Countrywide Home Loans News
Colorado Attorney General Attorney Announces Countrywide Settlement
February 11, 2009(DENVER) – Colorado Attorney General John Suthers today announced that Colorado has entered into a settlement with Countrywide Financial Corporation, and several of its affiliated entities, over the marketing of ...
Another Example of the Deplorable Conditions at Countrywide Home LoansFebruary 11, 2009
Countrywide simply CANNOT HANDLE and PROPERLY SERVICE the VOLUME OF BAD MORTGAGES it holds in its portfolios. Thousands of homeowners are getting foreclosed on because they cannot obtain loan modifications from this ...
Virginia AG McGraw settles Countrywide suit
February 6, 2009
Attorney General Darrell McGraw today settled his suit against Countrywide Financial Corporation, Countrywide Home Loans, Inc., Countrywide Home Loans Servicing, LP, and Full Spectrum Lending, Inc. Countrywide sold subprime loans, including ...
Pennsylvania Attorney General Reaches $150 Settlement With CountrywideJanuary 29, 2009
HARRISBURG - Attorney General Tom Corbett today announced that the Attorney General's Office has reached a more than $150 million settlement with Countrywide Financial Corporation to obtain mortgage relief and ...
Countrywide Agrees To Modify Predatory Loans For Tennesseans
January 23, 2009
The lawsuit said Countrywide misled customers by offering low "teaser" rates or no closing costs to induce borrowers into loans they couldn't afford and without disclosing the risk, leading to ...
Countrywide Lawyers Say Loan Modification Ads Are Mere Commercial Puffery
January 19, 2009
In marketing, advertising and testimony before Congress, Countrywide Home Loans has said repeatedly that it is working hard to modify the mortgages of financially strapped borrowers caught up in the ...
Housing Push for Hispanics Spawns Wave of Foreclosures
January 5, 2009
Mortgage brokers became a key portion of the lending pipeline. Phi Nguygn, a former broker, worked at two suburban Washington-area firms that employed hundreds of loan originators, most of them ...
Ohio to Receive $4.39M in Countrywide Settlement
January 2, 2009
COLUMBUS - Attorney General Nancy Rogers has announced the details of a final settlement with Countrywide Financial Corporation. Under the agreement, filed in Cuyahoga County Court of Common Pleas, Ohio will ...
Angelo Mozilo Email on Loan Safe Voted #1 Business Blunder in 08′
December 18, 2008
Choosing only 10 this year was next to impossible, but somehow we managed. Incidentally, we'd like to throw a special shout out to Angelo Mozilo of Countrywide for making this ...
Investors Prove Countrywide Lawsuit 100% Valid
December 12, 2008
The facts are the facts. I am not going to add much commentary to this damaging blog post because it is what it is. All I know is Angelo (Ex-Countrywide CEO) is ...
Bill Frey and his investors will be OK. But BofA may have their day…
December 4, 2008
“Bill Frey of Greenwich Financial - Countrywide worked out an arrangement with fifteen state attorney generals for fraudulent lending practices and they're handing the bill to bondholders. They plead guilty ...
Countrywide $122 Billion Mortgage Pool May Drown Bank of America
December 2, 2008
"The loan modification buy back clause is on a secret Countrywide loan pool in which $122 billion worth of mortgages sold to investors from early 2004 to April of this year. ...
Investors Sue Countrywide and B of A is Surprised
December 1, 2008
Investors filed a lawsuit in New York State Supreme Court in Manhattan on Monday over the recent predatory lending settlement that Countrywide parent, Bank of America had agreed to in ...
Homeowner Survey Says Countrywide is the Worst Mortgage Servicer in America
November 25, 2008
CORONA, Calif.: 25 November 2008 — In the current mortgage and foreclosure crisis, the data and feedback from actual homeowners in regards to outreach and customer service by mortgage servicers during the loan ...
Countryfried Loans - Kernal Mozilo’s Original Recipe for Disaster
October 11, 2007
Countryfried Loans, led by Kernel, Angelo Mozilo has been cooking more "Toxic Original Recipe Loans" then any other lender is US history. The reports that are coming out daily, confirm that ...
Countrywide Foreclosure
July 27, 2007
If you are a borrower that is facing a Countrywide Foreclosure, there is help for you. You can try calling the loss mitigation and home retention department, its' called Countrywide's ...
Saturday, February 28, 2009
What Got Lost in the Loan Pool?
(This is an excellent article which I had taken with the compliment of NY Times.
March 1, 2009
Fair Game
Guess What Got Lost in the Loan Pool?
By GRETCHEN MORGENSON
WE are all learning, to our deep distress, how the perpetual pursuit of profits drove so many of the bad decisions that financial institutions made during the mortgage mania.
But while investors tally the losses that were generated by loose lending so far, the impact of another lax practice is only beginning to be seen. That is the big banks’ minimalist approach to meeting legal requirements — bookkeeping matters, really — when pooling thousands of loans into securitization trusts.
Stated simply, the notes that underlie mortgages placed in securitization trusts must be assigned to those trusts soon after the firms create them. And any transfers of these notes must also be recorded.
But this seems not to have been a priority with many big banks. The result is that bankruptcy judges are finding that institutions claiming to hold the notes that back specific mortgages often cannot prove it.
On Feb. 11, a circuit court judge in Miami-Dade County in Florida set aside a judgment against Ana L. Fernandez, a borrower whose home had been foreclosed and repurchased on Jan. 21 by Chevy Chase Bank, the institution claiming to hold the note. But the bank had been unable to produce evidence that the original lender had assigned the note, which was in the amount of $225,000, to Chevy Chase.
With the sale set aside, Ms. Fernandez remains in the home. “We believe this loan was never assigned,” said Ray Garcia, the lawyer in Miami who represented the borrower. Now, he said, it is up to whoever can produce the underlying note to litigate the case. The statute of limitations on such a matter runs for five years, he said.
A spokeswoman for Capital One, which is in the process of acquiring Chevy Chase, did not return a phone call on Friday seeking comment.
Mr. Garcia has another case in which a borrower tried to sell his home but could not because the note underlying a $60,000 second mortgage cannot be found. The statute of limitations on the matter will expire in October, he said, and if the note holder has not come forward by then, the borrower will be free of his obligation on the second mortgage.
No one knows how many loans went into securitization trusts with defective documentation. But as messes go, this one has, ahem, potential. According to Inside Mortgage Finance, some eight million nonprime mortgages were put into securities pools in 2005 and 2006 and sold to investors. The value of these loans was $797 billion in 2005 and $815 billion in 2006.
If notes underlying even some of these mortgages were improperly assigned or lost, that will surely complicate pending legislation intended to allow bankruptcy judges to modify mortgage terms for troubled borrowers. A so-called cram-down provision in the law would let judges reduce the size of a loan, forcing whoever holds the security interest in it to take a loss.
But if the holder of the note is in doubt, how can these loans be modified?
Bookkeeping is such a bore, especially when there are billions to be made shoveling loans into trusts like coal into the Titanic’s boilers. You can imagine the thought process: Assigning notes takes time and costs money, why bother? Who’s going to ask for proof of ownership of these notes anyhow?
But as the Fernandez case and others indicate, bankruptcy judges across the country are increasingly asking these pesky questions. Two judges in California — one in state court, another in federal court — issued temporary restraining orders last month stopping foreclosures because proper documentation was not produced by lenders or their representatives. And in another California case, a borrower’s lawyer was awarded $8,800 in attorney’s fees relating to costs spent litigating against a lender that could not prove it had the right to foreclose.
California cases are especially interesting because foreclosures in that state can be conducted without the oversight of a judge. Borrowers who do not have a lawyer representing them can be turned out of their homes in four months.
Samuel L. Bufford, a federal bankruptcy judge in Los Angeles since 1985, has overseen some 100,000 bankruptcy cases. He said that in previous years, he rarely asked for documentation in a foreclosure case but that problems encountered in mortgage securitizations have made him become more demanding.
In a recent case, Judge Bufford said, he asked a lender to produce the original of the note and it turned out to be different from the copy that had been previously submitted to the court. The original had been assigned to a bank that had then transferred it to Freddie Mac, the judge explained. “They had no clue what happened after that,” he said. “Now somebody’s got to go find that note.”
“My guess is it’s because in the secondary mortgage market they have been sloppy,” Judge Bufford added. “The people who put the deals together get paid for the deals, but they don’t get paid for the paperwork.”
A small but spirited group of consumer lawyers has argued for years that the process of pooling residential mortgages into securities was so haphazard that proper documentation of the loans was never made in many cases. Leading the brigade is April Charney, a foreclosure lawyer at Jacksonville Legal Aid in Florida; she now trains consumer lawyers around the country to litigate these cases.
Depending on the documentation defect, lawyers say, investors in the trust could try to force the institution that sold the loan to the trust to buy it back. Many of these institutions would be unable to do so, however, because they are defunct. In the meantime, when judges are not persuaded that the documentation is proper, troubled borrowers can remain in their homes even if they are delinquent.
THE woes brought on by sloppy bookkeeping in securitizations will be on the agenda at the American Bankruptcy Institute’s annual spring meeting on April 3. An article titled “Where’s the Note, Who’s the Holder,” co-written by Judge Bufford and R. Glen Ayers, a former federal bankruptcy judge in Texas, will be the basis of a discussion at the meeting.
Mr. Ayers, who is a lawyer at Langley & Banack in San Antonio, said he expects that these documentation problems will halt a lot of foreclosures. That will mean pain for investors who hold the securities. The problem for those who expect to receive the benefit of the note, Mr. Ayers said, is that they “may not be able to show to the judge they have a right to foreclose.”
“It’s a huge problem,” he added. “It’s going to be expensive, I don’t know how expensive, ultimately to the bondholders.”
March 1, 2009
Fair Game
Guess What Got Lost in the Loan Pool?
By GRETCHEN MORGENSON
WE are all learning, to our deep distress, how the perpetual pursuit of profits drove so many of the bad decisions that financial institutions made during the mortgage mania.
But while investors tally the losses that were generated by loose lending so far, the impact of another lax practice is only beginning to be seen. That is the big banks’ minimalist approach to meeting legal requirements — bookkeeping matters, really — when pooling thousands of loans into securitization trusts.
Stated simply, the notes that underlie mortgages placed in securitization trusts must be assigned to those trusts soon after the firms create them. And any transfers of these notes must also be recorded.
But this seems not to have been a priority with many big banks. The result is that bankruptcy judges are finding that institutions claiming to hold the notes that back specific mortgages often cannot prove it.
On Feb. 11, a circuit court judge in Miami-Dade County in Florida set aside a judgment against Ana L. Fernandez, a borrower whose home had been foreclosed and repurchased on Jan. 21 by Chevy Chase Bank, the institution claiming to hold the note. But the bank had been unable to produce evidence that the original lender had assigned the note, which was in the amount of $225,000, to Chevy Chase.
With the sale set aside, Ms. Fernandez remains in the home. “We believe this loan was never assigned,” said Ray Garcia, the lawyer in Miami who represented the borrower. Now, he said, it is up to whoever can produce the underlying note to litigate the case. The statute of limitations on such a matter runs for five years, he said.
A spokeswoman for Capital One, which is in the process of acquiring Chevy Chase, did not return a phone call on Friday seeking comment.
Mr. Garcia has another case in which a borrower tried to sell his home but could not because the note underlying a $60,000 second mortgage cannot be found. The statute of limitations on the matter will expire in October, he said, and if the note holder has not come forward by then, the borrower will be free of his obligation on the second mortgage.
No one knows how many loans went into securitization trusts with defective documentation. But as messes go, this one has, ahem, potential. According to Inside Mortgage Finance, some eight million nonprime mortgages were put into securities pools in 2005 and 2006 and sold to investors. The value of these loans was $797 billion in 2005 and $815 billion in 2006.
If notes underlying even some of these mortgages were improperly assigned or lost, that will surely complicate pending legislation intended to allow bankruptcy judges to modify mortgage terms for troubled borrowers. A so-called cram-down provision in the law would let judges reduce the size of a loan, forcing whoever holds the security interest in it to take a loss.
But if the holder of the note is in doubt, how can these loans be modified?
Bookkeeping is such a bore, especially when there are billions to be made shoveling loans into trusts like coal into the Titanic’s boilers. You can imagine the thought process: Assigning notes takes time and costs money, why bother? Who’s going to ask for proof of ownership of these notes anyhow?
But as the Fernandez case and others indicate, bankruptcy judges across the country are increasingly asking these pesky questions. Two judges in California — one in state court, another in federal court — issued temporary restraining orders last month stopping foreclosures because proper documentation was not produced by lenders or their representatives. And in another California case, a borrower’s lawyer was awarded $8,800 in attorney’s fees relating to costs spent litigating against a lender that could not prove it had the right to foreclose.
California cases are especially interesting because foreclosures in that state can be conducted without the oversight of a judge. Borrowers who do not have a lawyer representing them can be turned out of their homes in four months.
Samuel L. Bufford, a federal bankruptcy judge in Los Angeles since 1985, has overseen some 100,000 bankruptcy cases. He said that in previous years, he rarely asked for documentation in a foreclosure case but that problems encountered in mortgage securitizations have made him become more demanding.
In a recent case, Judge Bufford said, he asked a lender to produce the original of the note and it turned out to be different from the copy that had been previously submitted to the court. The original had been assigned to a bank that had then transferred it to Freddie Mac, the judge explained. “They had no clue what happened after that,” he said. “Now somebody’s got to go find that note.”
“My guess is it’s because in the secondary mortgage market they have been sloppy,” Judge Bufford added. “The people who put the deals together get paid for the deals, but they don’t get paid for the paperwork.”
A small but spirited group of consumer lawyers has argued for years that the process of pooling residential mortgages into securities was so haphazard that proper documentation of the loans was never made in many cases. Leading the brigade is April Charney, a foreclosure lawyer at Jacksonville Legal Aid in Florida; she now trains consumer lawyers around the country to litigate these cases.
Depending on the documentation defect, lawyers say, investors in the trust could try to force the institution that sold the loan to the trust to buy it back. Many of these institutions would be unable to do so, however, because they are defunct. In the meantime, when judges are not persuaded that the documentation is proper, troubled borrowers can remain in their homes even if they are delinquent.
THE woes brought on by sloppy bookkeeping in securitizations will be on the agenda at the American Bankruptcy Institute’s annual spring meeting on April 3. An article titled “Where’s the Note, Who’s the Holder,” co-written by Judge Bufford and R. Glen Ayers, a former federal bankruptcy judge in Texas, will be the basis of a discussion at the meeting.
Mr. Ayers, who is a lawyer at Langley & Banack in San Antonio, said he expects that these documentation problems will halt a lot of foreclosures. That will mean pain for investors who hold the securities. The problem for those who expect to receive the benefit of the note, Mr. Ayers said, is that they “may not be able to show to the judge they have a right to foreclose.”
“It’s a huge problem,” he added. “It’s going to be expensive, I don’t know how expensive, ultimately to the bondholders.”
How to Repair Credit? Excellent Article
Watch Out The Foreclosure Scam: How?
Foreclosure Recovery Scams If any firm claims they can stop your foreclosure immediately if you sign a document appointing them to act on your behalf, you may well be signing over the title to your property and becoming a renter in your own home! Never sign a legal document without reading and understanding all the terms and getting professional advice from an attorney, a trusted real estate professional, or a housing counselor.
FORECLOSURE ALERT - Homeowners: Be Informed About Foreclosure Consulting Services
Las Vegas — The Nevada Division of Mortgage Lending and the Consumer Affairs Division are warning homeowners to be cautious when contracting with companies representing themselves as “foreclosure consultants”. While many of these providers are legitimate, many are not and may charge hundreds of dollars up front to negotiate with a lender on behalf of the homeowner, often without success.
“There are laws prohibiting fees being charged up front for foreclosure assistance,” says Mortgage Lending Commissioner Joe Waltuch. According to NRS 645F.400, foreclosure consultants cannot charge a fee before they have performed the services you’ve contracted for.
“It’s important to remember, however, that those laws only take affect when the home has officially been placed in the lender’s foreclosure cycle,” continued Commissioner Waltuch. “Depending on the services offered, the foreclosure consultant may also need to be registered with the Nevada Consumer Affairs Division under the Credit Service Organization law.”
According to NRS 598.741, companies providing “counseling or assistance to a person in establishing State of Nevada or effecting a plan for the payment of his indebtedness” must be registered with Consumer Affairs. “Before signing any contracts, check with Consumer Affairs to determine if the company is registered,” says Consumer Affairs Commissioner James Campos. “It also helps to check with the Better Business Bureau for complaints and to research the company on the Internet to see what experiences other consumers have had.”
Adds Commissioner Waltuch, “Be careful when using the Internet to find these types of companies. There are many out-of-state companies, and some lawyers, who claim they can help you. Make sure they are legitimate businesses, properly licensed to operate in Nevada.”
