Return of the Predators: The Perpetual Visits
This is an interesting article which is an editorial from NY times. All credit for this article goes to NY Times.
November 24, 2008
Editorial
Return of the Predators
The demise of the subprime mortgage industry has been hard on predatory brokers, too. They feasted for years on bad loans until reality crashed down and the money ran out, and there they were: sharks without a frenzy.
Now they are circling again. Predators of every sort have regrouped and returned to their old ways, this time as loan-modification companies, inserting themselves between hard-strapped homeowners and banks, offering to work deals — for cash up front.It’s a high-pressure, high-volume business, advertising in the usual low-rent ways: talk-radio ads, Web come-ons, fliers on car windshields. The ads are full of glossy promises, like this one for a Long Island outfit: “Reduce your mortgage rate to as low as 4%. No refinancing — no closing costs. Reduce your monthly payment. Foreclosures, late pays/bad credit okay.”It’ll cost you — in this case, 1 percent of your outstanding loan, half of it in advance.There’s often nothing illegal about this booming and largely unregulated business. Some shops are true scams, taking the money and running. But others are just immoral, profiting on fear and false hopes with expensive services that nonprofit organizations and government agencies offer for nothing.Troubled homeowners know all about the relentlessness of the loan-rescue racket: it fills their mailboxes and sends salespeople to lurk on their doorsteps. Foreclosure filings are public records, and loan modifiers routinely swarm courthouses to find leads. Loan counselors at the Long Island Housing Partnership, a respected nonprofit in Hauppauge, N.Y., tell of scammers crashing its housing workshops, posing as troubled borrowers, then working the crowd with sales pitches.And they do work hard. A call to one law firm’s toll-free number plugged on WABC radio quickly gets a call back with a hard sell. “We have a 100 percent success rate” in renegotiating loans, an operator sweetly vows, reluctant to say more until you tell her what your mortgage payment is and how far behind you are.The painful truth is that nobody has a 100 percent success rate, and not every loan is fixable. Banks have recently made public commitments to putting more effort into working loans out. But homeowners need to realize that the best way to do that is directly with the lender or through a reputable nonprofit counselor.The for-profit loan modifier’s cruelly deceptive sales pitch is that you get what you pay for. Nonprofit organizations, which work for no fee, say they can strike better deals, because they have longstanding relationships with lenders that storefront firms do not have.But that doesn’t mean that well-meaning advocates are aggressive and effective in finding people who need help. The government, banks and nonprofit organizations need to be more creative and assertive to outmaneuver the predators — to send the competing message that hope doesn’t require thousands of dollars in cash up front, although it does mean facing up to hard truths about one’s finances and future.Nonprofits frequently complain about how hard it is to get at-risk homeowners to ask for help. It’s true that people deep in debt are often embarrassed and wrapped in blankets of denial. They don’t open mail or reliably make appointments. But the good actors in this bad drama need to get better at working around that problem, before more good money is thrown after bad.
Friday, January 23, 2009
What Should You Do During the Foreclosure Process?
What Should You Do During the Foreclosure Process
Mortgage Payments Sending You Reeling? Here’s What to Do
[Note: This article is taken from the Federal Trade Commission Site.]
The possibility of losing your home because you can’t make the mortgage payments can be terrifying. Perhaps you’re having trouble making ends meet because you or a family member lost a job, or you’re having other financial problems. Or maybe you’re one of the many consumers who took out a mortgage that had a fixed rate for the first two or three years and then had an adjustable rate – and you want to know what your payments will be and whether you’ll be able to make them.
Regardless of the reason for your mortgage anxiety, the Federal Trade Commission (FTC), the nation’s consumer protection agency, wants you to know how to help save your home, and how to recognize and avoid foreclosure scams.
Know Your Mortgage:
Do you know what kind of mortgage you have? Do you know whether your payments are going to increase? If you can’t tell by reading the mortgage documents you received at settlement, contact your loan servicer and ask. A loan servicer is responsible for collecting your monthly loan payments and crediting your account.
Here are some examples of types of mortgages:
Hybrid Adjustable Rate Mortgages (ARMs): Mortgages that have fixed payments for a few years, and then turn into adjustable loans. Some are called 2/28 or 3/27 hybrid ARMs: the first number refers to the years the loan has a fixed rate and the second number refers to the years the loan has an adjustable rate. Others are 5/1 or 3/1 hybrid ARMs: the first number refers to the years the loan has a fixed rate, and the second number refers to how often the rate changes. In a 3/1 hybrid ARM, for example, the interest rate is fixed for three years, then adjusts every year thereafter.
ARMs: Mortgages that have adjustable rates from the start, which means your payments change over time.Fixed Rate Mortgages: Mortgages where the rate is fixed for the life of the loan; the only change in your payment would result from changes in your taxes and insurance if you have an escrow account with your loan servicer.If you have a hybrid ARM or an ARM and the payments will increase – and you have trouble making the increased payments – find out if you can refinance to a fixed-rate loan. Review your contract first, checking for prepayment penalties. Many ARMs carry prepayment penalties that force borrowers to come up with thousands of dollars if they decide to refinance within the first few years of the loan. If you’re planning to sell soon after your adjustment, refinancing may not be worth the cost. But if you’re planning to stay in your home for a while, a fixed-rate mortgage might be the way to go. Online calculators can help you determine your costs and payments.
If You’re Behind On Your Payments.
If you are having trouble making your payments, contact your loan servicer to discuss your options as early as you can. The longer you wait to call, the fewer options you will have.
Many loan servicers expanded the options available to borrowers during 2008 – it’s worth calling your servicer even if your request has been turned down before. Servicers are getting lots of calls: Be patient, and be persistent if you don’t reach your servicer on the first try.You also may want to ask if you qualify for the “HOPE for Homeowners (H4H)” program. Congress created H4H to help those at risk of default and foreclosure refinance into more affordable, sustainable loans. The program provides a new, 30-year fixed rate mortgage insured by the Federal Housing Administration (FHA) if you and your lender agree to certain conditions. The program expires September 30, 2011. For more information, see www.hud.gov/foreclosure.
Avoiding Default and ForeclosureIf you have fallen behind on your payments, consider discussing the following foreclosure prevention options with your loan servicer:Reinstatement: You pay the loan servicer the entire past-due amount, plus any late fees or penalties, by a date you both agree to. This option may be appropriate if your problem paying your mortgage is temporary.
Repayment plan:
Your servicer gives you a fixed amount of time to repay the amount you are behind by adding a portion of what is past due to your regular payment. This option may be appropriate if you’ve missed a small number of payments.
Forbearance:
Your mortgage payments are reduced or suspended for a period you and your servicer agree to. At the end of that time, you resume making your regular payments as well as a lump sum payment or additional partial payments for a number of months to bring the loan current. Forbearance may be an option if your income is reduced temporarily (for example, you are on disability leave from a job, and you expect to go back to your full time position shortly). Forbearance isn’t going to help you if you’re in a home you can’t afford.
Loan modification:
You and your loan servicer agree to permanently change one or more of the terms of the mortgage contract to make your payments more manageable for you. Modifications may include reducing the interest rate, extending the term of the loan, or adding missed payments to the loan balance. A modification also may involve reducing the amount of money you owe on your primary residence by forgiving, or cancelling, a portion of the mortgage debt. Under the Mortgage Forgiveness Debt Relief Act of 2007, the forgiven debt may be excluded from income when calculating the federal taxes you owe, but it still must be reported on your federal tax return. For more information, see www.irs.gov. A loan modification may be necessary if you are facing a long-term reduction in your income or increased payments on an ARM.
Before you ask for forbearance or a loan modification, be prepared to show that you are making a good-faith effort to pay your mortgage. For example, if you can show that you’ve reduced other expenses, your loan servicer may be more likely to negotiate with you.
Selling your home: Depending on the real estate market in your area, selling your home may provide the funds you need to pay off your current mortgage debt in full.
Bankruptcy: Personal bankruptcy generally is considered the debt management option of last resort because the results are long-lasting and far-reaching. A bankruptcy stays on your credit report for 10 years, and can make it difficult to get credit, buy another home, get life insurance, or sometimes, get a job. Still, it is a legal procedure that can offer a fresh start for people who can’t satisfy their debts.If you and your loan servicer cannot agree on a repayment plan or other remedy, you may want to investigate filing Chapter 13 bankruptcy. If you have a regular income, Chapter 13 may allow you to keep property, like a mortgaged house or car, that you might otherwise lose. In Chapter 13, the court approves a repayment plan that allows you to use your future income toward payment of your debts during a three-to-five-year period, rather than surrender the property. After you have made all the payments under the plan, you receive a discharge of certain debts.
To learn more about Chapter 13, visit www.usdoj.gov/ust; it’s the website of the U.S. Trustee Program, the organization within the U.S. Department of Justice that oversees bankruptcy cases and trustees.
