Forsaking sounding “Pollyannaish” here, but isn’t this type of business transaction for the sheer benefit of the investor and only the investor bordering on fraud?  Granted that the big banks are devilish to deal with in negotiating short sales.  I do it every day.  I have very little respect or sympathy for the devil no matter how badly it claims to be wounded.  I have a lot to say about that subject but don’t have enough hard disk space on my desktop to discuss it in detail. 

However, I am a California real estate broker who oversees a well respected real estate brokerage and prides myself on always playing it straight and never placing my needs before my client’s.  That goes for the agents in my office as well.   I may be one of the last remaining white hats out there but at least I can bank on having kept my word and integrity as the foundation and cornerstone to continue to build on.  In a cyclical industry we must protect whatever we have left in order to survive the tough times.  And that does not include riding on the coat tails of another or at the cost of another’s misfortune.

I’m an advocate for risk taking as long as all parties are aware of and accept the terms of the deal.  Having the ability to procure properties for 80% of the BPO before it hits the MLS smells bad to me.  This individual offers properties to investors for less than market pricing for the reward of “earning” two commissions.  Smelly, smelly, smelly. 

With new government directives released on April 4, 2010 and Fannie and Freddie’s versions on June 1, 2010 known as HAFA there are a number of guidelines that include verbiage to prevent short sale flipping.  One that prominently comes to mind is that Buyers cannot sell the property again for 90 days. This is meant to prevent investors from “flipping” homes by purchasing at a low price and selling at a quickly inflated price. 

Some blogs denounce short sale flipping while others encourage and celebrate it.  Which is it?  My hands are clean and I think I’ll stay clear of playing in the mud but I do feel that this type of business dealing is becoming an epidemic that needs to be addressed.  Can I hear your thoughts on this to help me understand if this game is made up of fair players where no one gets hurt?

Diane Wheatley, Broker

www.MoveUpProperties.com

sales@moveupproperties.com

Courtesy of Danielle Graychik, Realtor with Move Up Properties -

We all know Wachovia’s reputation for taking the initiative to streamline the Short Sale process.  Working with a Wachovia short sale is almost like the days where standard sales dominated the market.

I took a listing last week on a Friday.  I listed it on the MLS Saturday and had offers within a couple of days.  The buyers accepted an offer on Wednesday and I submitted it to Wachovia first thing Thursday morning.  This listing had a pending Trustee sale date scheduled for 10 am the following Wednesday (June 2nd) following a 3 day weekend to boot.

By Tuesday (June 1st), the day after memorial weekend, not only did I receive the confirmed postponement to the trustee sale, I also had full written approval on the offer I submitted with no variations on value, closing costs, commission or concessions.  My client is elated as they will receive a $5,000 incentive to relocate if we close escrow within 45 days.  

On a personal note, I have to really thank the negotiator assigned to this file.  I would be happy to give her name out but I’m afraid she might get inundated with phone calls that she may not need in order to work her files as effectively as she did for me.  

Thank you Wachovia for providing me with such a rewarding breath of fresh air.  Now if the others would follow suit and learn that the agent is NOT the enemy and that our efforts can be used as an essential tool to orchestrate the short sale process to a win-win solution for all, the world would be a happier place.   

 

  I certainly do not mean to offend my fellow Real Estate Professionals, but sometimes I can’t help but wonder.   Recently at a continuing education class, I met a colleague who is new to the business and is now trying to acquire some investment property with her husband.  After a brief conversation we had with other licensees in the class, she pulled me aside to ask some questions.  She told me about some concerns she had regarding her current transaction.

It turns out that she had being trying to purchase property with the help of her broker.   She sent out several viable offers that would surely be considered acceptable by a short sale lender.  However, not one of her offers was accepted by the listing agent.  Someone in her circle suggested that she use the listing agent to represent her to submit an offer.  This would force her to pass on the commission she would earn by allowing the listing agent to double theirs.

She agreed and decided to submit a low offer through the representation of the listing agent to see what would happen.   Sure enough her first offer was accepted and submitted to the lender for approval.  The first offer!   Coincidence or intentional?   Please don’t tell me maybe this was the best offer out there because I simply won’t buy it.

In my opinion this was a simple case of double ending a commission.  This brings me to my question.  Where is the professionalism?   Where is our oath to the Realtor’s code of ethics?  Where is the fiduciary duty we owe to our sellers to act in their best interest and present all available offers?

The scary part is that it appears to be a pretty common practice in today’s real estate environment.   I’ve felt the effects of this business practice being used in the REO market as well.

Don’t get me wrong, I understand the market can be brutal for some and I know we are coming out of a pretty tough year, but the rules haven’t changed just because the market may be fierce.

You may be saying “well, no harm no foul, the seller has anything to gain anyway.  He or she will not be gaining any financial benefit from this transaction other than salvaging one’s credit to begin home ownership once again sooner rather than later.”   I say wrong, the seller may have a lot to gain by selling the property for the highest possible value.

     We need to make something very clear here, not all short sale sellers will qualify for the debt forgiveness act.  Chances are that the seller will receive a 1099 at the beginning of next year stating that they may have incurred tax liability on the difference between the closing price of their home and the amount they owed to the lender.   That is the precise reason the listing short sale addendum here in California indicates to the seller to consult a legal or tax professional to know what the tax consequences may be.

Real Estate Professionals are obligated to inform you of this possibility.  If not, then they have no right to be selling real estate in the first place.  Secondly, once the sellers are given notice by the IRS or their State Tax Board that they have potentially incurred a tax liability they were never told about, it will be too late.   

If this story rings true for any real estate professionals out there then you should be ashamed of yourself and understand that you are lucky you only lost a client this time, next time you could end up on court and possibly lose a lot more than just a client’s trust.  

Most Real Estate Professionals out there are knowledgeable, responsible and accountable individuals who serve the public in the manner in which they are obligated.  But unfortunately it only takes a few bad apples to tarnish the integrity of those of us who consider ourselves the serious professionals we set out to be.

Let me hear your opinions.

Leading the Way...® in Real Estate Law

Brought to you by the CALIFORNIA ASSOCIATION OF REALTORS®

Just a quick question based on a buyer's view of the upcoming changes in the California State Tax Credit vs. the current Federal Tax Credit. 

My buyers opted to cancel their newly created escrow due to their belief that the California State Tax Credit would be a better choice for them.  After months of looking at homes we found a charming home in the exact area they were hoping for.  Shortly after we opened escrow they called to cancel due to the California State Tax Credit on the books to begin May 1st, a day after the federal tax credit will expire for them if they are not already in contract.

I disagree with them in their interpretation of how the State tax credit will benefit them more than the Fed Tax Credit.  And, if they don't purchase something very soon the funds available to them for the State tax credit may not be available to them either which causes a lose-lose. 

Anyone dealing with this scenario?  I sent them to a tax accountant but that still did not seem to get through to them.  Your thoughts are appreciated.  Thank you!

I wanted to follow up on my recent post regarding Promissory Notes required in order to facilitate short sale approvals.

I took a short sale listing in February 2009 on a condo with one purchase money loan at a 97% LTV.  The condo was purchased for $325,000 in 2007.  I have a transaction going with the lender, buyer and seller for $189,000 with $5,000 allowance to the buyer, FHA.

In June 2009 I received a conditional approval from Aurora Home Loans.  The terms of the original offer were acceptable to Aurora but not to Guaranty Mortgage Insurance Co.  They made a request for a $25,000 promissory note to be signed by the seller in order to proceed.  She would not sign the note and the buyer walked.  Back to square one.

In August 2009 I submitted another offer to Aurora Home Loans along with updated financials, bank records, proof that my client had lost her job and an appropriate hardship letter. 

This is nearly the end of March 2010 and I’m days away from closing this transaction (I hope).  On February 19, 2010 I finally received an approval letter from Aurora Home Loans after an exhaustive 6 month wait.  The buyer hung in there the entire time. 

The bulk of the timeframe was waiting on the MI company’s stamp of approval with no promissory note required.  I suppose my client’s hardship was more severe after a longer period of time had elapsed depleting ALL of her remaining resources.  She is now officially insolvent.

Now here is the kicker.  And I want to kick myself too.  The super patient buyer decides to switch lenders midway through our 30 day escrow period.  After all this waiting and constant follow up calls with Aurora to speed up the process, I could not believe that I would need to ask for a two week extension! 

One week prior to our closing date I notified Aurora that we would need until the end of March to close this escrow.  I was granted an extension to the end of the month by Aurora VERBALLY with the written approval of the extension to be fax’d within 48 hours of my request made on March 14th.   This written form of approval is imperative as a prior to fund condition.

It is now March 26th and guess what?  No written extension has been delivered yet.  I have called Aurora every single day, twice a day since the 14th explaining the crucial need for this follow up letter so that we can close by the end of March.  I’m promised every day that I will receive it within 48 hours.

Well today I found out that the formal approval must come from the MI company and it is relatively out of Aurora’s hands.  I’m technically in breach of the agreement and losing hope that we will have a chance to close by month’s end anyway without this letter. 

Just when you think it’s almost over, it ain’t over.  This short sale will be my career short sale transaction.  Wish me luck, lots of it. 

According to HAFA (Home Affordable Foreclosure Alternatives) program slated to take effect April 5, 2010, lenders MUST first evaluate/advise homeowners on HAMP (Home Affordable Modification Program) loan modification programs prior to any consideration of eligibility of the HAFA short sale option.

One of the goals of the new HAFA program is to simplify and streamline the use of the short sale option by incorporating the following unique features:

1. 1.  Uses borrower financial and hardship information already collected in connection with consideration of loan modification.
2. Allows borrowers to receive pre-approved short sales terms before listing the property (including the minimum acceptable net proceeds).
3. Disallows foreclosure sales during the marketing period specified in the SSA short sale agreement. 
4. Must pay commissions stated in the listing agreement not to exceed 6% of the contract sales amount.
5. REQUIRES BORROWERS TO BE RELEASED FROM FUTURE LIABILITY FOR THE FIRST MORTGAGE DEBT – NO CASH CONTRIBUTION, PROMISSORY NOTE OR DEFICIENCY JUDGMENT IS ALLOWED.

If I understand this correctly, HAFA will consider a stream line short sale approval and process for borrowers who have proven their hardship and financial situation already collected in consideration of a loan modification.  I believe that an increasing number of homeowners holding "A"-paper, fixed rate mortgages with adequate earning ability will attempt to participate in the HAFA program due to their negative equity position and desire to move.

Loss of equity is not an acceptable basis for "hardship".  If these individuals are declined for HAMP due to an unproven hardship will they also be declined for the HAFA short sale process?  I assume so based on the outlined criteria. 

That brings me to my point.  The government appears to be showing bias towards weaker individuals by allowing them the ability to move from one location to another while eliminating the threat of repayment of the forgiven debt to boot. 

The "stronger" individuals I referred to may be forced to remain in their current homes with no ability to move unless they can pay off the full principal balance of their mortgage with no assistance. 

Is this a breach of the US Department of Housing and Urban Development (HUD) Fair Housing Act?  I believe that the term "hardship" will need to be redefined to enable equal housing opportunities for all.

Offers may be accepted without notifying loan servicers

By Inman News, Wednesday, January 6, 2010.

Inman News with Commentary by Diane Wheatley, Broker

My office recently went over Bank of America’s head out of pure frustration and poor communication and called Fannie Mae direct to inquire about why B of A was telling us that our approval letter good until January 11, 2010 was no longer valid due to new Fannie Mae requirements. 

Low and behold, Fannie Mae got right on the file, contacted Bank of America to notify them that they would be postponing the trustee sale in order for our buyer to complete his purchase transaction.  The sale date was immediately changed, Fannie Mae returned our call the same day to inform us of what transpired and we are back on board to close escrow as planned. 

Finally, what we have all been waiting for.  A strong arm to manage these stagnant negotiators and get them off their behinds (literrally).  Thank you Fannie!!

Fannie Mae has adopted a new policy in which it may accept offers to purchase homes it has repossessed without notifying loan servicers.

Loan servicers may be required to reimburse Fannie Mae for a loss if it turns out the original mortgage on the home did not meet its eligibility or underwriting requirements.

Fannie Mae previously allowed servicers 15 days to turn over loan files for review if there was a question over whether a mortgage on a repossessed property met Fannie Mae's requirements. Loan servicers then had the option of trying to find a better offer for the property or buy it themselves rather than reimburse Fannie Mae for any loss.

To speed up sales of foreclosed properties, Fannie Mae says after beginning the property disposition process by obtaining opinions on the market value of a repossessed home and listing it with a real estate broker, it may now accept a purchase offer without first notifying the servicer, whether or not a final decision has been reached with respect to the review.

"If, after completion of the review, Fannie Mae determines that the mortgage loan did not meet its eligibility or underwriting requirements and Fannie Mae has incurred a loss by selling the property, the lender will be required to fully reimburse Fannie Mae for its loss," the company said in a bulletin to loan servicers.

In its most recent quarterly report, Fannie Mae said it had 72,275 REO properties on its books at the end of September, up 7 percent from a year ago. The company acquired 98,428 homes through foreclosure during first nine months of 2009 -- 40,959 in the third quarter alone -- and sold 89,691.

Fannie Mae's sister company, Freddie Mac, reported REO inventory totalling 41,140 homes at end of September, up 46 percent from a year ago. The company acquired 24,375 home during the quarter, and sold 17,941.

In its most recent monthly summary, Fannie Mae said the serious delinquency rate (loans three or more months behind in payments or in the foreclosure process) on single family home loans it owns or guarantees jumped to 4.98 percent in October, up from 1.89 percent the same time a year ago.

Freddie Mac's single-family portfolio delinquency rate rose to 3.72 percent in November, up from 1.52 percent in November, 2008, the company said.

It is nearing the end of our “forever and a day” wait for the lender’s final approval letter outlining the terms of what they need to complete the short sale closing.  During a recent visit to the long anticipated vacant home of their dreams the buyer realizes that the water heater is missing!  The air conditioner’s condenser unit is missing from the outside too!  Vandalism is running rampant throughout Southern California’s neighborhoods hardest hit by declining values leaving communities dotted with one vacant home after another.  Some areas are so hard hit that they have become a breeding ground for vandals and thieves to rob these vacant homes of just about anything that is not anchored or bolted down well into their foundations.  

As foreclosures continue across the nation in record numbers this type of behavior will continue to run rampant increasing the loss associated with the meltdown of the mortgage market by millions of additional dollars.  However, these losses are rarely absorbed by the lending institutions.  These losses come directly out of the pockets of individuals who have put it all out on the line to proudly take ownership and begin rebuilding desolate neighborhoods into the glorious communities they were built to be.  

So why has this rebuilding process come to rest on the shoulders of the homeowners, real estate agents and hard working citizens of our nation who are barely able to keep their own families fed much less shovel more revenue into the mouths of these predatory lenders?  Where is the humanity in that?  

