bankruptcy was discharged in Nov. 07.  We have since then continued to pay our 1st mortgage but stopped paying our second. My husband has now lost his income and we are considering letting the house go. (we could never sell it for what we owe in this market) Will the forclosure process be the same as anyone or will it be quicker, and will we be responsible for the balance?  Thanks!

Heather (more…)

Repo Accounting

Filed under: Repo

well I got a car at a used car lot and got in house financing on it. I put 1000.00 down and the balance of 2000.00 was left for me to pay. It was an As-is sale. Within first month the car stopped working for some reason. I called the car lot they fixed it for free I got it back. That same month it stopped working.. I then moved to a new address and eventually called for them to come pick it up. I have no proof that they took it. But when I went to apply for a car loan, now mind you this happened in 2004 and its now 2008. they are saying i owe them the full price. i was young and naive and dont have any of the paper work for the car that i signed. what do i do?

AFATASI (more…)

June 29, 2008

Recovering From Life Events

Filed under: Credit Repair

Hello Paul,

Like many others, I found this site by chance, and I am so greatful for the information you provide- this site has helped me to realize that I really could possibly own a home again. In 2006 while I was in grad school, my husband was our sole bread winner- he was unexpectedly (38 yrs. old) diagnosed with cancer and has undergone multiple surgeries and chemotherapy cycles. Obviously, this turned our world upside down, and we fell behind on our obligations. Since that time, he is now doing much better and we thankfully expect continued progress.

My question to you is this: I filed a chapter 13 (only my name) on 9/06 in an attempt to save my home from foreclosure, the bk was dismissed 6/07 due to nonpayment. I have since graduated and obtained employment with a salary of 70K. After pulling my free credit reports from all 3 cb, I see that the first mortgage company reports “max delinquency of 120+ days as pay status and high balance of 116K”. Currently, none of the reports are showing the foreclosure, however, I know that the home was sold in 9/07. I also have other debts that are still showing as wage earner plan or bk 13 9/06 (including a second mortgage for 30K). I am wondering if I should refile bk or try to nego with all creditors (or have Brian to help)…my goal is to do whatever is necessary in order for us to have our credit where it needs to be in order to purchase a home again.

I apologize for the long email, but I do value your opinion and very much appreciate your time. Thank you for what you are doing here-

Katherine (more…)

June 28, 2008

Standing in a Foreclosure Action

Filed under: Foreclosure,RESPA

I have a mortgage that went into foreclosure,  i have filed a chapter 13,  since I learned that my mortgage has been sold to another lender, is i true that the old mortgage company cannot proceed with the foreclosure because it does not own the mortgage any longer.   The new company would have to file a new foreclosure proceeding if I fall behind on my mortgage. Is this true?  Do i still need to be in Chapter 13??

Thanks,
Larry (more…)

Loss Mitigation Reps Wanted

Do you work for a servicing lender in their loss mitigation department? 

Do you work as a negotiator for Bank of America, Chase, Countrywide, HomEq, Litton Loan Services, Ocwen, Wells Fargo, etc? 

Well let me tell you, you need a voice on the internet!  The Broken Credit Blog would like to hear from you.

If you work on the lender side of loss mitigation, then I’d like you to guest author some posts on the Broken Credit Blog.  This is an anonymous forum, so say what you want, as long as it is the truth.  Send me an email and we’ll talk.

paul at brokencredit.com

Private School Tuition

Filed under: Miscellaneous

I had enrolled my child in private school for the upcoming school year. Due to financial circumstances (i.e. reduction in my work hrs) it has been necessary to withdraw my child from the school. HOwever the school is trying to hold me responsible for entire year tuition do I have any recourse?

Lynn (more…)

June 27, 2008

FNMA Likes Short Sales

Filed under: Short Sale

Fannie Mae (FNMA) amended its guidelines in Announcement 08-16 to extend the amount of time an individual must wait to buy another home post-foreclosure.

Effective August 1, 2008, the new requirement will be five-years after the completion date of the foreclosure.  The previous requirement was four-years.

Interestingly, FNMA added a new category to its list for a preforeclosure sale.  FNMA defines preforeclosure sale as follows:

“A preforeclosure sale involves the sale of the property by the borrower to a third party for less than the amount owed to satisfy the delinquent mortgage, as agreed to by the lender, investor, and mortgage insurer.  Due to the increased incidents of preforeclosure sales, Fannie Mae is establishing a 2-year elapsed time period for reestablishing credit following completion of the action.” 