Consumers may also receive foreclosure assistance, including loan modification help, by working with a qualified housing counselor. Legitimate foreclosure consulting agencies are generally nonprofits that never charge an up-front fee and are usually free. Visit for a list of qualified Nevada housing counselors.
If you think you have been victimized by an unscrupulous foreclosure consultant, file a complaint with Consumer Affairs at http://www.fyiconsumer.org/Forms/ComplaintFormLV.pdf. For more information about foreclosure scams, visit the Foreclosure Help Website at http://foreclosurehelp.nv.gov/ForeclosureScams.html.
In addition, Commissioner Campos encourages consumers to visit the Fight Fraud Website at http://fightfraud.nv.gov/. “The site includes extensive tips on how to prevent fraud and provides downloadable complaint forms to help you respond effectively if you become a victim,” says Campos. “Visit it regularly for the latest fraud alerts.”
FORECLOSURE ALERT
If your property mortgage is delinquent and you are facing foreclosure, you may be contacted by a person or company willing to take the property off your hands to save your credit. While some of these companies are actually good and do help, others are not.
Do not sign anything that you do not understand or that is blank. Go through a reputable escrow company to make sure that your mortgage(s) is paid off to the satisfaction of the lender(s). If you do not do this, you may find that the person or company has title to or owns your property, yet the mortgage is still in your name. The person or company pays nothing to the mortgage(s) holder. The foreclosure happens. Your credit is ruined while the company “saving” your credit has made money from your property by renting it until the foreclosure.
If you think you’ve been a victim of this fraud, contact Nevada Consumer Affairs Division at (702) 486-7355 or (775) 688-1800.
Common Foreclosure Scams
1. Equity skimming: A "buyer" approaches you, offering to get you out of financial trouble by promising to pay off your mortgage or give you a sum of money when the property is sold. The "buyer" may suggest that you move out quickly and deed the property to him or her. The "buyer" then collects rent for a time, does not make any mortgage payments, and allows the lender to foreclose. Remember, signing over your deed to someone else does not necessarily relieve you of your obligation on your loan.
2. Phantom help: The "rescuer" charges outrageous fees for light-duty phone calls or paperwork that the homeowner could easily do, none of which results in saving the home. This predatory scam gives homeowners a false sense of hope and prevents them from seeking qualified help.
3. The bailout: In this scam, the homeowner is deceived into signing over title with the belief that he will be able to remain in the house as a renter and eventually buy it back over time. The terms of these scams are so onerous that the buy-back becomes impossible, the homeowner loses possession and the "rescuer" walks off with most or all of the equity.
4. The bait-and-switch: In this scam, the homeowners think they are signing documents to bring the mortgage current, but instead actually surrender their ownership. They usually don't even know they've been scammed until they're evicted.
5. Phony counseling agencies. Some groups calling themselves "counseling agencies" may approach you and offer to perform certain services for a fee. These could well be services you could do for yourself for free, such as negotiating a new payment plan with your lender, or pursuing a pre-foreclosure sale.
7 Ways to Avoid Foreclosure Scams
Follow these tips from the National Consumer Law Center.
1. Don't panic. Get detailed information about the deadlines you face in resolving your problems. Pay special attention to the date on which you would lose legal right to ownership.
2. Never sign a contract under pressure. Take your time, and consult a lawyer if possible.
3. Never sign away ownership via a quitclaim deed or other means without consulting a lawyer. Be especially suspicious of offers to lease back your home, in order to buy it back over time. These offers are weighted against you.
4. Never make your mortgage payments to anyone other than your lender. If you can't pay, do not ignore warning letters from your lender; contact them instead.
5. Beware of any home-sale contract in which you are not formally released from liability for your mortgage. Make sure you know the rights you are giving up and that you agree to give them up.
6. Don't sign anything with blank lines or spaces; information could be added later without your knowledge and consent.
7. If you do not speak English, never use a "rescuer's" translator. Instead, insist on using your own translator.
FORECLOSURE ALERT - Homeowners: Be Informed About Foreclosure Consulting Services
Las Vegas — The Nevada Division of Mortgage Lending and the Consumer Affairs Division are warning homeowners to be cautious when contracting with companies representing themselves as “foreclosure consultants”. While many of these providers are legitimate, many are not and may charge hundreds of dollars up front to negotiate with a lender on behalf of the homeowner, often without success.
“There are laws prohibiting fees being charged up front for foreclosure assistance,” says Mortgage Lending Commissioner Joe Waltuch. According to NRS 645F.400, foreclosure consultants cannot charge a fee before they have performed the services you’ve contracted for.
“It’s important to remember, however, that those laws only take affect when the home has officially been placed in the lender’s foreclosure cycle,” continued Commissioner Waltuch. “Depending on the services offered, the foreclosure consultant may also need to be registered with the Nevada Consumer Affairs Division under the Credit Service Organization law.”
According to NRS 598.741, companies providing “counseling or assistance to a person in establishing State of Nevada or effecting a plan for the payment of his indebtedness” must be registered with Consumer Affairs. “Before signing any contracts, check with Consumer Affairs to determine if the company is registered,” says Consumer Affairs Commissioner James Campos. “It also helps to check with the Better Business Bureau for complaints and to research the company on the Internet to see what experiences other consumers have had.”
Adds Commissioner Waltuch, “Be careful when using the Internet to find these types of companies. There are many out-of-state companies, and some lawyers, who claim they can help you. Make sure they are legitimate businesses, properly licensed to operate in Nevada.”
Consumers may also receive foreclosure assistance, including loan modification help, by working with a qualified housing counselor. Legitimate foreclosure consulting agencies are generally nonprofits that never charge an up-front fee and are usually free. Visit for a list of qualified Nevada housing counselors.
If you think you have been victimized by an unscrupulous foreclosure consultant, file a complaint with Consumer Affairs at http://www.fyiconsumer.org/Forms/ComplaintFormLV.pdf. For more information about foreclosure scams, visit the Foreclosure Help Website at http://foreclosurehelp.nv.gov/ForeclosureScams.html.
In addition, Commissioner Campos encourages consumers to visit the Fight Fraud Website at http://fightfraud.nv.gov/. “The site includes extensive tips on how to prevent fraud and provides downloadable complaint forms to help you respond effectively if you become a victim,” says Campos. “Visit it regularly for the latest fraud alerts.”
FORECLOSURE ALERT
If your property mortgage is delinquent and you are facing foreclosure, you may be contacted by a person or company willing to take the property off your hands to save your credit. While some of these companies are actually good and do help, others are not.
Do not sign anything that you do not understand or that is blank. Go through a reputable escrow company to make sure that your mortgage(s) is paid off to the satisfaction of the lender(s). If you do not do this, you may find that the person or company has title to or owns your property, yet the mortgage is still in your name. The person or company pays nothing to the mortgage(s) holder. The foreclosure happens. Your credit is ruined while the company “saving” your credit has made money from your property by renting it until the foreclosure.
If you think you’ve been a victim of this fraud, contact Nevada Consumer Affairs Division at (702) 486-7355 or (775) 688-1800.
Common Foreclosure Scams
1. Equity skimming: A "buyer" approaches you, offering to get you out of financial trouble by promising to pay off your mortgage or give you a sum of money when the property is sold. The "buyer" may suggest that you move out quickly and deed the property to him or her. The "buyer" then collects rent for a time, does not make any mortgage payments, and allows the lender to foreclose. Remember, signing over your deed to someone else does not necessarily relieve you of your obligation on your loan.
2. Phantom help: The "rescuer" charges outrageous fees for light-duty phone calls or paperwork that the homeowner could easily do, none of which results in saving the home. This predatory scam gives homeowners a false sense of hope and prevents them from seeking qualified help.
3. The bailout: In this scam, the homeowner is deceived into signing over title with the belief that he will be able to remain in the house as a renter and eventually buy it back over time. The terms of these scams are so onerous that the buy-back becomes impossible, the homeowner loses possession and the "rescuer" walks off with most or all of the equity.
4. The bait-and-switch: In this scam, the homeowners think they are signing documents to bring the mortgage current, but instead actually surrender their ownership. They usually don't even know they've been scammed until they're evicted.
5. Phony counseling agencies. Some groups calling themselves "counseling agencies" may approach you and offer to perform certain services for a fee. These could well be services you could do for yourself for free, such as negotiating a new payment plan with your lender, or pursuing a pre-foreclosure sale.
7 Ways to Avoid Foreclosure Scams
Follow these tips from the National Consumer Law Center.
1. Don't panic. Get detailed information about the deadlines you face in resolving your problems. Pay special attention to the date on which you would lose legal right to ownership.
2. Never sign a contract under pressure. Take your time, and consult a lawyer if possible.
3. Never sign away ownership via a quitclaim deed or other means without consulting a lawyer. Be especially suspicious of offers to lease back your home, in order to buy it back over time. These offers are weighted against you.
4. Never make your mortgage payments to anyone other than your lender. If you can't pay, do not ignore warning letters from your lender; contact them instead.
5. Beware of any home-sale contract in which you are not formally released from liability for your mortgage. Make sure you know the rights you are giving up and that you agree to give them up.
6. Don't sign anything with blank lines or spaces; information could be added later without your knowledge and consent.
7. If you do not speak English, never use a "rescuer's" translator. Instead, insist on using your own translator.
Sunday, February 22, 2009
Bankruptcy Reforms by Obama Administration
This is an interesting news item which we are publishing with the courtsey to Washington Post.
Extent of Bankruptcy Reform Hinges on Details
By Renae Merle
Washington Post Staff Writer
Saturday, February 21, 2009; D01
When President Obama touted reform of the bankruptcy code while unveiling his foreclosure prevention program earlier this week, it wasn't much of a surprise. He had advocated allowing judges to modify troubled loans several times before, including during the presidential campaign.
But in the fine print of Obama's proposal were restrictions that some of his fellow supporters of bankruptcy reform said could blunt its impact. Opponents, meanwhile, have said they viewed the president's version of the proposal as a move in the right direction.
For one, the Obama initiative would cap the value of mortgages that could be revised in bankruptcy court. It would also pertain only to loans originated in the "past few years," according to a summary of his proposal.
How the administration chooses to define several parts of its plan will impact whether tens of thousands of homeowners are excluded, said Henry Sommer, a past president of the National Association of Consumer Bankruptcy Attorneys. "It could affect a lot of people or very few people, we don't know," he said.
The details will ultimately be hammered out on Capitol Hill, where lawmakers have been wrangling with the financial services industry for years about allowing bankruptcy judges to lower the principal owed on home loans. Now, bankruptcy judges are precluded from modifying mortgages on primary residences, a practice known as cramdown. The House, where bankruptcy reform has already been approved in committee, could take up the measure as soon as next week, a Democratic aide said.
Republicans and the financial services industry fiercely oppose the measure, complaining it could drive up mortgage rates and increase losses to lenders. But some financial industry sources have said they expect some version of the legislation to pass and are working to limit its scope.
"What the administration put out was encouraging, because it looked at bankruptcy as a last option rather than a first option," said Francis Creighton, chief lobbyist for the Mortgage Bankers Association.
Scott DeFife, senior managing director of government affairs at the Securities Industry and Financial Markets Association, said that his industry "saw the president's proposal as improvements to the bankruptcy cramdown debate."
The provision will also be a key part of a housing package being put together by Congress to codify changes to housing policy called for by Obama, a congressional aide said. The administration has designed a program to lavish incentives on lenders that modify mortgages. The incentives are the carrots to encourage more modifications, and bankruptcy reform is seen by the administration as the stick lenders would face for failing to comply.
Democratic congressional leaders aim to have the legislation passed within the next month, the aide said.
Nearly three-quarters of homeowners in Chapter 13 bankruptcy -- which allows borrowers to restructure their debt -- have unaffordable home payments, said Katie Porter, a University of Iowa law professor who has studied the bankruptcy process. About 20 percent of homeowners spend at least half of their income on their mortgage. Having an unaffordable mortgage can be a major stumbling block to completing the bankruptcy process successfully, she said.
Obama's plan would limit bankruptcy cramdown to mortgages written in "the past few years" -- a restriction advocated by industry officials.
"It will curb the number of people who can use [the bankruptcy court] -- and probably not in a sensible way," said Porter. "The people who are still in homes they bought in '04 really fought hard to stay," she said. "We should be giving them help." Many subprime and other loans now burdening homeowners were taken out at least four years ago, she noted.
The proposal would also cap the value of the loans eligible for bankruptcy modification to limits set by mortgage finance firms Fannie Mae and Freddie Mac, which could be difficult in parts of the country that saw the biggest run-up in prices.
(The conforming loan limit is currently $417,000 in most parts of the country and $625,000 in high-price areas, including the Washington region, though the limit in these areas will soon rise to $729,750.)
"At certain points during the bubble, 60 percent of the homes purchased in California were above the conforming loan limit," Sommer said.
Obama's plan mimics a provision included in the House version of the legislation requiring homeowners to contact their lender before filing for bankruptcy. But the White House version also requires the homeowner to certify that they have complied with requests for information from their lender. Industry officials said that would help weed out homeowners that received their mortgage fraudulently.
But the provision could also allow lenders to disrupt the bankruptcy process by contending they did not receive all requested information, Sommer said. That would be frustrating to homeowners who complain that lenders ignore their pleas for help even after submitting and resubmitting information, he said.
"What we don't want is where someone would think they had provided reasonable information, and the lender comes into bankruptcy court and says, 'You can't do this, we wanted to ask you for more information,' " Sommer said. "We don't want to create a potential gotcha situation where they can try to trip people up."
Extent of Bankruptcy Reform Hinges on Details
By Renae Merle
Washington Post Staff Writer
Saturday, February 21, 2009; D01
When President Obama touted reform of the bankruptcy code while unveiling his foreclosure prevention program earlier this week, it wasn't much of a surprise. He had advocated allowing judges to modify troubled loans several times before, including during the presidential campaign.
But in the fine print of Obama's proposal were restrictions that some of his fellow supporters of bankruptcy reform said could blunt its impact. Opponents, meanwhile, have said they viewed the president's version of the proposal as a move in the right direction.
For one, the Obama initiative would cap the value of mortgages that could be revised in bankruptcy court. It would also pertain only to loans originated in the "past few years," according to a summary of his proposal.
How the administration chooses to define several parts of its plan will impact whether tens of thousands of homeowners are excluded, said Henry Sommer, a past president of the National Association of Consumer Bankruptcy Attorneys. "It could affect a lot of people or very few people, we don't know," he said.
The details will ultimately be hammered out on Capitol Hill, where lawmakers have been wrangling with the financial services industry for years about allowing bankruptcy judges to lower the principal owed on home loans. Now, bankruptcy judges are precluded from modifying mortgages on primary residences, a practice known as cramdown. The House, where bankruptcy reform has already been approved in committee, could take up the measure as soon as next week, a Democratic aide said.
Republicans and the financial services industry fiercely oppose the measure, complaining it could drive up mortgage rates and increase losses to lenders. But some financial industry sources have said they expect some version of the legislation to pass and are working to limit its scope.
"What the administration put out was encouraging, because it looked at bankruptcy as a last option rather than a first option," said Francis Creighton, chief lobbyist for the Mortgage Bankers Association.
Scott DeFife, senior managing director of government affairs at the Securities Industry and Financial Markets Association, said that his industry "saw the president's proposal as improvements to the bankruptcy cramdown debate."
The provision will also be a key part of a housing package being put together by Congress to codify changes to housing policy called for by Obama, a congressional aide said. The administration has designed a program to lavish incentives on lenders that modify mortgages. The incentives are the carrots to encourage more modifications, and bankruptcy reform is seen by the administration as the stick lenders would face for failing to comply.
Democratic congressional leaders aim to have the legislation passed within the next month, the aide said.
Nearly three-quarters of homeowners in Chapter 13 bankruptcy -- which allows borrowers to restructure their debt -- have unaffordable home payments, said Katie Porter, a University of Iowa law professor who has studied the bankruptcy process. About 20 percent of homeowners spend at least half of their income on their mortgage. Having an unaffordable mortgage can be a major stumbling block to completing the bankruptcy process successfully, she said.
Obama's plan would limit bankruptcy cramdown to mortgages written in "the past few years" -- a restriction advocated by industry officials.
"It will curb the number of people who can use [the bankruptcy court] -- and probably not in a sensible way," said Porter. "The people who are still in homes they bought in '04 really fought hard to stay," she said. "We should be giving them help." Many subprime and other loans now burdening homeowners were taken out at least four years ago, she noted.
The proposal would also cap the value of the loans eligible for bankruptcy modification to limits set by mortgage finance firms Fannie Mae and Freddie Mac, which could be difficult in parts of the country that saw the biggest run-up in prices.
(The conforming loan limit is currently $417,000 in most parts of the country and $625,000 in high-price areas, including the Washington region, though the limit in these areas will soon rise to $729,750.)
"At certain points during the bubble, 60 percent of the homes purchased in California were above the conforming loan limit," Sommer said.