A few thousand dollars of necessary repairs is a pittance compared the enormous losses these lenders are taking by dragging their feet for colossal amounts of time before coming to a final conclusion as to whether they will approve or disapprove of a short sale offer.  In retrospect, a few thousand dollars is an enormous amount of money to an already strapped buyer or real estate agent who has been on the phone nearly every day for six to nine months begging for an answer or any information they may be able to pass on to their increasingly frustrated client.  

These lenders need to step up and take responsibility for the maintenance and condition of their properties and stop placing the burden on the individuals who have taken on the pain and risk necessary to cultivate these tarnished communities into the thriving, safe and beautiful residential landscapes we once admired.

Diane Wheatley, Broker

diane@moveupproperties.com

TRIAL LOAN MODS - PLEASE BEWARE

·  Any imaginary person or thing you have spoken to that appears genuine.

·  A fictitious story, or unscientific account, theory, belief, etc. that gives you hope.

Why is this happening?  Pretty simple, two reasons, first the fact is that in almost all cases where you have a mortgage that has been resold to a mysterious group of so-called investors, you the homeowner or your representative are not dealing with a party that has authority to modify the loan which in actuality they NEED you to default.  The reality is that they, the “pretender lender,” know the debt is unenforceable, the real party in interest is unidentifiable in most cases, and the title to the property has a cloud on it. So what do they REALLY need?

1. They need new paperwork and they need new signatures on something they can represent as your affirmation of the debt….to THEM… not the party that actually funded your loan who may be damaged by a default or even the party still on the deed or mortgage at the county recorders office. 
2. They need you to waive any rights and claims you could assert because the “real lender” or “real party in interest” and/or various parties in the chain of securitization assumed liability for those claims you could assert as the notes flowed up the chain.
3. Here’s the biggie, they have insurance in the event of default, they can’t collect on the insurance, credit default swaps, PMI, etc. in the event of modification.

Insurers have a habit of including exclusions into policies of all types and credit default insurance policies are not different. Here is a little sample of a PMI exclusion:

“Notwithstanding any other provision of this Policy, the coverage extended to any Loan by a Certificate of Insurance may be terminated at the Company’s sole discretion, immediately and without notice, if, with respect to such Loan, the Insured shall permit or agree to any of the following without prior written consent of the Company: (1) Any material change or modification of the terms of the Loan including, but not limited to, the borrowed amount, interest rate, term or amortization schedule, excepting such modifications as may be specifically provided for in the Loan documents, and permitted without further approval or consent of the Insured.“

So who is the “insured”?  Well, the bondholders who put up the money that was actually used to fund your loan, reality is they are the only other party other than you that has been damaged in this whole mortgage meltdown. Every other party between you and them was an intermediary, who made a killing, and had no capital at risk. The truth, there is no incentive or reason to modify your loan. In order to collect on the insurance they need a default, not a modification.

Why do you think they want you to use the “fax” to resend them your “modification” paperwork for the umpteenth time?  So they can “lose” it again.  If they allowed you to scan and email it to them or send it Certified Mail Return Receipt Requested you would have evidence that  a) they received it  b) who received it and  c) when they received it. Then all of a sudden you have a timeline, then all of a sudden someone has to be accountable and explain why they received your information 3 months ago and you haven’t heard a whisper since…

They know that 60% of these “modifications” are back in default within a year so they need to clear the deck to foreclose when that happens.  Meantime, with regard to these “trial” modifications, the paperwork I have seen explicitly says that the payments will NOT be credited to your loan account but will be placed in a “suspense” account until after the trial modification period is done. Now, if you fail to complete the trial period or when the “trial” period is completed and you did comply, but they tell you they cannot approve your for a modification…who do you suppose keeps that money sitting in the suspense account?

 

Buyers need to take time to read this story to help them understand that Realtors are people too.

I received an email about a month and a half ago from a gentleman who we will call “Alan” stating that he has been mistreated by many real estate agents who have not followed through with their commitment to find him a home to purchase.  He goes on to say that no one listens to his needs, they do not show him homes that match what he is looking for and many don’t even show up for appointments with him or even return his calls. 

Next comes his cry for help.  “I am a pre-approved buyer with 20% down looking for a Realtor who will represent me in the purchase of a home right now.”  He goes on, “I realize you are a very busy woman, but would you have time for someone like me?  I realize that I am not a high dollar buyer.  My price range is up to $350,000.  But could you please be my agent?  If you are too busy to take on a buyer like me, I will understand.”  He finishes with “I hope to hear from you real soon and thank you for your consideration.” 

Wow?  My head is sorting through many scenarios that have led this man to write such a desperate email.  Has he been truly batted around like some unwanted mosquito on family camping trip?  Has he made ridiculous offers on homes, asked for too much from sellers or can it be that he is “the one that got away” and I was fortunate enough to be the agent he found that always completes her tasks and NEVER ignores a cry for help?  No matter, I had no time to waste.  This buyer NEEDS me now!  Pick up the phone.

Without stirring up any more of his past aches and pains, I quickly establish what he is looking for, location, price, amenities and we share emailed summaries of available homes on the market to see.  I set up a time to meet to get started in our search for that ideal home.

In the meanwhile I also involve a handful of my in-house agents to help assist me in locating properties for Alan to see by making phone calls to outside agents for their upcoming listings to enable us to see all the new inventory before the rest, if possible.  Alan begins to speak to the other agents in my office on a regular basis too.  I am proud that I have been able to dismiss the thought of this stray buyer desperately searching for a home on his own to now becoming a part of a “family” of realtors, each making Alan a priority in their day to day real estate activities.

My philosophy is that the client always comes first.  No client is treated any differently from another client, no matter how qualified or genuine they may be.  If I ask for help with a certain client I realize that I am giving up a portion of my commission as well.  To satisfy Alan and make his home buying experience a pleasant and successful one, I’m willing to make those sacrifices.  Besides a happy client will bring more clients and a strong referral business is true success.

Now let’s cut to the chase here.   For a good month and a half of dedicated and loyal service, three offers, personal tours of 30-40 homes, lunches, countless phone calls and emails later, one particular email arrives in the early morning late last week.

As I am waiting on a response to our latest offer made over the weekend I receive another email from Alan.  Not surprisingly as we typically email each other between phone calls every day anyhow.  I open the email and read words that hardly seem as though they are coming from the same sender. 

Dear Diane,  Thank you and your staff for showing me homes the past few weeks.  I request that my offer on 1234 Somestreet be cancelled as I have purchased a home with another Realtor yesterday.  Alan.

That was it.  The Alan I took under my wing was gone.  And by notice though an email.  I suppose it was helpful that he emailed me at all.  What do I take away from this experience?  As life continually teaches us lessons, what lesson did I learn from this?  Maybe “OUCH” that hurt? Or “I should have saved that lunch money?”  No.

This type of situation comes with the job.  It is most definitely heart breaking to an extent.  But it is business, not personal.  I can only pray, hope and beg that there are only a few bad apples hanging around on those beautiful and rewarding apple trees – and they fall to the ground before we ever reach out to them.

Diane Wheatley, Broker

diane@moveupproperties.com

After much research from various sources I’ve come to a comprehensive understanding of the issues involving a short sale vs. foreclosure and believe that short-sales are often not a preferred solution.  I do not fault those who attempt to do “something” rather than “nothing” in an attempt to proceed with a viable action in order to facilitate a means to an end.  However, it appears as though the short sale process may be a futile attempt to appease a lender that could care less in the first place.

A short-sale may cause severe harm to the borrower's credit rating for the next 2 years; 2 years for a foreclosure if it was an FHA loan; and 2-3 years if the foreclosure was a Fannie or Freddie with documented extenuating circumstances such as hardship – not much difference. 

{Allow me to correct myself with pleasure.  After a continued search regarding how one's credit score is affected after a short sale transaction is concluded, I've found that many borrower's credit scores were not negatively affected to the degree I originally reported.  In some cases, a borrower's credit score was reduced by as little as 30 points.  This news certainly opens my mind to a more optimistic view that a short sale is the preferred choice for some homeowners.}

If the borrower is not at risk of owing a deficiency after foreclosure, it is not always the case that a short sale is a better option than foreclosure. The seller of a property owes certain obligations to the buyer: These obligations are imposed by the disclosure statutes, other statutes and the contract of sale.

A defaulted borrower, in contrast, does not owe these obligations to his foreclosing lender. Moreover, if a borrower must default on his loan and lose his property, perhaps it is easier for him to surrender the deed or simply allow a foreclosure to occur, than pursue a short sale. 

The only benefit to the borrower is when the lender agrees to accept the sale proceeds and not seek the remainder of the debt from the borrower.  By law, this is all the lender would obtain anyway from a surrendered deed, a foreclosure on a purchase-money loan, or a foreclosure done by trustee sale. 

I’m interested in what your opinion is on the recent “trial period loan modifications” that were sent out to homeowners beginning in June of this year. 

If you received a “trial period loan modification” from your lender this summer, I’m interested in what action you took, if any and if you chose to accept the terms, were you approved for a long term solution as well? 

It was my speculation that President Obama’s Homeowner Affordability and Stability Plan may have been a hollow attempt to achieve its main objective – enable homeowners to afford and remain in their homes. 

After my personal experience along with listening to the experiences of other homeowners this past summer who also received these short term trial mods, I believe the successes or failures relate to the lenders providing them.

I found that a very small percentage of homeowners who agreed to the terms outlined in these “short term mods” were successful.  Specifically, the homeowners who hold mortgages with lenders other than Bank of America actually obtained a sensible, long term work out plan.  

After many phone calls and follow up emails, I found NO successful work out plans offered to Bank of America mortgage holders.  From my examination, I did not find a single long term loan modification offered by Bank of America to a borrower who chose the “trial period modification plan”.  

To make things worse, the homeowners who signed these temporary agreements in good faith and paid their three month’s worth of mortgage payments as outlined in their agreement were ultimately denied for one reason or another.  These poor people were taken for as much as $9,000 or more for a spin of the “lucky mortgage wheel of chance” which inevitably landed on “YOU LOSE” every time.

The reasons for denial vary from Bank of America claiming that their “trial period loan modification agreements” were not received back from the borrower on time (but the payments were collected) to the borrower’s credit history was not sufficient (but the payments were collected) to the borrower making too much money (and the payments were collected) or a plan that increased their monthly payment by $500 to $1,500 per month!  It’s literally as if they had absolutely NO intention of honoring these agreements from the point of initiation.  

What I found to be very difficult to understand was the fact that other banks are granting long term modifications as they should based upon the borrower’s performance of the terms of the “trial period mods”.  I viewed a work out plan from GMAC just today that granted the borrower similar terms to the trial terms they were offered just a few months ago.  These “trial period loan modifications” did work out for some borrowers.

So those of you who are skeptical of a trial loan modification plan offered by your lender are right to feel that way.  Until more time passes and we see more evidence that the borrower’s monetary and good faith efforts to win the approval from their lender for a long term solution proposed by President Obama’s Homeowner Affordability and Stability Plan can be achieved, I hope to hear that Bank of America made an honest effort too.  But until then, I would not hold my breath.

If you received a long term mortgage solution based upon a Bank of America “trial loan modification” plan offered to you, please share!  I want to believe that we were all dealt a fair hand in our time of desperate need.  If you were denied too, please share your story with us.

Diane Wheatley, Broker

diane@moveupproperties.com

 

I had a very interesting and somewhat enlightening day today.  But that is not to say that I may need some additional clarification from other agents and brokers who deal with REO properties and their assigned listing agents.

After writing an offer on a small bank owned home I showed to my interested buyer on Monday of this week I am no closer to an answer or agreement than I was on Sunday before the whole ordeal began.

As with many REO listed properties in Southern California I have no doubt that my client’s offer will be one of many and possibly one that will inevitably be kicked to curb for some unknown reason.  Par for the course I suppose.  However, this offer was actually read and considered by proof of a faxed “multiple” counter offer the following day.  We are in the game.

The terms of the counter offer #1 were outrageous but not out of reach for my client.  Also par for the course.  As a responsible broker and designated representative to my client I suggested that some minor “tweaking” be made to this counter to eliminate a moderate amount of ambiguity and onerous terms for my client.  Unfavorable terms can be moderated if carefully examined and addressed.

The following day I received a counter offer #3!  Not only are we still in the game but this counter offer is no longer a multiple counter offer at that.  The seller is negotiating with my client and my client alone.  We are not only in the game, we are playing the game.  But, as the day progresses we begin to wonder what “game” we are participating in.  It is not appearing to be a game of real estate negotiations as we were prepared to play.  What is going on?

After reviewing the terms outlined in the seller’s counter offer #3 with my client it is clear that the agent representing this seller may not have all of his marbles in the right line of action to consummate an acceptance.  Ambiguous?  Let’s call it baffling.  But not to worry.  This contract can be easily rectified to include terms originally offered by the seller in counter offer #1 with a few modifications set out in counter offer #2 and MAYBE a term or two that we were able to extract from the spirit of good business practice outlined in counter offer #3.  Counter offer #4 is born; contract is meaningful for all involved with little to no loose ends to be misinterpreted.

I immediately fax my counter offer #4 to the listing agent on behalf of my clients within the timeframes provided and subject to the terms outlined in counter offer #3.  Whatever game this is, we believe that we have a handle on it now and should be sliding into home base any time now.

No more than a half hour after I fax our counter #4 I receive an email from the listing agent.  He states that he cannot review our counter offer #4 until he knows what terms are on counter offer #3.  Wait!  What did he mean?  Counter offer #3 was prepared by his seller.  He has to have his own counter #3.  Is this a curve ball or an attempt to throw us out at home plate?  I have to assume it is simply a foul ball and we need to fax him counter #3 and #4 just for his clarification.  “Dear Mr. listing agent, please find your counter offer #3 and our counter offer #4 for your review.  We look forward to hearing from you shortly and thank you for your consideration of our offer.”

Within an hour or so I receive another email message from the listing agent.  This time he is writing to me in all CAPS – I CANNOT NEGOTIATE WITH YOU ANY FURTHER UNTIL I HAVE AN ACCEPTED COUNTER OFFER #3 FROM YOU TO DETERMINE HOW TO PROCEED.  What?  And why is he yelling at me?  I think I should make a phone call this time.  Mr. Listing agent is not available but I’m told to leave a message for him.  Ok. I do. “Mr. Listing agent, could you please clarify what it is that you are needing from me so that we may be able to wrap up negotiations on this transaction as soon as reasonably possible.  Thank you!”

Mr. Listing agent returned my call.  Great!  “Hello, it is nice to speak with you regarding my client’s offer to purchase your listing.  I’m a bit confused regarding your email.  What can I offer you in order to clarify any issues you may have?”  Here it comes…..

Mr. Listing agent does not only yell at people on the internet, he yells at people on the phone too.  If I had a choice, I preferred the internet.  He was yelling so loud that I don’t believe I fully understood what it was that he was attempting to communicate and for what reason.  But after the marching band went by and 21 gun salute was over I think I get the bulk of it.  Now, this is where I need some help.  Actually, I don’t believe that I am the one needing some “help”, if you know what I mean.

