Colorado Independent – A top Democrat on Monday warned the nation’s banks that, unless they get more aggressive in modifying mortgages to prevent foreclosure, Congress will renew previous efforts to empower families to keep their homes through bankruptcy. But Sen. Richard Durbin (Ill.), the upper-chamber’s second ranking Democrat, also gave the banks three months to comply with his ultimatum — a span over which roughly 1 million new homeowners are projected to enter foreclosure.

Congress and White House officials have created a series of programs designed to entice mortgage lenders and servicers to modify troubled loans voluntarily, but those efforts haven’t kept pace with an ever-rising number of foreclosures, which have already topped 1.5 million since January. The issue has plagued lawmakers, who have spent hundreds of billions of dollars propping up the nation’s banks, but have provided little in direct help for families caught in the swirl of the housing crisis, which was at the root of the current recession.

Durbin is the sponsor of legislation to alter the bankruptcy code to allow judges to trim, or “cramdown,” the terms of primary mortgages to keep people in their homes — an option current law doesn’t permit. The Senate killed the proposal earlier in the year, but it could resurface if foreclosures continue to rise and the banks continue their reluctance to cut mortgage rates on their own. Durbin, for his part, thinks the bankruptcy change can’t come soon enough.

“The voluntary efforts by some banks to slow the foreclosure crisis and stabilize America’s housing market have not worked,” Durbin said during a housing forum at the Center for American Progress Action Fund. “Whether the bankers and mortgage servicers are failing because of intransigence or incompetence doesn’t matter … They have to do much better.”

Hi Paul -

Just having read briefly some of your posts, I am hoping you may have a few words of advice for me.  I recently received a huge paycut (27%) and now am unable to afford my mortgage payments.  As an act of good faith, I contacted my mortgage co (not a bank, the original lender of my 80/20 loan) on June 29 — a few days before the first of the month (July) in which I would not be able to pay, and explained my situation… after a lengthy phone conversation, the Home Retention team member suggested that a deed-in-lieu would probably be the best option for me, especially since I have no issues about giving up my home at this point (I tried in the summer of 2007 to sell, without receiving any offers, and then my mortgage co helped by giving me a LM in September of that year (reducing my interest percentages)).

Now it seems that even though the mortgage co (AHMSI holds both loans — and I specifically asked on June 29th if this would hinder a DIL application, and was told no it would not) lists DIL on their own website as a means of assistance, they are insisting I try to remain in the home and try again for some kind of modification.  My income is now so severely reduced (about $850/mo, and I was only living check-to-check as it was!) that I don’t see how they can modify without losing as much as they would if they just accepted my DIL.  Furthermore, they are beginning to try to pressure me into paying (which I cannot do anyway!) by threatening foreclosure.  I understand they have every right to come after me, especially when I haven’t paid them (though I am only one month behind at this point).  HOWEVER, the reason I went to them first, BEFORE ever missing a payment, was to avoid a “full” or regular foreclosure in the hopes that they too would see the benefit of taking this easier way out (if there is such a thing here).  Either way, they will end up with a very underwater property — why would they rather hire lawyers and come after me the hard way, when I’ve been trying to offer my deed over to them on a silver platter for more 5 weeks now?!!

Any advice you can give would be most appreciated.  Thank you in advance.

-Karen (more…)

“The Home Affordable Modification Program (HAMP) announced by President Obama’s administration on March 4, 2009, is a laudable attempt to overcome long standing reluctance by servicers to perform large numbers of sustainable loan modifications. HAMP seeks to change the dynamic that leads servicers to refuse even loan modifications that would be in the investors’ best interests by providing both servicers and investors with payments to support successful loan modifications. Several months into the Home Affordable Modification Program (HAMP), however, homeowners and their advocates report that the program is not providing a sufficient number of loan modifications to homeowners, the modifications offered often do not meet the guidelines of the program, and the program itself still presents serious barriers to mass loan modifications.”

Diane E. Thompson
National Consumer Law Center
also on behalf of
National Association of Consumer Advocates
Before the United States Senate Committee on
Banking, Housing, & Urban Affairs
July 16, 2009

I was approved for a loan mod in march.  I was current when I was approved. the bank suspended my payments for three months because they were going to use the principle balance due that day plus the interest that continued to accrue during these three months in the paperwork they needed to submit to the lender.  Makes sense! 

