Modification Not Approved by Investor may be Invalid.

A federal judge has ruled that Bank of America Corp cannot have a lawsuit by investors seeking to force it to buy back mortgages heard in federal court, saying he lacks jurisdiction to decide the case. Tuesday’s ruling by Judge Richard Holwell of the U.S. District Court in Manhattan means the case will move to state court. Holwell did not decide the merits of the case. “Congress passed two statutes within a year of each other to address the mortgage crisis,” the judge wrote. “In neither of these statutes did Congress federalize the case.”

The ruling is a win for investors, to the extent that Holwell rejected a claim by the bank’s Countrywide Financial Corp unit that new federal laws to encourage loan modifications to help struggling borrowers stay in their homes govern this case. Countrywide had argued that the laws negated obligations it might have had to buy back modified loans. In 2008, Countrywide agreed with some 11 state attorneys general to modify $8.4 billion of loans made to roughly 400,000 borrowers. Investors who own mortgage securities typically receive interest and principal payments. If servicers modified the underlying loans to reduce borrower obligations, investors would be harmed because they would receive lower payments.

Holwell did rule that investors bear the burden of showing that pooling and servicing agreements for their loans, taken “as a whole,” require Countrywide to buy back the loans. The current case was brought by two investment funds holding Countrywide mortgages, Greenwich Financial Services Distressed Mortgage Fund 3 LLC and QED LLC. These investors complained they would be harmed if Countrywide shifted the burdens of loan modifications to 374 trusts into which loans had been repackaged and securitized.

These investors would rather Countrywide repurchase modified loans for the full unpaid amounts. Countrywide had been the largest U.S. mortgage lender before Bank of America acquired it last July for $2.5 billion. The case is Greenwich Financial Services Distressed Mortgage Fund 3 LLC and QED LLC v. Countrywide Financial Corp, U.S. District Court, Southern District of New York (Manhattan), No. 08-11343.

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Source: National Loan Auditors, Inc.
http://www.NLAudit.com

Loan Modification Fails when Families Turn to Firms

Banks Fail To Modify Mortgages – Homeowners tell how firms failed to redo home loans

By Kevin G. Hall
McClatchy Newspapers

Nearly three years into the deepest U.S. housing slump in generations, lenders are modifying only a small number of problem mortgages, and rising foreclosures are retraining the economy’s recovery.

The Obama administration has stepped up pressure on lenders and their mortgage servicers, who act as bill collectors on behalf of investors who own mortgage bonds. The administration on Aug. 4 unveiled the first of what will be monthly “name and shame” exercises, publishing data on the loan modification efforts of about three dozen companies. McClatchy received calls and e-mails from borrowers across the nation in response to a recent story about the “name and shame” effort.

In subsequent interviews with them, a common theme emerged: Virtually all say they were encouraged, directly or indirectly, by their lenders to fall behind on their mortgage payments in order to qualify for loan modifications. Then the modifications never came. These borrowers burned through retirement savings, destroyed their credit reactions and suffered mental and financial hardship.

Here are two of their stories:
Phil Stubblefield, 61, arrived in loan modification hell quite by accident. His ex-wife died of heart failure April 20, and her Sacramento home and Countrywide mortgage passed to their daughters, one of whom was in college and the other starting medical school. As students, each had limited income.

Stubblefield reached out in May to Bank of America, which had bought Countrywide in January 2008, as it faced a bankruptcy filing because of problems with its loan portfolio. Stubblefield sought to modify the loan on the property in order to stay current amid unusual circumstances.

“Virtue was met with no help at all. The only recommendation was, ‘We can help you when the loan goes into default,’ “said Stubblefield, an Amtrak train conductor in California’s capital.

After the mortgage payment became two months late in June, the girls started receiving what Stubblefield dubs “nasty-grams.” After becoming authorized to speak for his daughters, he tried to negotiate a lower interest rate to reduce payments enough for him to help, or to have some portion of the loan forgiven.

“I was waiting for them to turn around and say, ‘What can you do for us?’ There was no coming together, no negotiation,” he said. “It was ‘Sell the house,’ and that’s when I came back and said, ‘Don’t you read the newspapers? There are 40,000 foreclosures in Sacramento and a 19-month turnaround on [real estate] listings.”’