If you have a mortgage through the Federal Housing Administration (FHA) or Veterans Administration (VA), you may have other foreclosure alternatives. Contact the FHA (www.fha.gov) or VA (www.homeloans.va.gov) to talk about them.
Contacting Your Loan Servicer Before you have any conversation with your loan servicer, prepare. Record your income and expenses, and calculate the equity in your home. To calculate the equity, estimate the market value less the balance of your first and any second mortgage or home equity loan.
Then, write down the answers to the following questions:
What happened to make you miss your mortgage payment(s)?
Do you have any documents to back up your explanation for falling behind? How have you tried to resolve the problem?Is your problem temporary, long-term, or permanent?What changes in your situation do you see in the short term, and in the long term? What other financial issues may be stopping you from getting back on track with your mortgage?What would you like to see happen?Do you want to keep the home? What type of payment arrangement would be feasible for you?Throughout the foreclosure prevention process: Keep notes of all your communications with the servicer, including date and time of contact, the nature of the contact (face-to-face, by phone, email, fax or postal mail), the name of the representative, and the outcome.Follow up any oral requests you make with a letter to the servicer. Send your letter by certified mail, “return receipt requested,” so you can document what the servicer received. Keep copies of your letter and any enclosures.Meet all deadlines the servicer gives you.Stay in your home during the process, since you may not qualify for certain types of assistance if you move out. Renting your home will change it from a primary residence to an investment property. Most likely, it will disqualify you for any additional “workout” assistance from the servicer. If you choose this route, be sure the rental income is enough to help you get and keep your loan current.
Housing and Credit Counseling You don’t have to go through the foreclosure prevention process alone. A counselor with a housing counseling agency can assess your situation, answer your questions, go over your options, prioritize your debts, and help you prepare for discussions with your loan servicer. Housing counseling services usually are free or low cost.
While some agencies limit their counseling services to homeowners with FHA mortgages, many others offer free help to any homeowner who is having trouble making mortgage payments. Call the local office of the U.S. Department of Housing and Urban Development (www.hud.gov) or the housing authority in your state, city, or county for help in finding a legitimate housing counseling agency nearby. Or consider contacting the Homeownership Preservation Foundation (HPF) at 888-995-HOPE or www.hopenow.com. HPF is a nonprofit organization that partners with mortgage companies, local governments, and other organizations to help consumers get loan modifications and prevent foreclosures.
When choosing a counselor, beware of anyone charging large up-front fees or guaranteeing you a loan modification or other solution to stop foreclosure. They shouldn’t be charging you high fees or making any guarantees. Take your business elsewhere.
Consider Giving Up Your Home Without Foreclosure. Not every situation can be resolved through your loan servicer’s foreclosure prevention programs. If you’re not able to keep your home, or if you don’t want to keep it, consider:
Selling Your House:
Your servicers might postpone foreclosure proceedings if you have a pending sales contract or if you put your home on the market. This approach works if proceeds from the sale can pay off the entire loan balance plus the expenses connected to selling the home (for example, real estate agent fees). Such a sale would allow you to avoid late and legal fees and damage to your credit rating, and protect your equity in the property.
Short Sale:
Your servicers may allow you to sell the home yourself before it forecloses on the property, agreeing to forgive any shortfall between the sale price and the mortgage balance. This approach avoids a damaging foreclosure entry on your credit report. Under the Mortgage Forgiveness Debt Relief Act of 2007, the forgiven debt on your primary residence may be excluded from income when calculating the federal taxes you owe, but it still must be reported on your federal tax return. For more information, see www.irs.gov, and consider consulting a financial advisor, accountant, or attorney.
Deed in Lieu of Foreclosure:
You voluntarily transfer your property title to the servicers (with the servicer’s agreement) in exchange for cancellation of the remainder of your debt. Though you lose the home, a deed in lieu of foreclosure can be less damaging to your credit than a foreclosure. You will lose any equity in the property, although under the Mortgage Forgiveness Debt Relief Act of 2007, the forgiven debt on your primary residence may be excluded from income when calculating the federal taxes you owe. However, it still must be reported on your federal tax return. For more information, see www.irs.gov. A deed in lieu of foreclosure may not be an option for you if other loans or obligations are secured by the property on your home.
Be Alert to ScamsScam artists follow the headlines, and know there are homeowners falling behind in their mortgage payments or at risk for foreclosure. Their pitches may sound like a way for you to get out from under, but their intentions are as far from honorable as they can be. They mean to take your money. Among the predatory scams that have been reported are:
The foreclosure prevention specialist: The “specialist” really is a phony counselor who charges high fees in exchange for making a few phone calls or completing some paperwork that a homeowner could easily do for himself. None of the actions results in saving the home. This scam gives homeowners a false sense of hope, delays them from seeking qualified help, and exposes their personal financial information to a fraudster.
Some of these companies even use names with the word HOPE or HOPE NOW in them to confuse borrowers who are looking for assistance from the free 888-995-HOPE hotline.The lease/buy back: Homeowners are deceived into signing over the deed to their home to a scam artist who tells them they will be able to remain in the house as a renter and eventually buy it back. Usually, the terms of this scheme are so demanding that the buy-back becomes impossible, the homeowner gets evicted, and the “rescuer” walks off with most or all of the equity.The bait-and-switch: Homeowners think they are signing documents to bring the mortgage current. Instead, they are signing over the deed to their home. Homeowners usually don’t know they’ve been scammed until they get an eviction notice.For More InformationTo learn more about mortgages and other credit-related issues, visit www.ftc.gov/credit and MyMoney.gov, the U.S. government’s portal to financial education.
The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. To file a complaint or to get free information on consumer issues, visit ftc.gov or call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261. The FTC enters consumer complaints into the Consumer Sentinel Network, a secure online database and investigative tool used by hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.
Mortgage Payments Sending You Reeling? Here’s What to Do
[Note: This article is taken from the Federal Trade Commission Site.]
The possibility of losing your home because you can’t make the mortgage payments can be terrifying. Perhaps you’re having trouble making ends meet because you or a family member lost a job, or you’re having other financial problems. Or maybe you’re one of the many consumers who took out a mortgage that had a fixed rate for the first two or three years and then had an adjustable rate – and you want to know what your payments will be and whether you’ll be able to make them.
Regardless of the reason for your mortgage anxiety, the Federal Trade Commission (FTC), the nation’s consumer protection agency, wants you to know how to help save your home, and how to recognize and avoid foreclosure scams.
Know Your Mortgage:
Do you know what kind of mortgage you have? Do you know whether your payments are going to increase? If you can’t tell by reading the mortgage documents you received at settlement, contact your loan servicer and ask. A loan servicer is responsible for collecting your monthly loan payments and crediting your account.
Here are some examples of types of mortgages:
Hybrid Adjustable Rate Mortgages (ARMs): Mortgages that have fixed payments for a few years, and then turn into adjustable loans. Some are called 2/28 or 3/27 hybrid ARMs: the first number refers to the years the loan has a fixed rate and the second number refers to the years the loan has an adjustable rate. Others are 5/1 or 3/1 hybrid ARMs: the first number refers to the years the loan has a fixed rate, and the second number refers to how often the rate changes. In a 3/1 hybrid ARM, for example, the interest rate is fixed for three years, then adjusts every year thereafter.
ARMs: Mortgages that have adjustable rates from the start, which means your payments change over time.Fixed Rate Mortgages: Mortgages where the rate is fixed for the life of the loan; the only change in your payment would result from changes in your taxes and insurance if you have an escrow account with your loan servicer.If you have a hybrid ARM or an ARM and the payments will increase – and you have trouble making the increased payments – find out if you can refinance to a fixed-rate loan. Review your contract first, checking for prepayment penalties. Many ARMs carry prepayment penalties that force borrowers to come up with thousands of dollars if they decide to refinance within the first few years of the loan. If you’re planning to sell soon after your adjustment, refinancing may not be worth the cost. But if you’re planning to stay in your home for a while, a fixed-rate mortgage might be the way to go. Online calculators can help you determine your costs and payments.
If You’re Behind On Your Payments.
If you are having trouble making your payments, contact your loan servicer to discuss your options as early as you can. The longer you wait to call, the fewer options you will have.
Many loan servicers expanded the options available to borrowers during 2008 – it’s worth calling your servicer even if your request has been turned down before. Servicers are getting lots of calls: Be patient, and be persistent if you don’t reach your servicer on the first try.You also may want to ask if you qualify for the “HOPE for Homeowners (H4H)” program. Congress created H4H to help those at risk of default and foreclosure refinance into more affordable, sustainable loans. The program provides a new, 30-year fixed rate mortgage insured by the Federal Housing Administration (FHA) if you and your lender agree to certain conditions. The program expires September 30, 2011. For more information, see www.hud.gov/foreclosure.