My first new payment was due on June 1st which I paid, although I had not yet recieved the official loan documents.  I finally got the documents, signed, notarized, and returned and verified that they had received them.  I also paid July 1st payment.

Mid july I contacted the bank and they verified that the modification was complete however the two payments were not posted correctly but they assured me that it would be corrected. I then filed for bankrupcy protection. 

I called to find out where my August payment should be sent and I was informed that the mod was not complete before I filed and they were not going to honor it. I was transfered to loss mitigation who again verified that the mod was complete prior to filing.  I again called bk dept and was told the same thing, not complete and again transferred to loss mit who again said it was complete but that my payments had not been applied correctly. 

It has been almost two weeks and the payments have not yet been applied although they have cashed my Aug payment.  I called the bank today to request copies of the loan modification agreement, specifically the page that they signed.  I was transferred to five different people who could not do it but could connect me with somebody who could.  After 55 minutes of this game they finally tried to transfer me to the bk dept but the call was disconnected. 

I’m not into conspiracy theories but something stinks here!  I didn’t think of it at the time but today I noticed that the lender’s signature and my signature are on different pages, so even if they did physically sign these documents it could be conveniently replaced with an unsigned document.  Am I paranoid? 

Do I have any legal recourse if this were to go to court since they accepted three payments even though they did not apply them yet?  They didn’t reduce my interest or principle they just extended the loan back out to 30 years and it is a freddiemac loan.

Sobroke (more…)

Hi Paul,

I think I’ve finally successfully got a good loan modification from Bank of America (previously Countrywide)……….but I have one question that I am seeking an answer to and immediately thought of you and your wisdom.

After 3 unsuccessful attempts at a modification on my sub-prime interest only option arm I recruited NACA and they have succeeded in getting me a 3.25% fixed rate for the life of the loan! Yeah.

Heres the question- I had filed chapter 7 bankruptcy in 2008 that was released in April of that year. The docs for my modification are signed, notarized and sealed in the fed-ex envelope ready to go back to BOA. As I was giving my copies one last review I see they have a sentence that I am not sure about in the docs….

It says “This offer is contingent upon BAC Home Loans Servicing, LP receiving relief from the Automatic Stay for any bankruptcy in which the property referred to in the Loan Modification Agreement is included at the time of the modification.”

They did not send any sort of form for me to sign regarding this. Countrywide had made me a modification offer a few months ago that I declined (modified payment was higher than current payment) but in those docs they sent me a form titled “Modification Bankruptcy Disclosure Rider”

Do you think because they wrote what they did and I signed the docs the request has been satisfied or do you think that I need some sort of signed document specifically relating to this?

Also I’ve read on another site that folks that are getting modifications from BOA are sending back their signed and notarized docs but BOA will not send back a copy with their signature and notarization. Is this cause for concern?

I am just worried that they could later claim that they never signed anything. I am sending a request for it to be sent back with their signature but I’ve heard they won’t do it. It worries me that they are trying to pull a fast one.

I have called my negotiator about the automatic stay part but he hasn’t returned my call and I need to get these docs back to them as soon as possible. My bankruptcy attorney isn’t worth calling. He was not helpful in the least (and always made me feel like I was bothering him) or I would ask him. I would just like to hear your take on it. I know you are not an attorney, but neither am I and I don’t know what to think.

Thanks for your help in the past. I think this is my 3rd or 4th time writing to you and you always have come through for me.

Sincerely,
Rae Jean (more…)

Recently I spoke with a Hud counselor connected to the Making Home affordable program. They advised me based on my situation I should be a  candidate for a loan modification under the Making Home Affordable program guidelines and that I should contact my loan servicer.

I did so and my loan servicer has indicated that my loan is owned by FHLB or Federal Home Loan Bank and that there not participating in the modification program.

I have not missed any payments or been late but time is running short and my liquidity is running dangerously low. Im still employed (albeit lower income) and could probably stay in my home with a modification.

Any suggestions?

Thomas (more…)

we are current on all of our mortgage payments and have never been late. we have a 1st and 2nd mortgage. We are seriously considering a short sale on our home. Our goal is to cover the 1st mortgage but the second (w real estate what it is today) will not cover the second. If we handle the short sale and approach the bank with a buyer before ever having been late on payments will credit be effected or can we negotiate with them so that we can repurchase immediately after the short sale of this home.