Obama's plan mimics a provision included in the House version of the legislation requiring homeowners to contact their lender before filing for bankruptcy. But the White House version also requires the homeowner to certify that they have complied with requests for information from their lender. Industry officials said that would help weed out homeowners that received their mortgage fraudulently.
But the provision could also allow lenders to disrupt the bankruptcy process by contending they did not receive all requested information, Sommer said. That would be frustrating to homeowners who complain that lenders ignore their pleas for help even after submitting and resubmitting information, he said.
"What we don't want is where someone would think they had provided reasonable information, and the lender comes into bankruptcy court and says, 'You can't do this, we wanted to ask you for more information,' " Sommer said. "We don't want to create a potential gotcha situation where they can try to trip people up."
Saturday, February 21, 2009
Swindlers Find Growing Benefits from Home Foreclosures
Las Vegas is not immune to swindlers and all kinds of scam artists, mostly from California who are benefitting from the miseries of homeowners in this distresses economy. Here, is an interesting article published in NY Times today. I always urged readers to be careful of "attorney-affiliated" attorney-based" fraud loan modification companies who are ripping off people again.
Here is the link.
Here is the link.
Take Help From TILA & RESPA in Your Loan Modification
Here is what Nevada Attorney Malik W. Ahmad of the Law Office of Malik W. Ahmad would look for violations in your home loan papers when seeking to modify your loan. This is just a short list, you may or may not have all these violations.
Even though we do not claim any expertise on any “Forensic Loan Audit”, we nevertheless sees to ourselves if we can find any prima facie violations of federal laws like RESPA,TILA and HOEPA.
- ARM Rate Calculations must be correct
- ARM Adjustment Disclosures must be correct
- APR (Annual Percentage Rate) must be adequately disclosed
Scope of RESPA
1. What kinds of transactions are covered under RESPA?
Transactions involving a federally related mortgage loan, which includes most loans secured by a lien (first or subordinate position) on residential property. This includes: home purchase loans, refinances, lender approved assumptions, property improvement loans, equity lines of credit, and reverse mortgages.
2. What types of transactions are generally not covered?
The following are kinds of transactions that are not covered: an all cash sale, a sale where the individual home seller takes back the mortgage, a rental property transaction or other business purpose transaction.
3. Is a "time share" a covered transaction under RESPA?
Yes, if the lender's interest is secured by a lien on residential property.
4. Is a loan secured by a condominium unit or a cooperative share a covered transaction under RESPA?
Yes, as long the units are not used for business purposes.
5. Is a loan secured by a manufactured home (mobile home) covered transaction under RESPA?
Yes, but only if the manufactured home is located on real property on which the lender's interest is secured by a lien.
6. Does a federally related mortgage loan only involve FHA, VA or other government sponsored loans?
No, RESPA covers most conventional loans too. See the statute or regulations for the definition of a federally related mortgage loan.
7. Are home equity loans covered under RESPA?
Yes, home equity loans secured by residential property are covered.
8. How does the coverage of home equity loans and subordinate lien loans differ from other RESPA covered loans?
If the loan involves an open-end line of credit, providing the disclosures required by Regulation Z satisfies the RESPA good faith estimate and the HUD-1 or HUD-1A requirements.
Both subordinate lien loans and open-end lines of credit (home equity loans) in first lien position are exempted from the loan servicing requirements.
9. Are construction loans covered under RESPA?No. Unless: 1) the loan is used as, or may be converted to permanent financing by the same lender; or 2) the lender issues a commitment for permanent financing; or 3) the loan is used to finance a transfer of title to the first user; or 4) the loan is for a term of two years or more, unless it is to a bona fide builder.
10. If a construction loan is covered under RESPA, how do you account for construction loan closing on the HUD-1 if funds will be held back by the lender until performance?
List the sales price of the land on Line 204, the construction cost on Line 105 (Line 101 is left blank) and the amount of the loan on line 102. The remainder of the form should be completed taking into account adjustments and charges related to the temporary and permanent financing which are known at the date of the settlement.
11. When the loan transaction includes an option for the borrower to obtain additional funds in the future merely by signing a note for the new amount, must RESPA's disclosure requirements be followed for the future advance of additional funds?
Yes, because there is a new note. This is consistent with Truth in Lending Act provisions.
12. If a loan is sold within 1-7 days of closing to another lender, does the sale of that loan fall within RESPA's coverage?
The sale of a loan after the original funding of the loan at settlement is a secondary market transaction. Such a sale is exempt from RESPA coverage as a secondary market transaction. However, any transfer of ownership and/or servicing rights is subject to RESPA's requirements in Section 6.
13. Does the exemption from RESPA for the sale of a land parcel of at least 25 acres apply even if there are 2 homes on the property?
Yes, as long as the property is a single parcel.
14. Can a credit agency provide a lender with a dedicated printer to expedite communication between the credit agency and the lender?Yes, provided the printer can only be used for communication with the lender and not for general use. If it's for general use it may be considered payment for the referral of business.
15. Can a flood zone certification company examine a lender's existing loan portfolio for free or at a reduced rate, in exchange for the lender sending the company future business?
No. Flood zone certification is a covered settlement service (24 CFR 3500.2), therefore RESPA would apply to agreements by companies or persons providing portfolio reviews. Providing free or reduced reviews is a thing of value. Providing this service in exchange for referrals of future flood insurance business would violate Section 8(a) of RESPA which provides that "[n]o person shall give and no person shall accept any fee, kickback, or thing of value pursuant to any agreement or understanding, oral or otherwise, that business incident to or a part of a real estate settlement service involving a federally related mortgage loan shall be referred to any person."
16. Can a lender set up a contest for real estate agents under which the agent who provides the lender with the most business will win a trip to Hawaii?
No. Under RESPA, the trip itself, and even the opportunity to win the trip, would be a thing of value given in exchange for the referral of business.
17. Can a lender give a borrower an incentive, such as a chance to win a trip or a rebate, for doing business with the lender?
RESPA does not prohibit a lender or other settlement provider from giving the borrower an incentive for doing business with it as long as the incentive is not based on the borrower referring business to the lender.
18. Can a mortgage banker and a real estate broker advertise their services together, for example, on the same brochure or newspaper advertisement?
Nothing in RESPA prevents joint advertising. However, if one party is paying less than a pro-rata share for the brochure or advertisement, there could be a RESPA violation.
19. Can a lender give a real estate agent note pads with the lender's name on it?
Yes. Such note pads with the lender's name on it would be allowable as normal promotional items. However, if the lender gives the real estate agent note pads with the real estate agent's name on it for the agent to use to market clients for its real estate business, then the note pads could be a thing of value given for referral of loan business, because it defrays a marketing expense that the real estate agent would otherwise incur.
20. Can a mortgage broker be compensated for referring business to a lender that is unrelated to a real estate transaction, such as automobile loans?
Yes, provided that the compensation is exclusively related to the automobile loan and does not represent, in whole or in part, compensation for the referral of real estate business, and no lien is placed on a residence to secure the auto loan.
Affiliated businesses
21. If a lender refers a consumer to more than one of its affiliated settlement service providers, does the lender have to provide a separate affiliated business arrangement disclosure statement for each referral?
No, the lender can use one disclosure statement.
22. If a lender refers a consumer to a settlement service provider with which it does not have an affiliate relationship, as defined by RESPA, does the lender still have to provide the affiliated business arrangement disclosure statement?
No, the affiliated business arrangement disclosure statement is only for affiliates.
23. When a principal in a law firm is a member of the board of a lender and the lender refers RESPA covered settlement service business to the firm, but not personally to the principal, must the relationship be disclosed?
Yes. When the lender refers the borrower to the law firm, the borrower must be given an Affiliated Business Arrangement Disclosure Statement.
Fee splitting
24. Can a lender charge a borrower a fee for sending documents via courier and disclose it on the HUD-1 where in fact the borrower stops by the lender's office and picks up the documents instead?
No, because the charge for the courier service does not represent a charge for work actually performed which can be imposed on the borrower.
25. Can a lender collect from the borrower an appraisal fee of $200, listing the fee as such on the HUD-1, yet pay an independent appraiser $175 and collect the $25 difference?No, the lender may only collect $175 as the actual charge.
It is a violation of Section 8 (b) for any person to accept a split of a fee where services are not performed.
26. Can a lender charge a borrower at closing a one time charge for setting up an account with a tax service to arrange for tax payments?
Yes, the lender may collect a reasonable charge for the service provided.
27. Can a title company, which has the only convenient closing room in the area, provide it to any interested party at $100 per closing?
Yes, provided the charge is reasonably related to the value of the space.
Specific forms and consumer information
28. Where a mortgage broker is used, is it the mortgage broker's responsibility to provide the Good Faith Estimate (GFE) to consumers, or is that the lender's responsibility?If the mortgage broker is not an exclusive agent of the lender, the broker should provide a GFE within 3 days of receiving an application. The lender is not required to send an additional GFE; however, it is the lender's responsibility to ascertain that one was sent and includes an estimate of all costs that are likely to occur. Where the broker is the exclusive agent of the lender, either the broker or the lender shall provide the GFE.
29. When must the special information booklet be provided and by whom?
In general, the lender or mortgage broker should provide the special information booklet at application. Alternatively, they may place it in the mail to the applicant not later than three business days after the application is received or prepared.
30. Must a mortgage servicing transfer notice be given for a prospective table funded transaction?Yes, by the mortgage broker.
31. When the potential borrower furnishes a substantial amount of financial information for prequalification, but no particular property has been identified, must the good faith estimate be furnished to the borrower?
No. A submission by a borrower to a lender that does not identify a property is not an application and thus does not trigger the Good Faith Estimate requirement. However, HUD encourages providing information to the borrower on settlement costs as soon as it can be estimated, so that the borrower may be better able to shop.
32. If the servicer neglects to pay the homeowner's insurance bill out of escrow and, as a result, the consumer loses coverage, what are the servicer's responsibilities and what is the servicer's liability for harm to the consumer that results?
The servicer is required to pay escrow items on time, so long as the borrower is timely in his/her mortgage payments. If the borrower is damaged by the servicer's failure to pay for the insurance on time, the borrower can sue under section 6.
Additional FAQs
33. If the borrower is getting a "no cost" loan, must the lender list charges the lender is going to pay?
Yes. The charges to be shown on the GFE and the HUD-1 must include any payments by the lender to affiliated or independent settlement providers. These payments should be shown as P.O.C. (paid outside of closing).
34. The regulations at 3500.15 (b)(1)(i) state that where a lender makes a referral to a borrower the condition for providing an Affiliated Business Disclosure (AfBA) may be satisfied as part of and at the time of the GFE. Does this mean the lender does not have to give a separate AfBA disclosure if the information is part of the GFE?
No. A separate AfBA must be given. The regulation means the AfBA may be given at the time the GFE is given if this is when the affiliate is referred or is required to be used (a lender may require the use of an appraisal, credit reporting company, or attorney).
35. Must a mortgage broker disclose payments he receives that the borrower does not pay for directly?Yes. The mortgage broker must disclose all payments and fees he receives whether they are received directly from the borrower or indirectly from the lender.
36. If I have a question concerning the calculation of the "Annual Percentage Rate" or "APR", can HUD answer it?
The calculation of the APR is part of the Truth-in-Lending Act (TILA) which is administered by the Federal Reserve Board. Questions concerning TILA as well as Section 32 (high cost loan disclosure) may be directed to the Federal Reserve Board at (202) 452-3693.
37. May a settlement service provider charge a fee that reflects its own fee plus any recording fees as the servicer provider's fee? Example: An attorney charges $500 for its services and the county charges $30 for recording fees. May the attorney simply charge the consumer $530 and pay the county as a cost of doing business?
No. The "Line Item" instructions to the HUD-1 state that "[f]or all items except for those paid to and retained by the lender, the name of the person or firm ultimately receiving the payment should be shown." The attorney must disclose all entities ultimately receiving the fee.
38. May real estate agents that are independent contractors be considered employees under the "employer-employee" exemption, for purposes of being allowed to be paid referral fees from employers?
No. The exemption applies only to bona-fide employees.
39. If the borrower's escrow account includes a surplus greater than $50 which HUD's rules require be refunded, may the servicer credit the surplus directly to the principal, rather than refund the surplus to the borrower?
No. However, the servicer may inform the borrower in the information accompanying the return of the surplus that the borrower may elect to use the refund to reduce principal or have it credited against the next year's escrow payments.
40. If there is a surplus in the escrow account and the borrower is in default, may the servicer retain the surplus as payment towards the amount in default?
HUD's escrow rules are inapplicable to loans that are in default, which is defined under the RESPA rules as current payments which are more than 30 days delinquent. The parties should consult the mortgage documents or state law to resolve whether escrow funds are available for this purpose.
41. May a consumer delay or avoid a mortgage transaction if it discovers that there exists a RESPA violation?
No. RESPA specifically provides that it does not affect the validity or enforceability of any sale or contract for the sale of real property, or any agreement arising in connection with a federally-related mortgage loan.
42. How should I report a violation of RESPA?
You should send a written complaint describing the practice that you believe violates RESPA. The complaint should include the names, addresses and phone numbers of the alleged violators. It is preferred that you include your name and phone number in case an investigator wishes to ask further questions. You may request confidentiality. Send the complaint to:
U.S. Department of HUD
Office of RESPA and Interstate Land Sales
451 7th Street, SW, Room 9154
Washington, DC 20410
43. You may also wish to send a complaint to State and other Federal agencies that have the responsibility for regulating the settlement providers engaged in the referenced practice.
(3) We audit your loan file to see if HOEPA was violated:
Here is some basic information about HOEPA from the Federal Trade Commission Website:
High-Rate, High-Fee Loans (HOEPA/Section 32 Mortgages)
If you're refinancing your mortgage or applying for a home equity installment loan, you should know about the Home Ownership and Equity Protection Act of 1994 (HOEPA). The law addresses certain deceptive and unfair practices in home equity lending. It amends the Truth in Lending Act (TILA) and establishes requirements for certain loans with high rates and/or high fees. The rules for these loans are contained in Section 32 of Regulation Z, which implements the TILA, so the loans also are called "Section 32 Mortgages." Here's what loans are covered, the law's disclosure requirements, prohibited features, and actions you can take against a lender who is violating the law.
What Loans Are Covered?
A loan is covered by the law if it meets the following tests:
• for a first-lien loan, that is, the original mortgage on the property, the annual percentage rate (APR) exceeds by more than eight percentage points the rates on Treasury securities of comparable maturity;
• for a second-lien loan, that is, a second mortgage, the APR exceeds by more than 10 percentage points the rates in Treasury securities of comparable maturity; or
• the total fees and points payable by the consumer at or before closing exceed the larger of $561 or eight percent of the total loan amount. (The $561 figure is for 2008. This amount is adjusted annually by the Federal Reserve Board, based on changes in the Consumer Price Index.) Credit insurance premiums for insurance written in connection with the credit transaction are counted as fees.
The rules primarily affect refinancing and home equity installment loans that also meet the definition of a high-rate or high-fee loan. The rules do not cover loans to buy or build your home, reverse mortgages or home equity lines of credit (similar to revolving credit accounts).
What Disclosures Are Required?
If your loan meets the above tests, you must receive several disclosures at least three business days before the loan is finalized:
• The lender must give you a written notice stating that the loan need not be completed, even though you've signed the loan application and received the required disclosures. You have three business days to decide whether to sign the loan agreement after you receive the special Section 32 disclosures.
• The notice must warn you that, because the lender will have a mortgage on your home, you could lose the residence and any money put into it, if you fail to make payments.
• The lender must disclose the APR, the regular payment amount (including any balloon payment where the law permits balloon payments, discussed below), and the loan amount (plus where the amount borrowed includes credit insurance premiums, that fact must be stated). For variable rate loans, the lender must disclose that the rate and monthly payment may increase and state the amount of the maximum monthly payment.
These disclosures are in addition to the other TILA disclosures that you must receive no later than the closing of the loan.
What Practices Are Prohibited?
The following features are banned from high-rate, high-fee loans:
• All balloon payments - where the regular payments do not fully pay off the principal balance and a lump sum payment of more than twice the amount of the regular payments is required - for loans with less than five-year terms. There is an exception for bridge loans of less than one year used by consumers to buy or build a home: In that situation, balloon payments are not prohibited.
• Negative amortization, which involves smaller monthly payments that do not fully pay off the loan and that cause an increase in your total principal debt.
• Default interest rates higher than pre-default rates.
• Rebates of interest upon default calculated by any method less favorable than the actuarial method.
• A repayment schedule that consolidates more than two periodic payments that are to be paid in advance from the proceeds of the loan.
• Most prepayment penalties, including refunds of unearned interest calculated by any method less favorable than the actuarial method. The exception is if:
o the lender verifies that your total monthly debt (including the mortgage) is 50 percent or less of your monthly gross income;
o you get the money to prepay the loan from a source other than the lender or an affiliate lender; and
o the lender exercises the penalty clause during the first five years following execution of the mortgage.