A work-from-home psychotherapist and real-estate agent, Helen Rudinsky, 53, bought property in the nation’s capital in June 2004. At the height of the housing boom, she took out an interest-only loan, offered for pricier homes and marketed as virtually risk-free because of climbing home values.

A few years later, she gave birth to a boy who was diagnosed with autism. She temporarily moved to Bend, Oregon, seeking easier access to expensive testing and therapy for her child. Rudinsky contacted Wells Fargo last October about mortgage options because her payment of $2,500 a month was set to leap by $1,000 this month. She said that a Wells Fargo employee advised her that only loans that fell behind on payments were reviewed for modification. Rudinsky has never missed a payment, had a credit score of 770 (anything higher than 600 is considered good) and put down $130,000 when she bought her home – clear evidence that she was a reliable customer. She took the employee’s response as a suggestion to miss payments, and as a solution to her problem. “I got behind, and then it spiraled out of control,” she said.

Assigned a loan negotiator, Rudinsky called many times a week but got nowhere. She followed a checklist to ensure that all necessary documents were with the lender, but it was never enough, she said.

In May, she was told that she was approved for a program with interest payments potentially as low as 2 percent. After more documents and more back-and-fourth, Rudinsky was finally assured that things were on track and that the foreclosure process was on hold. Later, to her shock – nearly 10 months after her initial call to Wells Fargo for help, her home suddenly headed for auction.

The sale was scheduled for 10:15AM, August 4th. Rudinsky raided her retirement funds to pay $30,795 in a last-ditch move that saved her home minutes before the auction. Days later, when Wells Fargo called again, demanding that she make good on her loan or lose her home, she said, “I don’t know what to do anymore. I feel like Alice in Wonderland, because whatever you do, it isn’t enough.”

Wells Fargo had modified only 6 percent of its eligible loans through June.

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Source: National Loan Auditors, Inc.
http://www.NLAudit.com

IT’S THE LAW – Avoiding Foreclosure through Lender Mediation in Nevada

Nevada recently passed a bill that requires all lenders to appear for mediation prior to foreclosing on a property. The bill has now been utilized to force lenders to the mediation table before they foreclose.

The Nevada Foreclosure Mediation Program has received its first three requests for mediation as the homeowners work to save their houses.

Two requests came from Clark County residents and the third came from a Carson City homeowner. Mediations have not yet been scheduled, but will be within 80 days of the filing of the foreclosure notice under Nevada law and Supreme Court rules. The first mediations are expected to occur in August.

In the first three weeks of the Nevada Foreclosure Mediation Program, which began on July 1 under Assembly Bill 149, more than 2,400 foreclosure notices have been filed in Nevada. More than 2,000 of those originated in Clark County. Those default notices include commercial and non-owner-occupied properties as well as the owner-occupied homes eligible for the mediation program.

The initial mediations will be conducted by Senior District Judges or Supreme Court Settlement Judges in addition to experienced mediators and some attorneys. These will participate in the program’s initial training sessions on Aug. 5 in Reno and Aug. 6-7 in Las Vegas. The media is invited to attend the training.

More than 400 attorneys have offered to become mediators, but are not yet trained. Under AB-149, the Nevada Supreme Court was responsible for adopting the rules for the program, which is being operated by the Administrative Office of the Courts. The rules require that the parties to mediate in “good faith.”

While the program will offer homeowners the opportunity to sit down with their lenders, mediation will not be the solution for everyone and some homes inevitably will be lost to foreclosure. AB-149 only affects single-family, owner-occupied housing in Nevada and currently applies only to foreclosure notices (formally known as Notice of Default and Election to Sell) filed on or after July 1, 2009.

A request form and easy to understand instructions will accompany the foreclosure notices when they are served. That form, along with other forms and information, is available on the Supreme Court website.

The Administrative Office of the Courts has established hotline phone number for questions about the program. The number in Carson City is 775-687-9816. The number in Las Vegas is 702-486-9380. Questions may also be directed over the Internet to foreclose@nvcourts.nv.gov. This e-mail address is being protected from spambots. You need JavaScript enabled to view it.

The foreclosure mediation program is self funded through fees and will not require the expenditure of any taxpayer dollars. Lenders pay an increased fee for filing a foreclosure notice, which is used to fund administrative costs of the program. Homeowners and lenders will share the $400 costs for the mediators, with each party paying $200 prior to the mediation.