Laurie (more…)

I have a CA Wachovia Option Arm loan that is at the million dollar mark, and valued in the low 800s.  I have been trying for 7 months to get better terms, mod with PR is my hope.  I have a steady job and good income and haven’t missed payments on CCs or mortgage in 30 years,  But this loan is slowly killing my financial foundation I have worked so hard to build up.  I am at a crossroads now.  Missed my prop tax, and things are getting tight. 

The Executive Offices of Wachovia told me they are only modifying loans that are 31 days late.  They said they are not suggesting to miss, but if I did, call back on day 31, and I would be modded. 

What happens to your credit score if I miss a few mortgage payments before this mod kicks in?  Does the mod also factor into my credit score?  The way my CCs have been squeezing me with balance reductions and cancelled accounts, does a credit score even mean anything anymore? 

I would appreciate your thoughts on this.

Dale (more…)

Hi Paul,

I’ve written to you several times over the last year or more. I have an interest only option arm, I filed ch. 7 bk that was discharged 4.08 in which the mortgage was included and no re-affirmed. I am still in the home and had paid on time up until 2 months ago. I did have a forensic audit done by Patrick Pulate and I do have multiple tila violations. I did send a recission notice to Countrywide within the 3 year recission period but they just blew me off and never acknowledged it. I did hire an attorney here in Colorado to help me but he quit the case after a few months of being jerked around by CW. I have since tried to get a loan modification 4 times (2 on my own and the 3rd and 4th via NACA). 1 modification was denied by CW, the 2nd attempt was never answered, the 3rd via NACA I got an offer of 5% fixed but it raised my payment $200 per month (was only paying and affording minimum on interest only) so I rejected the offer (NACA submitted my self employment income wrong-too high- which made the payments too high), Also I am about 40k-45k upside down.

The loan will eventually reset and be so unaffordable there is no way we could stay.

Because I was in a modification mode (the one they offered) they took my mortgage payment for March (funds were withdrawn from my bank) but they do not show that payment was ever made. Therefore since they are not showing that payment, and I dont know if they will modify at an affordable rate I have not made my April or May payemnts. The March payment still shows as un-paid on the web-site.

Those are the condensed lengthy facts!!

Here are the condensed lenthy questions:

1- Since I have tila violations and I did submit the notice of recission or recission request letter within the 3 year period, shouldnt I be able to recind the loan?

2- If so, it is all great in theory but how do I accomplish such a task? My last attorney quit! Its almost comical. I have to laugh or I will cry and not stop

3- I am on the fence about even accepting a new modification offer (Naca is requesting 3% fixed which would keep the payment just a few dollars higher than the minimum I have been paying for the last 4 years) but not sure its financially even worth it since we are 40k+ upside down.

So if I dont take the offer and decide to walk am I correct that I can let it foreclose and I am not legally liable for the balance due to my chapter 7 bk?

4- Is there any benefit to doing a short sale? I live in Colorado and it looks to me from reading other posts that CO is a power of sale state and there really wouldnt be a huge benefit in short selling?

5- If I short sale or foreclose will my credit report show a bk and a forecloser? (I understand I will have to honestly answer the question about if I have ever foreclosed when applying for a loan in the future)

6- Also when I did this mistake of a refinance 4 years ago the loan was put in only my name. The bk is only in my name too, and we did a quit claim deed to take my husband off the deed since he would no longer be on the loan, but they messed that up too and he is still on the deed. I have the quit claim I signed and you can see that they charged my $6 to process it on the hud1, but it was never filed/processed because they filled the form out wrong. If I decide to walk how do I get my husband off of the deed so he isnt liable for taxes, etc? Can I just take the papers to the county and show them we filed, filled out the forms and were charged for it?

I am so tired of all of this it is making me physically ill. Best case I would like the loan rescinded but dont know how to make that happen or how to find a lawyer capable of making that happen. If offered a loan mod of 3% fixed I may take it just so we dont have to move, but I’ve been waiting forever and I am really thinking about walking away. If I walk away I just need some advise on the best way to do it. Can I just let it foreclose since I am in Colorado and the house was in the bk or should I short sell? Then how long before we can apply for a loan? I am thinking of walking and trying a rent to own, or lease option, possibly owner fincanced due to my credit issues.

