Of course, if the property is located in Pinellas, Hillsborough, Manatee, or Pasco counties then send me an email: paul @ brokencredit.com

Freddie Mac will require a $15k promissory note over 120 months at 0% interest = $125/month or $7500 cash contribution at closing instead of promissory note.  The loss to Freddie Mac is very large, so they will require one of these two things to consider approving this transaction.  Please let me know what the seller agree to so we can try and wrap this up.

Thanks,

Clueless Ken
Fifth Third Bank 
Homeowners Assistance Specialist
*****************************************************
Hello Ken,

This borrower applied under the HAFA.  Please advise why this borrower was rejected for the HAFA?

Thanks,

Paul
*****************************************************
Paul, 

It was not reviewed by HAFA because there is a current offer.  If there is no offer, it can be reviewed.  Please be advised, I spoke with the borrower about this today, the prom note or cash at closing option, he said he wanted to discuss with his wife and you.  please let me know by tomorrow what is decided.

Clueless Ken
Fifth Third Bank 
Homeowners Assistance Specialist
*****************************************************

Hello Ken,
 
Can you please verify that?  According to the MMA Handbook page 127, the Alternative RASS applies “[i]f the borrower has an executed sales contract and requests the servicer to approve a short sale under HAFA before an SSA has been executed”.  Page 120 of the MMA Handbook goes on to state:
 
“If a borrower requests a short sale or DIL (whether such request is in response to a servicer’s solicitation under the first paragraph of Section 4 or initiated by the borrower), within 45 days of such request the servicer must consider the borrower for HAFA and send the SSA, DIL Agreement, a written notification that the borrower will not be offered a SSA or DIL or a written response to the Alternative RASS, in accordance with Section 4.2 and Section 7.4.”
 
Ken, this 74 year old borrower is the ideal candidate for the HAFA Alternative RASS program.  If there are additional forms 5/3rd or Freddie Mac would like to have completed for this then please let me know or send them to me.  Every page of the fax stated that the borrower was requesting HAFA!
 
Thanks for you help.
 
Paul
*****************************************************

(clueless Ken cc’s Nancy presumably his Supervisor)

Paul,

I can’t answer a HAFA question because I’ve never worked in the HAFA department, so I don’t know their guidelines.  On another note, they have income and they have assets, they can afford the prom note or contribution….the estimated loss is $128k…why should Freddie Mac assume all that loss and not put any responsibility back on the borrower?

Nancy,

Please review Paul’s email and advise.  I will hold this file open until I get an answer on this tomorrow.  Also, seller has bank statements showing $22k in CDs and checking account combined.  They also have a current offer on the property.  Please advise.

Thanks,

Clueless Ken
Fifth Third Bank 
Homeowners Assistance Specialist
*****************************************************
(I reply to both emails)

Hello Ken & Nancy,
 
Per the hardship letter, the money in the bank is the remains of insurance proceeds from their daughter’s death (I can get a death cert if needed).  The deceased daughter also had a daughter (borrower’s granddaughter) and as the executor of the estate your borrower is obligated to care for the granddaughter with those funds.
 
She makes approximately $500 per month from her job.  He doesn’t work.  They are in their 70′s and receive SSI.
 
Thanks and please help!
 
Paul

The number of U.S. homes that received an initial default notice — the first step in the foreclosure process — jumped 33% in August from July, foreclosure listing firm RealtyTrac said Thursday.

The rise represents a nine-month high and the biggest monthly gain in four years. The spike signals banks are starting to take swifter action against homeowners, nearly a year after processing issues led to a sharp slowdown in foreclosures.

“This is really the first time we’ve seen a significant increase in the number of new foreclosure actions,” said Rick Sharga, a senior vice president at RealtyTrac. “It’s still possible this is a blip, but I think it’s much more likely we’re seeing the beginning of a trend.” Foreclosure activity began to slow last fall after problems surfaced with how many lenders were handling foreclosure paperwork, namely several shortcuts known as robo-signing.

Many of the nation’s largest banks reacted by temporarily ceasing all foreclosures, re-filing previously filed foreclosure cases and revisiting pending cases to prevent errors.

Other factors have also worked to stall the pace of new foreclosures this year. The process has been held up by court delays in states where judges play a role in the foreclosure process, a possible settlement of government probes into the industry’s mortgage-lending practices, and lender reluctance to take back properties amid slowing home sales.

A pickup in foreclosure activity also means a potentially faster turnaround for the U.S. housing market. Experts say a revival isn’t likely as long as a glut of potential foreclosures hovers over the market.

Foreclosures weigh down home values and create uncertainty among would-be buyers who fret that prices may fall as more foreclosures hit the market. There are about 3.7 million more homes in some stage of foreclosure now than in a normal housing market, according to Citi analyst Josh Levin.

“This bloated foreclosure pipeline now presents the greatest obstacle to a housing market recovery,” Levin said in a client note this week.

Banks have been working through a backlog of properties that first entered the foreclosure process months, if not years ago. But the August increase in homes entering that process sets the stage for a host of new properties being targeted for foreclosure.