Avoiding Default and ForeclosureIf you have fallen behind on your payments, consider discussing the following foreclosure prevention options with your loan servicer:Reinstatement: You pay the loan servicer the entire past-due amount, plus any late fees or penalties, by a date you both agree to. This option may be appropriate if your problem paying your mortgage is temporary.
Repayment plan:
Your servicer gives you a fixed amount of time to repay the amount you are behind by adding a portion of what is past due to your regular payment. This option may be appropriate if you’ve missed a small number of payments.
Forbearance:
Your mortgage payments are reduced or suspended for a period you and your servicer agree to. At the end of that time, you resume making your regular payments as well as a lump sum payment or additional partial payments for a number of months to bring the loan current. Forbearance may be an option if your income is reduced temporarily (for example, you are on disability leave from a job, and you expect to go back to your full time position shortly). Forbearance isn’t going to help you if you’re in a home you can’t afford.
Loan modification:
You and your loan servicer agree to permanently change one or more of the terms of the mortgage contract to make your payments more manageable for you. Modifications may include reducing the interest rate, extending the term of the loan, or adding missed payments to the loan balance. A modification also may involve reducing the amount of money you owe on your primary residence by forgiving, or cancelling, a portion of the mortgage debt. Under the Mortgage Forgiveness Debt Relief Act of 2007, the forgiven debt may be excluded from income when calculating the federal taxes you owe, but it still must be reported on your federal tax return. For more information, see www.irs.gov. A loan modification may be necessary if you are facing a long-term reduction in your income or increased payments on an ARM.
Before you ask for forbearance or a loan modification, be prepared to show that you are making a good-faith effort to pay your mortgage. For example, if you can show that you’ve reduced other expenses, your loan servicer may be more likely to negotiate with you.
Selling your home: Depending on the real estate market in your area, selling your home may provide the funds you need to pay off your current mortgage debt in full.
Bankruptcy: Personal bankruptcy generally is considered the debt management option of last resort because the results are long-lasting and far-reaching. A bankruptcy stays on your credit report for 10 years, and can make it difficult to get credit, buy another home, get life insurance, or sometimes, get a job. Still, it is a legal procedure that can offer a fresh start for people who can’t satisfy their debts.If you and your loan servicer cannot agree on a repayment plan or other remedy, you may want to investigate filing Chapter 13 bankruptcy. If you have a regular income, Chapter 13 may allow you to keep property, like a mortgaged house or car, that you might otherwise lose. In Chapter 13, the court approves a repayment plan that allows you to use your future income toward payment of your debts during a three-to-five-year period, rather than surrender the property. After you have made all the payments under the plan, you receive a discharge of certain debts.
To learn more about Chapter 13, visit www.usdoj.gov/ust; it’s the website of the U.S. Trustee Program, the organization within the U.S. Department of Justice that oversees bankruptcy cases and trustees.
If you have a mortgage through the Federal Housing Administration (FHA) or Veterans Administration (VA), you may have other foreclosure alternatives. Contact the FHA (www.fha.gov) or VA (www.homeloans.va.gov) to talk about them.
Contacting Your Loan Servicer Before you have any conversation with your loan servicer, prepare. Record your income and expenses, and calculate the equity in your home. To calculate the equity, estimate the market value less the balance of your first and any second mortgage or home equity loan.
Then, write down the answers to the following questions:
What happened to make you miss your mortgage payment(s)?
Do you have any documents to back up your explanation for falling behind? How have you tried to resolve the problem?Is your problem temporary, long-term, or permanent?What changes in your situation do you see in the short term, and in the long term? What other financial issues may be stopping you from getting back on track with your mortgage?What would you like to see happen?Do you want to keep the home? What type of payment arrangement would be feasible for you?Throughout the foreclosure prevention process: Keep notes of all your communications with the servicer, including date and time of contact, the nature of the contact (face-to-face, by phone, email, fax or postal mail), the name of the representative, and the outcome.Follow up any oral requests you make with a letter to the servicer. Send your letter by certified mail, “return receipt requested,” so you can document what the servicer received. Keep copies of your letter and any enclosures.Meet all deadlines the servicer gives you.Stay in your home during the process, since you may not qualify for certain types of assistance if you move out. Renting your home will change it from a primary residence to an investment property. Most likely, it will disqualify you for any additional “workout” assistance from the servicer. If you choose this route, be sure the rental income is enough to help you get and keep your loan current.
Housing and Credit Counseling You don’t have to go through the foreclosure prevention process alone. A counselor with a housing counseling agency can assess your situation, answer your questions, go over your options, prioritize your debts, and help you prepare for discussions with your loan servicer. Housing counseling services usually are free or low cost.
While some agencies limit their counseling services to homeowners with FHA mortgages, many others offer free help to any homeowner who is having trouble making mortgage payments. Call the local office of the U.S. Department of Housing and Urban Development (www.hud.gov) or the housing authority in your state, city, or county for help in finding a legitimate housing counseling agency nearby. Or consider contacting the Homeownership Preservation Foundation (HPF) at 888-995-HOPE or www.hopenow.com. HPF is a nonprofit organization that partners with mortgage companies, local governments, and other organizations to help consumers get loan modifications and prevent foreclosures.
When choosing a counselor, beware of anyone charging large up-front fees or guaranteeing you a loan modification or other solution to stop foreclosure. They shouldn’t be charging you high fees or making any guarantees. Take your business elsewhere.
Consider Giving Up Your Home Without Foreclosure. Not every situation can be resolved through your loan servicer’s foreclosure prevention programs. If you’re not able to keep your home, or if you don’t want to keep it, consider:
Selling Your House:
Your servicers might postpone foreclosure proceedings if you have a pending sales contract or if you put your home on the market. This approach works if proceeds from the sale can pay off the entire loan balance plus the expenses connected to selling the home (for example, real estate agent fees). Such a sale would allow you to avoid late and legal fees and damage to your credit rating, and protect your equity in the property.
Short Sale:
Your servicers may allow you to sell the home yourself before it forecloses on the property, agreeing to forgive any shortfall between the sale price and the mortgage balance. This approach avoids a damaging foreclosure entry on your credit report. Under the Mortgage Forgiveness Debt Relief Act of 2007, the forgiven debt on your primary residence may be excluded from income when calculating the federal taxes you owe, but it still must be reported on your federal tax return. For more information, see www.irs.gov, and consider consulting a financial advisor, accountant, or attorney.
Deed in Lieu of Foreclosure:
You voluntarily transfer your property title to the servicers (with the servicer’s agreement) in exchange for cancellation of the remainder of your debt. Though you lose the home, a deed in lieu of foreclosure can be less damaging to your credit than a foreclosure. You will lose any equity in the property, although under the Mortgage Forgiveness Debt Relief Act of 2007, the forgiven debt on your primary residence may be excluded from income when calculating the federal taxes you owe. However, it still must be reported on your federal tax return. For more information, see www.irs.gov. A deed in lieu of foreclosure may not be an option for you if other loans or obligations are secured by the property on your home.
Be Alert to ScamsScam artists follow the headlines, and know there are homeowners falling behind in their mortgage payments or at risk for foreclosure. Their pitches may sound like a way for you to get out from under, but their intentions are as far from honorable as they can be. They mean to take your money. Among the predatory scams that have been reported are:
The foreclosure prevention specialist: The “specialist” really is a phony counselor who charges high fees in exchange for making a few phone calls or completing some paperwork that a homeowner could easily do for himself. None of the actions results in saving the home. This scam gives homeowners a false sense of hope, delays them from seeking qualified help, and exposes their personal financial information to a fraudster.
Some of these companies even use names with the word HOPE or HOPE NOW in them to confuse borrowers who are looking for assistance from the free 888-995-HOPE hotline.The lease/buy back: Homeowners are deceived into signing over the deed to their home to a scam artist who tells them they will be able to remain in the house as a renter and eventually buy it back. Usually, the terms of this scheme are so demanding that the buy-back becomes impossible, the homeowner gets evicted, and the “rescuer” walks off with most or all of the equity.The bait-and-switch: Homeowners think they are signing documents to bring the mortgage current. Instead, they are signing over the deed to their home. Homeowners usually don’t know they’ve been scammed until they get an eviction notice.For More InformationTo learn more about mortgages and other credit-related issues, visit www.ftc.gov/credit and MyMoney.gov, the U.S. government’s portal to financial education.
The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. To file a complaint or to get free information on consumer issues, visit ftc.gov or call toll-free, 1-877-FTC-HELP (1-877-382-4357); TTY: 1-866-653-4261. The FTC enters consumer complaints into the Consumer Sentinel Network, a secure online database and investigative tool used by hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.
Homeowner Right of Rescission?