Is it true that an REO seller or authorized agent never signs a counter offer he prepares until AFTER the buyer signs?  And is it true that an REO seller NEVER reviews a counter offer prepared by a buyer when the agent has signed on their behalf?  I explained that I have a signed authorization to receive and convey information agreement on file to substantiate the terms of the counter offer for the brief period of time until a true signature is obtained that same day.  Must have fallen on deaf ears.  All other related documents have the buyer’s signatures on them.  All other related documents do NOT have a single seller signature anywhere.

Do I want to encourage my buyer to continue with a purchase transaction with a listing agent that has behaved so poorly and unprofessionally?  Can I bring myself to continue a relationship with a fellow agent that has defamed me in such a chauvinistic manner that I want to gag? 

It is difficult enough to have the opportunity to be a part of the game these days much less have a chance at bat.  Now that I’m in the game, do I finish it out or choose to sit the bench?  Advice?

Diane Wheatley, Broker
diane@moveupproperties.com

 

Is this a case of bait and switch or simply an attempt at artificial hype?  I will find out tomorrow when I attend a phase release at their Avonlea Development in Corona, CA. 

On August 15th my buyers and I made a visit to Avonlea by Shea Homes to see what they might have to offer for sale.  The sales office informed us that they had three separate communities under construction with a few available floor plans for sale in various phases of development.  However, the available plans were listed above my buyer’s affordable price range.  We asked the sales staff if they were planning to build homes that would meet my buyer’s comfort zone in another location close by.  BINGO!  Shea Homes was ready to announce the release of their “Spaces” community in just a few weeks right here in Avonlea.

This phase includes homes that are very similar to the homes already for sale that did not fit our budget; just a scaled down version.  Perfect!  Where do we sign?  Well, not so fast.  The sales office informed us that they were not taking deposits on this new tract yet but were preparing to begin releasing the homes at their Grand Opening scheduled for September 12th.  “Well, what can we do to help the process along now?” I asked.  “You can register your clients today using this registration form, leave us your business card and allow us to pre-approve your buyer with our lender” we’re told.  “OK”.

We performed all the tasks the sales office asked of us, allowed their lender to pre-approve my buyer with my buyer’s consent (790-800+ FICO scores) to determine if they would qualify for the price range slated for the newest release.  No problem.  We left with a smile and a giddy enthusiasm not typically felt in Socal’s real estate market.  We were so fortunate to have stumbled upon this ideal opportunity that met my client’s needs perfectly with completion dates scheduled before year end!  Or were we??

After approximately three weeks from the date of our visit and a day before the Grand Opening I called the sales office to inform them that my clients were looking forward to the “BIG” day and to inform them that many other agents from my office would be attending in support of their growing community.  HALT!  About face.  There’s been a newer development at the Avonlea Community and I don’t mean more homes.

I was told over the phone followed by a step by step “Fair and Respectful” sales procedure guideline that our enthusiastic visit, registration and loan approval process must be performed all over again from scratch as if we had never knew about the release of “Spaces” at all.  You see, no one was supposed to know about this secret community and any or all of the information we received was by mistake and most likely unreliable.  The registration form I hold in my hands outlining the basic terms of our agreement, signed by ALL parties including Shea Homes would not be honored. 

If we were interested in purchasing a Shea Home in this particular tract, we would need to start at the end of the line and carefully jump through each hoop and over each hurdle outlined in their “Fair and Respectful” sales guide.  And what a guide it is!  This sales procedures guide is so full of twists and turns you would think you were racing a Grand Prix.  We were told that we would be lucky to qualify for phase three at best, oh! and by the way, Shea Homes will not cooperate with any outside brokers on this tract afterall.  The registration agreement stating that they welcome cooperating brokers has been eliminated as of September 1st.  So much for my office support and attendance. 

I have to ask this question of those of you working with new home builders.  Is the new home market so hot that builders must release “secret” communities with excessive qualification deadlines for fear of over night stays, lotteries or a “frenzy” of overzealous home buyers climbing over each other to reserve the ideal lot location?  

Or is this a case of dangling the affordable carrot in front of the enthusiastic rabbit only to substitute it with a suddenly overpriced, uncooperative lemon so sour you’ll be inclined to steer clear of new home developments such as those by Shea Homes for all time?

What happened to the kind, compassionate and understanding individuals who provided you with a professional yet personal service only to turn around and open up a can of venom and indignation against you that you can hardly believe it is the same person or company that Aunt Emily encouraged you to trust?

I live in a suburb about 60 miles away from Los Angeles where the population is small enough that you are bound to see the same people from the community on an almost regular basis.  You pass each other at the grocery store, the soccer field, your child’s school, on the street while passing by in your car each morning or at the dentist’s office, the swimming pool supply store, the accountant’s office and even while you’re on the examination table at your doctor’s office.

It is inevitable that you will run into these people outside their business establishments while going about your normal daily routine.  It is with this familiarity and seemingly friendly relationship that you are likely to refer your closest friends to them happily assisting in their growing popularity and expanding business practices.  Why wouldn’t you?  Commerce has so much to do with reputation, quality of conduct and solid customer service.  Or does it?

How does a company or individual survive without receiving stellar ratings and referrals achieved from a job well done?  How can these people call themselves professionals when they don’t return your calls, answer questions and hide behind their office assistant’s ignorant collection attempts when it is obvious that their job is not completed?  You are left with an unfilled root canal exposing the drilled out section of your tooth as a ideal collection point for remnants of each meal you eat, or your accountant’s staff insists that you sign your tax return even if you don’t understand why you owe over $5.000 you had not prepared for or even understand with no explanation except to sign it anyway and file an amended return later when your trusted “friend” returns from his vacation.  

Never fall under the illusion that these practitioners could ever be considered “friends” or even friendly acquaintances.  Commerce in today’s world is only about the mighty dollar and never about the customer’s current side of the story relating to their temporary hardship.  You pay them whatever fee they happen to pull out of their hat the moment they ask for it or you get kicked to curb like you have no idea what you’re talking about daring to address a possible question or point our a mistake made during their omnipotent and omniscient performance.  Give me a break!

With so many major creditors continuously calling over and over again hoping for a different result that you simply don’t have for them to satisfy their perpetual monetary requests, it is the locally based, long term service provider that you have met with for years, considered a friendly acquaintance and who you trusted to refer to your friends and family that presents the harshest and rudest collection method of all.  Small claims court, bank levies, wage garnishments, slander and most recently – the county district attorney’s filing of an alleged crime committed for which restitution and debt counseling is mandated unless you can prove otherwise.  Give me a break!  Kick a man when he’s down why don’t you?  And kick hard and long.

It is with these types of individuals that I can only show contempt and disrespect for.  I’m in no way stating that I do not owe monies earned by these businesses.  Acceptable and agreeable work performed shall always be compensated in one way or another for as long as it takes.  This all has to do with either a warranted performance or the “trickle down theory”.  If wages are not provided to the debtor to pay debts on time then those providing the services will not be able to be paid on time either.  That is a simple fact.

Now when your accountant prepares a tax return for which you do not agree to but are strongly encouraged to sign anyway with the promise that an amended return will be filed, then why hasn’t it been done?  After numerous phone calls and attempts to correct this return, the IRS placed levies on bank accounts leaving absolutely NO funds to live on as well as causing the accountant’s payment check to go unpaid thus, resulting in a filing with the DA for allegedly passing bad checks requiring restitution and mandated education on how to handle money. 

What about all those referrals provided to him out of a sense of civic duty?  Is that meaningless?  Do we become unworthy of any form of patience and understanding in our time of need?  The answer to that is NO, NO, NO.  And DO NOT BORE ME WITH YOUR “POOR ME” STORY.  Pay up baby and watch the door as it hits you on the behind when you get out of my office; hole in your tooth, bank levy or not!  Wow, how ruthless our world has become. 

If only we can all go back to the days of the good neighbor and personal patronage.

 

This story may be of no real surprise for those you study the reasons for the restrictive hold the banks appear to have on the evident lack of inventory of homes for sale in the current market place.  But I wanted to share a recent discussion I had with a Bank of America representative yesterday with you anyway.

I’m interested in what your opinion is on the recent “trial period loan modifications” that were sent out to homeowners beginning in June of this year.  For those homeowners who received such an offer seemingly “out of the blue” what did you decide to do?

My personal experience with many homeowners has been an equal share of those who chose to participate and those who thought differently.  These “trial offers” came to some at a time when they were at their wits end in attempting to negotiate an effective loan modification to no avail.  Some received these “trial forbearance agreements” just days after they received their formal “denial” letters.  So what’s up?

It was my speculation that President Obama’s Homeowner Affordability and Stability Plan which outlines guidance to Fannie Mae servicers for adoption and implementation of the Home Affordable Modification Program (HAMP) for Fannie Mae loans may be a hollow attempt to achieve its main objective – enable homeowners to remain in their homes and be able to afford to. 

The mere aspect that the plan’s directive mandated all Fannie Mae-approved servicers to participate in the program for all eligible Fannie Mae portfolio mortgage loans and pool mortgage loans whether or not the borrower would ultimately qualify for a long term loan modification upon completion of the “trial period” made me uneasy.

In other words, the government was ordering the lenders to offer “something” to the homeowner facing foreclosure to prove that they attempted to help them.  That’s all.  These “trial period plans” were a means for the lenders to collect money from homeowners whether or not they would be eligible for more beyond the end of the trial period. 

The most recent stats on the success of the Obama plan show that a mere 9% of eligible borrowers have seen any change in their mortgage terms or payment.  Disgusting. 

What I heard yesterday from the Bank of America representative was that beginning in September 2009, the first month after the initial “trial period loan modifications” were introduced coupled by the lift of the moratorium in foreclosure proceedings is that the banks are going to unload their held inventory of foreclosed properties into the market place like never before. 

This news raises many concerns for homeowners everywhere as an acute rise in available inventory could outnumber current demand causing another monumental decline in home prices.  Let’s hope that the lenders are cognizant of their actions during such a volatile time in our economic history.  Basic measured and proven results based on the rules of cause and effect and supply and demand remain constant.  It is the variables applied by the lending institutions that cause us so much fear and uncertainty.  We shall see.

Diane Wheatley, Broker

diane@moveupproperties.com

What a breath of fresh air !  Probably the deepest breath of fresh air I’ve had in over a year or so.  Finally, a lender that “gets it”.

So many of us working in the latest round of foreclosures and short sales will appreciate this post.  Wachovia has all the right moves in facilitating short sale negotiations and REO transactions to a successful and almost “pleasurable” escrow closing. 

No fighting, wrangling, senseless negotiating and the ever present attitude shown by most banks that Realtors are nothing more than a burden or liability that only gets in the way of their day to day asset management duties.  We are treated as if we are rodents that should be exterminated or a bug ready to be squashed.

Wachovia Bank has learned that the Realtor is a valuable asset that can be used to HELP the process, not hinder it.  Instead of taking the approach that so many lenders have by continually ignoring us, placing our files in a perpetual “hold” pattern for “x” amount of days, telling us that they don’t have the third party authorization to speak with us that you know for a fact has been sent over several times or better yet, they inform you that your file has been closed due to the inability to contact us on numerous occasions.

Shall I go on?  I think many of you can relate to the various frustrations we experience when dealing with the major lenders that hold the majority of the inventory hostage as we beat our heads against the wall trying to get our buyer’s offers accepted.  We attempt to gain an acceptance that we know will eventually come but often too late for our once loyal and dedicated buyers to hang in there for.  The buyers walk away days before the final approval arrives leaving the listing agents holding the bag, beleaguered by the thought of having to start all over again. 

I submitted a complete short sale package including all the necessary financials, hardship letter, estimated HUD-1, offer to purchase, buyer’s financing qualifications, proof of funds, credit scores, etc. to Wachovia Bank last Friday after taking a short sale listing a few days before.  Wachovia confirmed receipt of the completed package the following day and explained that their turn around time on processing approvals is typically 30 days out.  30 days already leaves me with a sense of hope that we might be able to complete the process in time to keep the buyer’s interest.

On Monday I called for a typical update that the file was in the right hands and if there was anything else I could provide to help the process.  The gal on the other end told me to just hold tight and I would be contacted as soon as they had a final decision.  That was what I expected to hear as the clock continued its “clicking”.  Well, to my absolute surprise and amazement I received a call from Wachovia’s loss mitigation assigned negotiator that afternoon telling me that the file has been approved!  APPROVED IN TWO DAYS!! 

And to top it off, Wachovia Bank would pay an additional percent for a total of 7% if I could get the file closed within 45 days!  Unbelievable!  Now, that’s how it SHOULD be done; incentives, not deterrents.

What sense does it make to cut, cut, cut every last available closing cost to the point that the agent is left wondering if all the time they spent waiting and working to keep the deal together for the sake of preventing a foreclosure action from occurring in the best interest of the lender makes any difference to the lender at all? 

Instead of casting this preponderance of doubt and unwillingness to work together as if the Realtor is the enemy only looking out for the depths of our pockets, why not adopt the Wachovia mentality of ease and speed?  Banks cannot gain by continually causing unnecessary delays and unsubstantiated reasons for their inefficient procedures in obtaining a timely approval that secures the enthusiasm of the buyer as ready, willing and able purchasers of this overbearing inventory the banks complain so often about.

My hat’s off to Wachovia and those who follow this logical and obvious method of creating a win-win solution to a system lacking in ingenuity and vision clearly necessary in today’s market. 

 

I interviewed a woman for a real estate sales position with my company today and had the most interesting chat.

My suspicions became a reality today.  Well, at least told by one woman’s account of how she performed her job as an asset manager for a large banking institution that recently relocated their headquarters from California to Texas.

In the interview she explained her experience in handling properties that her company retained through foreclosure proceedings for resale by local Realtors. 

I asked her the question many of my colleagues want to know.  Why does it take so long for the bank to approve or disapprove a short sale and what could agents do to help the process speed up a bit?

She answered “it is all about relationships”.  She went on to say that processors or asset managers have “favorite” agents that they enjoy doing business with and other agents that they don’t want to give the time of day. 

If an agent understands the needs of the bank in submitting a complete package for review including all of the necessary financials, hardship letter, third party authorization, fully executed purchase contracts complete with the buyer’s loan approval documentation, estimated HUD-1, etc. then their files were dealt with and processed without delay.  And, as she built ongoing relationships with these qualified agents that performed to her specific needs, the stamp of approval could be delivered to the agent very quickly and sometimes THE SAME DAY. 

I was trying hold my lower jaw together with my upper jaw so that I could complete the interview without showing my utter disbelief that my suspicions and fantasies were confirmed right before me.  But it became increasingly difficult to hold my teeth together as she went on with her detailed description of how these expedited approvals were established.

The crowning moment of our conversation came when she shared one final detail with me.  She explained that she would not be able to begin her employment with me until the first week of September.   When asked why, she told me “I’m going to Australia for two weeks with my family”.  I had to compliment her on her upcoming travels especially in light of her recent job loss and the rising unemployment rate broadcast every day in the news. 