Forcing the lender to the mediation table is a great step in the right direction to help homeowners protect their homes from unethical and wrongful foreclosures.

 

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Source: National Loan Auditors, Inc.
http://www.NLAudit.com

Senate Bill 94: Protecting homeowners or protecting lenders?

The California State Senate has passed Senate Bill 94 (”SB 94?), legislation proposed by Sen. Ron S. Calderon (D-Montebello), Chairman of the Banking, Finance & Insurance Committee. The senate passed the bill on May 21, 2009, by a vote of 21 to 14. It is now in the state assembly where it has been read once and “held at desk,” which means that it’s awaiting referral to a committee.

Senate Bill 94 is intended to protect California homeowners from scam loan modification companies.

In my view, the problems with SB 94, as written include:

1. It was created to protect consumers from loan modification “scammers” who charge distressed homeowners up front fees and deliver nothing in return, but it was written without the benefit of accurate data on the contribution being made by the legitimate loan modification industry in California. Without knowing how many homeowners the private sector loan modification firms save each month, or the sustainability of the modifications obtained by the private sector, it would not be possible to design a solution in the best interests of homeowners and the state’s economy.

2. The SB 94 bill, as written, is based on a fundamental misconception. As stated in the in bill’s narrative:

“It is not necessary to pay a third party to arrange for a loan modification or other form of forbearance from your mortgage lender or servicer. You may call your lender directly to ask for a change in your loan terms. Nonprofit housing counseling agencies also offer these and other forms of borrower assistance free of charge.”

While both of these statements are technically true, this language ignores the fact that there are also reputable private sector firms that homeowners may choose to hire to help them negotiate with their banks when seeking a modification of their mortgages. Private sector firms, including those licensed by the state’s Department of Real Estate and/or law firms offering that such services, have helped tens of thousands of California homeowners get their mortgages modified. With the number of foreclosures continuing to increase each month, it would seem clear that the state’s homeowners would not benefit from any legitimate avenue being overlooked or unfairly maligned.

3. Defrauding a homeowner has always been against California law, so in that sense, SB 94 is redundant. When you consider that “scammers” who did in fact defraud consumers in conjunction with the promise of a loan modification, did so in violation of existing law, it would seem that a new law making it illegal to charge an advance fee when offering to assist a homeowner with a loan modification would be unlikely to prevent future scammers from attempting to do the same.

4. Legitimate firms offering to assist troubled homeowners could be regulated and monitored, without requiring these firms to operate at a financial disadvantage by disallowing advance fees. The process of obtaining a loan modification is not similar to other real estate transactions in several key ways:

A. The process can take six weeks, or six months… and in some cases even longer. The lenders and servicers are not consistent in how loan modifications are handled or on what basis they are granted.

B. There is no escrow, or objective standard for “satisfaction,” in conjunction with a loan modification transaction, and therefore there is no assurance that a company would receive payment from the homeowner once the mortgage has been modified.

These are just a few of the issues with SB 94. The law is attempting to protect homeowners, but is actually protecting the lender guaranteeing that homeowners will not be adequately represented when dealing with the lender. The lenders will take advantage of this and will offer homeowners loan modifications that do not help their situation.

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Source: National Loan Auditors, Inc.
http://www.NLAudit.com

Obama’s New Plans to Help Homeowners

The Obama Administration announced last April 28, 2009 new details to being relief to homeowners under the Making Home Affordable program. Two new programs were unveiled. The first one is called the Second Lien Program which is designed to help homeowners achieve affordability. The Second program involves the integration of the FHA Hope for Homeowners plan into the Making Home Affordable Plan.

There are significant challenges to modifying loans for homeowners with first and second mortgages, especially in cases where the first and second mortgages involve different lenders. It is estimated by the U.S. Treasury that up to 50 percent of homeowners at-risk of being foreclosed involve homeowners with Second Mortgages on their homes. Hence, the Second Lien Program announced last week is estimated to help millions of homeowners.