How Homeowners Can Enforce Right of Rescission?
Right of Rescission
Regulation Z: The Right-of-Rescission
The right-of-rescission rules are technical, and the consequences of noncompliance can be very costly to the Banks. Take the time to review the right of rescission rules for closed-end credit.
What is the right of rescission?
The right of rescission is a consumer protection law found within the Truth in Lending Act
Truth In Lending Act — Regulation Z
The Truth in Lending Act (TILA), Title I of the Consumer Credit Protection Act, is aimed at promoting the informed use of consumer credit by requiring disclosures about its terms and costs. In general, this regulation applies to each individual or business that offers or extends credit when the credit is offered or extended to consumers; the credit is subject to a finance charge or is payable by a written agreement in more than four installments; the credit is primarily for personal, family or household purposes; and the loan balance equals or exceeds $25,000.00 or is secured by an interest in real property or a dwelling.
TILA is intended to enable the customer to compare the cost of cash versus credit transaction and the difference in the cost of credit among different lenders. The regulation also requires a maximum interest rate to be stated in variable rate contracts secured by the borrower’s dwelling, imposes limitations on home equity plans that are subject to the requirements of certain sections of the Act and requires a maximum interest that may apply during the term of a mortgage loan. TILA also establishes disclosure standards for advertisements that refer to certain credit terms.
In addition to financial disclosure, TILA provides consumers with substantive rights in connection with certain types of credit transactions to which it relates, including a right of rescission in certain real estate lending transactions, regulation of certain credit card practices and a means for fair and timely resolution of credit billing disputes. This discussion will be limited to those provisions of TILA that relate specifically to the mortgage lending process, including:
1. Early and Final Regulation Z Disclosure Requirements
2. Disclosure Requirements for ARM Loans
3. Right of Rescission
4. Advertising Disclosure Requirements
Early and Final Regulation Z Disclosure Requirements:
TILA requires lenders to make certain disclosures on loans subject to the Real Estate Settlement Procedures Act (RESPA) within three business days after their receipt of a written application. This early disclosure statement is partially based on the initial information provided by the consumer. A final disclosure statement is provided at the time of loan closing. The disclosure is required to be in a specific format and include the following information:
Name and address of creditor
Amount financed
Itemization of amount financed (optional, if Good Faith Estimate is provided)
Finance charge
Annual percentage rate (APR)
Variable rate information
Payment schedule
Total of payments
Demand feature
Total sales price
Prepayment policy
Late payment policy
Security interest
Insurance requirements
Certain security interest charges
Contract reference
Assumption policy
Required deposit information
Disclosure Requirements for ARM Loans:
If the annual percentage rate on a loan secured by the consumer’s principal dwelling may increase after consummation and the term of the loan exceeds one year, TILA requires additional adjustable rate mortgage disclosures to be provided, including:
The booklet titled Consumer Handbook on Adjustable Rate Mortgages, published by the Board and the Federal Home Loan Bank Board or a suitable substitute.
A loan program disclosure for each variable-rate program in which the consumer expresses an interest. The loan program disclosure shall contain the necessary information as prescribed by Regulation Z.
TILA requires servicers to provide subsequent disclosure to consumers on variable rate transactions in each month an interest rate adjustment takes place.
Right of Rescission:
In a credit transaction in which a security interest is or will be retained or acquired in a consumer’s principal dwelling, each consumer whose ownership is or will be subject to the security interest has the right to rescind the transaction. Lenders are required to deliver two copies of the notice of the right to rescind and one copy of the disclosure statement to each consumer entitled to rescind. The notice must be on a separate document that identifies the rescission period on the transaction and must clearly and conspicuously disclose the retention or acquisition of a security interest in the consumer’s principal dwelling; the consumer’s right to rescind the transaction; and how the consumer may exercise the right to rescind with a form for that purpose, designating the address of the lender’s place of business.
In order to exercise the right to rescind, the consumer must notify the creditor of the rescission by mail, telegram or other means of communication. Notice is considered given when mailed, filed for telegraphic transmission or sent by other means, when delivered to the lender’s designated place of business. The consumer may exercise the right to rescind until midnight of the third business day following consummation of the transaction; delivery of the notice of right to rescind; or delivery of all material disclosures, whichever occurs last. When more than one consumer in a transaction has the right to rescind, the exercise of the right by one consumer shall be effective for all consumers.
When a consumer rescinds a transaction, the security interest giving rise to the right of rescission becomes void and the consumer will no longer be liable for any amount, including any finance charge. Within 20 calendar days after receipt of a notice of rescission, the lender is required to return any money or property that was given to anyone in connection with the transaction and must take any action necessary to reflect the termination of the security interest. If the lender has not delivered any money or property, the consumer may retain possession until the lender has complied with the above.
The consumer may modify or waive the right to rescind if the consumer determines that the extension of credit is needed to meet a bona fide personal financial emergency. To modify or waive the right, the consumer must give the lender a dated written statement that describes the emergency, specifically modifies or waives the right to rescind and bears the signature of all of the consumers entitled to rescind. Printed forms for this purpose are prohibited.
Advertising Disclosure Requirements:
If a lender advertises directly to a consumer, TILA requires the advertisement to disclose the credit terms and rate in a certain manner. If an advertisement for credit states specific credit terms, it may state only those terms that actually are or will be arranged or offered by the lender. If an advertisement states a rate of finance charge, it may state the rate as an “annual percentage rate” (APR) using that term. If the annual percentage rate may be increased after consummation the advertisement must state that fact. The advertisement may not state any other rate, except that a simple annual rate or periodic rate that is applied to an unpaid balance may be stated in conjunction with, but not more conspicuously than, the annual percentage rate.
The closed-end rescission rules discussed in this article are found in Title 12 CFR Regulation Z 226.23
The open-end rescission rules rules discussed in this article are found in Title 12 CFR Regulation Z 226.15
Who is able to rescind a loan?The right of rescission doesn’t apply just to borrowers. All consumers who have an ownership interest in the property have the right to rescind.
While other parts of Regulation Z typically focus on the borrowers, this is one area where you need to look beyond the applicants, and identify any and all owners of the home being pledged on the transaction. Often times this will require looking at title work and making note of all fee owners of the property.
What does the right of rescission require of lenders?
The right of rescission requires lenders to provide certain “material disclosures” and multiple copies of the right of rescission notice to EACH owner of the property. Following proper disclosures, lenders must wait at least three business days (until you are reasonably satisfied that the owners have not rescinded) before disbursing loan proceeds.
When does the three-day rescission time clock begin to tick?
The three-day right of rescission period begins once the material disclosures and notice have been given, and lasts three full business days. Business days are defined by Regulation Z to include all calendar days except Sundays and federal holidays. Saturday IS considered a business day for rescission purposes, regardless of whether your offices are open.
In order to properly complete the Notice of Right to Rescind form, you need to know how to calculate the rescission period. Consider the following example.
Assume a closing is set for Thursday, November 15th, 2001, and that all material disclosures and notices are provided to the parties at that time. The rescission period would run:
Friday, November 16, 2001;
Saturday, November. 17, 2001, and
Monday, November 19, 2001.
Sunday is not counted since it is not considered a business day. The rescission period would end at midnight on November 19, 2001.
When may a borrower waive the right of rescission?Regulation Z allows borrowers to waive their rescission rights, but this exception only applies in very limited circumstances. The law is protective of the right of rescission, and you should be too.
Borrowers may waive their rescission rights and receive their loan proceeds immediately only if they have what is called a “bona fide personal financial emergency.” This means a financial emergency of the magnitude that waiting an additional three days will be personally or financially devastating to the borrower. It might include situations involving natural disasters such as flooding, or a medical emergency that requires immediate funds. When this type of situation does arise, the borrower must provide a written explanation of his or her circumstances to the financial institution. This is not a document that you should draft for the borrower.
Waiving the right of rescission is not a common practice, mostly because doing it wrong can backfire and create a rescindable loan, causing all kinds of problems down the road.
What happens once the rescission period is over?
After the right-of-rescission period has expired, make sure you feel reasonably certain that the consumer has not rescinded before you disburse the loan proceeds. There are some risks in disbursing after the third day. For example, the law allows consumers to exercise their rescission rights by mail, and a rescission is effective when mailed. Thus, a rescission mailed on the third day after closing is effective even though the lender may not receive it until the fourth or fifth day after the closing. Because of this potential timing problem, Regulation Z suggests that lenders take extra precautions to ensure that the loan has not been rescinded.
To avoid further delay of the loan proceeds, you may want to obtain a confirmation statement from all the owners stating that they have not exercised their rescission rights. Such a written confirmation provides written documentation that the transaction has not been rescinded. Notice of rescission form contains this confirmation language, which can be an effective way to resolve the rescission issue quickly.