• A due-on-demand clause. The exceptions are if:
o there is fraud or material misrepresentation by the consumer in connection with the loan;
o the consumer fails to meet the repayment terms of the agreement; or
o there is any action by the consumer that adversely affects the creditor's security.
Creditors also may not:
• make loans based on the collateral value of your property without regard to your ability to repay the loan. In addition, proceeds for home improvement loans must be disbursed either directly to you, jointly to you and the home improvement contractor or, in some instances, to the escrow agent.
• refinance a HOEPA loan into another HOEPA loan within the first 12 months of origination, unless the new loan is in the borrower's best interest. The prohibition also applies to assignees holding or servicing the loan.
• wrongfully document a closed-end, high-cost loan as an open-end loan. For example, a high-cost mortgage may not be structured as a home equity line of credit if there is no reasonable expectation that repeat transactions will occur.
How Are Compliance Violations Handled?
You may have the right to sue a lender for violations of these new requirements. In a successful suit, you may be able to recover statutory and actual damages, court costs and attorney's fees. In addition, a violation of the high-rate, high-fee requirements of the TILA may enable you to rescind (or cancel) the loan for up to three years.
(4) We audit your loan file to see if the ARM was adequately disclosed
(5) We look at whether costs and fees were excessive/predatory
If we can find a legal violation of any of these statutes we can seek an appropriate remedy in a Court of law. These remedies may include monetary damages, punitive damages, attorney fees, court costs, rescission of your loan, restitution and/or a loan modification.
Note: By performing an audit we are under no obligation to take your case and file a lawsuit. Attorney retains the discretion whether or not to file any case. The audit will be written in such a way that any attorney can review our findings and decide if they want to file a lawsuit on your behalf.
A lender faced with the prospects of an attorney filing a lawsuit is faced with a difficult decision: (a) modify the Client's loan as an act that seeks to take accountability for their non-compliance with serious loan and mortgage laws, or (b) face the prospects of losing in court to a jury that may be largely unsympathetic to these lenders who have largely caused the economic crises we are facing? Let's not forget this bailout is touted as a bailout for lenders. People are not at all happy about this. If we find a serious loan compliance error or omission in your loan files following a loan audit, we will be in a very strong position to compel the lender to give you the loan modification you so badly need.
GOOD REASONS TO HAVE YOUR LOAN AUDITED BY AN ATTORNEY
(1) You have negotiated your own loan modification and the lender wants you to relinquish your rights in a new loan modification agreement. Send us the loan modification agreement your lender sent you and have us review it. At the same time, have your loan audited. You may be able to negotiate a better deal than you have now. Let the Law Office of Malik Ahmad Nevada Attorney & Counselor at Law, look at your papers and see if there are any prima facie violations which needs establishes a lawful and legal course of action. We can also send for a detailed forensic loan audit later.
(2) Even if you are not late on your mortgage (which in today's loan modification market means no one wants to deal with you as far as banks go) have your file audited and see if the tune changes. After all, if you find a legal error, doesn't that give you a potential right to sue your bank or lender or do you have to wait until you are late on your mortgage to sue your bank? Keep in mind, in the legal world, statutes of limitations are always running. Another reason to have your loan audited now.
Even though we do not claim any expertise on any “Forensic Loan Audit”, we nevertheless sees to ourselves if we can find any prima facie violations of federal laws like RESPA,TILA and HOEPA.
- ARM Rate Calculations must be correct
- ARM Adjustment Disclosures must be correct
- APR (Annual Percentage Rate) must be adequately disclosed
Scope of RESPA
1. What kinds of transactions are covered under RESPA?
Transactions involving a federally related mortgage loan, which includes most loans secured by a lien (first or subordinate position) on residential property. This includes: home purchase loans, refinances, lender approved assumptions, property improvement loans, equity lines of credit, and reverse mortgages.
2. What types of transactions are generally not covered?
The following are kinds of transactions that are not covered: an all cash sale, a sale where the individual home seller takes back the mortgage, a rental property transaction or other business purpose transaction.
3. Is a "time share" a covered transaction under RESPA?
Yes, if the lender's interest is secured by a lien on residential property.
4. Is a loan secured by a condominium unit or a cooperative share a covered transaction under RESPA?
Yes, as long the units are not used for business purposes.
5. Is a loan secured by a manufactured home (mobile home) covered transaction under RESPA?
Yes, but only if the manufactured home is located on real property on which the lender's interest is secured by a lien.
6. Does a federally related mortgage loan only involve FHA, VA or other government sponsored loans?
No, RESPA covers most conventional loans too. See the statute or regulations for the definition of a federally related mortgage loan.
7. Are home equity loans covered under RESPA?
Yes, home equity loans secured by residential property are covered.
8. How does the coverage of home equity loans and subordinate lien loans differ from other RESPA covered loans?
If the loan involves an open-end line of credit, providing the disclosures required by Regulation Z satisfies the RESPA good faith estimate and the HUD-1 or HUD-1A requirements.
Both subordinate lien loans and open-end lines of credit (home equity loans) in first lien position are exempted from the loan servicing requirements.
9. Are construction loans covered under RESPA?No. Unless: 1) the loan is used as, or may be converted to permanent financing by the same lender; or 2) the lender issues a commitment for permanent financing; or 3) the loan is used to finance a transfer of title to the first user; or 4) the loan is for a term of two years or more, unless it is to a bona fide builder.
10. If a construction loan is covered under RESPA, how do you account for construction loan closing on the HUD-1 if funds will be held back by the lender until performance?
List the sales price of the land on Line 204, the construction cost on Line 105 (Line 101 is left blank) and the amount of the loan on line 102. The remainder of the form should be completed taking into account adjustments and charges related to the temporary and permanent financing which are known at the date of the settlement.
11. When the loan transaction includes an option for the borrower to obtain additional funds in the future merely by signing a note for the new amount, must RESPA's disclosure requirements be followed for the future advance of additional funds?
Yes, because there is a new note. This is consistent with Truth in Lending Act provisions.
12. If a loan is sold within 1-7 days of closing to another lender, does the sale of that loan fall within RESPA's coverage?
The sale of a loan after the original funding of the loan at settlement is a secondary market transaction. Such a sale is exempt from RESPA coverage as a secondary market transaction. However, any transfer of ownership and/or servicing rights is subject to RESPA's requirements in Section 6.
13. Does the exemption from RESPA for the sale of a land parcel of at least 25 acres apply even if there are 2 homes on the property?
Yes, as long as the property is a single parcel.
14. Can a credit agency provide a lender with a dedicated printer to expedite communication between the credit agency and the lender?Yes, provided the printer can only be used for communication with the lender and not for general use. If it's for general use it may be considered payment for the referral of business.
15. Can a flood zone certification company examine a lender's existing loan portfolio for free or at a reduced rate, in exchange for the lender sending the company future business?
No. Flood zone certification is a covered settlement service (24 CFR 3500.2), therefore RESPA would apply to agreements by companies or persons providing portfolio reviews. Providing free or reduced reviews is a thing of value. Providing this service in exchange for referrals of future flood insurance business would violate Section 8(a) of RESPA which provides that "[n]o person shall give and no person shall accept any fee, kickback, or thing of value pursuant to any agreement or understanding, oral or otherwise, that business incident to or a part of a real estate settlement service involving a federally related mortgage loan shall be referred to any person."
16. Can a lender set up a contest for real estate agents under which the agent who provides the lender with the most business will win a trip to Hawaii?
No. Under RESPA, the trip itself, and even the opportunity to win the trip, would be a thing of value given in exchange for the referral of business.
17. Can a lender give a borrower an incentive, such as a chance to win a trip or a rebate, for doing business with the lender?
RESPA does not prohibit a lender or other settlement provider from giving the borrower an incentive for doing business with it as long as the incentive is not based on the borrower referring business to the lender.
18. Can a mortgage banker and a real estate broker advertise their services together, for example, on the same brochure or newspaper advertisement?
Nothing in RESPA prevents joint advertising. However, if one party is paying less than a pro-rata share for the brochure or advertisement, there could be a RESPA violation.
19. Can a lender give a real estate agent note pads with the lender's name on it?
Yes. Such note pads with the lender's name on it would be allowable as normal promotional items. However, if the lender gives the real estate agent note pads with the real estate agent's name on it for the agent to use to market clients for its real estate business, then the note pads could be a thing of value given for referral of loan business, because it defrays a marketing expense that the real estate agent would otherwise incur.
20. Can a mortgage broker be compensated for referring business to a lender that is unrelated to a real estate transaction, such as automobile loans?
Yes, provided that the compensation is exclusively related to the automobile loan and does not represent, in whole or in part, compensation for the referral of real estate business, and no lien is placed on a residence to secure the auto loan.
Affiliated businesses
21. If a lender refers a consumer to more than one of its affiliated settlement service providers, does the lender have to provide a separate affiliated business arrangement disclosure statement for each referral?
No, the lender can use one disclosure statement.
22. If a lender refers a consumer to a settlement service provider with which it does not have an affiliate relationship, as defined by RESPA, does the lender still have to provide the affiliated business arrangement disclosure statement?
No, the affiliated business arrangement disclosure statement is only for affiliates.
23. When a principal in a law firm is a member of the board of a lender and the lender refers RESPA covered settlement service business to the firm, but not personally to the principal, must the relationship be disclosed?
Yes. When the lender refers the borrower to the law firm, the borrower must be given an Affiliated Business Arrangement Disclosure Statement.
Fee splitting
24. Can a lender charge a borrower a fee for sending documents via courier and disclose it on the HUD-1 where in fact the borrower stops by the lender's office and picks up the documents instead?
No, because the charge for the courier service does not represent a charge for work actually performed which can be imposed on the borrower.
25. Can a lender collect from the borrower an appraisal fee of $200, listing the fee as such on the HUD-1, yet pay an independent appraiser $175 and collect the $25 difference?No, the lender may only collect $175 as the actual charge.
It is a violation of Section 8 (b) for any person to accept a split of a fee where services are not performed.
26. Can a lender charge a borrower at closing a one time charge for setting up an account with a tax service to arrange for tax payments?
Yes, the lender may collect a reasonable charge for the service provided.
27. Can a title company, which has the only convenient closing room in the area, provide it to any interested party at $100 per closing?
Yes, provided the charge is reasonably related to the value of the space.
Specific forms and consumer information
28. Where a mortgage broker is used, is it the mortgage broker's responsibility to provide the Good Faith Estimate (GFE) to consumers, or is that the lender's responsibility?If the mortgage broker is not an exclusive agent of the lender, the broker should provide a GFE within 3 days of receiving an application. The lender is not required to send an additional GFE; however, it is the lender's responsibility to ascertain that one was sent and includes an estimate of all costs that are likely to occur. Where the broker is the exclusive agent of the lender, either the broker or the lender shall provide the GFE.
29. When must the special information booklet be provided and by whom?
In general, the lender or mortgage broker should provide the special information booklet at application. Alternatively, they may place it in the mail to the applicant not later than three business days after the application is received or prepared.
30. Must a mortgage servicing transfer notice be given for a prospective table funded transaction?Yes, by the mortgage broker.
31. When the potential borrower furnishes a substantial amount of financial information for prequalification, but no particular property has been identified, must the good faith estimate be furnished to the borrower?
No. A submission by a borrower to a lender that does not identify a property is not an application and thus does not trigger the Good Faith Estimate requirement. However, HUD encourages providing information to the borrower on settlement costs as soon as it can be estimated, so that the borrower may be better able to shop.
32. If the servicer neglects to pay the homeowner's insurance bill out of escrow and, as a result, the consumer loses coverage, what are the servicer's responsibilities and what is the servicer's liability for harm to the consumer that results?
The servicer is required to pay escrow items on time, so long as the borrower is timely in his/her mortgage payments. If the borrower is damaged by the servicer's failure to pay for the insurance on time, the borrower can sue under section 6.
Additional FAQs
33. If the borrower is getting a "no cost" loan, must the lender list charges the lender is going to pay?
Yes. The charges to be shown on the GFE and the HUD-1 must include any payments by the lender to affiliated or independent settlement providers. These payments should be shown as P.O.C. (paid outside of closing).
34. The regulations at 3500.15 (b)(1)(i) state that where a lender makes a referral to a borrower the condition for providing an Affiliated Business Disclosure (AfBA) may be satisfied as part of and at the time of the GFE. Does this mean the lender does not have to give a separate AfBA disclosure if the information is part of the GFE?
No. A separate AfBA must be given. The regulation means the AfBA may be given at the time the GFE is given if this is when the affiliate is referred or is required to be used (a lender may require the use of an appraisal, credit reporting company, or attorney).
35. Must a mortgage broker disclose payments he receives that the borrower does not pay for directly?Yes. The mortgage broker must disclose all payments and fees he receives whether they are received directly from the borrower or indirectly from the lender.
36. If I have a question concerning the calculation of the "Annual Percentage Rate" or "APR", can HUD answer it?
The calculation of the APR is part of the Truth-in-Lending Act (TILA) which is administered by the Federal Reserve Board. Questions concerning TILA as well as Section 32 (high cost loan disclosure) may be directed to the Federal Reserve Board at (202) 452-3693.
37. May a settlement service provider charge a fee that reflects its own fee plus any recording fees as the servicer provider's fee? Example: An attorney charges $500 for its services and the county charges $30 for recording fees. May the attorney simply charge the consumer $530 and pay the county as a cost of doing business?
No. The "Line Item" instructions to the HUD-1 state that "[f]or all items except for those paid to and retained by the lender, the name of the person or firm ultimately receiving the payment should be shown." The attorney must disclose all entities ultimately receiving the fee.
38. May real estate agents that are independent contractors be considered employees under the "employer-employee" exemption, for purposes of being allowed to be paid referral fees from employers?
No. The exemption applies only to bona-fide employees.
39. If the borrower's escrow account includes a surplus greater than $50 which HUD's rules require be refunded, may the servicer credit the surplus directly to the principal, rather than refund the surplus to the borrower?
No. However, the servicer may inform the borrower in the information accompanying the return of the surplus that the borrower may elect to use the refund to reduce principal or have it credited against the next year's escrow payments.
40. If there is a surplus in the escrow account and the borrower is in default, may the servicer retain the surplus as payment towards the amount in default?
HUD's escrow rules are inapplicable to loans that are in default, which is defined under the RESPA rules as current payments which are more than 30 days delinquent. The parties should consult the mortgage documents or state law to resolve whether escrow funds are available for this purpose.
41. May a consumer delay or avoid a mortgage transaction if it discovers that there exists a RESPA violation?
No. RESPA specifically provides that it does not affect the validity or enforceability of any sale or contract for the sale of real property, or any agreement arising in connection with a federally-related mortgage loan.
42. How should I report a violation of RESPA?
You should send a written complaint describing the practice that you believe violates RESPA. The complaint should include the names, addresses and phone numbers of the alleged violators. It is preferred that you include your name and phone number in case an investigator wishes to ask further questions. You may request confidentiality. Send the complaint to:
U.S. Department of HUD
Office of RESPA and Interstate Land Sales
451 7th Street, SW, Room 9154
Washington, DC 20410
43. You may also wish to send a complaint to State and other Federal agencies that have the responsibility for regulating the settlement providers engaged in the referenced practice.
(3) We audit your loan file to see if HOEPA was violated:
Here is some basic information about HOEPA from the Federal Trade Commission Website:
High-Rate, High-Fee Loans (HOEPA/Section 32 Mortgages)
If you're refinancing your mortgage or applying for a home equity installment loan, you should know about the Home Ownership and Equity Protection Act of 1994 (HOEPA). The law addresses certain deceptive and unfair practices in home equity lending. It amends the Truth in Lending Act (TILA) and establishes requirements for certain loans with high rates and/or high fees. The rules for these loans are contained in Section 32 of Regulation Z, which implements the TILA, so the loans also are called "Section 32 Mortgages." Here's what loans are covered, the law's disclosure requirements, prohibited features, and actions you can take against a lender who is violating the law.
What Loans Are Covered?
A loan is covered by the law if it meets the following tests:
• for a first-lien loan, that is, the original mortgage on the property, the annual percentage rate (APR) exceeds by more than eight percentage points the rates on Treasury securities of comparable maturity;
• for a second-lien loan, that is, a second mortgage, the APR exceeds by more than 10 percentage points the rates in Treasury securities of comparable maturity; or
• the total fees and points payable by the consumer at or before closing exceed the larger of $561 or eight percent of the total loan amount. (The $561 figure is for 2008. This amount is adjusted annually by the Federal Reserve Board, based on changes in the Consumer Price Index.) Credit insurance premiums for insurance written in connection with the credit transaction are counted as fees.
The rules primarily affect refinancing and home equity installment loans that also meet the definition of a high-rate or high-fee loan. The rules do not cover loans to buy or build your home, reverse mortgages or home equity lines of credit (similar to revolving credit accounts).