The Second Lien Program is envisioned to work together with the loan modifications offered under the MHA program. When a Home Affordable Modification is initiated on a first mortgage, lenders participating in the Second Lien Program will automatically reduce payments on the Second mortgage according to some standards set by the U.S. Treasury. This program also makes it possible for homeowners to buy out the second mortgage with a lump sum payment under a formula also set by the U.S. Treasury. This gives homeowners the chance to extinguish second mortgages when appropriate.

The other announcement by the U.S. Treasury involves steps to incorporate the FHA’s Hope for Homeowners into the MHA program. Hope for Homeowners require the lender to accept a payoff below the current market value of the home, allowing the homeowner to refinance into a new FHA guaranteed loan. Refinancing into a new loan below the home’s market value gives the homeowner equity in the home thus resulting in a better financial position for borrowers who qualify.

Under the program changes announced last week, when lenders evaluate a homeowner for an affordable home modification, lenders will be required to determine the homeowner’s eligibility for a Hope for Homeowners refinancing. Where the homeowner qualifies, the lender must offer this option to the homeowner. To encourage lenders to join the program, they will be given incentives similar to the success payments in the MHA program.

To better illustrate the second lien program, the U.S. Treasury came up with two case examples.

The first example involved Family A, which took out a 30-year closed-end second mortgage with a balance of $45,000 and an interest rate of 8.6%. Today, the Family A has an unpaid balance of almost $44,000 on their second mortgage. Under the second lien program, the interest rate on Family A’s second mortgage will be reduced to 1% for the 5 years reducing their annual payments by over $2,300. After those 5 years, Family A’s mortgage payment will rise again but to a more moderate level.

The second example involves Family B, which took out an interest only second mortgage with a balance of $60,000 with an interest rate of 4.4% and a term of 15 years. Today, Family B has $60,000 remaining on their interest only second mortgage because none of the principal was paid down. Under the second lien program, the interest rate on Family B’s interest only second mortgage will be reduced to 2% for 5 years reducing their annual payments by $1,440. after those 5 years, Family B’s mortgage payment will adjust up and the mortgage will amortize again over a certain term.

Treasury Secretary Tim Geithner said that: “With these latest program details, we’re offering even more opportunities for borrowers to make their homes more affordable under the administrations housing plan.” These programs are part of the ongoing effort of the Obama administration to solve the current economic crisis. Programs, guidelines and participants in these programs are likewise being constantly revised. Thus, homeowners also need to be vigilant and get up to date information on all their options as available programs are also constantly changing and updating.

California Loan Modification Company Brings Financial Relief to Filipino Families

Mortgage Resolution Services Launches Website, Services for Bay Area Homeowners

Mortgage Resolution Services, an attorney-based loan modification company, is set to reach hundreds of Northern California homeowners this week with the launch of their new website, http://MortgageResolutionServices.com.

The San Francisco Bay Area mortgage firm assists borrowers facing foreclosure by guiding clients through the loan modification process, offering forensic loan audit reports through National Loan Auditors and providing referrals for legal services with Liz Koepke Law Office. Mortgage Resolution Services utilizes a reliable, well-developed approach for helping homeowners through challenging loan workouts, including thorough case assessments and document submission management.

Mortgage Resolution Services specializes in providing assistance to America’s Registered Nurses, United States Postal Workers, and the Filipino-American Community.

For additional information, contact:

Alex Abela
Email: aabela@mortgageresolutionservices.com
Cell: 650-455-3924
Office: 650-342-9438

Filipino Loan Modification | California Loan Modification Services | Forensic Loan Audit Reports

National Loan Auditors’ Alliances with Rapid Reporting and PLATINUMdata Add Information Depth to US Court Audit™

National Loan Auditors (NLA) has formed strategic alliances with two companies — Rapid Reporting and PLATINUMdata Solutions, Inc.– adding their cutting edge information technology solutions to US Court Audit™, the comprehensive, forensic analysis of mortgage loan files NLA has designed for participants in the bankruptcy process.

“Our alliances with these two innovative industry leaders add important and valuable dimensions to US Court Audit(TM),” August Blass, founder and CEO of NLA, said. Based on NLA’s nationally recognized Forensic Loan Audit Pro™, US Court Audit™ provides a detailed, independent analysis of loans and the underwriting process, identifying violations of state and federal laws and regulations by lenders, and uncovering evidence of fraud or other improprieties by home buyers, Blass explained. The audit includes a bottom-line recommendation for loan modification terms, providing a framework for negotiations between debtors’ and lenders’ counsel and a benchmark bankruptcy judges can use in evaluating modification requests.