(Note, however, that owners should not sign this confirmation until after the three day period is over. Otherwise, it may look like they have improperly waived their rescission rights.)
What are the consequences of noncompliance?
There are serious consequences for failing to follow the right-of-rescission rules. First, until a lender provides the material disclosures and the proper Notice of Right to Rescind, the three-business day rescission period does not start to run, and the transaction remains rescindable for up to three years. And once a consumer rescinds a transaction, the security interest in the property becomes void and you must reimburse the consumer for all of the finance charges collected over the life of the loan.
Keep in mind that most rescission errors are alleged in response to collection actions or other litigation initiated by the lender. Because of this, it is important to regularly review your institution’s right of rescission compliance program generally, as well as to verify compliance on the individual level before initiating action against any one borrower.
Right of Rescission
Regulation Z: The Right-of-Rescission
The right-of-rescission rules are technical, and the consequences of noncompliance can be very costly to the Banks. Take the time to review the right of rescission rules for closed-end credit.
What is the right of rescission?
The right of rescission is a consumer protection law found within the Truth in Lending Act
Truth In Lending Act — Regulation Z
The Truth in Lending Act (TILA), Title I of the Consumer Credit Protection Act, is aimed at promoting the informed use of consumer credit by requiring disclosures about its terms and costs. In general, this regulation applies to each individual or business that offers or extends credit when the credit is offered or extended to consumers; the credit is subject to a finance charge or is payable by a written agreement in more than four installments; the credit is primarily for personal, family or household purposes; and the loan balance equals or exceeds $25,000.00 or is secured by an interest in real property or a dwelling.
TILA is intended to enable the customer to compare the cost of cash versus credit transaction and the difference in the cost of credit among different lenders. The regulation also requires a maximum interest rate to be stated in variable rate contracts secured by the borrower’s dwelling, imposes limitations on home equity plans that are subject to the requirements of certain sections of the Act and requires a maximum interest that may apply during the term of a mortgage loan. TILA also establishes disclosure standards for advertisements that refer to certain credit terms.
In addition to financial disclosure, TILA provides consumers with substantive rights in connection with certain types of credit transactions to which it relates, including a right of rescission in certain real estate lending transactions, regulation of certain credit card practices and a means for fair and timely resolution of credit billing disputes. This discussion will be limited to those provisions of TILA that relate specifically to the mortgage lending process, including:
1. Early and Final Regulation Z Disclosure Requirements
2. Disclosure Requirements for ARM Loans
3. Right of Rescission
4. Advertising Disclosure Requirements
Early and Final Regulation Z Disclosure Requirements:
TILA requires lenders to make certain disclosures on loans subject to the Real Estate Settlement Procedures Act (RESPA) within three business days after their receipt of a written application. This early disclosure statement is partially based on the initial information provided by the consumer. A final disclosure statement is provided at the time of loan closing. The disclosure is required to be in a specific format and include the following information:
Name and address of creditor
Amount financed
Itemization of amount financed (optional, if Good Faith Estimate is provided)
Finance charge
Annual percentage rate (APR)
Variable rate information
Payment schedule
Total of payments
Demand feature
Total sales price
Prepayment policy
Late payment policy
Security interest
Insurance requirements
Certain security interest charges
Contract reference
Assumption policy
Required deposit information
Disclosure Requirements for ARM Loans:
If the annual percentage rate on a loan secured by the consumer’s principal dwelling may increase after consummation and the term of the loan exceeds one year, TILA requires additional adjustable rate mortgage disclosures to be provided, including:
The booklet titled Consumer Handbook on Adjustable Rate Mortgages, published by the Board and the Federal Home Loan Bank Board or a suitable substitute.
A loan program disclosure for each variable-rate program in which the consumer expresses an interest. The loan program disclosure shall contain the necessary information as prescribed by Regulation Z.
TILA requires servicers to provide subsequent disclosure to consumers on variable rate transactions in each month an interest rate adjustment takes place.
Right of Rescission:
In a credit transaction in which a security interest is or will be retained or acquired in a consumer’s principal dwelling, each consumer whose ownership is or will be subject to the security interest has the right to rescind the transaction. Lenders are required to deliver two copies of the notice of the right to rescind and one copy of the disclosure statement to each consumer entitled to rescind. The notice must be on a separate document that identifies the rescission period on the transaction and must clearly and conspicuously disclose the retention or acquisition of a security interest in the consumer’s principal dwelling; the consumer’s right to rescind the transaction; and how the consumer may exercise the right to rescind with a form for that purpose, designating the address of the lender’s place of business.
In order to exercise the right to rescind, the consumer must notify the creditor of the rescission by mail, telegram or other means of communication. Notice is considered given when mailed, filed for telegraphic transmission or sent by other means, when delivered to the lender’s designated place of business. The consumer may exercise the right to rescind until midnight of the third business day following consummation of the transaction; delivery of the notice of right to rescind; or delivery of all material disclosures, whichever occurs last. When more than one consumer in a transaction has the right to rescind, the exercise of the right by one consumer shall be effective for all consumers.
When a consumer rescinds a transaction, the security interest giving rise to the right of rescission becomes void and the consumer will no longer be liable for any amount, including any finance charge. Within 20 calendar days after receipt of a notice of rescission, the lender is required to return any money or property that was given to anyone in connection with the transaction and must take any action necessary to reflect the termination of the security interest. If the lender has not delivered any money or property, the consumer may retain possession until the lender has complied with the above.
The consumer may modify or waive the right to rescind if the consumer determines that the extension of credit is needed to meet a bona fide personal financial emergency. To modify or waive the right, the consumer must give the lender a dated written statement that describes the emergency, specifically modifies or waives the right to rescind and bears the signature of all of the consumers entitled to rescind. Printed forms for this purpose are prohibited.
Advertising Disclosure Requirements:
If a lender advertises directly to a consumer, TILA requires the advertisement to disclose the credit terms and rate in a certain manner. If an advertisement for credit states specific credit terms, it may state only those terms that actually are or will be arranged or offered by the lender. If an advertisement states a rate of finance charge, it may state the rate as an “annual percentage rate” (APR) using that term. If the annual percentage rate may be increased after consummation the advertisement must state that fact. The advertisement may not state any other rate, except that a simple annual rate or periodic rate that is applied to an unpaid balance may be stated in conjunction with, but not more conspicuously than, the annual percentage rate.
The closed-end rescission rules discussed in this article are found in Title 12 CFR Regulation Z 226.23
The open-end rescission rules rules discussed in this article are found in Title 12 CFR Regulation Z 226.15
Who is able to rescind a loan?The right of rescission doesn’t apply just to borrowers. All consumers who have an ownership interest in the property have the right to rescind.
While other parts of Regulation Z typically focus on the borrowers, this is one area where you need to look beyond the applicants, and identify any and all owners of the home being pledged on the transaction. Often times this will require looking at title work and making note of all fee owners of the property.
What does the right of rescission require of lenders?
The right of rescission requires lenders to provide certain “material disclosures” and multiple copies of the right of rescission notice to EACH owner of the property. Following proper disclosures, lenders must wait at least three business days (until you are reasonably satisfied that the owners have not rescinded) before disbursing loan proceeds.
When does the three-day rescission time clock begin to tick?
The three-day right of rescission period begins once the material disclosures and notice have been given, and lasts three full business days. Business days are defined by Regulation Z to include all calendar days except Sundays and federal holidays. Saturday IS considered a business day for rescission purposes, regardless of whether your offices are open.
In order to properly complete the Notice of Right to Rescind form, you need to know how to calculate the rescission period. Consider the following example.
Assume a closing is set for Thursday, November 15th, 2001, and that all material disclosures and notices are provided to the parties at that time. The rescission period would run:
Friday, November 16, 2001;
Saturday, November. 17, 2001, and
Monday, November 19, 2001.
Sunday is not counted since it is not considered a business day. The rescission period would end at midnight on November 19, 2001.
When may a borrower waive the right of rescission?Regulation Z allows borrowers to waive their rescission rights, but this exception only applies in very limited circumstances. The law is protective of the right of rescission, and you should be too.
Borrowers may waive their rescission rights and receive their loan proceeds immediately only if they have what is called a “bona fide personal financial emergency.” This means a financial emergency of the magnitude that waiting an additional three days will be personally or financially devastating to the borrower. It might include situations involving natural disasters such as flooding, or a medical emergency that requires immediate funds. When this type of situation does arise, the borrower must provide a written explanation of his or her circumstances to the financial institution. This is not a document that you should draft for the borrower.
Waiving the right of rescission is not a common practice, mostly because doing it wrong can backfire and create a rescindable loan, causing all kinds of problems down the road.
What happens once the rescission period is over?