What Disclosures Are Required?
If your loan meets the above tests, you must receive several disclosures at least three business days before the loan is finalized:
• The lender must give you a written notice stating that the loan need not be completed, even though you've signed the loan application and received the required disclosures. You have three business days to decide whether to sign the loan agreement after you receive the special Section 32 disclosures.
• The notice must warn you that, because the lender will have a mortgage on your home, you could lose the residence and any money put into it, if you fail to make payments.
• The lender must disclose the APR, the regular payment amount (including any balloon payment where the law permits balloon payments, discussed below), and the loan amount (plus where the amount borrowed includes credit insurance premiums, that fact must be stated). For variable rate loans, the lender must disclose that the rate and monthly payment may increase and state the amount of the maximum monthly payment.
These disclosures are in addition to the other TILA disclosures that you must receive no later than the closing of the loan.
What Practices Are Prohibited?
The following features are banned from high-rate, high-fee loans:
• All balloon payments - where the regular payments do not fully pay off the principal balance and a lump sum payment of more than twice the amount of the regular payments is required - for loans with less than five-year terms. There is an exception for bridge loans of less than one year used by consumers to buy or build a home: In that situation, balloon payments are not prohibited.
• Negative amortization, which involves smaller monthly payments that do not fully pay off the loan and that cause an increase in your total principal debt.
• Default interest rates higher than pre-default rates.
• Rebates of interest upon default calculated by any method less favorable than the actuarial method.
• A repayment schedule that consolidates more than two periodic payments that are to be paid in advance from the proceeds of the loan.
• Most prepayment penalties, including refunds of unearned interest calculated by any method less favorable than the actuarial method. The exception is if:
o the lender verifies that your total monthly debt (including the mortgage) is 50 percent or less of your monthly gross income;
o you get the money to prepay the loan from a source other than the lender or an affiliate lender; and
o the lender exercises the penalty clause during the first five years following execution of the mortgage.
• A due-on-demand clause. The exceptions are if:
o there is fraud or material misrepresentation by the consumer in connection with the loan;
o the consumer fails to meet the repayment terms of the agreement; or
o there is any action by the consumer that adversely affects the creditor's security.
Creditors also may not:
• make loans based on the collateral value of your property without regard to your ability to repay the loan. In addition, proceeds for home improvement loans must be disbursed either directly to you, jointly to you and the home improvement contractor or, in some instances, to the escrow agent.
• refinance a HOEPA loan into another HOEPA loan within the first 12 months of origination, unless the new loan is in the borrower's best interest. The prohibition also applies to assignees holding or servicing the loan.
• wrongfully document a closed-end, high-cost loan as an open-end loan. For example, a high-cost mortgage may not be structured as a home equity line of credit if there is no reasonable expectation that repeat transactions will occur.
How Are Compliance Violations Handled?
You may have the right to sue a lender for violations of these new requirements. In a successful suit, you may be able to recover statutory and actual damages, court costs and attorney's fees. In addition, a violation of the high-rate, high-fee requirements of the TILA may enable you to rescind (or cancel) the loan for up to three years.
(4) We audit your loan file to see if the ARM was adequately disclosed
(5) We look at whether costs and fees were excessive/predatory
If we can find a legal violation of any of these statutes we can seek an appropriate remedy in a Court of law. These remedies may include monetary damages, punitive damages, attorney fees, court costs, rescission of your loan, restitution and/or a loan modification.
Note: By performing an audit we are under no obligation to take your case and file a lawsuit. Attorney retains the discretion whether or not to file any case. The audit will be written in such a way that any attorney can review our findings and decide if they want to file a lawsuit on your behalf.
A lender faced with the prospects of an attorney filing a lawsuit is faced with a difficult decision: (a) modify the Client's loan as an act that seeks to take accountability for their non-compliance with serious loan and mortgage laws, or (b) face the prospects of losing in court to a jury that may be largely unsympathetic to these lenders who have largely caused the economic crises we are facing? Let's not forget this bailout is touted as a bailout for lenders. People are not at all happy about this. If we find a serious loan compliance error or omission in your loan files following a loan audit, we will be in a very strong position to compel the lender to give you the loan modification you so badly need.
GOOD REASONS TO HAVE YOUR LOAN AUDITED BY AN ATTORNEY
(1) You have negotiated your own loan modification and the lender wants you to relinquish your rights in a new loan modification agreement. Send us the loan modification agreement your lender sent you and have us review it. At the same time, have your loan audited. You may be able to negotiate a better deal than you have now. Let the Law Office of Malik Ahmad Nevada Attorney & Counselor at Law, look at your papers and see if there are any prima facie violations which needs establishes a lawful and legal course of action. We can also send for a detailed forensic loan audit later.
(2) Even if you are not late on your mortgage (which in today's loan modification market means no one wants to deal with you as far as banks go) have your file audited and see if the tune changes. After all, if you find a legal error, doesn't that give you a potential right to sue your bank or lender or do you have to wait until you are late on your mortgage to sue your bank? Keep in mind, in the legal world, statutes of limitations are always running. Another reason to have your loan audited now.
Thursday, February 19, 2009
Details of New Obama Plan
Here is an interesting article from NY Times.
http://www.nytimes.com/2009/02/19/your-money/mortgages/19modify.html?pagewanted=print
More Housing Details Are Pending, but First Some Answers
By TARA SIEGEL BERNARD
The Obama administration’s housing plan aims to help millions of homeowners who fall into two categories: either they have been struggling to pay their mortgages or they have been shut out of the refinancing market.
The initiative gives lenders incentives to modify the mortgages of the three million to four million homeowners on the brink of foreclosure or who cannot make their monthly payments. The goal is to reduce the payments to levels they can afford.
The plan also aims to help the four million to five million homeowners who have been unable to refinance their mortgages because their home values dropped, erasing much or all of their home equity. Some of them would have a fresh shot at refinancing.
While the administration offered some details about the programs, more information will be available on March 4, when the programs begin.
Below are answers to some of the questions that troubled borrowers may have.
Q. Am I eligible?
A. Your loan must be owned or guaranteed by Fannie Mae or Freddie Mac, the government-controlled companies that together account for about half of the mortgage market. The problem is that many of the most problematic loans do not fall under the Fannie-Freddie umbrella. You can call your mortgage lender after March 4 to find out if your loan qualifies.
You will need to have “sufficient income to make the new payment and an acceptable mortgage payment history,” according to documents about the initiative. Precise details will be released next month.
In the meantime, you should get your financial house in order. That means collecting the paperwork you will need to refinance, including information detailing your gross monthly income; most recent income tax returns; information about any second mortgages; payments made on credit cards if you carry a balance; and payments on other loans, like auto or student loans.
Q. What if my home is under water?
A. If you owe more on your mortgage than your property is worth, you may still be eligible. But there is a giant caveat: your new mortgage cannot exceed 105 percent of the property’s current market value. That means many homeowners in areas like Florida, Arizona and Nevada, where home prices have plunged the most, will not be eligible.
If your property is worth $200,000, you can qualify if you owe $210,000 or less. Your property will be valued after you apply to refinance.
Q. What if I have a second mortgage?
A. You are still eligible as long as the amount due on the first mortgage is less than 105 percent of the property’s value and you have the wherewithal to meet the new terms on your first mortgage. But the lender on your second mortgage needs to agree to remain in a “second position,” which means that if you declared bankruptcy, the second loan would be less likely to be repaid. To date, these lenders have not been wholly cooperative.
Q. What kind of interest rate am I likely to get?
A. All loans that are refinanced under the plan will have a 15- or 30-year term with a fixed rate, which will be based on market rates at the time of refinancing, as well as any associated points and fees charged by the lender.
Q. Am I eligible for that?
A. To qualify, your monthly mortgage payment needs to exceed 31 percent of your monthly gross income and the house you are refinancing must be your primary home. Mortgages on two-, three- and four-unit properties are also eligible, as long as you also consider one as your primary home. You do not need to be behind on your payments to qualify. If your income is no longer enough to make the payments (because your paycheck has shrunk, your expenses rose or your mortgage rate is about to reset higher), you would still qualify.
Moreover, the loan amount must not exceed current Fannie Mae or Freddie Mac loan limits, which are $417,000, but up to about $729,000 in certain high-cost areas.
Unlike the refinancing program, the loans do not have to be owned or insured by Fannie or Freddie. Only primary loans may be modified.
Q. Will the plan reduce my mortgage balance?
A. Lenders are most likely to lower your payments to a level you can afford by reducing your interest rate. But that does not preclude lenders from reducing your loan amount. All borrowers who make timely payments will be able to cut their balance by up to $1,000 a year for five years.
Q. What if I am about to lose my house to foreclosure?
A. Call the company that services your mortgage or your credit counselor. Many lenders have stopped foreclosures on houses that may qualify for the modification program. If you are already working with a counselor, ask him or her to consider your case for the new program.
Q. Is my lender required to comply?
A. No, but the government is offering lenders incentives if they do. The government expects that most major lenders will participate.
http://www.nytimes.com/2009/02/19/your-money/mortgages/19modify.html?pagewanted=print
More Housing Details Are Pending, but First Some Answers
By TARA SIEGEL BERNARD
The Obama administration’s housing plan aims to help millions of homeowners who fall into two categories: either they have been struggling to pay their mortgages or they have been shut out of the refinancing market.
The initiative gives lenders incentives to modify the mortgages of the three million to four million homeowners on the brink of foreclosure or who cannot make their monthly payments. The goal is to reduce the payments to levels they can afford.
The plan also aims to help the four million to five million homeowners who have been unable to refinance their mortgages because their home values dropped, erasing much or all of their home equity. Some of them would have a fresh shot at refinancing.
While the administration offered some details about the programs, more information will be available on March 4, when the programs begin.
Below are answers to some of the questions that troubled borrowers may have.
Q. Am I eligible?
A. Your loan must be owned or guaranteed by Fannie Mae or Freddie Mac, the government-controlled companies that together account for about half of the mortgage market. The problem is that many of the most problematic loans do not fall under the Fannie-Freddie umbrella. You can call your mortgage lender after March 4 to find out if your loan qualifies.
You will need to have “sufficient income to make the new payment and an acceptable mortgage payment history,” according to documents about the initiative. Precise details will be released next month.
In the meantime, you should get your financial house in order. That means collecting the paperwork you will need to refinance, including information detailing your gross monthly income; most recent income tax returns; information about any second mortgages; payments made on credit cards if you carry a balance; and payments on other loans, like auto or student loans.
Q. What if my home is under water?
A. If you owe more on your mortgage than your property is worth, you may still be eligible. But there is a giant caveat: your new mortgage cannot exceed 105 percent of the property’s current market value. That means many homeowners in areas like Florida, Arizona and Nevada, where home prices have plunged the most, will not be eligible.
If your property is worth $200,000, you can qualify if you owe $210,000 or less. Your property will be valued after you apply to refinance.
Q. What if I have a second mortgage?
A. You are still eligible as long as the amount due on the first mortgage is less than 105 percent of the property’s value and you have the wherewithal to meet the new terms on your first mortgage. But the lender on your second mortgage needs to agree to remain in a “second position,” which means that if you declared bankruptcy, the second loan would be less likely to be repaid. To date, these lenders have not been wholly cooperative.
Q. What kind of interest rate am I likely to get?
A. All loans that are refinanced under the plan will have a 15- or 30-year term with a fixed rate, which will be based on market rates at the time of refinancing, as well as any associated points and fees charged by the lender.
Q. Am I eligible for that?
A. To qualify, your monthly mortgage payment needs to exceed 31 percent of your monthly gross income and the house you are refinancing must be your primary home. Mortgages on two-, three- and four-unit properties are also eligible, as long as you also consider one as your primary home. You do not need to be behind on your payments to qualify. If your income is no longer enough to make the payments (because your paycheck has shrunk, your expenses rose or your mortgage rate is about to reset higher), you would still qualify.
Moreover, the loan amount must not exceed current Fannie Mae or Freddie Mac loan limits, which are $417,000, but up to about $729,000 in certain high-cost areas.
Unlike the refinancing program, the loans do not have to be owned or insured by Fannie or Freddie. Only primary loans may be modified.
Q. Will the plan reduce my mortgage balance?
A. Lenders are most likely to lower your payments to a level you can afford by reducing your interest rate. But that does not preclude lenders from reducing your loan amount. All borrowers who make timely payments will be able to cut their balance by up to $1,000 a year for five years.
Q. What if I am about to lose my house to foreclosure?
A. Call the company that services your mortgage or your credit counselor. Many lenders have stopped foreclosures on houses that may qualify for the modification program. If you are already working with a counselor, ask him or her to consider your case for the new program.
Q. Is my lender required to comply?
A. No, but the government is offering lenders incentives if they do. The government expects that most major lenders will participate.
Sunday, February 15, 2009
Send us Your Questions
Readers of this blog can freely send us their questions on their particular situation. We would however, answer as a general question of academic nature and omit the particulars like name, lenders etc.
1. Send us any foreclosure questions of general nature?
2. Send us any question about the peculiar problem you are facing about your lender?
3. Send us any question regarding any deceptive trade practice in reference to your property.
4.
Office of Malik W. Ahmad.
(702) 270-9100
1. Send us any foreclosure questions of general nature?
2. Send us any question about the peculiar problem you are facing about your lender?
3. Send us any question regarding any deceptive trade practice in reference to your property.
4.
Office of Malik W. Ahmad.
(702) 270-9100
Send us Your Questions
Readers of this blog can freely send us their questions on their particular situation. we would however, answer as a general question of academic nature and omit the particulars like name, lenders etc.
Office of Malik W. Ahmad.
(702) 270-9100
Office of Malik W. Ahmad.
(702) 270-9100
By Malik Ahmad attorney at law, Las Vegas, Nevada.
Here is what Nevada Attorney Malik W. Ahmad of the Law Office of Malik W. Ahmad would look for violations in your home loan papers when seeking to modify your loan. This is just a short list, you may or may not have all these violations. Even though we do not claim any expertise on any “Forensic Loan Audit”, we nevertheless sees to ourselves if we can find any prima facie violations of federal laws like RESPA,TILA and HOEPA.
- ARM Rate Calculations must be correct
- ARM Adjustment Disclosures must be correct
- APR (Annual Percentage Rate) must be adequately disclosed
Here is some basic information about RESPA from the Housing and Urban Development Website (HUD)
Scope of RESPA1. What kinds of transactions are covered under RESPA?
Transactions involving a federally related mortgage loan, which includes most loans secured by a lien (first or subordinate position) on residential property. This includes: home purchase loans, refinances, lender approved assumptions, property improvement loans, equity lines of credit, and reverse mortgages.
2. What types of transactions are generally not covered?
The following are kinds of transactions that are not covered: an all cash sale, a sale where the individual home seller takes back the mortgage, a rental property transaction or other business purpose transaction.
3. Is a “time share” a covered transaction under RESPA?
Yes, if the lender’s interest is secured by a lien on residential property.
4. Is a loan secured by a condominium unit or a cooperative share a covered transaction under RESPA?
Yes, as long the units are not used for business purposes.
5. Is a loan secured by a manufactured home (mobile home) covered transaction under RESPA?
Yes, but only if the manufactured home is located on real property on which the lender’s interest is secured by a lien.
6. Does a federally related mortgage loan only involve FHA, VA or other government sponsored loans?
No, RESPA covers most conventional loans too. See the statute or regulations for the definition of a federally related mortgage loan.
7. Are home equity loans covered under RESPA?
Yes, home equity loans secured by residential property are covered.
8. How does the coverage of home equity loans and subordinate lien loans differ from other RESPA covered loans?
If the loan involves an open-end line of credit, providing the disclosures required by Regulation Z satisfies the RESPA good faith estimate and the HUD-1 or HUD-1A requirements.
Both subordinate lien loans and open-end lines of credit (home equity loans) in first lien position are exempted from the loan servicing requirements.
9. Are construction loans covered under RESPA?No. Unless: 1) the loan is used as, or may be converted to permanent financing by the same lender; or 2) the lender issues a commitment for permanent financing; or 3) the loan is used to finance a transfer of title to the first user; or 4) the loan is for a term of two years or more, unless it is to a bona fide builder.
10. If a construction loan is covered under RESPA, how do you account for construction loan closing on the HUD-1 if funds will be held back by the lender until performance?
List the sales price of the land on Line 204, the construction cost on Line 105 (Line 101 is left blank) and the amount of the loan on line
102. The remainder of the form should be completed taking into account adjustments and charges related to the temporary and permanent financing which are known at the date of the settlement.
11. When the loan transaction includes an option for the borrower to obtain additional funds in the future merely by signing a note for the new amount, must RESPA’s disclosure requirements be followed for the future advance of additional funds?Yes, because there is a new note. This is consistent with Truth in Lending Act provisions.