I just want my life back, and want this all over with. Its been a nightmare to say the least!

Sorry for the long long story. Just alot involved and too many questions that nobody seems to know the answers to.

Thanks for a great web site with tons of good info!

Rae Jean (more…)

MY MORTGAGE CO. APPROVED ME FOR A LOAN MOD AND ASKED FOR 3800 IN CONTRIBUTION FEES IN WHICH I HAD TO PAY IMMEDIATELY ,THAT WAS APRIL 16TH 2009,THEY TOLD ME MY MORTGAGE PAYMENT WOULD BEGIN JUNE 1ST 2009 AND I WOULD BE PAYING 1623 WITH A 4.62% RATE. I WAS ECSTATIC ,AS ANY ONE WOULD BE BUT MY SITUATION HAD WAY MORE SENTIMENTAL VALUE THEN ANYTHING ELSE! MY FATHER IS THE ORIGINAL HOME OWNER AND HE WAS SUDDENLY KILLED IN A HIT AND RUN IN SEPT AND I BEING THE ONLY CHILD  AND THERE BEING NO SPOUSE,I WAS THE ONLY HEIR OF THE ESTATE. I LIVED WITH MY DAD WHEN HE WAS KILLED ALONG WITH MY 4 CHILDREN, APPROXIMATELY 2 WEEKS AFTER I PAID THE CONTRIBUTION FEES THEY TURN ON ME AND REVOKED THE LOAN THAT WAS ON MAY 1ST 2009,THEY NEVER SENT ME A LETTER OR ANY NOTIFICATION ,THE ONLY REASON I BECAMR AWARE OF THIS IS BECAUSE I CALLED THEM TO MAKE SURE THERE WAS NO MISTAKES OR ERRORS ON WHICH OFFICE I WAS TO SEND MY 1ST MORTGAGE PAYMENT TO,,I MEAN I WAS ACTUALLY CALLING THEM TO PAY MY MORTGAGE PAYMENT IM SO GREATFUL I DIDNT JUST SEND IT LIKE I WAS GONNA DO,,I KEPT HAVING AN INNER VOICE TELLING ME TO CALL,IM SO GLAD I DID!THEY TOLD ME IT BECAME REJECTED BECAUSE THEY MADE AN ERROR,IM NOT ON THE LOAN WITH MY DAD IM JUST THE HEIR AND THE PERSONAL REP OF HIS ESTATE. THEY HAD TO OF KNOWN THIS BEFORE THEY AGEED TO A LOAN MOD AND SENT ME ALLL THE PAPER WORK TO SIGN AND COLLECT ALMOST 4 THOUSAND DOLLARS FROM ME!I CALLED TO ASSUME THE LOAN AND WAS TOLD I COULD BE PUT ON THE LOAN WITH MY DECEASED DAD HOWEVER THE LOAN HAD TO BE BROUGHT CURRENT AND THE LOAN IS NO LONGER CONSIDERED CURRENT NOW THAT THEY ARE REVOKING THE LOAN MOD APPROVAL! IS IT TRUE THAT I CANT GET A LOAN MOD WITH OUT BEING IN THE LOAN? THE MORTGAGE COMPANY SAYS AFTER THEY CLEAR MY RECORD OF THE LOAN MOD THEY CAN OFFER ME A REPAY PAYMENT PLAN,,THERE IS ABSOLUTELY NO WAY I CAN AFFORD EVEN 1 MORE DOLLAR A MONTH ON THESE MORTGAGE PAYMENTS!IVE HEARD AMERICAS SERVICING COMPANY DOESNT EVEN REALLY EXIST ON ANOTHER BLOG ON THIS SITE AND WELLS FARGO AND ASC ARE MY SERVICERS !
 
WHAT CAN I DO TO HOLD ONTO THE ONLY PART OF MY DAD I HAVE LEFT AND THE ONLY ROOF I HAVE FOR MY KIDS TO SLEEP UNDER AT NIGHT?CAN I CLAIM BANKRUPTSY FOR THE ESTATE OF MY DAD SINCE IM RESPONSIBLE FOR THE DEBT? PLEASE HELP,I COULD BE ON THE STREET IN A MATTER OF DAYS IF I DONT FIND A LOOP HOLE OR A WAY TO STOP THESE COLD HEARTED PREDITORY ANIMALS!  THANKS CINDY (more…)