FreeDIYkits Loan Modification Blog

TAMPA – Attorneys and others are scrambling to become mediators following Monday’s Supreme Court order requiring foreclosure mediation for some troubled homeowners.

“There’s a lot of interest in this program,” said Rod Petrey, president of the Tallahassee-based Collins Center for Public Policy, a nonprofit group that trains mediators and assigns them to cases. “We have a roster of hundreds of mediators, and they’re all hungry for more work.”

Chief Justice Peggy Quince issued the order to help handle Florida’s glut of foreclosures. With an estimated 465,000 cases clogging the court system, mediation may help resolve some cases early in the process.

The order applies to new foreclosure lawsuits and requires that homeowners of primary residences be given the opportunity to have their case go to mediation with a third-party. The goal is to work something out between the homeowner and the lender in order to avoid foreclosure.

Choosing a mediator will be up to a judge, although the borrower and lender can request one. Judges typically work with nonprofits, such as the Collins Center, to assign mediators to cases.

A group of billionaires, hedge-fund managers and ex-Goldman Sachs executives are building a banking empire in California—with assistance from Uncle Sam.

Exactly a year ago these investors acquired the assets of collapsed mortgage lender IndyMac Bank from the federal government for about $1.5 billion and renamed it OneWest Bank. Earlier this month, OneWest purchased First Federal Bank of California, a failed Los Angeles-based lender.

With the purchase, Pasadena, Calif.-based OneWest more than doubled its branches to 72 and increased its total assets by a third to $24 billion, making it the largest bank based in Southern California.

The OneWest ownership roster reads like an excerpt of the Forbes 400. It includes J.C. Flowers & Co., an investment firm run by former Goldman Sachs Group Inc. banker J. Christopher Flowers; Paulson & Co., the large hedge fund; MSD Capital, which invests the fortune of computer mogul Michael Dell; and a fund controlled by famed speculator George Soros.

How successful OneWest’s owners are with the venture—both financially and in the public eye—will influence whether the government welcomes more private capital into the banking system.

Federal regulators, struggling with a rash of failures, can save money by lining up a ready buyer when a bank fails. But the Federal Deposit Insurance Corp. has been wary of private-equity investors, given their reputation for loading companies with debt and selling businesses quickly.

Of the 140 banks closed by the government this year, private investors have acquired only two outright—IndyMac and Florida’s BankUnited. Private equity investors argue that they should play a bigger role, as their funds’ billions in unspent capital could bolster the banking system.

Losing one’s home to foreclosure can be one of the worst experiences anyone can go through.

Emotions run high, including anger. In some cases, that anger can lead troubled homeowners to do drastic things.

In the case of one home recently foreclosed by a bank, it appeared “debtor rage” took over the homeowner, one North Texas realtor said. The home, which the realtor has since listed, was “trashed.” Large gaping holes in the wall can be seen throughout the house.

“They’re mad at the bank so they take it out on the house,” said George Roddy, of the Addison based Foreclosure Listing Service.
From the outside, the house looks attractive, but inside it’s another story. Most of the walls have gaping holes, as though someone took a sledgehammer or kicked in the walls. Roddy said interior damage can be a common sight after foreclosures.
“There is a lot of pent up emotion in this process,” he said. “It’s a terrible, terrible process to go through to have your home taken away.”

Cuyahoga County is placing a six month moratorium on foreclosures due to tax delinquency as part of the effort to help struggling homeowners stay in their homes. Ideastream’s Rick Jackson has the details.

Cuyahoga County Treasurer Jim Rokakis says he’s seeing a growing number of people either abandoning or being put out of their homes because they don’t have money to pay property taxes.

To slow the increase, Rokakis’ office is initiating a six-month foreclosures stop on single-family, owner-occupied structures whose owners’ tax bills are past due.

JIM ROKAKIS: “We’re now past the stage where it’s just the sub-prime folks who are in trouble. We’re seeing a lot of prime rate borrowers struggle and we’re seeing a lot of people who’ve paid their property taxes struggle.”

It is NOT amnesty – taxes are still owed, and penalties and interest will continue to accrue. But it’s hoped that that keeping people in their homes longer will give them time to get back on their feet, and stop the slide in neighborhoods property values that occurs when homes are empty.

Americans’ mortgage woes continued to get worse in the third quarter. Just 87.2% of U.S. mortgages were current in the third quarter, a decrease of 1.5% from the previous quarter, according to the OCC and OTS Mortgage Metrics Report released Monday. The Office of the Comptroller of the Currency and the Office of Thrift Supervision report covers 34 million loans totaling $6 trillion in principal balances, about 65% of the U.S. mortgage market.