12. If a loan is sold within 1-7 days of closing to another lender, does the sale of that loan fall within RESPA’s coverage?
The sale of a loan after the original funding of the loan at settlement is a secondary market transaction. Such a sale is exempt from RESPA coverage as a secondary market transaction. However, any transfer of ownership and/or servicing rights is subject to RESPA’s requirements in Section 6.
13. Does the exemption from RESPA for the sale of a land parcel of at least 25 acres apply even if there are 2 homes on the property?Yes, as long as the property is a single parcel.
14. Can a credit agency provide a lender with a dedicated printer to expedite communication between the credit agency and the lender?Yes, provided the printer can only be used for communication with the lender and not for general use. If it’s for general use it may be considered payment for the referral of business.
15. Can a flood zone certification company examine a lender’s existing loan portfolio for free or at a reduced rate, in exchange for the lender sending the company future business?
No. Flood zone certification is a covered settlement service (24 CFR 3500.2), therefore RESPA would apply to agreements by companies or persons providing portfolio reviews. Providing free or reduced reviews is a thing of value. Providing this service in exchange for referrals of future flood insurance business would violate Section 8(a) of RESPA which provides that “[n]o person shall give and no person shall accept any fee, kickback, or thing of value pursuant to any agreement or understanding, oral or otherwise, that business incident to or a part of a real estate settlement service involving a federally related mortgage loan shall be referred to any person.”
16. Can a lender set up a contest for real estate agents under which the agent who provides the lender with the most business will win a trip to Hawaii?
No. Under RESPA, the trip itself, and even the opportunity to win the trip, would be a thing of value given in exchange for the referral of business.
17. Can a lender give a borrower an incentive, such as a chance to win a trip or a rebate, for doing business with the lender?RESPA does not prohibit a lender or other settlement provider from giving the borrower an incentive for doing business with it as long as the incentive is not based on the borrower referring business to the lender.
18. Can a mortgage banker and a real estate broker advertise their services together, for example, on the same brochure or newspaper advertisement?
Nothing in RESPA prevents joint advertising. However, if one party is paying less than a pro-rata share for the brochure or advertisement, there could be a RESPA violation.
19. Can a lender give a real estate agent note pads with the lender’s name on it?
Yes. Such note pads with the lender’s name on it would be allowable as normal promotional items. However, if the lender gives the real estate agent note pads with the real estate agent’s name on it for the agent to use to market clients for its real estate business, then the note pads could be a thing of value given for referral of loan business, because it defrays a marketing expense that the real estate agent would otherwise incur.20. Can a mortgage broker be compensated for referring business to a lender that is unrelated to a real estate transaction, such as automobile loans?
Yes, provided that the compensation is exclusively related to the automobile loan and does not represent, in whole or in part, compensation for the referral of real estate business, and no lien is placed on a residence to secure the auto loan.
Affiliated businesses
21. If a lender refers a consumer to more than one of its affiliated settlement service providers, does the lender have to provide a separate affiliated business arrangement disclosure statement for each referral?No, the lender can use one disclosure statement.
22. If a lender refers a consumer to a settlement service provider with which it does not have an affiliate relationship, as defined by RESPA, does the lender still have to provide the affiliated business arrangement disclosure statement?No, the affiliated business arrangement disclosure statement is only for affiliates.23. When a principal in a law firm is a member of the board of a lender and the lender refers RESPA covered settlement service business to the firm, but not personally to the principal, must the relationship be disclosed?
Yes. When the lender refers the borrower to the law firm, the borrower must be given an Affiliated Business Arrangement Disclosure Statement.
Fee splitting
24. Can a lender charge a borrower a fee for sending documents via courier and disclose it on the HUD-1 where in fact the borrower stops by the lender’s office and picks up the documents instead?
No, because the charge for the courier service does not represent a charge for work actually performed which can be imposed on the borrower.
25. Can a lender collect from the borrower an appraisal fee of $200, listing the fee as such on the HUD-1, yet pay an independent appraiser $175 and collect the $25 difference?No, the lender may only collect $175 as the actual charge. It is a violation of Section 8 (b) for any person to accept a split of a fee where services are not performed.
26. Can a lender charge a borrower at closing a one time charge for setting up an account with a tax service to arrange for tax payments?
Yes, the lender may collect a reasonable charge for the service provided.
27. Can a title company, which has the only convenient closing room in the area, provide it to any interested party at $100 per closing?Yes, provided the charge is reasonably related to the value of the space.Specific forms and consumer information
28. Where a mortgage broker is used, is it the mortgage broker’s responsibility to provide the Good Faith Estimate (GFE) to consumers, or is that the lender’s responsibility?
If the mortgage broker is not an exclusive agent of the lender, the broker should provide a GFE within 3 days of receiving an application. The lender is not required to send an additional GFE; however, it is the lender’s responsibility to ascertain that one was sent and includes an estimate of all costs that are likely to occur. Where the broker is the exclusive agent of the lender, either the broker or the lender shall provide the GFE.
29. When must the special information booklet be provided and by whom?
In general, the lender or mortgage broker should provide the special information booklet at application. Alternatively, they may place it in the mail to the applicant not later than three business days after the application is received or prepared.
30. Must a mortgage servicing transfer notice be given for a prospective table funded transaction?
Yes, by the mortgage broker.
31. When the potential borrower furnishes a substantial amount of financial information for prequalification, but no particular property has been identified, must the good faith estimate be furnished to the borrower?
No. A submission by a borrower to a lender that does not identify a property is not an application and thus does not trigger the Good Faith Estimate requirement. However, HUD encourages providing information to the borrower on settlement costs as soon as it can be estimated, so that the borrower may be better able to shop.
32. If the servicer neglects to pay the homeowner’s insurance bill out of escrow and, as a result, the consumer loses coverage, what are the servicer’s responsibilities and what is the servicer’s liability for harm to the consumer that results?
The servicer is required to pay escrow items on time, so long as the borrower is timely in his/her mortgage payments. If the borrower is damaged by the servicer’s failure to pay for the insurance on time, the borrower can sue under section 6.
Additional FAQs
33. If the borrower is getting a “no cost” loan, must the lender list charges the lender is going to pay?
Yes. The charges to be shown on the GFE and the HUD-1 must include any payments by the lender to affiliated or independent settlement providers. These payments should be shown as P.O.C. (paid outside of closing).
34. The regulations at 3500.15 (b)(1)(i) state that where a lender makes a referral to a borrower the condition for providing an Affiliated Business Disclosure (AfBA) may be satisfied as part of and at the time of the GFE. Does this mean the lender does not have to give a separate AfBA disclosure if the information is part of the GFE?
No. A separate AfBA must be given. The regulation means the AfBA may be given at the time the GFE is given if this is when the affiliate is referred or is required to be used (a lender may require the use of an appraisal, credit reporting company, or attorney).
35. Must a mortgage broker disclose payments he receives that the borrower does not pay for directly?
Yes. The mortgage broker must disclose all payments and fees he receives whether they are received directly from the borrower or indirectly from the lender.
36. If I have a question concerning the calculation of the “Annual Percentage Rate” or “APR”, can HUD answer it?The calculation of the APR is part of the Truth-in-Lending Act (TILA) which is administered by the Federal Reserve Board. Questions concerning TILA as well as Section
32 (high cost loan disclosure) may be directed to the Federal Reserve Board at (202) 452-3693 .
37. May a settlement service provider charge a fee that reflects its own fee plus any recording fees as the servicer provider’s fee? Example: An attorney charges $500 for its services and the county charges $30 for recording fees. May the attorney simply charge the consumer $530 and pay the county as a cost of doing business?
No. The “Line Item” instructions to the HUD-1 state that “[f]or all items except for those paid to and retained by the lender, the name of the person or firm ultimately receiving the payment should be shown.” The attorney must disclose all entities ultimately receiving the fee.
38. May real estate agents that are independent contractors be considered employees under the “employer-employee” exemption, for purposes of being allowed to be paid referral fees from employers?
No. The exemption applies only to bona-fide employees.
39. If the borrower’s escrow account includes a surplus greater than $50 which HUD’s rules require be refunded, may the servicer credit the surplus directly to the principal, rather than refund the surplus to the borrower?
No. However, the servicer may inform the borrower in the information accompanying the return of the surplus that the borrower may elect to use the refund to reduce principal or have it credited against the next year’s escrow payments.
40. If there is a surplus in the escrow account and the borrower is in default, may the servicer retain the surplus as payment towards the amount in default?
HUD’s escrow rules are inapplicable to loans that are in default, which is defined under the RESPA rules as current payments which are more than 30 days delinquent. The parties should consult the mortgage documents or state law to resolve whether escrow funds are available for this purpose.
41. May a consumer delay or avoid a mortgage transaction if it discovers that there exists a RESPA violation?
No. RESPA specifically provides that it does not affect the validity or enforceability of any sale or contract for the sale of real property, or any agreement arising in connection with a federally-related mortgage loan.
42. How should I report a violation of RESPA? You should send a written complaint describing the practice that you believe violates RESPA.
The complaint should include the names, addresses and phone numbers of the alleged violators. It is preferred that you include your name and phone number in case an investigator wishes to ask further questions. You may request confidentiality. Send the complaint to:
U.S. Department of HUD
Office of RESPA and Interstate Land Sales
451 7th Street, SW, Room 9154
Washington, DC 20410
43. You may also wish to send a complaint to State and other Federal agencies that have the responsibility for regulating the settlement providers engaged in the referenced practice. The Law Office of Malik W. Ahmad can also audit your loan of course, on a limited basis to to see if HOEPA was violated:
Here is some basic information about HOEPA from the Federal Trade Commission Website:
High-Rate, High-Fee Loans (HOEPA/Section 32 Mortgages)
If you’re refinancing your mortgage or applying for a home equity installment loan, you should know about the Home Ownership and Equity Protection Act of 1994 (HOEPA). The law addresses certain deceptive and unfair practices in home equity lending. It amends the Truth in Lending Act (TILA) and establishes requirements for certain loans with high rates and/or high fees. The rules for these loans are contained in Section 32 of Regulation Z, which implements the TILA, so the loans also are called “Section 32 Mortgages.” Here’s what loans are covered, the law’s disclosure requirements, prohibited features, and actions you can take against a lender who is violating the law.
What Loans Are Covered?
A loan is covered by the law if it meets the following tests:
• for a first-lien loan, that is, the original mortgage on the property, the annual percentage rate (APR) exceeds by more than eight percentage points the rates on Treasury securities of comparable maturity;
• for a second-lien loan, that is, a second mortgage, the APR exceeds by more than 10 percentage points the rates in Treasury securities of comparable maturity; or
• the total fees and points payable by the consumer at or before closing exceed the larger of $561 or eight percent of the total loan amount. (The $561 figure is for 2008. This amount is adjusted annually by the Federal Reserve Board, based on changes in the Consumer Price Index.) Credit insurance premiums for insurance written in connection with the credit transaction are counted as fees.
The rules primarily affect refinancing and home equity installment loans that also meet the definition of a high-rate or high-fee loan. The rules do not cover loans to buy or build your home, reverse mortgages or home equity lines of credit (similar to revolving credit accounts).
What Disclosures Are Required?
If your loan meets the above tests, you must receive several disclosures at least three business days before the loan is finalized:
• The lender must give you a written notice stating that the loan need not be completed, even though you’ve signed the loan application and received the required disclosures. You have three business days to decide whether to sign the loan agreement after you receive the special Section 32 disclosures.
• The notice must warn you that, because the lender will have a mortgage on your home, you could lose the residence and any money put into it, if you fail to make payments.
• The lender must disclose the APR, the regular payment amount (including any balloon payment where the law permits balloon payments, discussed below), and the loan amount (plus where the amount borrowed includes credit insurance premiums, that fact must be stated). For variable rate loans, the lender must disclose that the rate and monthly payment may increase and state the amount of the maximum monthly payment.
These disclosures are in addition to the other TILA disclosures that you must receive no later than the closing of the loan.
What Practices Are Prohibited?
The following features are banned from high-rate, high-fee loans:
• All balloon payments - where the regular payments do not fully pay off the principal balance and a lump sum payment of more than twice the amount of the regular payments is required - for loans with less than five-year terms. There is an exception for bridge loans of less than one year used by consumers to buy or build a home: In that situation, balloon payments are not prohibited.
• Negative amortization, which involves smaller monthly payments that do not fully pay off the loan and that cause an increase in your total principal debt.
• Default interest rates higher than pre-default rates.
• Rebates of interest upon default calculated by any method less favorable than the actuarial method.
• A repayment schedule that consolidates more than two periodic payments that are to be paid in advance from the proceeds of the loan.
• Most prepayment penalties, including refunds of unearned interest calculated by any method less favorable than the actuarial method. The exception is if:
o the lender verifies that your total monthly debt (including the mortgage) is 50 percent or less of your monthly gross income;
o you get the money to prepay the loan from a source other than the lender or an affiliate lender; and
o the lender exercises the penalty clause during the first five years following execution of the mortgage.
• A due-on-demand clause. The exceptions are if:
o there is fraud or material misrepresentation by the consumer in connection with the loan;
o the consumer fails to meet the repayment terms of the agreement; or
o there is any action by the consumer that adversely affects the creditor’s security.
Creditors also may not:
• make loans based on the collateral value of your property without regard to your ability to repay the loan. In addition, proceeds for home improvement loans must be disbursed either directly to you, jointly to you and the home improvement contractor or, in some instances, to the escrow agent.
• refinance a HOEPA loan into another HOEPA loan within the first 12 months of origination, unless the new loan is in the borrower’s best interest. The prohibition also applies to assignees holding or servicing the loan.
• wrongfully document a closed-end, high-cost loan as an open-end loan. For example, a high-cost mortgage may not be structured as a home equity line of credit if there is no reasonable expectation that repeat transactions will occur.
How Are Compliance Violations Handled?
You may have the right to sue a lender for violations of these new requirements. In a successful suit, you may be able to recover statutory and actual damages, court costs and attorney’s fees. In addition, a violation of the high-rate, high-fee requirements of the TILA may enable you to rescind (or cancel) the loan for up to three years.
(4) Our Law Office audit your loan file to see if the ARM was adequately disclosed
(5) Our Law Office look at whether costs and fees were excessive/predatory
If we can find a legal violation of any of these statutes we can seek an appropriate remedy in a Court of law. Of course, these remedies may include monetary damages, punitive damages, attorney fees, court costs, rescission of your loan, restitution and/or a loan modification.
Note: We do not file lawsuit in every case and or not obligated just by auditing a loan to file a lawsuit. Our Attorney retains the discretion whether or not to file any case. Each suit is depends again on many other factors including the size of the loan, the nature of the lender and the complexity of litigation. Our audit is written in simple, precise and concise manner readable by anyone and understanable in simple ways. A lender faced with the prospects of an attorney filing a lawsuit overnight changes to a decent human being again eager to help his customers. This is a welcome change, and of course our borrowers like to deal with this new lenders. Now we can request the following from this newly chaged lenders:
(
a) modify the Client’s loan as an act that seeks to take accountability for their non-compliance with serious loan and mortgage laws, or
(b) face the prospects of losing in court to a jury that may be largely unsympathetic to these lenders who have largely caused the economic crises we are facing? Let’s not forget this bailout is touted as a bailout for lenders. People are not at all happy about this. If we find a serious loan compliance error or omission in your loan files following a loan audit, we will be in a very strong position to compel the lender to give you the loan modification you so badly need.
GOOD REASONS TO HAVE YOUR LOAN AUDITED BY by Our Law Office:
(1) You have negotiated your own loan modification and the lender wants you to relinquish your rights in a new loan modification agreement. Send us the loan modification agreement your lender sent you and have us review it.
(2) Even if you are not late on your mortgage (which in today’s loan modification market means noone wants to deal with you as far as banks go) have your file audited and see if the tune changes. After all, if you find a legal error, doesn’t that give you a potential right to sue your bank or lender or do you have to wait until you are late on your mortgage to sue your bank? Keep in mind, in the legal world, statutes of limitations are always running.
Here is what Nevada Attorney Malik W. Ahmad of the Law Office of Malik W. Ahmad would look for violations in your home loan papers when seeking to modify your loan. This is just a short list, you may or may not have all these violations. Even though we do not claim any expertise on any “Forensic Loan Audit”, we nevertheless sees to ourselves if we can find any prima facie violations of federal laws like RESPA,TILA and HOEPA.
- ARM Rate Calculations must be correct
- ARM Adjustment Disclosures must be correct
- APR (Annual Percentage Rate) must be adequately disclosed
Here is some basic information about RESPA from the Housing and Urban Development Website (HUD)
Scope of RESPA1. What kinds of transactions are covered under RESPA?
Transactions involving a federally related mortgage loan, which includes most loans secured by a lien (first or subordinate position) on residential property. This includes: home purchase loans, refinances, lender approved assumptions, property improvement loans, equity lines of credit, and reverse mortgages.