After the right-of-rescission period has expired, make sure you feel reasonably certain that the consumer has not rescinded before you disburse the loan proceeds. There are some risks in disbursing after the third day. For example, the law allows consumers to exercise their rescission rights by mail, and a rescission is effective when mailed. Thus, a rescission mailed on the third day after closing is effective even though the lender may not receive it until the fourth or fifth day after the closing. Because of this potential timing problem, Regulation Z suggests that lenders take extra precautions to ensure that the loan has not been rescinded.
To avoid further delay of the loan proceeds, you may want to obtain a confirmation statement from all the owners stating that they have not exercised their rescission rights. Such a written confirmation provides written documentation that the transaction has not been rescinded. Notice of rescission form contains this confirmation language, which can be an effective way to resolve the rescission issue quickly.
(Note, however, that owners should not sign this confirmation until after the three day period is over. Otherwise, it may look like they have improperly waived their rescission rights.)
What are the consequences of noncompliance?
There are serious consequences for failing to follow the right-of-rescission rules. First, until a lender provides the material disclosures and the proper Notice of Right to Rescind, the three-business day rescission period does not start to run, and the transaction remains rescindable for up to three years. And once a consumer rescinds a transaction, the security interest in the property becomes void and you must reimburse the consumer for all of the finance charges collected over the life of the loan.
Keep in mind that most rescission errors are alleged in response to collection actions or other litigation initiated by the lender. Because of this, it is important to regularly review your institution’s right of rescission compliance program generally, as well as to verify compliance on the individual level before initiating action against any one borrower.
Lots of Scam Artists Joining Loan Modifications
Lot of Scam Artists Joining Loan Modification:A look at both print and electronic media suggests a new proliferation of loan modification services. Most of them by incompetent people who wants to make a quick buck and then disappear again. First of all, this catastrophe is brought by these rouge elements in the first place. There were loan officers who did not know anything about financial statements, how to read various discolusre forms, know anything about TILA or RESPA regulations, had the only one motivating factors and that was how to make quick money. They indeed made quick money but look at the end result. The whole country has suffered because of these uncouth and incompetent people. In my office, I get calls from these loan modification agencies all the time, they needed some kind of legal umbreall where they can work and get a legal shelter. I got a call few days from some California office, where a femal caller introduced herself as “working from an attorney’s office”. When I asked her specifically what attorney’s office, she was hesitant to tell me the name of the attorney. When I pressed her, she told me that they are not an attorney’s office but in fact working with an attorney’s office. I recall most of these loan officers in Las Vegas were former valet people, black jack dealers, people who were doing your landscaping and carpet cleaning services. They overnight become senior loan officers and branch managers. Folks who had entrusted them, are suffering consequences. Many people I know had sued them, and lots of them are behind jail or had declared bankruptcy. So, I request please do not trust these folks. They have no experience, they have no negotiating skills.
They are here only to make a quick buck. Ask them the following questions”
1. Had they worked as a loan officer previously?
2. Do they have a current license from the State of Nevada Lending and Mortgage Division?
3. Do they have a business license from the City of Las Vegas or Clark County?
4. Do they have website?
5. What exactly they can do and deliver? Ask to get everything in writing?
6. Please do not give any advance money to them? You would never see it again.
7. Tell them if they are registered under the Mortgage and Lending Division of the State of Nevada.
8. Please be very wary if they ask all money upfront. Please under no circumstances give out your social security number, or other important information about your loan and your home.
9. Please do not sign any papers of any kind unless you check with a licensed attorney familiar with real estate matters.
10. First thing, always get the number of callers and name. Ask them few questions like how long they have been in business, and how many loans they had modified.
They are here only to make a quick buck. Ask them the following questions”
1. Had they worked as a loan officer previously?
2. Do they have a current license from the State of Nevada Lending and Mortgage Division?
3. Do they have a business license from the City of Las Vegas or Clark County?
4. Do they have website?
5. What exactly they can do and deliver? Ask to get everything in writing?
6. Please do not give any advance money to them? You would never see it again.
7. Tell them if they are registered under the Mortgage and Lending Division of the State of Nevada.
8. Please be very wary if they ask all money upfront. Please under no circumstances give out your social security number, or other important information about your loan and your home.
9. Please do not sign any papers of any kind unless you check with a licensed attorney familiar with real estate matters.
10. First thing, always get the number of callers and name. Ask them few questions like how long they have been in business, and how many loans they had modified.
Lots of Scam Artists Joining Loan Modifications
Lot of Scam Artists Joining Loan Modification:
A look at both print and electronic media suggests a new proliferation of loan modification services. Most of them by incompetent people who wants to make a quick buck and then disappear again. First of all, this catastrophe is brought by these rouge elements in the first place. There were loan officers who did not know anything about financial statements, how to read various discolusre forms, know anything about TILA or RESPA regulations, had the only one motivating factors and that was how to make quick money. They indeed made quick money but look at the end result. The whole country has suffered because of these uncouth and incompetent people. In my office, I get calls from these loan modification agencies all the time, they needed some kind of legal umbreall where they can work and get a legal shelter. I got a call few days from some California office, where a femal caller introduced herself as “working from an attorney’s office”. When I asked her specifically what attorney’s office, she was hesitant to tell me the name of the attorney. When I pressed her, she told me that they are not an attorney’s office but in fact working with an attorney’s office. I recall most of these loan officers in Las Vegas were former valet people, black jack dealers, people who were doing your landscaping and carpet cleaning services. They overnight become senior loan officers and branch managers. Folks who had entrusted them, are suffering consequences. Many people I know had sued them, and lots of them are behind jail or had declared bankruptcy. So, I request please do not trust these folks. They have no experience, they have no negotiating skills. They are here only to make a quick buck. Ask them the following questions”
1. Had they worked as a loan officer previously?
2. Do they have a current license from the State of Nevada Lending and Mortgage Division?
3. Do they have a business license from the City of Las Vegas or Clark County?
4. Do they have website?
5. What exactly they can do and deliver? Ask to get everything in writing?
6. Please do not give any advance money to them? You would never see it again.
A look at both print and electronic media suggests a new proliferation of loan modification services. Most of them by incompetent people who wants to make a quick buck and then disappear again. First of all, this catastrophe is brought by these rouge elements in the first place. There were loan officers who did not know anything about financial statements, how to read various discolusre forms, know anything about TILA or RESPA regulations, had the only one motivating factors and that was how to make quick money. They indeed made quick money but look at the end result. The whole country has suffered because of these uncouth and incompetent people. In my office, I get calls from these loan modification agencies all the time, they needed some kind of legal umbreall where they can work and get a legal shelter. I got a call few days from some California office, where a femal caller introduced herself as “working from an attorney’s office”. When I asked her specifically what attorney’s office, she was hesitant to tell me the name of the attorney. When I pressed her, she told me that they are not an attorney’s office but in fact working with an attorney’s office. I recall most of these loan officers in Las Vegas were former valet people, black jack dealers, people who were doing your landscaping and carpet cleaning services. They overnight become senior loan officers and branch managers. Folks who had entrusted them, are suffering consequences. Many people I know had sued them, and lots of them are behind jail or had declared bankruptcy. So, I request please do not trust these folks. They have no experience, they have no negotiating skills. They are here only to make a quick buck. Ask them the following questions”
1. Had they worked as a loan officer previously?
2. Do they have a current license from the State of Nevada Lending and Mortgage Division?
3. Do they have a business license from the City of Las Vegas or Clark County?
4. Do they have website?
5. What exactly they can do and deliver? Ask to get everything in writing?
6. Please do not give any advance money to them? You would never see it again.
Myths & Mysteries About Loan Modification
Myths and Mysteries: Loan Modifications
Saturday, November 22, 2008
Today, we are going to address lots of myths associated with loan modification process. Most of this myth and mysteries are floated and propagated by scam loan artists, and inexperienced people. For instance, there is a lots of myth surrounding the whole lending process and services associated with lenders, new regulations, rate of interest, whether you would not have to pay back the HELOC loan, whether you really have to be delinquent. I had made a list of all of these and in this short article would address all those issues one by one. Again, like I said, most of these myths are fueled by uninformed and confused people who are here to make a quick buck. In my office, I got lots of calls from this loan modification expert who are plying their trade to get a legal umbrella. You know what, I politely deny it.
First Myth:
We have done a lot of loans modification. If someone claims that, he is telling a blatant lies. If they had tones of loan modification, how come we are in this crisis? The banks had a liquidity crisis, the credit was not enhanced, banks were losing money left and right, and these claims are accepted, we would not be in this crisis at this time. They are all blatant lies. Congress just passed Housing Assistance Bill, and loan modification just started, how come these artists had made hundreds of loan modification? This is simply not possible.
The purpose of this article and more on my webpage and in my blogs is just to educate people. Education is the key to the whole process. First, if you are educated, then you would start trusting and that is the cornerstone of any business.