Sounds to me like FNMA likes short sales.

June 26, 2008

Bankruptcy, Nuclear Bombs, Credit Reports & Credit Repair

Filed under: Bankruptcy,Credit Repair

Paul,

I would never tell anyone not to pay their bills, but I do recommend they go through the credit repair process first, and then handle the situation afterwards, if they so wish.  This ensures the best chance for an effective credit picture improvement.  Bankruptcy should only be considered as the very last option.

Many bankruptcy attorneys do not adequately explain the effects of bankruptcy to their clients. Stated simply, bankruptcy is to the credit rating what the nuclear bomb is to war. When you file for bankruptcy, every credit account that you decide to include in bankruptcy will become an “included in bankruptcy” account. Additionally, a bankruptcy filing and bankruptcy discharge listing will appear in the court records section of your credit report.

Brian

Loan Modifications

Filed under: Loan Modification

An article authored by Patrick Pulatie

No matter where you turn today, the most common remedy prescribed for people facing foreclosure, or who have been the victim of subprime loans and predatory lending, is the Loan Modification.  So, what is a loan modification and how does it work?

A loan modification is a process whereby the original terms of a mortgage are changed in order for you to better meet your mortgage obligations. It will usually involve a lower interest rate, and adding missed payments onto the rear of the loan. Doing so is expected to get a borrower current on the mortgage and having a mortgage payment that can be made each month. These changes can be anywhere from one year to thirty years, depending upon the lender.

(Do not get Forbearance confused with Loan Modification. Forbearance is a process whereby the lender will temporarily change the terms of the loan for a homeowner to get caught up on his late payments. The problem is that this involves higher payments than before and it does not change the terms of the loan. Also, it only postpones the foreclosure and if you miss just one payment, the foreclosure process resumes, and the forbearance in terminated.)

The process for getting a loan modification is supposed to be pretty straightforward. You gather the documents that the lender requires and fax those documents to them. This includes an accurate monthly budget, income documentation, hardship letter and any other records that might be needed. (Most often, these documents are lost, or never received, so expect to be faxing them again, time and time over.) The lender will then review the documents and make a decision.

If only it were that easy. In reality, the loan modification process is the most convoluted process imaginable. Each lender is reported to have their own standards and procedures, ones that can change on a daily basis, and from person to person. The apparent truth is that there are no set guidelines for loan modifications with most lenders, as I have been told by a person who works in loss mitigation for a major lender. To make matters worse, each loss mitigation counselor has at any one time, from 500 to 800 files sitting on their desk. Only a  tiny portion of these files get worked, so most people end up with nothing.

When applying for loan mods, homeowners are being told that they must be behind on the mortgage before a loan modification can be started. So the homeowner will deliberately miss payments at the lender’s insistence. Then, when the mod process is started, many lenders will reverse course and tell the homeowner that they must be caught up on payments before it can go forward. To make matters worse, you will hang on the phone for hours, never speaking to the same person twice, and when you do talk to a live person, you will have to retell your story again and again.

In the meantime, homeowners will trash their credit, grow increasingly frustrated with the process and eventually just give up, oftentimes of which it will mean that they end up losing their homes. Of people who try to get loan modifications on their own, less than 20% actually do get modified.

How does a person get a loan modification for their home?  Increasingly frustrated homeowners are now turning to outside “experts” for assistance in achieving loan modifications. These companies can be summed up in the following.

The Loan Modification “Factory” as I like to term it, is one of the worst. These are companies on the internet and elsewhere who engage in massive advertising and even telemarketing. The websites only say to contact them about a loan mod and may have very little information about the company or themselves. The costs can run from $1500 up to $2500 or more. There is no concern within the company employees about whether the prson could even afford the payment if a loan mod was received, or even if they could qualify. It is “Take the Money and Run”.

A second type of company doing loan modifications are the loan officers who can no longer make a living doing loans. They have “transferred” over into loan modifications because they see the lure of “big money”. The truth is that these loan officers do not have the “right stuff” for the loan mod business. Loan mods are about helping people, and not expecting to make “big money” but instead trying to correct the wrongs done to people over the past several years. If this is not a part of their motivation, then they cannot do mods well and to use them is generally a waste of money.