2. What types of transactions are generally not covered?
The following are kinds of transactions that are not covered: an all cash sale, a sale where the individual home seller takes back the mortgage, a rental property transaction or other business purpose transaction.
3. Is a “time share” a covered transaction under RESPA?
Yes, if the lender’s interest is secured by a lien on residential property.
4. Is a loan secured by a condominium unit or a cooperative share a covered transaction under RESPA?
Yes, as long the units are not used for business purposes.
5. Is a loan secured by a manufactured home (mobile home) covered transaction under RESPA?
Yes, but only if the manufactured home is located on real property on which the lender’s interest is secured by a lien.
6. Does a federally related mortgage loan only involve FHA, VA or other government sponsored loans?
No, RESPA covers most conventional loans too. See the statute or regulations for the definition of a federally related mortgage loan.
7. Are home equity loans covered under RESPA?
Yes, home equity loans secured by residential property are covered.
8. How does the coverage of home equity loans and subordinate lien loans differ from other RESPA covered loans?
If the loan involves an open-end line of credit, providing the disclosures required by Regulation Z satisfies the RESPA good faith estimate and the HUD-1 or HUD-1A requirements.
Both subordinate lien loans and open-end lines of credit (home equity loans) in first lien position are exempted from the loan servicing requirements.
9. Are construction loans covered under RESPA?No. Unless: 1) the loan is used as, or may be converted to permanent financing by the same lender; or 2) the lender issues a commitment for permanent financing; or 3) the loan is used to finance a transfer of title to the first user; or 4) the loan is for a term of two years or more, unless it is to a bona fide builder.
10. If a construction loan is covered under RESPA, how do you account for construction loan closing on the HUD-1 if funds will be held back by the lender until performance?
List the sales price of the land on Line 204, the construction cost on Line 105 (Line 101 is left blank) and the amount of the loan on line
102. The remainder of the form should be completed taking into account adjustments and charges related to the temporary and permanent financing which are known at the date of the settlement.
11. When the loan transaction includes an option for the borrower to obtain additional funds in the future merely by signing a note for the new amount, must RESPA’s disclosure requirements be followed for the future advance of additional funds?Yes, because there is a new note. This is consistent with Truth in Lending Act provisions.
12. If a loan is sold within 1-7 days of closing to another lender, does the sale of that loan fall within RESPA’s coverage?
The sale of a loan after the original funding of the loan at settlement is a secondary market transaction. Such a sale is exempt from RESPA coverage as a secondary market transaction. However, any transfer of ownership and/or servicing rights is subject to RESPA’s requirements in Section 6.
13. Does the exemption from RESPA for the sale of a land parcel of at least 25 acres apply even if there are 2 homes on the property?Yes, as long as the property is a single parcel.
14. Can a credit agency provide a lender with a dedicated printer to expedite communication between the credit agency and the lender?Yes, provided the printer can only be used for communication with the lender and not for general use. If it’s for general use it may be considered payment for the referral of business.
15. Can a flood zone certification company examine a lender’s existing loan portfolio for free or at a reduced rate, in exchange for the lender sending the company future business?
No. Flood zone certification is a covered settlement service (24 CFR 3500.2), therefore RESPA would apply to agreements by companies or persons providing portfolio reviews. Providing free or reduced reviews is a thing of value. Providing this service in exchange for referrals of future flood insurance business would violate Section 8(a) of RESPA which provides that “[n]o person shall give and no person shall accept any fee, kickback, or thing of value pursuant to any agreement or understanding, oral or otherwise, that business incident to or a part of a real estate settlement service involving a federally related mortgage loan shall be referred to any person.”
16. Can a lender set up a contest for real estate agents under which the agent who provides the lender with the most business will win a trip to Hawaii?
No. Under RESPA, the trip itself, and even the opportunity to win the trip, would be a thing of value given in exchange for the referral of business.
17. Can a lender give a borrower an incentive, such as a chance to win a trip or a rebate, for doing business with the lender?RESPA does not prohibit a lender or other settlement provider from giving the borrower an incentive for doing business with it as long as the incentive is not based on the borrower referring business to the lender.
18. Can a mortgage banker and a real estate broker advertise their services together, for example, on the same brochure or newspaper advertisement?
Nothing in RESPA prevents joint advertising. However, if one party is paying less than a pro-rata share for the brochure or advertisement, there could be a RESPA violation.
19. Can a lender give a real estate agent note pads with the lender’s name on it?
Yes. Such note pads with the lender’s name on it would be allowable as normal promotional items. However, if the lender gives the real estate agent note pads with the real estate agent’s name on it for the agent to use to market clients for its real estate business, then the note pads could be a thing of value given for referral of loan business, because it defrays a marketing expense that the real estate agent would otherwise incur.20. Can a mortgage broker be compensated for referring business to a lender that is unrelated to a real estate transaction, such as automobile loans?
Yes, provided that the compensation is exclusively related to the automobile loan and does not represent, in whole or in part, compensation for the referral of real estate business, and no lien is placed on a residence to secure the auto loan.
Affiliated businesses
21. If a lender refers a consumer to more than one of its affiliated settlement service providers, does the lender have to provide a separate affiliated business arrangement disclosure statement for each referral?No, the lender can use one disclosure statement.
22. If a lender refers a consumer to a settlement service provider with which it does not have an affiliate relationship, as defined by RESPA, does the lender still have to provide the affiliated business arrangement disclosure statement?No, the affiliated business arrangement disclosure statement is only for affiliates.23. When a principal in a law firm is a member of the board of a lender and the lender refers RESPA covered settlement service business to the firm, but not personally to the principal, must the relationship be disclosed?
Yes. When the lender refers the borrower to the law firm, the borrower must be given an Affiliated Business Arrangement Disclosure Statement.
Fee splitting
24. Can a lender charge a borrower a fee for sending documents via courier and disclose it on the HUD-1 where in fact the borrower stops by the lender’s office and picks up the documents instead?
No, because the charge for the courier service does not represent a charge for work actually performed which can be imposed on the borrower.
25. Can a lender collect from the borrower an appraisal fee of $200, listing the fee as such on the HUD-1, yet pay an independent appraiser $175 and collect the $25 difference?No, the lender may only collect $175 as the actual charge. It is a violation of Section 8 (b) for any person to accept a split of a fee where services are not performed.
26. Can a lender charge a borrower at closing a one time charge for setting up an account with a tax service to arrange for tax payments?
Yes, the lender may collect a reasonable charge for the service provided.
27. Can a title company, which has the only convenient closing room in the area, provide it to any interested party at $100 per closing?Yes, provided the charge is reasonably related to the value of the space.Specific forms and consumer information
28. Where a mortgage broker is used, is it the mortgage broker’s responsibility to provide the Good Faith Estimate (GFE) to consumers, or is that the lender’s responsibility?
If the mortgage broker is not an exclusive agent of the lender, the broker should provide a GFE within 3 days of receiving an application. The lender is not required to send an additional GFE; however, it is the lender’s responsibility to ascertain that one was sent and includes an estimate of all costs that are likely to occur. Where the broker is the exclusive agent of the lender, either the broker or the lender shall provide the GFE.
29. When must the special information booklet be provided and by whom?
In general, the lender or mortgage broker should provide the special information booklet at application. Alternatively, they may place it in the mail to the applicant not later than three business days after the application is received or prepared.
30. Must a mortgage servicing transfer notice be given for a prospective table funded transaction?
Yes, by the mortgage broker.
31. When the potential borrower furnishes a substantial amount of financial information for prequalification, but no particular property has been identified, must the good faith estimate be furnished to the borrower?
No. A submission by a borrower to a lender that does not identify a property is not an application and thus does not trigger the Good Faith Estimate requirement. However, HUD encourages providing information to the borrower on settlement costs as soon as it can be estimated, so that the borrower may be better able to shop.
32. If the servicer neglects to pay the homeowner’s insurance bill out of escrow and, as a result, the consumer loses coverage, what are the servicer’s responsibilities and what is the servicer’s liability for harm to the consumer that results?
The servicer is required to pay escrow items on time, so long as the borrower is timely in his/her mortgage payments. If the borrower is damaged by the servicer’s failure to pay for the insurance on time, the borrower can sue under section 6.
Additional FAQs
33. If the borrower is getting a “no cost” loan, must the lender list charges the lender is going to pay?
Yes. The charges to be shown on the GFE and the HUD-1 must include any payments by the lender to affiliated or independent settlement providers. These payments should be shown as P.O.C. (paid outside of closing).
34. The regulations at 3500.15 (b)(1)(i) state that where a lender makes a referral to a borrower the condition for providing an Affiliated Business Disclosure (AfBA) may be satisfied as part of and at the time of the GFE. Does this mean the lender does not have to give a separate AfBA disclosure if the information is part of the GFE?
No. A separate AfBA must be given. The regulation means the AfBA may be given at the time the GFE is given if this is when the affiliate is referred or is required to be used (a lender may require the use of an appraisal, credit reporting company, or attorney).
35. Must a mortgage broker disclose payments he receives that the borrower does not pay for directly?
Yes. The mortgage broker must disclose all payments and fees he receives whether they are received directly from the borrower or indirectly from the lender.
36. If I have a question concerning the calculation of the “Annual Percentage Rate” or “APR”, can HUD answer it?The calculation of the APR is part of the Truth-in-Lending Act (TILA) which is administered by the Federal Reserve Board. Questions concerning TILA as well as Section
32 (high cost loan disclosure) may be directed to the Federal Reserve Board at (202) 452-3693 .
37. May a settlement service provider charge a fee that reflects its own fee plus any recording fees as the servicer provider’s fee? Example: An attorney charges $500 for its services and the county charges $30 for recording fees. May the attorney simply charge the consumer $530 and pay the county as a cost of doing business?
No. The “Line Item” instructions to the HUD-1 state that “[f]or all items except for those paid to and retained by the lender, the name of the person or firm ultimately receiving the payment should be shown.” The attorney must disclose all entities ultimately receiving the fee.
38. May real estate agents that are independent contractors be considered employees under the “employer-employee” exemption, for purposes of being allowed to be paid referral fees from employers?
No. The exemption applies only to bona-fide employees.
39. If the borrower’s escrow account includes a surplus greater than $50 which HUD’s rules require be refunded, may the servicer credit the surplus directly to the principal, rather than refund the surplus to the borrower?
No. However, the servicer may inform the borrower in the information accompanying the return of the surplus that the borrower may elect to use the refund to reduce principal or have it credited against the next year’s escrow payments.
40. If there is a surplus in the escrow account and the borrower is in default, may the servicer retain the surplus as payment towards the amount in default?
HUD’s escrow rules are inapplicable to loans that are in default, which is defined under the RESPA rules as current payments which are more than 30 days delinquent. The parties should consult the mortgage documents or state law to resolve whether escrow funds are available for this purpose.
41. May a consumer delay or avoid a mortgage transaction if it discovers that there exists a RESPA violation?
No. RESPA specifically provides that it does not affect the validity or enforceability of any sale or contract for the sale of real property, or any agreement arising in connection with a federally-related mortgage loan.
42. How should I report a violation of RESPA? You should send a written complaint describing the practice that you believe violates RESPA.
The complaint should include the names, addresses and phone numbers of the alleged violators. It is preferred that you include your name and phone number in case an investigator wishes to ask further questions. You may request confidentiality. Send the complaint to:
U.S. Department of HUD
Office of RESPA and Interstate Land Sales
451 7th Street, SW, Room 9154
Washington, DC 20410
43. You may also wish to send a complaint to State and other Federal agencies that have the responsibility for regulating the settlement providers engaged in the referenced practice. The Law Office of Malik W. Ahmad can also audit your loan of course, on a limited basis to to see if HOEPA was violated:
Here is some basic information about HOEPA from the Federal Trade Commission Website:
High-Rate, High-Fee Loans (HOEPA/Section 32 Mortgages)
If you’re refinancing your mortgage or applying for a home equity installment loan, you should know about the Home Ownership and Equity Protection Act of 1994 (HOEPA). The law addresses certain deceptive and unfair practices in home equity lending. It amends the Truth in Lending Act (TILA) and establishes requirements for certain loans with high rates and/or high fees. The rules for these loans are contained in Section 32 of Regulation Z, which implements the TILA, so the loans also are called “Section 32 Mortgages.” Here’s what loans are covered, the law’s disclosure requirements, prohibited features, and actions you can take against a lender who is violating the law.
What Loans Are Covered?
A loan is covered by the law if it meets the following tests:
• for a first-lien loan, that is, the original mortgage on the property, the annual percentage rate (APR) exceeds by more than eight percentage points the rates on Treasury securities of comparable maturity;
• for a second-lien loan, that is, a second mortgage, the APR exceeds by more than 10 percentage points the rates in Treasury securities of comparable maturity; or
• the total fees and points payable by the consumer at or before closing exceed the larger of $561 or eight percent of the total loan amount. (The $561 figure is for 2008. This amount is adjusted annually by the Federal Reserve Board, based on changes in the Consumer Price Index.) Credit insurance premiums for insurance written in connection with the credit transaction are counted as fees.
The rules primarily affect refinancing and home equity installment loans that also meet the definition of a high-rate or high-fee loan. The rules do not cover loans to buy or build your home, reverse mortgages or home equity lines of credit (similar to revolving credit accounts).
What Disclosures Are Required?
If your loan meets the above tests, you must receive several disclosures at least three business days before the loan is finalized:
• The lender must give you a written notice stating that the loan need not be completed, even though you’ve signed the loan application and received the required disclosures. You have three business days to decide whether to sign the loan agreement after you receive the special Section 32 disclosures.
• The notice must warn you that, because the lender will have a mortgage on your home, you could lose the residence and any money put into it, if you fail to make payments.
• The lender must disclose the APR, the regular payment amount (including any balloon payment where the law permits balloon payments, discussed below), and the loan amount (plus where the amount borrowed includes credit insurance premiums, that fact must be stated). For variable rate loans, the lender must disclose that the rate and monthly payment may increase and state the amount of the maximum monthly payment.
These disclosures are in addition to the other TILA disclosures that you must receive no later than the closing of the loan.
What Practices Are Prohibited?
The following features are banned from high-rate, high-fee loans:
• All balloon payments - where the regular payments do not fully pay off the principal balance and a lump sum payment of more than twice the amount of the regular payments is required - for loans with less than five-year terms. There is an exception for bridge loans of less than one year used by consumers to buy or build a home: In that situation, balloon payments are not prohibited.
• Negative amortization, which involves smaller monthly payments that do not fully pay off the loan and that cause an increase in your total principal debt.
• Default interest rates higher than pre-default rates.
• Rebates of interest upon default calculated by any method less favorable than the actuarial method.
• A repayment schedule that consolidates more than two periodic payments that are to be paid in advance from the proceeds of the loan.
• Most prepayment penalties, including refunds of unearned interest calculated by any method less favorable than the actuarial method. The exception is if:
o the lender verifies that your total monthly debt (including the mortgage) is 50 percent or less of your monthly gross income;
o you get the money to prepay the loan from a source other than the lender or an affiliate lender; and
o the lender exercises the penalty clause during the first five years following execution of the mortgage.
• A due-on-demand clause. The exceptions are if:
o there is fraud or material misrepresentation by the consumer in connection with the loan;
o the consumer fails to meet the repayment terms of the agreement; or
o there is any action by the consumer that adversely affects the creditor’s security.
Creditors also may not:
• make loans based on the collateral value of your property without regard to your ability to repay the loan. In addition, proceeds for home improvement loans must be disbursed either directly to you, jointly to you and the home improvement contractor or, in some instances, to the escrow agent.
• refinance a HOEPA loan into another HOEPA loan within the first 12 months of origination, unless the new loan is in the borrower’s best interest. The prohibition also applies to assignees holding or servicing the loan.
• wrongfully document a closed-end, high-cost loan as an open-end loan. For example, a high-cost mortgage may not be structured as a home equity line of credit if there is no reasonable expectation that repeat transactions will occur.
How Are Compliance Violations Handled?
You may have the right to sue a lender for violations of these new requirements. In a successful suit, you may be able to recover statutory and actual damages, court costs and attorney’s fees. In addition, a violation of the high-rate, high-fee requirements of the TILA may enable you to rescind (or cancel) the loan for up to three years.
(4) Our Law Office audit your loan file to see if the ARM was adequately disclosed
(5) Our Law Office look at whether costs and fees were excessive/predatory
If we can find a legal violation of any of these statutes we can seek an appropriate remedy in a Court of law. Of course, these remedies may include monetary damages, punitive damages, attorney fees, court costs, rescission of your loan, restitution and/or a loan modification.