That’s bad news for homeowners accustomed to missing payments for months without the threat of foreclosure. In states such as New York and Florida, for instance, processing delays have helped some stay in their homes more than two years before banks got around to taking back their properties.

In all, 78,880 properties received a default notice in August. Despite the sharp rise from July, last month was still down 18% versus August last year and 44% below the peak set in April 2009, RealtyTrac said.

Some states, however, saw a much larger increase.

California saw a 55% jump in homes receiving a default notice last month. In Indiana they climbed 46%. In New Jersey, where last month a judged ruled that four major banks could resume uncontested foreclosure actions under court monitoring, homes getting a default notice rose 42%.

Despite the increase in new defaults, the number of homes scheduled for auction and those repossessed by banks slowed in August.

Lenders repossessed 64,813 properties last month, a drop of 4% from July and down 32% from a year earlier. Home repossessions peaked September last year at 102,134.

Banks are now on track to repossess some 800,000 homes this year, down from more than 1 million last year, Sharga said.

In all, 228,098 U.S. homes got a foreclosure-related notice last month, up 7% from July but down nearly 33% from a year ago. That’s one in every 570 U.S. households.

Nevada leads, with one in every 118 households receiving a foreclosure-related notice last month. Rounding out the top 10 states with the highest foreclosure rate in August are California, Arizona, Georgia, Idaho, Michigan, Florida, Illinois, Colorado and Utah.

Source=Investors.com

Florida Deficiency Judgment

That may not make much sense to the thousands of homeowners who are behind on their mortgages in Florida. But it seems it does to Bank of America, which has filed to foreclose on Bullington and her husband, James, 78, who is terminally ill.

“It’s like death to me,” Sharon Bullington said, her voice quivering on the phone Friday. “My husband is bedridden. It’s almost more than I can bear.”

The couple moved to Florida 15 years ago after James Bullington retired from General Motors in Flint, Mich., and moved into the 1,591-square-foot New Port Richey home, which is now valued at $133,464, though they owe about $177,000.

When James became ill, the couple encountered financial difficulties because of high medical bills. The couple asked Bank of America to modify the loan.

There was a catch. The couple would have to first officially default on their $1,400-a-month payment. The couple did that and entered into the modification plan, which reduced their payment to $916.

Sharon Bullington made the January payment on Dec. 23, and the bank accepted the money, according to court records.

The next month, she made the February payment over the phone. Weeks later, the money had not been withdrawn from her bank account. After Bullington asked the bank about it, a representative told her she had punched in the wrong routing number. In March, the bank kicked the couple out of the modification plan.

Bullington pleaded for help in a June letter to Bank of America president Brian Moynihan and U.S. Rep. Gus Bilirakis, R-Palm Harbor.

One of Moynihan’s aides, Ana Olivera, told Bullington the foreclosure could not be stopped. She wrote in a two-page letter that the payment due on Jan. 1, 2011, had been made in December.

“In accordance with the Trial Payment Letter dated December 15, 2010, it indicates that if you are not able to make each payment in the month in which it is due, you will not be eligible for a modification under the Home Affordable Modification Program,” the letter said.

Olivera told Bullington she could avoid a foreclosure by selling the home in a short sale or by signing it over to the bank. The letter said the bank values Bullington’s business and strives to provide exceptional customer service.

“I understand that you may be disappointed with our final resolution and appreciate the opportunity to clarify this matter,” Olivera wrote. “While this may not be the response you were hoping for, I trust I have addressed your concerns.”

Olivera, a California-based employee, declined to comment about the case when reached by the Times on Friday. Bank of America replied in an e-mail: “We are going to re-review the Bullington’s case.”

The Bullingtons’ lawyer, Shawn Yesner, said the case makes no sense because his clients did what the bank told them to do. In 10 years as a lawyer, he said, he has never seen such an outrageous letter.

“I couldn’t believe they would put that in writing,” he said. “I had to read the letter three or four times. … Bank of America is putting her in a depressed state. She has never been behind on anything.”

As thousands of property owners across Florida and the nation battle foreclosure, defense attorneys have accused lenders of bogging down the courts with an unwillingness to negotiate with people on their mortgages, often by simply refusing to make decisions.

Earlier this month, a 41-year-old man faced foreclosure after missing a mortgage payment on a St. Petersburg gas station by just one day. He made several attempts to continue paying and made a $50,000 payment in court earlier this month to settle the case, but the bank refused the payment. The day the Times published an article detailing the saga, BB&T suspended the foreclosure action and worked to settle the case.

Sharon Bullington, who has no children or siblings, said she is the sole caregiver for her ill husband, who cannot move from the home in his condition. She said she has repeatedly contacted the bank, but nobody will talk to her.

She wants Moynihan and Bank of America to know this:

“I want them to feel how we feel,” she said. “I just don’t understand why they’re doing this. It looks like they’re out to get us.”

Source = St Petersburg Times

HAFA was designed to provide an incentive to servicers for completing short sales and deeds-in-lieu of foreclosure for loans that fail out of the larger Home Affordable Modification Program. Through June, servicers started 21,412 short sales and DILs, up 20% from the month before. A total of 10,754 were completed, up 25%.