She was sure to clarify that the trip was not a financial burden for her in any regard.  Her trip was 100% paid for in advance by a tight knit group of Realtors!  These Realtors she considered her favorites gave her another generous thank you gift in the form of an extravagant get away for processing their files so efficiently.

Diane Wheatley, Broker
diane@moveupproperties.com
 

Taken from a recent blog post written by Redfin Corporate, August 11, 2009

The market has just gotten less and less efficient. And most of it isn’t the Realtors’ fault but the banks. Banks selling a home don’t trust one another’s credit. They reject appraisals for a price that a buyer is willing to pay. They’re slow to put homes on the market, but aggressive about pricing other sellers out of the market, even as buyers are frantic to strike before the tax credit expires.  

This is not to blame the banks, who have good reason for an abundance of caution.  The point is just to state the obvious:  the market has become distorted so much that it is ridiculous to pretend that it is a free market. It is instead an oligarchy.  An oligarchy was established by men with a certain aim in life: the good they sought was wealth, and it was the insatiable appetite for money-making to the neglect of everything else that proved its undoing.

So the question remains, where is this vast sea of unforeseen inventory? 

1. Banks are hoarding listings to avoid writing down their losses: individual home-owners who want to sell can’t compete with the banks on price, and so hold their properties off the market. As a result, banks have effectively become the sole supplier of homes for sale in many distressed areas. We routinely see bank-listed homes with 30, 50 sometimes more than 100 offers. And yet even as sales volume in California is up 35%, prices are down 30% over last year, despite modest recent gains. Supply and demand have been slow to find a new balance because there is an enormous backlog of homes that could be sold, and most are not being put on the market. Banks have good reasons to withhold inventory: staff reductions, the need for repairs, concern about flooding the market. But another reason banks withhold inventory is that they can avoid acknowledging the loss on their books until someone puts a new price on the listing. Dribbling out the inventory may prolong the banks’ survival, but it means a recovery will take longer, too. The major source of uncertainty in today’s market is that nobody knows how much of the inventory iceberg is under the water.

3. Banks refuse to accept what the market tells them is a fair price for a home: for a long time, banks have aggressively priced their own listings to create a bidding war between buyers that results in final prices hundreds of thousands of dollars over the asking price. That was strange enough, but now in the Inland Empire our partner agents are seeing banks refusing to take the highest offer, for fear that the home won’t appraise for the value offered by the buyer. Rather than risking that a loan will fail because of the appraisal, the banks take a lower offer from an all-cash buyer.  What this means is that the market establishes a price for the property and the banks on both sides of the deal — the one selling the property, and the other lending money to a would-be buyer — refuse to believe it. Now cash has always trumped other offers at nearly the same prices, but when we see a bank reject offers 10% or 20% higher it means that the credit markets are still hindering a recovery. Perhaps soon people will be offering two chickens and a goat for a house.

So what’s the solution? The government could require that banks receiving federal assistance put real estate up for sale within nine months of taking ownership or we should at least extend the home-buyer tax credit so that we don’t create demand exactly when the foreclosure moratorium reduced supply.

And banks themselves obviously need to require listing agents to keep a listing on the market for a minimum length of time — say three days — so the market can do its work. But as for banks that refuse to accept a price for fear it won’t be supported by the appraisal, we shouldn’t worry. We’ve all had enough of banks being pressured to make deals they’re not comfy with. If the banks increase the flow of inventory to meet demand, the market can start to do its work again.  There are no short cuts or work-arounds to the natural progression of life’s systems.

Diane Wheatley, Broker
diane@moveupproperties.com
(909) 981-5400

I listened to some interest information this morning.  During an office sales meeting this morning there was a representative from Bank of America who spoke to us.  She provided her usual information with regards to how Bank of America performs successful loan closings from start to finish.  This gal has been in the business a long time and has years of lending experience under her belt.  What I found most interesting was what she had to say about Countrywide Home Loans.

My home mortgage is currently with Bank of America, formerly Countrywide.  My experience with BOA has been one step short of a true nightmare as with many other homeowners I have talked to.  When BOA announced that they were going to retire the name Countrywide Home Loans all together due to the poor reputation it earned, I had mixed feelings. 

In my case, Countrywide did nothing to negotiate a loan modification for me.  I received the infamous rejection letter as shown in a prior post for a key example of their incompetence.  When my loan servicing was sold by Greenpoint Mortgage to Countrywide in December 2009 I had a ray of hope that I might be able to be heard and considered for the newly announced loan modification programs available.  I was so very wrong.

When Bank of America announced that all loans serviced by Countrywide Home Loans would no longer carry the name Countrywide, I was also notified that Countrywide would no longer be a factor in my negotiations.  Bank of America had owned Countrywide for some time now and the transition from one servicer to the other would be unnoticeable.  Ok, fine.

What I didn’t know until this morning was that the dissolution of Countrywide as I was told is not complete.  These two entities remain separate from each other to this day.  CW may be headlined as Bank of America but it is still Countrywide.  The Countrywide offices remain intact with the same staff of employees, loan processors, loan reps and procedures that differ from offices that were and are Bank of America offices. 

The loan approval process is less cumbersome when using a “former” Countrywide office posing as Bank of America.  Their loan processors and underwriters are on site for easier manipulation and exceptions needed to approve their loans were Bank of America based offices must maneuver their loan processing through their corporate loan center. 

I won’t assume any more than I already have here but how could I have thought that Countrywide would truly walk quietly into the night not to be heard from again?  Their influences still remain a part of the real estate business just as a leopard will always keep its spots. 

Diane Wheatley, Broker

diane@moveupproperties.com

(909) 981-5400

Continued from prior post …..

I’m not through with my nightmare quite yet.  I’m sifting through the ashes and always sweeping up messes that were caused by a lack of income, lack of desire and my trademark talent, denial. 

Denial will get you no where, ever.  Complacency is almost a sin and a lack of motivation or desire will kill you.  Those three thinking patterns are the most difficult to overcome.  Change in any regard can make a person extremely uncomfortable much less impossible to deal with.  But it is vital for survival.

I did not wait by the phone until an opportunity presented itself.  I learned survival skills.  You must immediately prepare yourself for the worse even if life does not hit rock bottom.  Begin paying only the bare necessities to live such as utilities for the home, food for the family and gas for the car.  When you have no income projected for the next 45-90 days and zero reserves you STOP paying on your credit cards first, they will just have to sit tight.  Next in line are other unsecured debts such as payments to doctors, dentists, professionals and service providers.  Only in an emergency should make a payment to one of these professionals.  If at all possible, make due for now.

I still have an open tooth where a crown needed to be drilled out for an emergency root canal.  I’m in no pain and that is the best I can hope for right now.  The finishing crown will have to wait.  Preventive maintenance is currently, a thing of the past.  Oh well, now you all know about my tooth.  Gosh, if that could be the worse of it I’d be a complainer and not a survivor.

Weigh your insurance policies to validate their need.  Do you need that umbrella policy when there is no net worth to cover or limits of liability to be sued for?  Be sure to drive as safe as possible to avoid any traffic citations, eat healthy foods and get plenty of rest to keep your immune system as strong as possible.  Why?  I think you are getting the picture by now. 

You must maintain auto insurance by law but you certainly can’t afford any bail amounts needed to pay traffic tickets or traffic school.  Health insurance becomes a luxury that each person must decide on for himself.  I came to realize that my medical costs amounted to $3,600 per year and I never go to the doctor!  $3,600 could cover a couple of routine visits to the doctor, and then some if needed.  But I realize we are all built differently.

Many of you wonder if you should maintain your homeowner’s insurance when you have already stopped making a mortgage payment.   First instinct would tell you to stop making that insurance payment right away.  Common sense will tell you that you are risking a whole lot of ugly legal and financial ruin in the event of an unexpected tragedy, theft or catastrophe.  And, the lender can make a claim to speed up your foreclosure sale for breach of contract and other obligations you agreed to in your promissory note.  I chose to continue making my homeowner’s insurance payment.  Others may disagree.

Make your primary car payment and keep it current.  You cannot be without a vehicle or risk having it repossessed.  Your credit will be garbage for a few years before you will qualify for an auto lease or purchase again.  So take care of your transportation.  Explain your situation to the finance company to see if they will offer you a forbearance agreement to help you get through the tough months.  You need time.  Take it any way you can for as long as you can.  Time becomes invaluable.

Think in basics.  Food, shelter and shoes for the kids.  That may be a bit drastic to swallow but at least you can begin to get into the proper mindset if you are to survive this hardship.  Survival is considered a success once you can finally see an end to the means.  But there are still other issues you must deal with and explore before you gain a full perspective on your situation in order to choose the best route to begin your journey of survival.  Next you must dive into the terms and fine print of your mortgage documents . . . . my story continues …

I wanted to follow up to my personal journey through the depths of depravity driven by the age of the loan mod, short sale, mortgage meltdown and the foreclosure bonanza. 

It has been awhile since I’ve updated my blog.  So many changes have occurred in my life over the past six months.  I can hardly believe where I am in comparison to where I was at the beginning of the year.  One aspect of my life remains unchanged however, I still own my home. 

I would like to take a few days to jot down the trials and tribulations surrounding my undying efforts to save my home and how I did it.  Allow me reflect a moment.

Here I sit at my desk in my home office with the comfort of knowing that I’ve prevailed over the impending threat of losing my home.  For over 18 months I have fought the fight that no one should ever need to; the sanctity of heart and home. 

If I could turn back time and have a second chance to undo two decisions I made dating back to a summer day in 2005, I would with no hesitation.  Many of us know what I mean.  “If only…..”, “if I had just said no….”, I wouldn’t have lived through such a financial travesty of loss, remorse and an unraveling sense of control.  “If I had just said no . . . .”

Not all of us can pin point the exact day and time that our lives would begin to travel down this deceptive path.  Or many of us had no control over the elements that occurred in our lives that lead them down that same road.  Which one’s worse?  To know that you made that undeniable decision or that the decision was made for you?  Better yet, does it really matter? 

I believe that we are products of our experiences, good and bad.  We learn from our mistakes and begin to use inductive reasoning more often in our decision making.  But does our past need to dictate our future?  Are we forever damaged by life’s misfortunes that we cannot challenge ourselves and try again?  I cannot answer that for you.  But I will tell you that there are many of us who thrive on risk taking and would not feel alive unless we are allowed to flirt with new ventures and ideas that lead us outside the box once again, a box that offers the safety and security many of us would not dare to live without. 

Everything in my life has changed in a way that I could never have predicted.  Thinking back to my life during the holidays, a mere 6-7 months ago only reinforces my belief that our lives can sweep us up and take us along without a thought for how scared or hopeless we may feel.  Just when it seems that you are hanging on to your last limb, last dollar saved, last gallon of milk in the refrigerator wondering how you will ever make it another day, something so simple yet so unforeseen occurs.  The phone rings….opportunity knocks.  To be continued . . .

Bank of America is retiring one of the most toxic names in U.S. banking,
 Countrywide Home Loans. 


As of April 27, 2009 all Countrywide customers will become Bank of America customers. Bank of America will keep the Countrywide website up and running for transitioning customers.

As a customer, there is nothing you need to do. Bank of America will be sending out their official welcome kit which will contain information about your transferring account. In the meantime, continue using the Countrywide website and telephone number you have.

My concern is how Bank of America plans on handling the current inventory of Countrywide named foreclosures?  Or better yet, how will B of A handle the onslaught of foreclosures in process under Countrywide Home Loans Servicing Division that recently took over servicing of all Greenpoint Mortgage home loans last December 2008? 

Very interesting that my foreclosure sale date was rescheduled without my urging from February 11, 2009 to April 27, 2009.  Silly me.  I just thought they chose a date out of a hat.  Looks at though Countrywide just didn’t want any part of my pending foreclosure date afterall.  Pass the buck please……

I would like to mention that my trustee sale notice dated February 9, 2009 makes no mention of Countrywide, Greenpoint or Bank of America anywhere.  The notice I received states that my beneficiary is MERS and MERS alone.  Even though I have a recorded assignment which states that MERS specifically deeded all beneficiary interest in my note to Greenpoint Mortgage.  What gives?

 Part Two of My Loan Mod Nightmare with
Countrywide Home Loans

I’m determined not to go down without a fight and a fight it shall be!  To the mattresses please. 

I have been attempting a loan mod with my mortgage company(s) since my second missed payment last May 2008.  I originated my loan with Greenpoint Mortgage and paid on time as agreed for three and a half years.  The last half of a year my payment increased from its usual $1516.00 per month to $2,881.00 per month but I tried with all I had to maintain it.  I’ve own my home for nearly eight years now, nearly rebuilt it and am in love with it.  I am a real estate broker in the business of selling resale homes for nearly 20 years, divorced and have a child.  No support.

I submitted my first hardship package to Greenpoint Mortgage in July 2008 for review.  It was denied flat.  Reason was that I did not make enough money to cover my mortgage payment.  (I needed someone to review that for me?  In case I didn’t realize it already)

I submitted my second hardship package to Greenpoint Mortgage in September 2008 with a more optimistic view.  It was not denied but being considered!  Ok, there is hope.  This may work out after all.

November 2008 I receive notification that Greenpoint Mortgage’s loan servicing is being sold to Countrywide Home Loans effective November 29th.  Greenpoint advises me that all of my loan modification paperwork will be sent to Countrywide for further review and completion.  I’m told that all further communication is to be through Countrywide but to wait until Dec. 10th or so before I call on status due to the volume of loans being transferred.  Ok.  My Trustee’s Sale date has now been postponed to January 9th.

I contacted Countrywide Home Loans as directed and was told that my loan mod paperwork was not forwarded and that I will need to resubmit my package to the home retention dept at Countrywide.  Done.

On December 29th I confirm that CW is in receipt of my work out package, it looks acceptable and was told to check my mail for loan mod documentation to arrive any day.  My foreclosure date is postponed again to February 9th in light of the modification agreement.

No package ever arrives in the mail and I continue my near daily calls to CW for any info they can provide me.  Feb. 9th is approaching and I still do not have any loan modification offer, discussion of any terms, never spoke to my representative, only support staff.  My sale date is postponed again to March 11th in light of the loan mod.

Feb. 22nd I receive a phone call from my rep at CW for the very first time!  She has requested that I resubmit my hardship package including updated bank statements, check stubs (I have a salary job as a real estate manager now!) and tax return for 2007.  Done.

I called to verify receipt of my documents only to find out that I must submit them again as no one seems to have found them.  I’m also told that my sale date has been postponed to April 27th now.  I confirm the fax number and resubmit.

On March 6th without too much concern I called CW to verify receipt of my docs and the postponement of my sale date to April 27th as previously discussed.  RED FLAG!  My docs are still not received and my sale date is on the calendar for March 11th. 