“Verifications of the borrower’s information (provided by Rapid Reporting) and a current estimate of the property’s value (provided by PLATINUMdata Solutions, Inc.) are key components of both the loan analysis and the modification recommendations we make,” Blass noted.

PLATINUMdata’s collateral assessment tool, “Collateral Expert™” is a sophisticated automated collateral method that provides a real-time analysis of the subject and it’s comparables in the vicinity as well as market information, including declining value indicators. The analysis includes foreclosure activity and “Notice of Default” (NOD) data for the neighborhood, along with extensive comparable sales information — all updated weekly. Going well beyond any other standard collateral automation, Collateral Expert™ also spots crucial neighborhood details the original appraisal may have overlooked or excluded, verifies owner occupancy status, identifies relationships between buyers and sellers, and flags possible property flips and other illegal activities.

“With Collateral Expert™, we are able to give users of US Court Audit™ the most detailed and most accurate analysis of property values and market information available today,” Blass said.

“The idea behind US Court Audit™ is to provide a completely objective analysis and Collateral Expert™ fits perfectly with that goal,” Terry Cabaniss, assistant vice president for production at PLATINUMdata, said. “Like the loan audit itself, our property and market assessments are completely objective. The multiple data points on the Collateral Expert™ reports are provided from PLATINUMdata as a true third party conduit for collateral valuations” she added, “and the numbers and data don’t lie.”

Rapid Reporting focuses on the borrower side of the loan transaction. The company’s signature products — Direct Check and Income Check — “have made Rapid Reporting the acknowledged leader in mortgage fraud prevention efforts,” Blass said. “That’s why we are so excited about adding these premier identity, income and employment verification tools to the US Court Audit™ arsenal.”

Direct Check supplements Social Security number matches with information compiled from more than 150 proprietary databases encompassing 15 billion public and private records, making it the most comprehensive and definitive identity verification tool available. Income Check combines information from IRS taxpayer transcripts with merged reports from three major credit reporting agencies.

“We believe early authentication is the key to preventing mortgage fraud ” Jay Meadows, president and chief executive officer of Rapid Reporting, said. “We know that mortgage fraud contributed to the financial problems we’re seeing today,” he continued. “By adding our service to US Court Audit™, we can help ensure that these fraudulent activities won’t be repeated in the loan modification and bankruptcy process.”

The premier provider of forensic loan audits to financial institutions and attorneys nationwide, NLA created US Court Audit™ to address the anticipated surge in bankruptcy-related demands for court-ordered mortgage “cram downs” resulting from pending legislation that would allow bankruptcy judges to modify mortgage loans as part of the Chapter 13 bankruptcy restructuring process.

But regardless of whether this legislation is approved, Blass noted, pressure for loan modifications will increase, encouraged both by the Obama Administration’s home owner assistance initiatives and by the efforts of struggling consumers to save their homes. “Lenders, servicers and homeowners are going to be dueling over loan modifications for some time to come,” Blass said, “and the independent, comprehensive analysis provided by US Court Audit™ will be an essential negotiating tool, equally useful to both sides.”

The strategic alliances with Rapid Reporting and PlatinumData follow NLA’s recent announcement of an alliance with SigniaDocs, which provides electronic document preparation and quality control management solutions for the residential mortgage industry.

“NLA’s alliances with these three companies — all innovative leaders in their fields — provide the information and technology building blocks that will make US Court Audit™ a uniquely valuable tool, both within the bankruptcy process and outside of it,” Blass said. “We’re providing what amounts to a loan modification in a box,” he added. “The audit includes all the information attorneys representing lenders, servicers and borrowers need to negotiate a modification solution for their clients, and it provides the objective analysis bankruptcy judges need to quickly review or order loan modifications, so they can clear crowded court dockets and provide the expeditious, equitable relief all parties in a bankruptcy proceeding are seeking.”

3 Tips for Doing Your Own Loan Modification

The loan modification process is a unique and slippery beast.