JPMorgan Chase (JPM: 36.03 0.00%) is the programs leading performer, completing nearly 3,600 through the program, including nearly 1,000 in June alone.

Wells Fargo (WFC: 24.55 0.00%) was second, completing more than 3,100 since the program launched and roughly 700 in June.

Bank of America (BAC: 7.40 0.00%) completed 1,873 HAFA transactions, an increase of roughly 200 in the month.

Pam Marron, a senior loan officer with Gold Start Mortgage Financial Group in Tampa Bay, Fla., said more and more homeowners in negative equity view a short sale as their only way out. Many, she said, are defaulting because banks require them to do so in order to qualify for a short sale.

“The growing problem in Florida is the alarming increase in the number of short sale listings that are coming onto the market. These people are still employed but severely underwater and are having to short sale because they are not able to pay the vast difference owed between the mortgage amount and the value of these homes,” Marron said. “Banks are requiring homeowners to default in order to qualify for the short sale.”

In 22% of the HAFA agreements started — equal to roughly 4,700 mortgages — the homeowner began a HAMP trial but later requested a HAFA agreement or was disqualified from HAMP.

Source – HousingWire.com

“This is a catastrophe being laid upon a crisis,” he said. “America is foreclosing upon ourselves. The federal government is foreclosing on taxpayers to pay rich bankers. This is madness.”

I have heard a lot of talk about what to do when we get a 1099c.  What about if we *don’t* get a 1099c?

I am currently in the process of negotiating a shortslae with my lender, CHASE.  I am using a very qualified third party negotiator (law firm) to help me.  So far, we have gotten acceptance of our offer and all of the terms we wanted *except* the release.  In other words, the “investor” who owns my loan says they will not sign a release for the debt amount if I go through with the short sale which means there is a very good chance I will *not* get a 1099c and therefore my debt is not “cancelled”. 

So, my question is, if my first mortgage debt is still hanging out there and is not cancelled, what effect will that have on my credit??  I happen to know that lenders are not currently pursuing borrowers for outstanding debt…YET.  If they were, they would start sending me letters and asking for payments and eventually, if I don’t pay, send the whole thing to collections where it could potentially be “charged off”.  However, lenders aren’t doing that…and my lender has said they won’t cancel my debt either.  So, without a cancellation or charge off, what do I have?  What happens to my credit?  Do I just have this open credit line hanging out there with no payments against it?  By the way, we are talking about nearly $100K in debt in the state of Florida.  And this is not my primary residence.  Supposedly, the “investor” is Wells Fargo…even though the loan is serviced by CHASE.

I may still have some negotiating room with the lender because nothing has been officially signed yet.
THANKS!
Greg

————–
Hello Greg,

Based on what you’ve written, Chase will be treating the proceeds of the sale the same as if you made a payment on the account and the remaining deficiency balance will be reported as owed.  This is referred to as a lien release only and is far from the desired full release solution.  Bear in mind that Florida’s statute of limitations is five years and if at any time in the next half decade following a lien release in Florida, the debtor appears collectible, a separate lawsuit may be brought to recover the remaining balance plus interest.

Overall, this does not sound like much of a solution to the problem and I would recommend clicking on the ‘short sale’ category on the right hand side of the blog to become familiar with the difference between lien release and full release and ways to defeat the sneaky tricks and games that lenders play when negotiating short sales.

Thanks for the questions and hope this helps.

Paul

This author is not an attorney and this information should not be considered legal advice.  Please consult an attorney for legal advice.

Milinda

————-

Hi Milinda,

You’ve got the FDCPA, FCCPA, RESPA and other consumer laws that may provide some protection, but Florida is a judicial foreclosure state and lenders may seek a deficiency judgment for the difference between the full mortgage balance and the value of the home at time of foreclosure.

There is a lot of information on the Broken Credit Blog regarding these subjects so my best advice is to start reading.

Thanks for the questions and hope this helps.

Paul

This author is not an attorney and this information should not be considered legal advice.  Please consult an attorney for legal advice.

Before the New Year, the Florida Supreme Court adopted a foreclosure mediation program to reach out to borrowers facing foreclosure and possibly clear up the backlog of foreclosure cases in the court system. The Task Force on Residential Mortgage Foreclosure Cases launched in March 2009 in response to the nation’s third highest delinquency rate and its worst foreclosure inventory at the time.

Florida has the fourth highest foreclosure rate in the country through January 2010, according to RealtyTrac. There, one in every 187 homes received a foreclosure notice.

The Task Force proposed the motion and recommended the adoption of the forms. In its proposal, the Task Force stated that many foreclosures set by the final judgment and handled by the clerks of court are “vague last minute” motions to reschedule sales without an explanation.

“It is important to know why sales are being reset so as to determine when they can properly be reset, or whether the sales process is being abused,” according to the Task Force proposal.

The new rule aims to clear up and accelerate a foreclosure process clogged with government incentive programs and civil cases. The Task Force wrote in an August report that the foreclosure pipeline resembled a traffic-jammed highway out of a town under hurricane evaluation.

“Again, this is designed at promoting effective case management and keeping properties out of extended limbo between final judgment and sale,” according to the Task Force proposal of the new rule.