No loan mod options were ever discussed with me, payment amount, terms, interest rate, nothing is presented to me as an option or work out plan during the entire time dating back to May of 2008.  I’m told to call back on Monday, March 9th (today) for more info.  What??  Why??  Click.  Dial tone.  Yes, I redialed over and over again until my boss stepped into my office.  I want to keep this new job of mine.  Back to work.

Monday morning first thing I call CW for my awaiting update.  An automated system announces that my loan modification has been cancelled due to an inability to reach me to discuss a work out plan.  Click.  Dial tone.   What??  All this time and I receive this news via a computer enhanced voice system.  Wow.

I call the trustee who is holding my sale on March 11th to find out that my sale date has been postponed to April 27th and not to worry.  Oh!  No worries!  I’m great!

I call Countrywide back to finally be able to speak to a live person (I believe he was alive however his communication was obviously scripted).  I immediately asked him about my loan modification.  He tells me that it was cancelled effective 8 a.m. this morning.  Why?  I make too much money and there are no programs available to me at this time.  Huh? 

The rep quizzes me on my financials submitted and asks if anything new has developed recently.  Well, I got a salary paying job with monthly tiered wage increases over a period of six months that will more than allow for my ability to keep my mortgage current but also told him that the figures he quizzed me on are not accurate and quickly spouted out numbers to him to help fill in the blanks.

He comes back on the line and announces that I do not qualify for a loan modification due to a deficiency in my ability to pay my mortgage.  I don’t even know what my mortgage payment is at this point, and either did he.  He stated again that CW has no loan modification programs available for me.  The only option left for me would be to reinstate the loan and my sale date is confirmed as April 27th due to the Obama stimulus plan that went into effect on March 4th.

So what now?  Anyone have some answers for me?  Is this where I must retreat?  Concede.  Declare defeat?  But I have a real income now with great incentive bonuses available to me monthly!  Why can’t I keep my home??  My hardship is over, or has it just begun.

Diane Wheatley, Broker

diane@moveupproperties.com

(909) 981-5589

Your termination notice may be accompanied by an offer to pay a lump sum if you leave the property by a certain time, and leave it in good condition.  Some former homeowners report offers as high as $2,000, which from the new owner’s perspective, is cheap compared to what it would cost the owner if you dug in your heels and made a formal eviction necessary.  Also, experience shows that unhappy former homeowners can do a remarkable amount of damage to a home if they think the new owner is being unreasonable.

Not all buyers of foreclosed properties are enlightened enough to make this sort of offer, and may be willing to spend hundreds or even thousands of dollars in lawyer fees to get you out.  That said, you should always be willing to propose a move-out bonus if the new owner doesn’t.  And if the new owner does propose one, you shouldn’t be shy about negotiating for a higher amount.

Note:  When I refer to the “new owner”, I’m also referring to the lending institution your home loan is owned by.  Many properties offered for sale at a trustee sale are not purchased by private individuals due to a lack of equity value in which case your home simply reverts back to the lien holder or lender and is now referred to as an “REO”.

Wow, what a refreshing change of scenery. 

I just returned from showing a home in Alta Loma or North Rancho Cucamonga that brought me back in time about 1 ½ to 2 years ago.  I know it is not productive to look back as the past is the past, period.  But I just had to remark on the incredible difference a home shows that is owner occupied, not a short sale, not in pre-foreclosure but simply “for sale” the old fashioned way.  Owner occupied with equity.  AAAAHHH! 

The home was absolutely beautiful in every regard from the curb presence to the lovely back yard pool to the immaculate maintained counters, cabinetry, carpeting, appliances, baths, windows, etc., etc., etc. 

The homes I see on a regular basis are tenant occupied with zero or no willingness to allow it to be shown, abandoned, filthy, stripped of all fixtures, no appliances, no electricity on to show interior rooms of the home without a flashlight, smelly, bug infested and occasionally unsafe for physical viewing due to strong gas odor, rotted out wood balconies, mosquito infested pools, no landscape, missing stair handrails, or loose sub-floor boards. 

The homes available on the market today need financial attention in some way or another prior to occupancy nearly 100% of the time.  Sure, there are some tremendous opportunities for sale at rock bottom (or close to) pricing that sell.  But today was the first day in a series of weeks or months that I was lucky enough to show a home that was priced well, didn’t need to be red tagged by the city code enforcement or reinspected for obvious structural defects prior to writing an offer.  This home actually radiated with the all American pride of ownership that is so missed in today’s residential real estate market. 

I’ll be most relieved when this time in history is over and we can enjoy a land of milk and honey once more – at least until the pendulum invariably swings back once again. 

I have been studying this issue all week as it applies to the transfer of servicing and note ownership.  This case study comes from my own situation.  Can anyone comment on this or shed some light on questions I have regarding “MERS”, the conflict between the “note holder” and the “beneficiary”?  Who owns my loan? 

When a payment is made to Countrywide as servicer who is entitled to the money?  If the loan were to be paid off, who receives the proceeds?  Who is actually entitled to the proceeds?  I understand that is it the “note holder”.  So actually holds my note?  Is it “MERS”, Greenpoint Mortgage, Countrywide or is it CAPITAL ONE?

Outline of Specific Facts

There are two parts to a home loan.  The Promissory Note and the Trust Deed.  There is a company or “servicer” designated to collect your monthly mortgage payment, manage your escrow account and keep accounting of your payments and payment history.  This company may or may not be the holder of the Promissory Note however. 

The borrower is required to be notified in writing at least 15 days in advance of any change in servicing including the name and address you are to make your payments to beginning on a specified date.

The borrower is NOT required to be notified of any change of who the holder of your Promissory note is or who the current owner of your loan is.

With that said, here is my case:

As of 4/22/04, the original beneficiary named on my note or “note holder” is Greenpoint Mortgage.   The lender named on the deed of trust is Greenpoint Mortgage.  The Trustee named on my deed of trust is Marin Conveyancing Corp. and “MERS” is named as the beneficiary under the deed of trust. 

As of 7/9/08 as noted on the N.O.D. the name of the “creditor” to whom the debt is owed is Greenpoint Mortgage.   The name of the beneficiary is “MERS” and the name of the Trustee is Marin Conveyancing Corporation.

As of 10/27/08 as noted on the N.T.S. the name of the “beneficiary” is “MERS” and the name of the Trustee is Old Republic National Title.  (Makes no mention of Greenpoint Mortgage.)

The Substitution of Trustee dated 10/13/08 attached to the N.T.S. states that the name of the Beneficiary is Greenpoint Mortgage Funding and the name of the Trustee is Old Republic National Title Insurance.  (Does this imply that “MERS” is no longer the beneficiary even though they are currently listed as such on the NTS?)

As of 12/9/08 the Notice of Transfer of Servicing states that the servicing of my loan is transferred from Greenpoint Mortgage to Countrywide Home Loans.  Countrywide states that owner of my loan is CAPITAL ONE.  (Does this imply that CAPITAL ONE is the beneficiary even though is makes no mention of this on the N.O.D. or N.T.S.?)

______________________________________________________________________

The following was written by Neil F. Garfield as part of an attorney’s group that follows all the latest findings and changes as it applies to what we call “The Mortgage Meltdown” and it prompted me to review my documents once again to attempt to track my chain of title with regards to “MERS”.  I also included information I thought you would find interesting regarding issues that are mounting in regards to title insurers and table funding.

______________________________________________________________________

Mortgage Electronic Registration Systems was invented by the financial services industry as an illegal scheme to avoid recording changes in ownership of the mortgage rights, changes in Trustees, assignments etc. Arizona law requires any interest in real estate to be recorded. The reason for the recording requirement, besides revenue, is simple — it is the only way to keep track of who owns which property. MERS (currently banned in the State of California and under attack in at least 2 dozen other states) is a cloak which the financial services industry is using to avoid paying the taxes, stamps and fees on each step of the securitization process, plus a way to obfuscate the real ownership and to essentially choose later who will be designated to be the “owner” of the mortgage rights — i.e., who will be said to own the mortgage note and thus be a successor to the beneficiary under the Deed of Trust.

The fact remains that companies are getting certificates of title transferred to them when there is nothing in the record to support the chain of title. Thus Arizona faces an enormous challenge and potential lawsuits in failing to enforce its recordation laws. One day, in the not distant future, some lawyer is going to take a close look at these transactions and realize that not one of the modification, refinancings, short sales, foreclosure sales and subsequent third party sales is supported by a proper chain of title in the record. The effect on the solvency of title insurers is immeasurable.

Note that in table funded loans of this sort the real lender is not the named payee on the note or the named beneficiary on the deed of trust — but it is the source of funds. The named payee on the note, the beneficiary under the deed of trust was paid an extra fee to drop its underwriting standards in favor of whatever was dictated by the securitizers, which makes the securitizers the successor trustee, successor beneficiary and possibly the successor payee. It means that companies are operating as “trustees” when they have failed to register or qualify as Trust Companies.

I called WAMU regarding a client’s HELOC loan which is the second loan on this particular property.  After three consecutive calls into the loss mitigation department, via India each call would be “dropped” whenever I would ask specific questions regarding what WAMU needed in order to proceed with a short sale. 

About two and half hours of continually explaining my needs to various individuals that would ultimately, mid-sentence disconnect my call I was finally successful in obtaining some information I needed during my fourth call – and them some…..

A seemingly hurried and erratic customer service department at WAMU provided me with the reason and an apology for the long hold time.  A very sweet girl that answered the phone on that fourth call from a local foreclosure unit told me that “it is has been crazy this past week since our loans are being transferred to Countrywide”.  I asked her when this was to occur and could she tell me if it affected my client’s loan as well.  She would only go on to say that they were currently working on the HELOC loans and did not know anything further regarding other loans. 

After this information was provided to me I was told to call back next week when things are more settled and I could speak with the appropriate department handling my client’s loan….now who would that be?  WAMU or Countrywide?  And how long will this transfer of files and information take?   Greenpoint Mortgage info is STILL being transferred (or lost) and that transfer began on December 1, 2009.

Has anyone else out there heard about this transfer recently?   Very interesting news…Has Countrywide taken on more than they can handle?

Countrywide forgives loan for 90 Year Old Woman
After She Shoots Herself While Deputies Tried to Evict

CNN's Jim Kavanagh, Brad Lendon and Mallory Simon contributed to this report.

(CNN) -- Fannie Mae said it will set aside the loan of a woman who shot herself as sheriff's deputies tried to evict her from her foreclosed home.

 
Fannie Mae foreclosed on the Akron, Ohio, home of Addie Polk, 90, after acquiring the mortgage in 2007.

Addie Polk, 90, of Akron, Ohio, became a symbol of the nation's home mortgage crisis when she was hospitalized after shooting herself at least twice in the upper body Wednesday afternoon.

On Friday, Fannie Mae spokesman Brian Faith said the mortgage association had decided to halt action against Polk and sign the property "outright" to her.

"We're going to forgive whatever outstanding balance she had on the loan and give her the house," Faith said. "Given the circumstances, we think it's appropriate."

Residents of Akron have rallied behind Polk, who is being treated at Akron General Medical Center. She was listed in critical condition Friday afternoon, according to Akron City Council President Marco Sommerville.

U.S. Rep. Dennis Kucinich, D-Ohio, mentioned Polk on the House floor Friday during debate over the latest economic rescue proposal.

"This bill does nothing for the Addie Polks of the world," Kucinich said after telling her story. "This bill fails to address the fact that millions of homeowners are facing foreclosure, are facing the loss of their home. This bill will take care of Wall Street, and the market may go up for a few days, but democracy is going downhill."

Neighbor Robert Dillon, 62, used a ladder to enter a second-story bathroom window of Polk's home after he and the deputies heard loud noises inside, Dillon said.  

"I was calling her name as I went in, and she wasn't responding," he said.

He found her lying on a bed, and he could see she was breathing. He also noticed a long-barreled handgun on the bed, but thought she just had it there for protection. He touched her on the shoulder.

"Then she kind of moved toward me a little and I saw that blood, and I said, 'Oh, no. Miss Polk musta done shot herself,' " Dillon said.

He hurried downstairs and let the deputies in. He said they told him they found Polk's car keys, pocketbook and life insurance policy laid out neatly where they could be found, suggesting that she intended to kill herself.

"There's a lot of people like Miss Polk right now. That's the sad thing about it," said Sommerville, who had met Polk before and rushed to the scene when contacted by police. "They might not be as old as her, some could be as old as her. This is just a major problem."

In 2004, Polk took out a 30-year, 6.375 percent mortgage for $45,620 with a Countrywide Home Loan office in Cuyahoga Falls, Ohio. The same day, she also took out an $11,380 line of credit.

Over the next couple of years, Polk missed payments on the 101-year-old home that she and her late husband purchased in 1970. In 2007, Fannie Mae assumed the mortgage and later filed for foreclosure.

Deputies had tried to serve Polk's eviction notice more than 30 times before Wednesday's incident, Sommerville said. She never came to the door, but the notes the deputies left would always disappear, so they knew she was inside and ambulatory, he said.

The city is creating programs to help people keep their homes, Sommerville said. "But what do you do when there's just so many people out there and the economy is in the shape that it's in?"

Many businesses and individuals have called since Wednesday offering to help Polk, Sommerville said.

"We're going to do an evaluation to see what's best for her," he said. "If she's strong enough and can go home, I think we should work with her to where she goes back home. If not, we need to find another place for her to live where she won't have to worry about this ever again."

For his part, Dillon hopes his neighbor of 38 years can return to her home.

"She loves that house," he said. "I hope they can get her back in. That would make me feel better because I don't know what they're going to put in there once she leaves."

He said the neighborhood is declining because so many people have lost their homes.

"There's a lot of vacant houses around here. ... Now I'm going to have a house on my left and a house on my right, vacant," he said. "That don't make me feel good, because we were good neighbors, we trusted each other, and we looked out for each other.

"This neighborhood is shot, to me, from what it used to be," he added.

"When I moved here, if it were like it is now, I would have never moved here. But it was a nice neighborhood. ...

"I'll just tough it out. I'm too old to start thinking about buying another house."

Sommerville said  that by the time people call for help with an impending foreclosure, it's usually too late.

"I'm glad it's not too late for Miss Polk, because she could have taken her life," Sommerville said. "Miss Polk will probably end up on her feet. But I'm not sure if anybody else will."

CNN's Jim Kavanagh, Brad Lendon and Mallory Simon contributed to this report.

Crossing the line?

This article was published in Business Weekly magazine and reveals some very unsettling reasons regarding predatory lending practices including Greenpoint Mortgage and why it is so important to realize that these people don’t just go quietly into the night.  They are still out there, so beware when seeking help with your loan modifications.

The unthinkable favors, whistleblower intimidation, and routine fraud behind the fiasco that has triggered the global financial crisis

Written By Mara Der Hovanesian, Business Weekly

It may seem like ancient history now, but not long ago the mortgage industry was turning ordinary people into millionaires. One of them was Sharmen Lane, a high school dropout who, like many other young women during the boom, found her way into an obscure banking job with the clunky title "mortgage wholesaler." Her experience—and the experiences of other wholesalers like her—offers a glimpse into the recklessness and indulgence that drove the industry to ruin.