Second Myth:
Does one have to be delinquent on his/her mortgage payments?
Not True: Probably, your economic hardship letter may draw more attention, but other than it is not a crucial all important fact. Sometime, lender would ask questions about delinquency and why they happened. Overall, it may have some weight age, but not a whole lot.
The whole loan modification process is long, cumbersome and tedious. It requires lots of patience. Just few phone calls are not enough. One has to do lots of works. When attorneys are associated, things start moving fast. Phone calls are returned, letters are answered.
IMPORTANT TIP: Forensic Evidence? I laugh when I get calls from this scam artist about forensic evidence. This is the so called audit these companies do under the guise of forensic evidence. Okay, if you had found a violation, then who is going to sue? Only an attorney can sue, and he needs to find his own independent reasons. Remembers attorney can be sued for malpractice, if they have not done a due diligence of their own work and sued someone without any reason. Please be cautious when dealing with these so called forensic audit companies. Most of them are just ripping off people and making their lives more miserable. Most of the lawsuits, for instance with Countrywide had already been settled and most of the small mortgage companies had disappeared or under the bankruptcy process. So, even if they had violations, where you going to sue and the money come from. Remember, it is very expensive to sue and you had to find the right attorney for that purpose.
Myth: Lenders and servicers are offering principle reductions on borrowers whose mortgage balances are in the red and owe more than the home is worth.
Fact: This is possible, but not done on a regular basis. Most of the HELOCK loans can be knocked off, but not in every case. However, a wider use of this by the banks would destroy the leftover market and most of the banks would close their shops.
Myth: Lenders and servicers are doing everything they can to assist struggling homeowners.
Banks are still resisting the whole thing. Deep down in their heart and minds, they are not happy with the whole situation. The whole thing was started by them, and their so called help is not very straight forward. However, there is a tremendous change in their mode of action. They are working, and hired more people, and return your phone calls swiftly. This need to be handled on a professional basis.
More Myths Later:
Saturday, November 22, 2008
Today, we are going to address lots of myths associated with loan modification process. Most of this myth and mysteries are floated and propagated by scam loan artists, and inexperienced people. For instance, there is a lots of myth surrounding the whole lending process and services associated with lenders, new regulations, rate of interest, whether you would not have to pay back the HELOC loan, whether you really have to be delinquent. I had made a list of all of these and in this short article would address all those issues one by one. Again, like I said, most of these myths are fueled by uninformed and confused people who are here to make a quick buck. In my office, I got lots of calls from this loan modification expert who are plying their trade to get a legal umbrella. You know what, I politely deny it.
First Myth:
We have done a lot of loans modification. If someone claims that, he is telling a blatant lies. If they had tones of loan modification, how come we are in this crisis? The banks had a liquidity crisis, the credit was not enhanced, banks were losing money left and right, and these claims are accepted, we would not be in this crisis at this time. They are all blatant lies. Congress just passed Housing Assistance Bill, and loan modification just started, how come these artists had made hundreds of loan modification? This is simply not possible.
The purpose of this article and more on my webpage and in my blogs is just to educate people. Education is the key to the whole process. First, if you are educated, then you would start trusting and that is the cornerstone of any business.
Second Myth:
Does one have to be delinquent on his/her mortgage payments?
Not True: Probably, your economic hardship letter may draw more attention, but other than it is not a crucial all important fact. Sometime, lender would ask questions about delinquency and why they happened. Overall, it may have some weight age, but not a whole lot.
The whole loan modification process is long, cumbersome and tedious. It requires lots of patience. Just few phone calls are not enough. One has to do lots of works. When attorneys are associated, things start moving fast. Phone calls are returned, letters are answered.
IMPORTANT TIP: Forensic Evidence? I laugh when I get calls from this scam artist about forensic evidence. This is the so called audit these companies do under the guise of forensic evidence. Okay, if you had found a violation, then who is going to sue? Only an attorney can sue, and he needs to find his own independent reasons. Remembers attorney can be sued for malpractice, if they have not done a due diligence of their own work and sued someone without any reason. Please be cautious when dealing with these so called forensic audit companies. Most of them are just ripping off people and making their lives more miserable. Most of the lawsuits, for instance with Countrywide had already been settled and most of the small mortgage companies had disappeared or under the bankruptcy process. So, even if they had violations, where you going to sue and the money come from. Remember, it is very expensive to sue and you had to find the right attorney for that purpose.
Myth: Lenders and servicers are offering principle reductions on borrowers whose mortgage balances are in the red and owe more than the home is worth.
Fact: This is possible, but not done on a regular basis. Most of the HELOCK loans can be knocked off, but not in every case. However, a wider use of this by the banks would destroy the leftover market and most of the banks would close their shops.
Myth: Lenders and servicers are doing everything they can to assist struggling homeowners.
Banks are still resisting the whole thing. Deep down in their heart and minds, they are not happy with the whole situation. The whole thing was started by them, and their so called help is not very straight forward. However, there is a tremendous change in their mode of action. They are working, and hired more people, and return your phone calls swiftly. This need to be handled on a professional basis.
More Myths Later:
Law Office of Malik W. Ahmad
Malik W. Ahmad Esq. is a Nevada licensed attorney. Malik Ahmad is admitted to practice in all the courts in the state of Nevada. Malik Ahmad is energetic, extremely focused in areas of civil, business litigation, labor and employment, workmen compensation, family laws and criminal defense.
Mr. Ahmad is a motivated speaker, self-starter who assisted in drafting policies, rules, and bylaws of various corporations and associations. Malik Ahmad is an accomplished contributor, experienced in case management, factual investigation, case development/preparation, pre-litigation, case analysis, and other client advisory matters. He has been an Attorney for 20 years both overseas and in the United States.Licenses
- Member State Bar of Nevada
- Admitted Supreme Court of Nevada
- Member American Bar Association
- Member Nevada Trial Lawyers Association
- Admitted United States District Court
- Real Estate Licensee State of Nevada
Offices:
- Treasurer - Barrington/Monterossa Home Owners Association (elected, term expire 2009)
- Secretary - Shadow Mountain Housing Association (elected, term expire 2009)
Education:
- BA: Punjab University (First Division) Major: Political Science: English
- MA: Punjab University (World History)
- LLB: Punjab University Law College (University Merit List)
- Diploma Labor & Employment Laws (University Merit List)
- Attended courses, seminars both under UN and various legal association to improve knowledge of law and understanding the judicial systems of USA, England, France & Switzerland.
Languages:
- Speaks English, Urdu, Punjabi & Hindi. Have both written and reading knowledge of Arabic, Persian.
Experience:
- 2004-2007: Worked as real estate agent
- 2001: Clerk, Justice Court, Las Vegas, Nevada
- 2001-2004: Worked as Collection Supervisor
- 1998-2000: Teacher, Clark County School District
- 1988-1998: Private business owner/operator: Vice President Paktron Bells (privately owned & operated company): Pioneer in telephone vending industry
- 1984-1988: Legal Instructor, Southwest College Los Angeles, California
- 1984-86: Supervisor Legal Clinic, Southwest College, Los Angeles, CA
- 1974-1979: Civil Service Officer
Who Qualifies for Mortgage Help: And How to Get It?
Who Qualifies for Mortgage Help and How to Get It?
NEVADA HOUSING DIVISION WANTS TO GET OUT THE FACTS:
Questions and answers about the Hope for Homeowners Act of 2008, passed by Congress last weekend and signed into law today, July 30 . It is important to try to steer as many as 400,000 struggling homeowners away from foreclosure:
A: It will allow those who qualify to cancel their old mortgage loans and replace them with 30- year fixed-rate loans for up to 90 percent of the home’s current value. The FHA will insure a total of $300 billion of the loans over a three-year period.
What exactly will the legislation do?
Q: Who is eligible?
A: Eligible borrowers must have spent more than 31 percent of their monthly incomes on their mortgages as of March 1, 2008. The troubled loan must have originated within the time period of January 1, 2002 through December 31, 2007 and be the borrower’s primary residence. And the borrower’s income must be verified.
Q: When does the program start?Q: Since lenders can pick and choose which loans to refinance, how can consumers determine if theirs will be selected?
A: It takes effect Oct. 1 and runs through September 2011, although the FHA isn’t likely to have it operating at full capacity until next year.
A: Check with the bank or financial company servicing your mortgage, but it may be weeks before they make decisions concerning the new guidelines and assess individual loans. Even then, keep expectations limited.
Servicers are going to be reluctant to take the government up on their offer,” predicted Mark Zandi, chief economist at Moody’s Economy.com. “The earliest they’ll start taking them up on it is early next year. And even then it’s likely to be modest.”