The third resource for loan modifications are lawyers. There are many lawyers trying to do mods right now. As can be expected, where there is money to be made, the lawyers will be there. (My apologies to my friends who are lawyers, but I know that you agree with this statement. I don’t include you among this group.) There are some good lawyers working with homeowners, but very few fit this category. Most are jumping into the business. And most are relying upon loan officers to guide them in understanding the law as pertaining to mortgage. (Even most Real Estate attorneys do not understand TILA and RESPA. I spend half my time educating them on the various facets of the law and how to approach the lenders.) But, if you find a good lawyer who knows this stuff, you are in good hands.)

The fourth resource to discuss is the loan modification company that is associated with and works directly with lawyers. These companies are very successful. They tend to have excellent results in getting loan modifications. That is because they use the techniques to get approval that most mod companies and loan officers do not even know about, the primary technique being the Loan Audit, where all violations of law in the loan are found and used to “hit the lender over the head” with it. Implied, of course, is the threat of legal actions including lawsuits.

That said, I have some real issues with these firms. Those issues are simple, the fees charged. They, in my opinion, can be quite excessive. And the fees are on a sliding scale, the greater the loan amount, the more the fees. In other words, if the homeowner has a larger loan, then they can afford to pay more. What is not generally known is that the greater the fees, the more the commission to the modification representative who found the homeowner in the first place. This commission can be over 50% of the total fees.

Here are some actual fees from one company

Loan Modification Fees:

  • The cost for a loan modification is $1,500 for a mortgage up to $350,000
  • $350,001–$750,000 is $2,000
  • $750,001 and $1,000,000 is $2,500
  • $1,000,001 and up is $3,500

A second mortgage is and additional $500 if it is a different lender than your first mortgage
The final loan modification resource that I shall briefly mention is a low-cost network of attorneys doing modifications. These attorneys have the knowledge and support of the larger firms, but total costs for loan modifications tend to run between $1000 and $1500.

Hopefully, this gives you a better insight into the loan modification business. There is much good that can come to a homeowner who desires a loan modification, but due diligence must be practiced to be sure that the company is the right one for you. 

(Patrick is a loan officer with 12 years of experience in the field. He does loan audits for several lawyers in numerous states and is a part of the legal team for a well known Northern California lawyer. He has served as an Expert Witness in Federal Courts and regularly advises lawyers regarding TILA and RESPA issues. He can be contacted at 925-522-0371 or at Patrick@loanmodificationca.com.   His website is LoanModificationCA.com  Please remember, he is not a licensed attorney and does not dispense legal advice.)

June 25, 2008

Some Options Are Better Than Others

Filed under: Short Sale,TILA

Do I try to keep the house, let it foreclose or try to sell it with a short sale.   I have a home in the Antelope Valley and have lived here for 11 years. I have a adjustable rate loan with varing payment options.  We are only able to make the payment that leaves us Negaive  amortorization 1100 a month so the balance just keeps going up.

We are at 380,000 now and the home values have crashed here because you have to commute a hour minimum to work in Los Angeles.  Even the new homes are being auctioned off.  We have approx 25.000 in unsecured debt and two car loans. 

We were fine until the gas costs doubled over last year and becuase we commute a 1000 miles a week our gas bill is now $1000.00 a month.  To work in the area is half the pay and in high demand. Adults are working McDonlads, you can’t make a house payment if you don’t commute.

I am 2 months behind in my house payments now.  We have now secured weekend jobs in addition to our full time jobs so we will make a little more money each month now.   I have three daughters going to college and we were going to move back into the LA area in two years anyway because of their schooling, but due to the gas prices I dont know what to do anymore. 

Problems Delinquent on most Credit Cards, keeping my auto loans, And two months behind on the house.   My current plan is to start consumercredit counseling for the unsecured debts and get those under control. Keep my car loans current and try to catch up on the house payments to keep to the original plan of waiting two years to move.  But if the gas prices keep going up I don’t see I have a choice to stay in m house. 

If we move now, I don’t know if I should spend every penny I have catching up the house and rent it out although the balance goes up 1100 a month and is already upside down (it would probably sell for $315,000.  Let the house foreclouse and put all my money into getting someplace to live and paying down my unsecured debt.  Or get the house on the market and hopefully find someone to purchase it short sale.  We have 4 homes for sale in my development for at least a year now where I live and nothing is moving. But our house is upgraded and comps are not. 

I am concerned about being sued for the balance owning after a foreclousure or not being able to sell and if it is sold the effects on us because of a short sale.  Any opinion or advice. I am really feeling lost.

Lori (more…)

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