The rise of mortgage wholesalers from grunts to rainmakers is one of the more curious developments of the housing bubble. Wholesalers work for banks and other lenders. The wholesaler's job is to buy loan applications from independent mortgage brokers so that lenders can turn them into loans. Wholesalers are paid on commission: the more loans they generate, the more money they make. During the housing boom, lenders typically approved the loans and then packaged them into securities. That path—from mortgage brokers to wholesalers to lenders to securities—turned out to be a road to disaster.

But as the housing bubble inflated, wholesalers—though hidden from public view—became high-earning superstars. Lane, a manicurist before joining now-defunct subprime lender New Century Mortgage in 1997, says she brought home $1 million in 2002 and $1.2 million in 2003.

Eventually the deal-making turned frenetic. Multiple wholesalers began inundating mortgage brokers with offers for the same applications. Some brokers chose to exercise their power by asking for something extra in exchange for their business: unthinkable acts.

Dozens of former brokers and wholesalers say the trading of unthinkable actsual favors was so common that it came to be expected. Lane recalls one visit to a mortgage brokerage near San Jose (Calif.) in which the manager lewdly propositioned her in his office. She says she declined the advance, and he didn't sell her any applications. But other female wholesalers didn't have the same qualms about crossing the line. "Women who had unthinkable acts for loans were known very quickly," says Lane, who left New Century before it failed in 2007 and now works as a $200-an-hour life coach and motivational speaker in New York. "I didn't want to be a mortgage prostitute."

WHOLESALE CORRUPTION

Investment bubbles always spawn excesses, and housing was no exception. The abuses went far beyond inappropriate dalliances. Court documents and interviews with scores of industry players suggest that wholesalers also offered bribes to fellow employees, fabricated documents, and coached brokers on how to break the rules. And they weren't alone. Brokers, who work directly with borrowers, altered and shredded documents. Underwriters, the bank employees who actually approve mortgage loans, also skirted boundaries, demanding secret payments from wholesalers to green-light loans they knew to be fraudulent. Some employees who reported misdeeds were harassed or fired. Federal and state prosecutors are picking through the industry's wreckage in search of criminal activity.

Now wholesalers, who for a brief moment rose to prominence, are an endangered species. The failures of large subprime lenders like New Century, BNC (a unit of Lehman Brothers), and GreenPoint Mortgage, owned by Capital One, threw thousands out of work. Some lenders still in business have curtailed or shuttered their wholesale operations.

In the end, the wholesalers were undone by the same people who allowed for their rise: their Wall Street overlords. During the boom investment banks bought as many loans as they could to pool together and turn into securities. In 2006 the top 10 investment banks, which included Merrill Lynch (MER), Bear Stearns (BSC), and Lehman Brothers, sold mortgage-backed securities worth $1.5 trillion, up from $245 billion in 2000. To keep the supply of loans coming, the investment banks increasingly took control of the industry's frontline players as well. First they started buying small, independent wholesaling firms. Next they extended billions in credit to subprime lenders. Then they took stakes in some, and bought others outright. At the height of the frenzy in 2006, six top investment banks shelled out a total of $2.2 billion to buy subprime shops.

That gave Wall Street the power to demand more subprime loans, which carried the highest interest rates and were the most profitable. As a national account director for Deutsche Bank (DB), Mark D. Toomey bought loans from mortgage lenders to turn into securities. Sometimes, he says, he "twisted arms" to get more loans. "Nobody had the [guts] to say no," says Toomey, who left the bank in 2007. Deutsche Bank declined to comment.

But mostly, brokers and wholesalers were happy to comply. The more loans they made, after all, the more they got paid. One former wholesaler in Northern California who requested anonymity joined subprime lender GreenPoint Mortgage in 1997, right out of college. By 2004, she says, she was pulling in several hundred thousand dollars a year. She kept a chauffeur on call to shuttle her and her friends to "exclusive clubs, restaurants, and parties," and treated friends to shopping sprees at Neiman Marcus, Gucci, and Louis Vuitton. "It was the time of our lives," says the woman, who now works as an account executive for another lender in the area.

Brokers say some female wholesalers weren't up on the finer points of finance—but exploited other assets in their quest for more loans. "You had boiler rooms of younger, predominantly male brokerage operations and in would walk a gorgeous, fit [wholesaler] who would go desk to desk," says Rick Arvielo, president of New American Funding, a mortgage brokerage in Irvine, Calif. "Most of them didn't know the product."

Of course, it's accepted practice in many industries for companies to hire attractive saleswomen. What's more, on Wall Street, lurid tales of erotic dancers livening up after-hours events are common.

"INDECENT PROPOSALS"

But in the mortgage business, it went further: The women allegedly offering inappropriate favors were bank employees. Evan Stone, president of Walnut Creek (Calif.) mortgage brokerage Pacific Union Financial, says "minimally trained and minimally dressed" wholesalers often wooed brokers. He says he regularly got visits in his suburban office from representatives wearing unusually short skirts to entice him and his team of brokers to party at the local Ruth's Chris Steak House. Stone says one New Century wholesaler offered to fly him to Chicago to "have a good time." He says he declined all offers of inappropriate favors. "There were some indecent proposals made," he says. "That was part of building the relationship."

Wholesalers also offered inappropriate favors to co-workers. To drive up their commissions, some enticed loan underwriters at their companies to approve questionable applications. A vice-president at Washington Mutual who once wielded $500 million to make loans recalls an incident in which a female wholesaler wanted him to approve a loan that didn't fit guidelines. The manager, who requested anonymity, says the co-worker, wearing a low-cut shirt, knelt down at his desk and said: "I really need this. What do I have to do?"

Some wholesalers turned a blind eye to broker fraud, too. "I'd walk into mortgage shops and see brokers openly cutting and pasting income documents and pay stubs, getting out the White-Out and changing Social Security numbers," says Melissa Hernandez, a former wholesaler for Argent Mortgage, a unit of now-defunct Ameriquest Mortgage, who says she never knowingly bought bogus applications. "There was no ambiguity."

Other wholesalers took matters into their own hands, doctoring documents to qualify borrowers for loans. A former Wells Fargo (WFC) wholesaler says he regularly used the copiers at a nearby Kinko's to alter borrowers' pay stubs and bank account statements. He would embellish job titles—turning a gardener, for instance, into the owner of a landscaping company—and inflate salaries. "I knew how to work the system," the former wholesaler says. Wells Fargo spokesman Kevin M. Waetke says the bank "does not condone any misrepresentations in the loan-underwriting process. We thoroughly investigate any incident that comes to our attention. Where necessary, we will take the appropriate disciplinary action."

Employees who resisted making bad loans ran the risk of being penalized. Shortly after Rachel Steinmetz joined GreenPoint's Manhattan branch as a senior underwriter in September 2005, wholesalers at the bank started asking her to approve loans "under terms that the borrower did not qualify for," according to a wrongful termination suit filed in June by Steinmetz in New York federal court. She says she told her superiors that the applications contained suspect details and that the loan files didn't have enough paperwork to back up borrowers' claims. "Notwithstanding [her] concerns, management overrode her decisions" and approved the loans anyway, the complaint says.

In April 2006, Steinmetz claims, she rejected a loan application that inflated the borrower's income and the home's appraisal value. While Steinmetz was out of the office celebrating Passover, she says in the complaint, her superiors signed off on the loan. A month later, Steinmetz says, her boss asked her to compile the paperwork on the same loan in preparation for closing. "Although she protested," the complaint notes, "the loan was funded in her name."

Steinmetz says through her attorney that there was retribution for her reluctance to make bad loans. Even though her bosses knew she was devoutly religious, the complaint says, they often would inundate her with "additional work and unnecessary meetings" on the eve of the Sabbath and religious holidays. In May 2006, she says, her superiors nixed her bonus even though she made her loan quota. Steinmetz is now suing Capital One (COF), which bought GreenPoint Mortgage in 2006 and shut it down less than a year later, for $10 million in damages. "We believe these claims are without merit, and we are confident that we will prevail in this litigation," says Capital One spokeswoman Diana Don.

DEMANDING "SPIFFS"

Whistleblowers at other firms complain of similar treatment. Coleen Colombo joined the Concord (Calif.) branch of BNC in 2003. The small office, next to a Mercedes-Benz dealership and a run-down Kmart (SHLD), was part of a regional group that funded some $1.2 billion of loans a month. Colombo initially thrived in her job as a senior underwriter. In a performance review, she received a top rating of "exceeds expectations," according to a wrongful termination and harassment suit filed in California Superior Court on behalf of Colombo and five other female employees.

The environment turned hostile in 2005, the suit says. One fellow employee, a male wholesaler, began bringing Colombo questionable loans with incorrect salaries, occupations, and home values, she says. In one instance, she claims in the suit, the wholesaler "tried to bribe [Colombo] to allow a loan with fraudulent information to go through."

The bribes, known as spiffs, were common at the BNC branch, says Sylvia Vega-Sutfin, a former wholesaler who left the firm in 2005. The mother of four, who says she made $16,000 a month during the boom, says that some underwriters demanded spiffs of $1,000 for the first 10 loans and $2,500 for the next 20 loans, whether they approved the mortgages or not. When she refused to pay them, Vega-Sutfin says, her loan files started to go missing and the size of her commission checks plummeted. Her bosses "said they would make an example of me to others: 'If you complain, this is what will happen,' " she says.

Colombo says in the suit that she e-mailed the regional vice-president for operations to report the wholesaler who tried to bribe her. She claims the vice-president brushed off her complaints in a meeting. Colombo "left the office in tears," the suit says. After she returned from a short leave of absence, the branch manager told her a co-worker "wanted her terminated for making the complaints," Colombo claims.

Meanwhile, the wholesaler who tried to bribe Colombo started inappropriately harassing her, according to the suit. The male colleague made her feel "uncomfortable and fearful" by "intentionally rubbing his body against hers." Colombo resigned from BNC in 2005. "You would have thought he was the pimp and we were his prostitutes," says Linda Weekes, another underwriter who is part of the suit. "It felt like a dirty, sleazy place to work." The case has been on hold since its owner, Lehman Brothers, filed for bankruptcy on Sept. 15. "We dispute the allegations made by these former employees and will be contesting them on the merits in the pending litigation," says a Lehman spokesman.

The world came crashing down for wholesalers in late 2006, when subprime loans started going bad. Wall Street quickly reined in its mortgage factories, tightening lending standards, pulling credit lines, and forcing lenders to buy back the same risky loans it once voraciously consumed. For the thousands of wholesalers swept up in the excitement and excess of a manic market, it was time to find a new job.

Der Hovanesian is Banking editor for BusinessWeek in New York.

I write this blog as a tool to help assist those who are facing financial uncertainty affecting their ability to keep their mortgages current, remaining in their homes or to help ease the pain and emotional distress resulting from having to make that quintessential decision – to take action or let due process take its cold hearted and unrelenting course.

I read hundreds of articles each week and follow discussions made by financial speculators, legal communities, consumer advocates and politicians to name a few.  There is so much talk regarding the latest legislative movements, proposals and opinions concerning various ways to move forward and survive, even benefit from this current housing crisis.  However, to many this ongoing rhetoric can go in one ear and out the other in this seemingly puzzling and sometimes baffling economic world we live in. 

I make no claims to be an expert or authority on the current financial state affecting the real estate market today.  I am not an attorney and am in no way in a position to provide anyone with legal, financial or tax advice that should be obtained by those individuals licensed and more qualified than I am.  I am a real estate broker with 20 years of experience and a history of surviving a few market adjustments from the very good, lucrative periods to the very challenging of circumstances.

I offer information in my blogs that come from my own experiences in dealing with foreclosures, speaking with numerous individuals in the same position, notice of defaults, short sales, bank negotiations and new information continually made available. 

I write to you whenever possible, no matter the time of day or night unconditionally with the hope that I can help in some capacity.  However prolific or trivial it may be, if you walk away with a better understanding of the foreclosure process, terminology, tools or simply a stronger sense of self-confidence to help with your specific situation then I’ll know that I did something rather than nothing as a responsible advocate for homeowners and borrowers seeking a better understanding or sounding board.

Remember to always check your facts and perform your own research as it directly relates to your specific needs.  A hypothesis is an interpretation of a practical situation taken for the grounds of action.  We can control our methods of surviving this mortgage meltdown and I hope to be able to aid in those methods made available to us.  I cannot control the outcome.  All we can do is our best with what we have and I wish the very best for all of you in your time of need.  May 2009 be a more positive and prosperous year and may all your time and efforts produce productive results.  My very best to all and happy holidays.

For those of you that are not already aware, Greenpoint Mortgage has sold ALL of their loans and servicing to Countrywide Mortgage effective November 29, 2008.  If you have made attempts to contact Greenpoint or have made any payments on your existing mortgage to Greenpoint after this date please read the following information.

The date that Greenpoint will stop accepting payments from you is November 30, 2008.  The date that Countrywide will start accepting payments from you is December 1, 2008.  You will receive a payment coupon attached to your Welcome Letter from Countrywide no later than 15 days after the effective date of the transfer.

If you have not received your payment coupon prior to your first payment due to Countrywide, you should forward your payment with your last Greenpoint statement (if available) to Countrywide.  You can contact Countrywide Home Loans toll free at 1-800-669-6607 Monday through Friday, 8:00 a.m. to 8:00 p.m. (EST) to find out exactly where to send your payments.

If you are currently paying your mortgage payment by a third party bill pay provider, you will need to make arrangements to have the designated payee changed to Countrywide Home Loans Servicing, LP with your new loan number at the payment address provided to you.

If there is an escrow account associated with your loan, Greenpoint will provide you within 60 days of the transfer a short-year statement that shows all the escrow account transactions for the date of your last year-end statement or escrow analysis to the date of transfer.  If any check or other instrument received by Greenpoint is/was returned unpaid, you remain liable to Greenpoint Mortgage for the amount unpaid.  At year-end, you will receive a statement of account from Greenpoint for payments received and applied to your account through November 30, 2008.  This statement is for your use when preparing your tax return.  If you have any questions, please contact Greenpoint at
1-800-784-5566.

If Greenpoint was automatically drafting/deducting your monthly payment from your bank account, please be advised that this service will be discontinued.  Therefore, you should contact Countrywide to enroll in their electronic payment services.

The transfer of servicing rights may affect the terms of or the continued availability of mortgage life, disability, accidental death insurance or any other type of optional insurance.  If you currently have any optional insurance, please contact Countrywide Insurance Services at 1-800-641-5298 for information about whether your existing optional insurance coverage can be continued.

You should also be aware of the following information, which is just one of many rules fully set out in Section 6 of the real estate settlement procedures act (RESPA), 12 U.S.C. 2605.

During the 60-day period following the effective date of this transfer, a loan payment received by your old servicer before its due date may not be treated by the new loan service as late, and late fees may not be imposed on you.