Q: Is there anything a homeowner can do to improve chances of benefiting from the program, such as crunching numbers to make a case for the bank? Q: But doesn’t this provide an incentive to NOT pay your mortgage, if you’re barely keeping ahead of bills and are underwater on your house, so you can qualify?Q: So what should I be doing now besides trying to keep up with payments?
A: Public and political pressure may prompt them to participate. If not, and more people continue to lose their homes, Zandi says the next White House administration subject them to additional regulations or investigations if they remain unwilling to take on the risks.
Q: What happens if I’m able to sell my home after I refinance?
Q: If the banks and lenders refuse to write these loans, then what?
A: Not really. The best step is to keep up your payments as best you can.
A: No. If your situation deteriorates enough the bank may reject any possible new loan. “Turning yourself into a financial basket case is not going to work,” said Dan Seiver, a finance professor at San Diego State University. “If you turn into a complete deadbeat, the servicer is going to just foreclose and dump it.”
A: Talk to a local credit counselor and call the toll-free hot line of the Hope Now alliance an industry group trying to coordinate a response to the mortgage crisis
A: If you sell during the next five years, you must agree to share 50 percent of any profits from the resale with the government. What’s more, homeowners can only retain equity gains based on a sliding scale. The homeowner would have zero equity from a sale in the first year, with the amount rising 10 percent in each succeeding year and capping at 50 percent from a sale in year five and t hereafter,The equity must be repaid because the maximum amount on the new loans will be capped at 90 percent of the current market value, which automatically gives the previously troubled homeowner 10 percent equity in the home.
Edit this entry.
NEVADA HOUSING DIVISION WANTS TO GET OUT THE FACTS:
Questions and answers about the Hope for Homeowners Act of 2008, passed by Congress last weekend and signed into law today, July 30 . It is important to try to steer as many as 400,000 struggling homeowners away from foreclosure:
A: It will allow those who qualify to cancel their old mortgage loans and replace them with 30- year fixed-rate loans for up to 90 percent of the home’s current value. The FHA will insure a total of $300 billion of the loans over a three-year period.
What exactly will the legislation do?
Q: Who is eligible?
A: Eligible borrowers must have spent more than 31 percent of their monthly incomes on their mortgages as of March 1, 2008. The troubled loan must have originated within the time period of January 1, 2002 through December 31, 2007 and be the borrower’s primary residence. And the borrower’s income must be verified.
Q: When does the program start?Q: Since lenders can pick and choose which loans to refinance, how can consumers determine if theirs will be selected?
A: It takes effect Oct. 1 and runs through September 2011, although the FHA isn’t likely to have it operating at full capacity until next year.
A: Check with the bank or financial company servicing your mortgage, but it may be weeks before they make decisions concerning the new guidelines and assess individual loans. Even then, keep expectations limited.
Servicers are going to be reluctant to take the government up on their offer,” predicted Mark Zandi, chief economist at Moody’s Economy.com. “The earliest they’ll start taking them up on it is early next year. And even then it’s likely to be modest.”
Q: Is there anything a homeowner can do to improve chances of benefiting from the program, such as crunching numbers to make a case for the bank? Q: But doesn’t this provide an incentive to NOT pay your mortgage, if you’re barely keeping ahead of bills and are underwater on your house, so you can qualify?Q: So what should I be doing now besides trying to keep up with payments?
A: Public and political pressure may prompt them to participate. If not, and more people continue to lose their homes, Zandi says the next White House administration subject them to additional regulations or investigations if they remain unwilling to take on the risks.
Q: What happens if I’m able to sell my home after I refinance?
Q: If the banks and lenders refuse to write these loans, then what?
A: Not really. The best step is to keep up your payments as best you can.
A: No. If your situation deteriorates enough the bank may reject any possible new loan. “Turning yourself into a financial basket case is not going to work,” said Dan Seiver, a finance professor at San Diego State University. “If you turn into a complete deadbeat, the servicer is going to just foreclose and dump it.”
A: Talk to a local credit counselor and call the toll-free hot line of the Hope Now alliance an industry group trying to coordinate a response to the mortgage crisis
A: If you sell during the next five years, you must agree to share 50 percent of any profits from the resale with the government. What’s more, homeowners can only retain equity gains based on a sliding scale. The homeowner would have zero equity from a sale in the first year, with the amount rising 10 percent in each succeeding year and capping at 50 percent from a sale in year five and t hereafter,The equity must be repaid because the maximum amount on the new loans will be capped at 90 percent of the current market value, which automatically gives the previously troubled homeowner 10 percent equity in the home.
Edit this entry.
What are the Nevada Laws of Foreclosure?
Nev. Rev. Stat. § 107.080 Most Common Method of Foreclosure:Power of Sale for deeds of trust.Preforeclosure Notice:Number of Notices: Two: Notice of Default (Breach) and Election to Sell; and Notice of Sale.
Amount of Notice Required:For Notice of Default (Breach), three months. For Notice of Sale, three weeks.
Content of Notice: Notice of Default:Must describe default and may contain notice of intent to accelerate entire unpaid balance if permitted by secured obligation. Notice of Default also must be recorded.Notice of Sale:Must state time and place of sale and must be published once per week for three weeks.
Method of Service: Notice of Default:By mail to the grantor and owner on the date the Notice is recorded, and within ten days ofrecording of Notice, by mail to each person who filed a request for a copy and to each ‘‘person with an interest’’ subordinate to the deed of trust.Notice of Sale:By mail within twenty days before the date of sale set forth in the Notice of Sale.
Right to Cure Default/Reinstate:Thirty-five days from recording and mailing to grantor and owner of Notice of Default.Redemption: None for nonjudicial foreclosures.Deficiency: Limited to the lesser of (i) the amount by which the amount of the secured debt exceeds the fair market value of the property as determined by the court, or (ii) the difference between the amount for which the property was sold and the amount of the secured debt, with interest from the date of sale.High-Cost Home Loans:
Power of sale under trust agreemententered into on or after October 1, 2003, and subject to § 152 of the Home Ownership and Equity Protection Act of 1994 and applicablefederal regulations, requires additional notice at least 60 days before date of sale. The notice, which must be personally servedunless otherwise directed by a court, must include applicable telephone numbers and addresses for offices of consumer creditcounseling, attorney general, division of financial institutions, legal services, and lender.
Date of sale may not be less than 30 days after date of most recently filed action, if any, claiming unfair lending practice in connection with the trust agreement. §§ 107.080, 107.085. Court that finds violation of high-cost home loan statute (Nev. Rev. Stat. §§ 598D.010 through 598D.150) has power to award equitable remedy and may cure any existing default and cancel a pending foreclosure sale, trustee’s sale or other sale to enforce the agreement.
If damages are awarded (statute allows three times actual damages) borrower has a defense against the unpaid obligation up to the amount of the damages. Nev. Rev. Stat. § 598D.110.
Amount of Notice Required:For Notice of Default (Breach), three months. For Notice of Sale, three weeks.
Content of Notice: Notice of Default:Must describe default and may contain notice of intent to accelerate entire unpaid balance if permitted by secured obligation. Notice of Default also must be recorded.Notice of Sale:Must state time and place of sale and must be published once per week for three weeks.
Method of Service: Notice of Default:By mail to the grantor and owner on the date the Notice is recorded, and within ten days ofrecording of Notice, by mail to each person who filed a request for a copy and to each ‘‘person with an interest’’ subordinate to the deed of trust.Notice of Sale:By mail within twenty days before the date of sale set forth in the Notice of Sale.
Right to Cure Default/Reinstate:Thirty-five days from recording and mailing to grantor and owner of Notice of Default.Redemption: None for nonjudicial foreclosures.Deficiency: Limited to the lesser of (i) the amount by which the amount of the secured debt exceeds the fair market value of the property as determined by the court, or (ii) the difference between the amount for which the property was sold and the amount of the secured debt, with interest from the date of sale.High-Cost Home Loans:
Power of sale under trust agreemententered into on or after October 1, 2003, and subject to § 152 of the Home Ownership and Equity Protection Act of 1994 and applicablefederal regulations, requires additional notice at least 60 days before date of sale. The notice, which must be personally servedunless otherwise directed by a court, must include applicable telephone numbers and addresses for offices of consumer creditcounseling, attorney general, division of financial institutions, legal services, and lender.
Date of sale may not be less than 30 days after date of most recently filed action, if any, claiming unfair lending practice in connection with the trust agreement. §§ 107.080, 107.085. Court that finds violation of high-cost home loan statute (Nev. Rev. Stat. §§ 598D.010 through 598D.150) has power to award equitable remedy and may cure any existing default and cancel a pending foreclosure sale, trustee’s sale or other sale to enforce the agreement.
If damages are awarded (statute allows three times actual damages) borrower has a defense against the unpaid obligation up to the amount of the damages. Nev. Rev. Stat. § 598D.110.
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