Dealing with a lender is never an easy process and will normally be slow and arduous. On top of this, loan modifications are currently different for every lender and standards change even within the same lender on a weekly basis due to the new legislation that is being passed by the Obama Administration. This is why i say that loan modifications are unique and slippery. For a borrower to successfully deal with a lender they are going to need something that will set them apart from the hundreds of other borrowers that are requesting loan modifications, knowledge of how the process works, and a gameplan for how they will achieve their modification.

Here are a few tips to help the average borrower increase their ability to successfully negotiate a loan modification.

Get a Forensic Loan Audit

Getting a forensic loan audit will allow the borrower to separate themselves form the hundreds of other borrowers who are contacting their lender to receive a loan modification. The Forensic Loan Audit will also strengthen your position by giving you legal leverage against the lender. Rather than just relying on a financial hardship you will also be putting the lender on notice of predatory lending violations.

Present yourself as a Good Candidate for Loan Modification

The most common mistake that people make is to understate their income, assets, and ability to pay a loan modification. The typical mindset is that as the borrower you should make your situation look as dismal as possible to convey to the lender that you cannot pay your mortgage and need help. However, this tactic usually backfires, if the lender sees you as being unable to pay even a modified loan then they will not want to work with you and will just foreclose on you now rather than later. The best tactic is to come up with a loan modification that you will be able to pay and is reasonable. The lender will be much more willing to work with you if they see that you are generating income and will be able to pay the terms of the new loan modification.

Be Patient and Courteous

This may seem like commonsense, but it is a very important point. Loan modifications take time, typically a minimum of 90 days, it is important to be patient during this time. If you are calling and badgering the lender everyday you will just be needlessly taking up the time of the people who are supposed to be working on your loan modification. If someone says to follow up in 3 days, follow up in 3 days. A concept that goes along with this is the idea that you should be courteous to everyone you work with from the lender. Your never know who has the power to help or hinder your loan modification so making enemies at the loan modification department is never a good thing.

These are just a few tips to help borrowers get the most out of their negotiations with the lender.

Successfully Bring a Claim Against a Lender.

Current Claim Approach Outline

Below is an example of a legal approach that attorneys in the field and modification companies use to successfully bring a claim against a lender.

Action Steps

1. The attorney or modification obtains a forensic loan audit to determine the strength of the case.

a. In the cases of a modification company if violations are found a certified opinion letter should be obtained in conjunction with the audit.

2. The borrower’s representative should then send a qualified written request to the bank requesting the loan. The bank must provide a written response acknowledging receipt of the correspondence within 20 days. 12 U.S.C. § 2605(e)(1)(A) and (B).

3. The borrower’s representative then presents their claim of violations within the loan to the lender.

4. The Lender has 60 days from the qualified written request to weigh its possible potions and to take steps to actually fix any alleged violations through a workout agreement. 12 U.S.C. § (e)(2)(A), (B), and (C).

5. If the lender does not fix the violations within 60 days, the borrower is entitled to bring a claim for any violations found in the loan.

6. Upon a successful claim of lending violations against the lender, the borrower is entitled to damages based on the specific violations.

a. Typically a borrower will always be entitled to actual damages, attorney fees, and statutory damages in the amount of $1000 per violation. 12 U.S.C. § 2605(a) Reg. X, 24 C.F.R. § 3500.21.

b. In some cases borrowers will be entitled to three times the amount paid for settlement services, attorney fees, and costs.12 U.S.C. § 2607 Reg. X, 24 C.F.R. § 3500.14(b).

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Sending Qualified Written Request to Lenders

Sample Qualified Written Request

Under 12 U.S.C. § 2605(e), of the Real Estate Settlement Procedure Act (RESPA), lenders are required to respond to any sort of qualified written request within 20 business days. Furthermore if the qualified written request alerts the lender to any illegality or errors within the loan, the lender has been put on notice of the error or illegality and has 60 business days to correct the error or to remedy any illegality.

When you contact National Loan Auditors, a we can provide you with a sample qualified written request that can easily be adapted to serve your specific needs. A qualified written request can be used to request copies of documents, obtain information about your loan, resolve discrepancies in your payment history, or request any other information about your loan or how your loan is being handled.

It is best to send the qualified written request by itself and not with any other documents, such as mortgage payments, to the lender. Also the qualified written request does not affect the borrower’s duty to make payments, and monthly payments should still be paid.