Note: We do not file lawsuit in every case and or not obligated just by auditing a loan to file a lawsuit. Our Attorney retains the discretion whether or not to file any case. Each suit is depends again on many other factors including the size of the loan, the nature of the lender and the complexity of litigation. Our audit is written in simple, precise and concise manner readable by anyone and understanable in simple ways. A lender faced with the prospects of an attorney filing a lawsuit overnight changes to a decent human being again eager to help his customers. This is a welcome change, and of course our borrowers like to deal with this new lenders. Now we can request the following from this newly chaged lenders:
(
a) modify the Client’s loan as an act that seeks to take accountability for their non-compliance with serious loan and mortgage laws, or
(b) face the prospects of losing in court to a jury that may be largely unsympathetic to these lenders who have largely caused the economic crises we are facing? Let’s not forget this bailout is touted as a bailout for lenders. People are not at all happy about this. If we find a serious loan compliance error or omission in your loan files following a loan audit, we will be in a very strong position to compel the lender to give you the loan modification you so badly need.
GOOD REASONS TO HAVE YOUR LOAN AUDITED BY by Our Law Office:
(1) You have negotiated your own loan modification and the lender wants you to relinquish your rights in a new loan modification agreement. Send us the loan modification agreement your lender sent you and have us review it.
(2) Even if you are not late on your mortgage (which in today’s loan modification market means noone wants to deal with you as far as banks go) have your file audited and see if the tune changes. After all, if you find a legal error, doesn’t that give you a potential right to sue your bank or lender or do you have to wait until you are late on your mortgage to sue your bank? Keep in mind, in the legal world, statutes of limitations are always running.
Why a Loan Modification Attorney is Required?
Why an Attorney Must For Loan Modification?
We all know it is very time consuming to talk or even to find the right person for a request for loan modification. We are constantly transferred from one line to another and of course to various countries during few minutes. Well, my experience in contacting the lenders has resulted many times in many frustrating experiences as well. However, when I told them that I am an attorney some of the non sense is washed away very quickly. Phones messages starts returning, letters being replied and they cut short the delaying tactics which are meant for almost all of the borrowers. I meet clients all day in reference to their loan modification needs. Here, is the summary of all the experiences what my clients had told me and my office staff in handling their own loan modification requests:
-We were transferred from one phone to another.
-We were transferred to a dead line.
-The average time of greetings last about 5 minutes, and each transferred calls is started again with greeting on the phone.
-You are advised to identify yourself each time.
-You are requested to send the same papers which you had faxed many times before.
-At each layer, the representative would ask you money.
-Each representative would give you same stale information, and invariably the first answer is “there is nothing we can do”.
Okay here is an experience of congresswoman Maxine Waters.
ABC Nightline
Countrywide:
Here is an interesting video clip about Countrywide. Countrywide is still hoodwinking its borrowers. Countrywide has not learnt its lessons and still using all the delaying tactics it can find to its borrowers.
Here is another article on House of Cards:
Part One: http://www.youtube.com/watch?v=OrmPwNFzBd4&feature=related
Part Two: http://www.youtube.com/watch?v=7PIfrI9saxM&feature=related
Where are the Chris Dodd’s Mortgage Papers:
We all know it is very time consuming to talk or even to find the right person for a request for loan modification. We are constantly transferred from one line to another and of course to various countries during few minutes. Well, my experience in contacting the lenders has resulted many times in many frustrating experiences as well. However, when I told them that I am an attorney some of the non sense is washed away very quickly. Phones messages starts returning, letters being replied and they cut short the delaying tactics which are meant for almost all of the borrowers. I meet clients all day in reference to their loan modification needs. Here, is the summary of all the experiences what my clients had told me and my office staff in handling their own loan modification requests:
-We were transferred from one phone to another.
-We were transferred to a dead line.
-The average time of greetings last about 5 minutes, and each transferred calls is started again with greeting on the phone.
-You are advised to identify yourself each time.
-You are requested to send the same papers which you had faxed many times before.
-At each layer, the representative would ask you money.
-Each representative would give you same stale information, and invariably the first answer is “there is nothing we can do”.
Okay here is an experience of congresswoman Maxine Waters.
ABC Nightline
Countrywide:
Here is an interesting video clip about Countrywide. Countrywide is still hoodwinking its borrowers. Countrywide has not learnt its lessons and still using all the delaying tactics it can find to its borrowers.
Here is another article on House of Cards:
Part One: http://www.youtube.com/watch?v=OrmPwNFzBd4&feature=related
Part Two: http://www.youtube.com/watch?v=7PIfrI9saxM&feature=related
Where are the Chris Dodd’s Mortgage Papers:
Wednesday, February 4, 2009
How To Talk To Your Lenders?
How to do loan modification with some top lenders?
In this article, I am suggesting ways and means to talk, handle and finally negotiate a loan modification with your lenders. These are time tested tricks, and procedure which people who does not want to hire an attorney, can use and be successful. I am not saying that you should not hire a licensed attorney, and by all means should hire a Nevada attorney but I am saying that if you are so hard pressed but otherwise feel capable of doing your own loan modification and like to sail through this troubled tsunami, then have my blessings and read the following pearls of wisdom.
First with Countrywide, there are some important steps you need to take.
Countrywide has made a settlement with State Attorney General of Nevada to do loan modifications. Countrywide, a rule of caution for everyone, is one of the most crooked bank of USA. Yes, close to the savings bank debacle of the 80’s. If one institution had single handedly destroyed the American fabric and American Home Dream, this is the one. What does Countrywide Bank need to see from you in order to approve your loan modification application? Here are some of the items you will need to prepare and submit with your application:
• Hardship Letter-a brief explanation detailing the circumstances that caused you to become delinquent, explain how you have tried to remedy the situation and tell the lender about your plan to get back on track and stay there.
• Recent Income documents: pay stubs, W2, benefit statements, unemployment
• Bank statements and Tax returns for last 2 years
• Complete & accurate financial statements
How all of these documents are prepared and presented to Countrywide loss mitigation department can make the difference between getting your loan modified to an affordable payment or being denied.
A little up-front knowledge and preparation will give you the fighting chance you need to save your home with a loan workout. Once you know what Countrywide Bank is looking for in an acceptable loan modification application, you will be able to present your case in the best possible light to get an approval.
First, send them an authorization, if some third party is handling your case like an attorney. Then, wait a few days, and send them a hardship letter. Please see my blog for writing a hardship letter. Then just give them basic financial information about your mortgage, expenses, and income. A rule of caution, don’t give them all the details, so in case you need to change down the road, you can do that. Try some intelligence with them. Don’t beg them. Tell them that they had done something wrong. Not a single day passes, when Countrywide does not settle with someone the ongoing litigation.
Here are 8 Tips that will help you get your loan modification application approved:
Tip #1: You should know the lenders guidelines for approval before you even send your documentation. Wells Fargo is strict about all these guidelines, and your case would be unnecessarily delayed, if some of your documents are missing.
Tip #2: Make a financial statements which can show all your income and expenses, and that you are trying to cut down your expenses, and in fact, balancing your budget and expenses. Eliminate all the unnecessary expenses like cable tv, cell phone bill, extra car sitting in garage for long time, including of course sending in-laws back to their original home.
Tip #3: Write a convincing letter explaining your circumstances about your hardship situation. I have given some templates. Use them extensively with some revision. Sooner, I am going to write more about different economic hardship situation.
Tip #4 Substantiate your economic hardship with supporting documents. Each fact should be corroborated with documentary evidence.
Tip #5: Calculate your monthly mortgage payment yourself, and prepare yourself, if you can live with it because this is the payment you are going to pay for the next 30 years or so.
Tip #6: Take your time and complete the required loan modification application forms. Call the lenders to find out if they had received all the papers.
Tip #7: Submit a complete, accurate and acceptable application that meets the Wells Fargo loan modification program guidelines. Remember, if you are missing on any of these documentation, you are losing valuable time.
When you call the lenders on phone, make sure you plan to stay longer period of time, and also to be very polite with the representatives. Make sure you get their name, and write on your journal with time and date, and the result of the conversation.
Please resubmit any of the financial information again if there is any change or it needs any update or your hours are reduced. The banks would not tell you what they are looking for (truthfully they are looking for excuse to get rid of you), sometime they would say you make more money, and some time they say there is no way you can make the modified payments. Try not to get angry. These are the frontline people who are taught this way. They are not rude, they are reading a script, and they can't depart from this script. Try not to convince them, but instead ask them about loan modification, or home retention department.
In this article, I am suggesting ways and means to talk, handle and finally negotiate a loan modification with your lenders. These are time tested tricks, and procedure which people who does not want to hire an attorney, can use and be successful. I am not saying that you should not hire a licensed attorney, and by all means should hire a Nevada attorney but I am saying that if you are so hard pressed but otherwise feel capable of doing your own loan modification and like to sail through this troubled tsunami, then have my blessings and read the following pearls of wisdom.
First with Countrywide, there are some important steps you need to take.
Countrywide has made a settlement with State Attorney General of Nevada to do loan modifications. Countrywide, a rule of caution for everyone, is one of the most crooked bank of USA. Yes, close to the savings bank debacle of the 80’s. If one institution had single handedly destroyed the American fabric and American Home Dream, this is the one. What does Countrywide Bank need to see from you in order to approve your loan modification application? Here are some of the items you will need to prepare and submit with your application:
• Hardship Letter-a brief explanation detailing the circumstances that caused you to become delinquent, explain how you have tried to remedy the situation and tell the lender about your plan to get back on track and stay there.
• Recent Income documents: pay stubs, W2, benefit statements, unemployment
• Bank statements and Tax returns for last 2 years
• Complete & accurate financial statements
How all of these documents are prepared and presented to Countrywide loss mitigation department can make the difference between getting your loan modified to an affordable payment or being denied.
A little up-front knowledge and preparation will give you the fighting chance you need to save your home with a loan workout. Once you know what Countrywide Bank is looking for in an acceptable loan modification application, you will be able to present your case in the best possible light to get an approval.
First, send them an authorization, if some third party is handling your case like an attorney. Then, wait a few days, and send them a hardship letter. Please see my blog for writing a hardship letter. Then just give them basic financial information about your mortgage, expenses, and income. A rule of caution, don’t give them all the details, so in case you need to change down the road, you can do that. Try some intelligence with them. Don’t beg them. Tell them that they had done something wrong. Not a single day passes, when Countrywide does not settle with someone the ongoing litigation.
Here are 8 Tips that will help you get your loan modification application approved:
Tip #1: You should know the lenders guidelines for approval before you even send your documentation. Wells Fargo is strict about all these guidelines, and your case would be unnecessarily delayed, if some of your documents are missing.
Tip #2: Make a financial statements which can show all your income and expenses, and that you are trying to cut down your expenses, and in fact, balancing your budget and expenses. Eliminate all the unnecessary expenses like cable tv, cell phone bill, extra car sitting in garage for long time, including of course sending in-laws back to their original home.
Tip #3: Write a convincing letter explaining your circumstances about your hardship situation. I have given some templates. Use them extensively with some revision. Sooner, I am going to write more about different economic hardship situation.
Tip #4 Substantiate your economic hardship with supporting documents. Each fact should be corroborated with documentary evidence.
Tip #5: Calculate your monthly mortgage payment yourself, and prepare yourself, if you can live with it because this is the payment you are going to pay for the next 30 years or so.
Tip #6: Take your time and complete the required loan modification application forms. Call the lenders to find out if they had received all the papers.
Tip #7: Submit a complete, accurate and acceptable application that meets the Wells Fargo loan modification program guidelines. Remember, if you are missing on any of these documentation, you are losing valuable time.
When you call the lenders on phone, make sure you plan to stay longer period of time, and also to be very polite with the representatives. Make sure you get their name, and write on your journal with time and date, and the result of the conversation.
Please resubmit any of the financial information again if there is any change or it needs any update or your hours are reduced. The banks would not tell you what they are looking for (truthfully they are looking for excuse to get rid of you), sometime they would say you make more money, and some time they say there is no way you can make the modified payments. Try not to get angry. These are the frontline people who are taught this way. They are not rude, they are reading a script, and they can't depart from this script. Try not to convince them, but instead ask them about loan modification, or home retention department.
Let us do some homework if you got a predatory loan?
Let Us Do Some Homework If You Got a Predatory Loan?
Foreclosures in Nevada are on the rise and unfortunately everyday more and more homes are being foreclosed. Not all of that is your fault, and it is not all based on your non payments of the monthly mortgage payments. There is something else to it, and that is the predatory practices of your lenders. They are the one who has given loans to unqualified people, with unverified and unsubstantiated incomes and financial reports, and started loans with the so called “teaser rate”. So they are also culpable in this fiasco. In fact, they are the one who caused this fiasco.
1. Find out if you have a balloon loan. A balloon loan is the one in which after a series of low payments the entire loan balance is due in a large lump sum) and your need to obtain another loan to finance that final lump-sum amount.
2. PMSI and other mandatory insurances? Were you required to buy credit insurance, insurance that will repay the debt if you die or become disabled? (Note: Credit insurance is optional and will not affect your loan decision if you decline to buy it. It can, however, add considerable cost to the loan transaction. You should decide whether you are going to purchase credit insurance carefully.)
3. Have you refinanced your loan several times, and in each instance increased either your monthly payment and/or the total amount you owe on your home?
4. After settlement, were you surprised to find that the monthly payments on your mortgage loan were higher than you anticipated based on the initial disclosures?
5. Did you incur any unexpected costs at settlement that were not explained to you prior to the settlement?
6. Were you asked to leave signature lines or any other important line-item of any form blank? Did the lender or broker alter any information you entered on your loan application?
7. Check your loan file. Are any of the following disclosures missing?
- Good Faith Estimate:
- Special Information Booklet
- Truth in Lending
- HUD-1 Settlement Statement
- Any missing signature of one of the spouse
- Any spouse missed any of the initial in those documents
o Each one of the spouse suppose to get separate documents for loan closing.
8. Do your documents reveal that your interest rate calculation will change to require you to pay "daily interest" in instances when your payments are late?
9. Is your loan amount on the loan you obtained higher than the value of the home?
10. Were you encouraged to include false information on your loan application?
11. What is falsification of loan documents? This is most common in Nevada because most of the people, who worked in the service industry, never made more money to deserve a conventional loan. Most of them got 80/20 loans. That means they have a principal mortgage accompanied with a secondary mortgage. Unfortunately, they are the prime victim of this predatory mortgage practices. Their assets, jobs, secondary job, and of course the so called “other income” was never verified by a single verifier. I still see lots of the missing documents in the loan/escrow package. Most of the times, the TILA documents are missing, at other times the most missing are the RESPA documents. The borrowers were given a different Good Faith Estimate and the escrow papers reveal a different outlook.
Foreclosures in Nevada are on the rise and unfortunately everyday more and more homes are being foreclosed. Not all of that is your fault, and it is not all based on your non payments of the monthly mortgage payments. There is something else to it, and that is the predatory practices of your lenders. They are the one who has given loans to unqualified people, with unverified and unsubstantiated incomes and financial reports, and started loans with the so called “teaser rate”. So they are also culpable in this fiasco. In fact, they are the one who caused this fiasco.
1. Find out if you have a balloon loan. A balloon loan is the one in which after a series of low payments the entire loan balance is due in a large lump sum) and your need to obtain another loan to finance that final lump-sum amount.
2. PMSI and other mandatory insurances? Were you required to buy credit insurance, insurance that will repay the debt if you die or become disabled? (Note: Credit insurance is optional and will not affect your loan decision if you decline to buy it. It can, however, add considerable cost to the loan transaction. You should decide whether you are going to purchase credit insurance carefully.)
3. Have you refinanced your loan several times, and in each instance increased either your monthly payment and/or the total amount you owe on your home?
4. After settlement, were you surprised to find that the monthly payments on your mortgage loan were higher than you anticipated based on the initial disclosures?
5. Did you incur any unexpected costs at settlement that were not explained to you prior to the settlement?
6. Were you asked to leave signature lines or any other important line-item of any form blank? Did the lender or broker alter any information you entered on your loan application?
7. Check your loan file. Are any of the following disclosures missing?
- Good Faith Estimate:
- Special Information Booklet
- Truth in Lending
- HUD-1 Settlement Statement
- Any missing signature of one of the spouse
- Any spouse missed any of the initial in those documents
o Each one of the spouse suppose to get separate documents for loan closing.
8. Do your documents reveal that your interest rate calculation will change to require you to pay "daily interest" in instances when your payments are late?
9. Is your loan amount on the loan you obtained higher than the value of the home?
10. Were you encouraged to include false information on your loan application?
11. What is falsification of loan documents? This is most common in Nevada because most of the people, who worked in the service industry, never made more money to deserve a conventional loan. Most of them got 80/20 loans. That means they have a principal mortgage accompanied with a secondary mortgage. Unfortunately, they are the prime victim of this predatory mortgage practices. Their assets, jobs, secondary job, and of course the so called “other income” was never verified by a single verifier. I still see lots of the missing documents in the loan/escrow package. Most of the times, the TILA documents are missing, at other times the most missing are the RESPA documents. The borrowers were given a different Good Faith Estimate and the escrow papers reveal a different outlook.
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