Serious delinquencies jumped to 6.2% of mortgage-servicing portfolios, an increase of 16.7% from the previous quarter. The number of prime borrowers in trouble continues to mount as 3.6% of prime mortgages were more than two months behind on payments, more than double the number in default a year ago.

Foreclosures in process reached 3.2%, an increase of 9.4%, with more than 1 million foreclosures in process.

Loan Modification Efforts Improving

Yet on the bright side, more people are getting help with home loan modifications. National banks and thrifts implemented more than 680,000 home loan modifications and payment plans in the third quarter of 2009. That’s up 67% from the second quarter, so it appears lenders have finally gotten their act together to help people in trouble with their mortgages.

The Obama refinance plan was created to help home owners lock into a low mortgage interest rate. The Making Home Affordable plan is designed to help homeowners stay in their home and avoid foreclosure. An easy way to lower your monthly mortgage payment is to refinance your current home loan to a lower mortgage interest rate. This could save you several hundred dollars a month.
If you have a decent credit score and you have equity in your home then there is a good chance that you can refinance to a much lower mortgage interest rate. It is extremely important that you have some equity in your home. Many people have tried to refinance and they have found that their home value is much lower than they expected. This is causing it to be very difficult to get through the refinance appraisal step.

It is also extremely important that you have a credit score of 680 or better to get a very low mortgage interest rate. If you have bad credit and little equity in your home then you might want to consider the home loan modification process because it is not likely you can refinance to the advertised low mortgage rates. For more information on the home loan modification option make sure to check out the Making Home Affordable website.

Going through the home loan modification process is something that can greatly help you lower your monthly mortgage payment and avoid foreclosure. One of the companies that has done a good job of getting borrowers into a trial period for mortgage modifications is CitiMortgage. At the present time CitiMorgage has approximately 40% of the qualifying mortgages in the trial period.

If you are finding it very difficult to make ends meet financially and you can not make your monthly mortgage payment that a home loan modification might be right for you. Make sure to access the making home affordable website to find out much more information. There is quite a bit of information on this website so make sure to devote a significant amount of time.

There are several mortgage lenders that are having great difficulty getting home loans into modification. You will have to be very persistent with your lender and make sure you have all your documentation available and ready. One of the reasons the borrowers are finding it difficult to get mortgages modified is that they are not providing the proper documentation at the proper time.

Only about 4% of homeowners whose home loans were reworked through a government-led program have successfully completed a trial period required to get permanent modifications — a slow pace of progress that has some now calling for change.
A total of 31,382 homeowners have gotten a permanent home loan modification since details of the program were announced in March, the Treasury Department said Thursday. There are more than 728,000 trial modifications underway.

Trial modifications last for three months before becoming eligible for permanent status; during that time, homeowners must remain current with their payments and submit documentation showing proof of income and that they are owner-occupants.

On Thursday, the Treasury Department released a list of servicers and the number of permanent modifications each has made.

About a quarter of borrowers in trial modifications already are in default again on their mortgages, according to Treasury, which has criticized banks for not doing more to make trial modifications permanent. Servicers have countered that borrowers have frequently failed to provide documentation of income or other paperwork.

HOPE NOW announced Thursday the initial launch of its HOPE LoanPort, a new web portal that will give HUD-approved housing counseling agencies the ability to submit completed Home Affordable Modification Program (HAMP) applications for borrowers facing foreclosure. The nationwide launch of the HOPE LoanPort is expected in early 2010.

“This is the highway system that will help more people get HAMP modifications, more quickly. It is a neutral and accessible site that will provide real-time aggregate reporting and status updates,” said Faith Schwartz, HOPE NOW executive director. “While we will initially roll it out with certified housing counselors, our goal in the upcoming year is take it directly to consumers.”

The intention of the new HOPE LoanPort is to streamline the HAMP application process by leveraging HUD counseling agencies that provide free services to at-risk borrowers. Housing counselors in nine key markets will assist troubled homeowners in collecting all required documents for a loan modification under the Making Home Affordable program.

Under President Barack Obama’s program to reduce foreclosures, fewer than 35,000 troubled South Floridians have had their mortgages modified, less than 5 percent of those who qualify for help.

Figures from a U.S. Treasury Department report Thursday offer little good news for the hundreds of thousands of Florida homeowners who are behind on their mortgage payments and seeking help from their lenders.

Banks and companies that service home loans are moving more slowly to renegotiate loans in Florida through the Making Home Affordable program than in the rest of the nation

Nationwide, 24 percent of the nation’s 3.3 million troubled home loans have been modified, the Treasury Department said. In Florida, the rate was 13.5 percent through November.