This section also provides for damages and costs for individuals and classes of individuals in circumstances where servicers are shown to have violated the requirements of this section.  You should seek legal advice if you believe your rights have been violated.

ASSIGNMENT OF DEED OF TRUST:

AUTHORIZATION TO SIGN AS AGENT AGREEMENT: written document given by a beneficiary authorizing an agent to sign a document on their behalf (such as a notice of default).

BANKRUPTCY: a legal proceeding which allows a debtor to discharge certain debts or obligations without paying the full amount or allows the debtor time to reorganize his financial affairs so he can fully repay his debts. (A bankruptcy does not discharge obligations secured by a deed of trust.)

BENEFICIARY: the lender or their successor in interest for whose benefit a trust is created and to whom the debt is owed.

BID AUTHORIZATION LETTER: your written authorization instructing the trustee to make the initial opening bid at the trustee's sale on the lender's behalf. This form will also advise our office of any additional amounts to be included in the opening bid, (total Debt), such as funds advanced by you to pay delinquent real estate taxes, etc.

BREACH: the failure without legal excuse to perform any promise made in a contract. A breach is stated in the notice of default.

DECLARATION OF DEFAULT: a written document that instructs the trustee to prepare and record a notice of default and if necessary, to sell the secured property in order to satisfy the unpaid obligation. This document does not require the acknowledgment of a notary public or recording and is merely retained by the trustee in their foreclosure file.

DEED OF TRUST: a written document, describing the real property that is being given as security for the repayment of an obligation.

EVICTION: See "Unlawful Detainer."

EXTENSION AGREEMENT: an agreement (normally written) giving additional time to pay an obligation.

FEDERAL TAX LIEN: an obligation to the United States government as a result of nonpayment of federal income taxes.

FORECLOSURE: (non-judicial): a popular term used to describe the procedure followed in enforcing a creditor's rights when a debt secured by any lien on property is in default; however, the correct term for a "Foreclosure" involving a deed of trust is a "Trustee's Sale Proceeding."

ENDORSEMENT/DATEDOWN: A continuation of the trustee's sale guarantee that reports any changes in the status of the property being foreclosed. Such "date downs" are requested from the title company prior to preparation of the notice of trustee's sale and prior to the trustee's sale.

IMPORTANT NOTICE: A written document required by California law to be a part of the recorded Notice of Default. This document is completed by our office and attached to the Notice of Default (as page 1) prior to recording. It sets forth the reinstatement amount as of a specific date and contains certain language directed to the borrower and emphasizes the fact that a foreclosure proceeding has been initiated.

INVALID: not legally sufficient; no binding force.

JUNIOR LIEN: a legal claim upon real property recorded subsequent (or recorded prior but has subordinated) to another legal claim upon the same real property.

LIMITED POWER OF ATTORNEY: a recorded document which authorizes someone to act as attorney-in-fact in a specific manner for someone else.

LIS PENDENS: a recorded notice of pending legal action, which notifies prospective purchases and encumbrances that any interest acquired by them in a property litigation is subject to the decision of the court.

MODIFICATION AGREEMENT: a written document, signed by the beneficiary and the borrower that alters the terms of either the note of deed of trust.

NONMILITARY AFFIDAVITS: a sworn statement, in writing from the beneficiary or his agent which declares that the property owner is not entitled to any rights under the Soldier's and Sailors Civil Relief Act of 1940.

NOTE: a written document, (promise to pay), that sets forth the amount of the obligation and the terms of repayment.

NOTICE OF DEFAULT: a written document that gives constructive notice of a trustor's failure to perform his obligation under a deed of trust. This document does not require the acknowledgment of a notary public and must be recorded.

NOTICE OF RESCISSION: a written document that cancels or annuls the effect of a notice of default when a default has been cured (reinstated). This document does not require the acknowledgment of a notary public, but must be recorded with the county recorder in the county in which the property is located.

NOTICE OF TRUSTEE'S SALE: a written document that sets forth the day, date and time of the trustee's sale, describes the property to be sold and gives an estimate of the unpaid debt as of the first publication debt. This document is prepared by the trustee and does not require the acknowledgment of a notary public and must be recorded with the county recorder in the county in which the property is located at least 14 days prior to the scheduled sale date. We must arrange for the notice of trustee's sale to be published in a qualified newspaper in the city (or judicial district), in which the property is located. This publication must appear for 3 consecutive weeks, with the first publication date being at least 20 days prior to the sale date.

POSTPONEMENT: a verbal announcement made at the time and place of the scheduled trustee's sale that establishes a new date or time for the trustee's sale. The sale cannot be changed from the originally noticed location.

PRELIMINARY INJUNCTION: A judicial order granted by a judge of the Superior Court, which prohibits the trustee from proceeding with any further action on a specific foreclosure file until a trial is held or settlement reached. This occurs when there is a dispute between the owner of a property and the beneficiary. A Trustee's Sale cannot be held any sooner than seven (7) days from the dismissal of the action or the expiration of a restraining order, injunction or stay from any court of competent jurisdiction. However, the order or any amendment thereto may expressly provide for an earlier sale date.

PRE-PUBLICATION PERIOD: the three month period following the recording of the notice of default. Prior to 1986 this period was called the reinstatement period.

PRESENT OWNER, CURRENT OWNER, NEW OWNER: the successor to the trustor named in the deed of trust and now the owner of the property.

PROMISSORY NOTE: See "Note."

PUBLICATION LETTER: this letter is sent to the lender by the trustee. When completed and returned, it authorizes the trustee to proceed with the scheduling of the trustee's sale and preparation of the notice of trustee's sale.

PUBLICATION PERIOD: this is the interval beginning the day after the pre-publication period expires and ending with the conducting of the trustee's sale. During the publication period, the notice of trustee's sale is published, posted, recorded, and copies are mailed to all entitled parties. The publication period is normally 30 to 40 days.

RECONVEYANCE: a recorded document which gives notice that the loan secured by the identified deed of trust has been paid in full.

RESCISSION: See "Notice of Rescission."

REINSTATEMENT: a curing of a default and restoration of the loan to current status through payment of past-due amounts together with the fee and expenses of the trustee.

REINSTATEMENT PERIOD: this is the interval from the date the notice of default is recorded until five business days prior to the date of sale during which time a default may be reinstated/cured.

REQUEST FOR NOTICE: a recorded document which requests a copy of any notice of default and any notice of sale to be sent to the requester at the address shown. See California Civil Code section 2924b(1).

RETURN AND ACCOUNT OF SALE BY TRUSTEE: an itemization prepared by the trustee or his agent and sent to the successful bidder at the sale. It gives a complete accounting of the successful bid.

REQUEST TO PREPARE NOTICE OF DEFAULT: See "Transmittal Form.'

SOLDIER'S AND SAILOR'S RELIEF ACT: an act passed by Congress in 1940, for the financial protection of those persons serving in the military service. This act is the reason for the completion of the nonmilitary affidavit forms.

STATEMENT/INVOICE: an itemization of the trustee's fee and expenses incurred at the conclusion of the foreclosure proceeding (cancellation, reinstatement, payoff or completed sale).

SUBSTITUTION OF TRUSTEE: a written document that appoints a successor trustee to the trustee named in the deed of trust, (or present trustee). This document must be acknowledged by a notary public and recorded with the county recorder in the county in which the property is located.

TEMPORARY RESTRAINING ORDER (TRO): A judicial order which is granted by a judge of the Superior Court. This order temporarily prohibits the trustee from proceeding with any further action under a specific foreclosure file until a trial is held or settlement reached. A TRO is effective, generally, for a 21 day time period or until a hearing is held and the judge decides whether a preliminary injunction will be granted or denied.

TOLL: to temporarily stop. Frequently used to describe the tolling (stopping) during bankruptcy of any further acts in foreclosure.

TRANSMITTAL FORM (TS138): this is the "Request to Prepare Notice of Default" transmittal form which is completed by the lender and forwarded to T.D. Service Company together with the note, deed of trust, assignments and other necessary loan documents. This form sets forth all pertinent information to enable us to prepare the default documents.

TRUSTEE'S DEED UPON SALE: a written document which is prepared and signed by the trustee when the secured property is sold at a trustee's sale. This document transfers ownership to the successful bidder at the sale; must be recorded with the county recorder in the county in which the property is located.

TRUSTEE'S SALE: the public auction of the real property, described in the deed of trust, to satisfy the unpaid obligation.

TRUSTEE'S SALE GUARANTEE : A Title report given to the present trustee when a trustee's sale proceeding has been initiated. This report provides the names of the current owner, all liens and encumbrances recorded and other information pertinent to the foreclosure process. The information is insured to be correct by the title company.

TRUSTEE'S SALE PROCEEDING (foreclosure): the term used to describe the non-judicial procedure followed by the trustee in enforcing a creditor's rights when a debt secured on real property is in default.

TRUSTOR: the borrower (or property owner) at the time the deed of trust was created. Trustor is often used to refer to the current owner.

TS138: See "Transmittal Form."

UNLAWFUL DETAINER ACTION (eviction): a legal action to remove someone who has unjustly retained possession of real property after one's right to possess has terminated.

VALID: a condition that is legally sufficient; that will be upheld by the courts.

VOID: having no legal force or binding effect. Incurable.

VOIDABLE: a condition capable of being made void, although not necessarily void in itself.

DISCLAIMER: Presentation of this glossary is for general purposes only. No information on this page is to be viewed as legal advice or as an official description of judicial process. These terms are general and are displayed strictly as a service to consumers. They are not intended to be all-inclusive or to cover default situations in all states. Consumers are advised to seek professional legal counsel in any default proceeding.

Defaults Rise on
Newly Modified Loans

I have taken some time to sit back to qualify my thoughts on the mortgage meltdown in America.  I believe our country is in a state of emergency in regards to the mortgage credit debacle and sub-prime loan fall out we hear of every day.  The ever growing snow ball broadens and continues to gain momentum by not only affecting the homeowner as an individual but the entire compass of the real estate market.  

 For several months, in discussions about the various and varied loan modification programs out there, there has been an ever present realization that these newly modified loans are defaulting, but could this be true?  This week, according to the Comptroller of the Currency, John Dugan, we have a preview of the latest Mortgage Metrics report:

“After three months, nearly 36 percent of the borrowers had re-defaulted by being more than 30 days past due. After six months, the rate was nearly 53 percent, and after eight months, 58 percent.”

When asked if he could give a definitive answer as to why so many of these “carefully thought out and structurally workable” loans could be defaulting, no one could provide a strong or feasible answer, not even Dugan.

“Is it because the modifications did not reduce monthly payments enough to be truly affordable to the borrowers? Is it because consumers replaced lower mortgage payments with increased credit card debt? Is it because the mortgages were so badly underwritten that the borrowers simply could not afford them, even with reduced monthly payments? Or is it a combination of these and other factors?”

To answer these questions is to admit failure in the eyes of the government with all its “bail out” scenarios and incredulous acts of malfeasance.  I would have to agree that the rising rate of unemployment coupled by each of the reasons stated above would be a safe bet.   Kudos to the private sector programs really trying to help troubled borrowers work out a long term solution to their financial woes, but the fact of the matter is that a lot of troubled borrowers are beyond help.  

We must decide whether to face the inevitable by either constructing a “bridge” or short term solution that has all the chances for success such as a temporary reprieve provided to borrowers from making their usual monthly mortgage payments.  The forgiven debt would be added to the principal balance of the loan or secured as a “silent second trust deed” to be paid when property values begin to rise and home equity is restored.   This would certainly allow homeowners the time they need to get through their current financial crisis while remaining in their homes.  History dictates that this down turn in the economy is what it has always been, time and time again, a temporary one. 

Or do we take the opposite approach and transition these defaulted borrowers out their homes with as little pain and trouble as possible in order to give qualified borrowers the opportunity to step in and absorb the mass amounts of painfully vacant and neglected inventory?

 Many Borrowers Re-Default After Mortgage Is Modified

Unless a viable solution is implemented soon our current course of action will certainly prove a worthless, costly effort that the homeowner will never reap any benefit from.  The government backed rescue plans are a sure fire means to allow the original predatory lenders and investors a chance to use government insured loans as a substitute for the sub-prime loans of yesterday.  And without proper supervision, examination and verification by the FHA and FHA standards, these newly modified loans will end up in the government’s lap once again as defaulted, unaffordable vacant properties that America will need to address all over again. 

 These "mass modifications" which a lot of government types are pushing and with limited government man power to properly process and manage the enormous load of these new loans require, could easily amplify and exasperate our current mortgage meltdown crisis.

 

For all the hoopla about moratoriums on foreclosures and other debt collection, the reality is that the only reason they are doing it is to figure out a way out of a mess founded in one inescapable FACT: the mortgage, the note, the credit card, the student loan, the furniture loan and all other consumer loans are worthless. They are not enforceable. This is of course my opinion, but all indicators point in the same direction in the same way.

Whether you are paying on a “debt” or not, whether you have been foreclosed or not, the “creditor” (the one you have been dealing with and who is now trying to enforce the alleged obligation) has NO rights to collect, and in fact has been paid, in some cases several times over.

The reason you are getting offers of “modification” is that they all need new signatures on a new document that is executed in the proper way by real people and recorded in accordance with the laws of your state. They need that because the old paper was turned into toxic waste through their sales process to investors, and because in truth — they never lent you the money and virtually all the people in the securitization chain have been paid in part or in whole on YOUR loan.

They got paid from you, they got paid from insurers, they got paid from the mortgage wholesaler (aggregator), they got paid on your loan from other borrowers, they got paid from investment banking bailouts, they got paid from the U.S. Treasury, they got paid from the Federal Reserve and they got paid from unwary investors, who have also in paid in part or in whole.

There is no debt in a legal sense anymore — but they don’t want you to know that. They want the world to think that if you escape without paying you are getting a windfall — but they don’t want the world to know they got paid and now they want your house anyway. Whose windfall is that?

Out of the thousands of cases we have tracked here, where the homeowner put up a real fight insisting on real proof, not one has gone to trial. Either the “lender” caved and let the homeowner or “debtor” walk or they settled with deep discounts on principal due, huge reductions in interest rates on thirty year fixed rate mortgages. Do your own research. Every word here is true. You don’t owe the money.

That doesn’t mean they won’t take your house. If they can get the money and your house too, they are going to do it. The only thing that can stop them is you. Use this site and others like it to inform yourself. Information is king. When they know that you know what you are talking about, the nightmare will be over — no more foreclosure, credit cards, student loans etc. You are in a much better position that you ever thought — you have the property and the earning power. They have nothing unless you give them power over you by signing documents that put you at the same risk you are in now.

Change it. Demand reductions of 60% or more in principal — or go to the mat and fight them off completely. Don’t agree to pay one penny more than you can easily pay. 3% is fine. Second mortgages and HELOCs are being settled for 2-3 cents on the dollar. They have no choice.

So accept the FNMA and Freddie Mac moratorium but realize that come January 9, they will be back and you need to be ready for them. Hold your head high. You are not the bad guy. They probably sold your “loan” for an amount that would astound you, and they received insurance premiums and payouts that would amaze you and they received bailouts from the government that have dismayed all of us.

Who do you really owe?
Written in conjuction with Foreclosure Strategy

Securities Disguised as Residential Mortgages

Let’s back into this so you can really understand why the reality of what has happened to nearly every American and every homeowner is so bad, the cause of most of our economic problems right now, and yes, are these actions potentially fraudulent.

You lose your job, your job is outsourced to China, you are in a car accident, substantially injured, life happens, etc. All of a sudden, you can’t pay your monthly mortgage payment, along with other debts. You call the financial institution that you send your mortgage payments to. Oh, by the way, this institution is different than who actually lent you the money at closing - and this “servicer” of the loan has maybe changed twice or more since you closed on the loan.

So, you can’t make your payment. The “servicer” now starts calling you almost daily “harassing” you to “pay up or else.” You indulge them in your perfectly legitimate and understandable situation and, yes, it falls on deaf ears. They tell you something like, “Miss, if you are having a hardship, we will mail you out a hardship package, please fill it out completely and include all the items requested and send back to us. We will see what we can do for you.

So you do just that, you spend about 3 hours of your precious time, diligently filling everything out and collecting all those “necessary” documents. You send it in. Hear nothing back for like 6 weeks. So you call, wait on hold for 40 minutes and finally get someone who barely speaks English… But it sure as hell is frustrating trying to communicate with someone who obviously doesn’t speak your language, not to mention that, in the back of your head, you wonder “how safe it is to be revealing your social security number and all sorts of sensitive, personal information to someone you’re sure is somewhere halfway around the globe and 10 hours ahead/behind us in time. Anyway, sorry for the rant again… back to the real story.

So, you finally get someone on the line and ask them if they received your fax of all the documents you most diligently put together and faxed to them at their request. You faxed everything in 6 weeks ago and haven’t heard a thing! The person politely tells you that for some reason, they have no record of receiving anything from you and “are you sure that you sent it to the right number?” - Now you’re head turns about 3 shades of red as your carotid artery starts to bulge and you consider popping a Nitro pill to stave off a sure-fire myocardial infarction. But that’s beside the point.

Anyway, back to the real story. So, you send it again, wait another 3 weeks, call again and, “MIRACLE!” They got it, thank God, now we can at least get a solution to our current challenges…right.  The foreigner on the other end politely tells you that it will be a few weeks before the “committee” can review it and come up with a decision on your “situation.” (You feel like telling them to go stick it but refrain since “good, polite Americans” don’t do that sort of thing). Son of a gun… I just went off on a quick rant again. Sorry.

Anyway, back to the real story. So, 4 weeks go by and you hear nothing. You think, “What the heck?” Does this company have their heads so far up their rear ends that they can’t even return a call and respond to my really dire “situation?” Then you remember that you were talking to some person who didn’t really care and by now, they might have taken your Social Security Number, borrowed another $100,000 (on your credit) to go shopping at their country’s version of Best Buy and they’re probably watching the CNN “Mortgage Meltdown” coverage on some 100 inch Big Screen Plasma on a brand new leather couch with a Universal Remote Control that even God would be jealous of. Shoot. Sorry for the rant right there.

Anyway, back to the real story… So, you call again, wait another 25 min. on hold and finally get someone on the line. You explain the whole nightmare and they tell you that “yes, we did receive your package and yes, it did come back from the committee, and “could you please wait for a supervisor?” - and yes, the wait on hold charade starts again… but I know, you can’t relate.

Anyway… supervisor comes on the phone like 10 minutes later and tells you that “unfortunately, there’s nothing we can do for you at this time. But if you’d like, you can go to our website and get the “I can’t make a friggin payment because I’m really out of a job” hardship form, fill it out and fax it in, we’ll see what we can do for you.”

Another rant and rave. Sorry. But really folks, this is the madness that everyday, hard-working AMERICANS are going through with their mortgage loans and the crazy lender/servicers can barely answer the phones much less speak intelligibly with a real solution or options!!!!

So, here’s the real story and WHY you continue to get the run around.  The company you’re calling is just the SERVICER!  They don’t own your mortgage OR your note. They don’t possess the note or even know the whereabouts of your note.  They have no substantial right to do anything with the note/debt. The mortgage is still recorded in the name of the FIRST mortgage company that gave you the money at closing AND the note (the real evidence of the debt) was sold BEFORE you ever made a payment INTO a Securitization Trust which then SOLD that POOL of NOTES as a Security to 100’s or 1000’s of Investors from all over the world.

So, the moral of the story is “THE SERVICER OF YOUR LOAN IS MOST LIKELY A DIFFERENT ENTITY THAN THE HOLDER OF YOUR NOTE, AND WHERE IS IT ACTUALLY LOCATED IS A WHOLE OTHER QUESTION...

Case studies, court actions, legal motions, pleadings, injunctions to name a few are being presented in courts all over the country in an on going effort to determine the basic question at hand, WHO DO YOU OWE THE MONEY TO AND WHO HAS THE RIGHT TO FORECLOSE?????

THE COST OF “HELP” MIGHT BE “NO HELP” AT ALL
Beware of Loan Modification Promises

The implosion of the subprime mortgage market has been a boon to loan-modification consultants who promise to help borrowers refinance and get back on the road to financial stability.

Some advisers steer clients toward taxpayer-guaranteed refinance deals backed by the Federal Housing Administration. Others negotiate on borrowers' behalf with existing lenders.

The hazard is that distressed borrowers are often asked to make substantial up-front payments—as much as $5,000—which loan-modification firms will keep, regardless of whether they successfully assist the customer.

A California based loan modification company who recently opened for business in August 2008 state that they receive upwards of 1,700 calls per day from “potential” clients needing assistance.  This company charges its clients a non-refundable $3,495 fee to negotiate with lenders.

The owner, a real estate lawyer, goes on to state that his extensive experience of dealing with banks make his services worth the non-refundable $3,495.  "I have a track record of knowing how to talk and get to people," he explains.  This company, one of many popping up all over the country has had a 52% success rate, which the industry considers impressive. Another way of looking at that figure, though, is that 48% of the clientele have failed to get the relief they sought. But they still pay the $3,495 fee.

Skeptics argue that borrowers are capable of negotiating directly—and for free—with their lenders. There are also nonprofit credit counselors who don't charge a fee. People should be very cautious about paying any non-refundable up-front fees to anyone claiming to be a loan-modification pro. 

If you have any stories about recent efforts in loan modification, short-sale negotiations or other promises to help bail you out of your mortgage nightmare, please share your stories with us.  Your story may help those thrown into this sub-prime mess.

For an informational chart on existing mortgage workout programs, click here. The chart is a compilation of programs offered by the larger lenders and government entities. If a specific lender or loan servicer is not on the chart, homeowners may wish to contact the lender or loan servicer to determine if a workout program is available.

For consumer information sheets containing detailed information on specific programs that REALTORS® can share with their clients, please click on the appropriate link below.

.  HOPE For Homeowners (H4H)

.  Countrywide Financial (Bank of America)

.  Citigroup, CitiMortgage

.  JP Morgan Chase&Co.

.  IndyMac Federal Bank, FDIC

.  Federal Government Loan Modification  (Participants include: Fannie Mae, Freddie Mac, Federal Home Loan Banks, Hope Now participants, Department of the Treasury, Federal Housing Administration and the Federal Housing Finance Agency, and Wells Fargo.)

Mortgage loan modifications typically are handled on a case-by-case basis. Homeowners having difficulty meeting their mortgage obligation or interested in finding out more about a loan modification program should start by contacting their lender. Prior to calling a lender or loan servicer, homeowners should have the following information available:

.  Loan number

.  Income information and documentation

.  Most recent mortgage statement

.  Bank statements

.  Letter demonstrating financial hardship

REALTORS® also may direct clients to work with a U.S. Dept. of Housing and Urban Development (HUD)-approved counselor.  For a list of HUD-approved counselors in California, visit the HUD Web site at http://www.hud.gov/offices/hsg/sfh/hcc/hcs.cfm?webListAction=search&searchstate=CA .

Earlier this summer, Countrywide Financial’s most famous troubled customer received an altruistic bailout that saved his home. Now months later, despite attention from the highest levels of government, hundreds of thousands of anxious homeowners are still waiting for their reprieve.

Back in August, high-profile developer Donald Trump purchased the 7,000 square-foot home of “Tonight Show” sidekick Ed McMahon. He then leased it back to the 85-year-old TV personality, allowing McMahon to avoid foreclosure. “How could this happen?” Trump asked at the time.

Not-so-famous homeowners across the country are asking the same question. Few are getting specific answers.

Foreclosures continue at a record pace, according to the latest data. Just last month, 84,000 homeowners lost their homes despite calls from Congress to freeze foreclosure activity, a $700 billion bailout that was intended to buy toxic debt and an $8.68 billion legal settlement with Countrywide Financial Corp., the country’s largest mortgage broker.

Undeterred, the grassroots Foreclosure Freeze Movement that started in San Diego, Calif. with a simple protest less than a year ago has enjoyed enough success to press on.

Aguirre, a Democrat, became the first city attorney to sue a major lender when he sued Countrywide along with attorneys general from Illinois and California. Many other states soon filed suits of their own.

California Attorney General Jerry Brown then released “shocking new details” that outlined the extent of Countrywide’s fraudulent and institutionalized predatory lending practices.

Though both Brown and Lewis spoke with The Greenlining Institute’s General Counsel Robert Gnaizda, neither supported a freeze on foreclosures.

But others did. The Federal Deposit Insurance Corp., which seized California-based mortgage lender IndyMac, gave national prominence to the foreclosure freeze philosophy. FDIC Chairwoman Sheila Bair initiated a temporary moratorium on foreclosures combined with a process of revising loans. In November, Bair told Congress the program had already helped more than 3,000 homeowners avoid foreclosure.

 “Saving neighborhoods by keeping families in their homes is a better option than foreclosure,” Aguirre said, “and a national consensus supporting that wisdom is galvanizing. We are better served if we turn off the automatic foreclosure switch.”

Democratic Sens. Charles Schumer, Robert Menendez, Sherrod Brown and Bob Casey requested a temporary foreclosure freeze for Fannie Mae and Freddie Mac. The moratoriums, the letter stated, would allow “time to modify loans and make them affordable for struggling homeowners.”

Brown jumped back into the fray when he Madigan negotiated an $8.68 billion settlement with Bank of America, owners of Countrywide. Brown said the deal was the largest of its kind, far surpassing the $484 million settlement with Household Financial Corp. in 2002.

“This loan-modification program provides real relief for borrowers at risk of losing their homes,” Brown said.

Aguirre even called it “a home run.”

But, as could be expected, investors facing the loss of billions in revised loans met The Movement’s swift rise to prominence with fierce backlash. Lawyers representing hedge funds spoke out against loan modifications and Bank of America issued statements putting them at ease, downplaying the prominence of revising loans.

Then on Nov. 4, The Movement lost its biggest ally. Voters bounced Aguirre out of office. His successor, Republican Judge Jan Goldsmith, vowed to drop the lawsuits against the mortgage lenders.

“I was not anticipating getting ousted in the election,” Aguirre said. “I got it from every angle: North, South, East and West. I united people who never worked together before. Unfortunately, I united them against me.”

The fight continues in daily negotiations, court proceedings and Congressional actions. This week, Gnaizda of the Greenlining Institute, went to Washington, D.C. and met with FDIC’s Bair, Speaker of House Nancy Pelosi and Rep. Barney Frank to lobby for The Movement’s goals.

“We cannot accept the Bank of America settlement as the gold standard,” Gnaizda said he told the political leaders. “Despite what Attorney General Brown says, Bank of America only expects to address 20 percent of their troubled mortgages. They don’t have the power to address those in the hands of the investors and hedge funds.”

The Greenlining Institute wants Bair and Pelosi to push for a national temporary freeze on all foreclosure activity for a period of 120 days. Legislation to that end is expected to be introduced this week, Gnaizda said.

Clearly Donald Trump won’t save everyone, so it’s the governments turn. How effective they are remains to be seen, but rarely has a progressive movement caught fire so rapidly and rose to such a high level of prominence. 

It's time for greatness -- not for greed. It's a time for idealism -- not ideology. It is a time not just for compassionate words, but compassionate action.   -Marian Wright Edelman

• a complete payment history, including but not limited to the dates and amounts of all the payments I have made on the loan to date.
• a breakdown of the amount of claimed arrears or delinquencies.
• an explanation of how the amount you claim I owe (on the monthly billing statement) was calculated and why this amount was increased to $5,600 on November 11, 20xx
• the payment dates, purpose of payment, and recipient of any and all foreclosure fees and costs that have been charged to my account.
• the payment dates, purpose of payment, and recipient of all escrow items charged to my account since January 20xx, the date A&B Mortgage took over the servicing
• a breakdown of the current escrow charge showing how it is calculated and reasons for any increase within the last 24 months, and
• a copy of any annual escrow statements and notices of a shortage, deficiency, or surplus sent to me within the last three (3) years.
  

Also, if you were to pursue a mortgage modification of some sort with the lender the likelihood of that happening is much weaker if you are not occupying the home or have leased it out.  Possession is an important factor in negotiating terms to allow you to stay whether short term or long term. 

If you have listed your property for sale to complete a short sale, is this to facilitate a short sale in lieu of foreclosure?  If so, then yes, a short sale may appear rosier than a foreclosure in the eyes of a future lender but at this point I wouldn't give that much credit.  You've missed payments already.  Your credit is damaged already.  A foreclosure will be looked upon as more forgivable in today's economic times than times gone by.  Poor credit is poor credit.  It's like saying you’re just a little bit pregnant.  (Pardon my candor). 

You do everything you can to stay in your home as long possible and do not worry about your credit cards, unsecured loans, etc. either.  Just be sure to pay your essentials such as utilities, food, child care, income tax, medical if needed then save as much money as possible from the money you are not paying towards your mortgage and credit cards for your future.  A bank is not willing to work out a modification to your mortgage if you are insolvent.  This money will enable you to work out a modification on your existing mortgage or allow you to pay for several months lease payments in advance to procure a roof over your head if and when you do need to relocate.

That's a lot to swallow.  Sorry if it sounds harsh.  But tough times call for tough measures.  You need to deal with the realities and strategies now rather than later.  A real estate attorney would be your #1 authority on how to proceed in a direction that best suits your needs.  Have a real estate attorney review all of your mortgage notes, RESPA agreements, closing statements and any paperwork you have received from the lenders to date.

Also, one final ray of hope for you from me and my resources is that Countrywide just announced this week that they are placing a three month stay on all properties currently facing foreclosure as a measure to assist the homeowners in their attempts to restructure and modify their current financial situations in order to stay in their homes, not leave them.  This is fact!  Good luck!!