Full Disclosure:
When either just describing or encouraging loan modification, the servicer shall give the debtor information that will aid them in understanding the terms of the modification and the process of modification, and debtors should also be given written information about the costs, terms, and risks of modification that is clear and concise. This should be given in a timely manner as to allow debtors to make an informed decision.

Fair Lending:
Modifications under the plan must abide by the Equal Credit Opportunity Act and the Fair Housing Act, both of which do not allow discrimination on a prohibited basis connecting to mortgage transactions. Loan modification plans are subject to fair lending laws, and both servicers and lenders should make sure debtors are being treated equally when it comes to mortgage modification.

Consumer Complaints and Questions:
Servicers should have a system to answer complaints and questions regarding loan modification timely and appropriately, and that every question and complaint is taken seriously and answered appropriately.
This protection will ensure that you and your family are not treated unfairly and can receive the full benefits a mortgage modification.

Article Source: Loan Store

While renting out a room has been around for years, especially in the South Bay’s Latino neighborhoods, sharing a home in order to save it has become an increasingly popular way to hang on to the front-door keys to the American dream.
“I’m up against a wall and I had no other place to turn for income,” said Rafael Porras, a 50-year-old waiter who began renting out a room in his downtown San Jose condo this month after he was squeezed by pay cuts at work and a mortgage payment about to rise. “But I had to do it because I don’t want to walk away from this place. ”

Whether they’ve rented out rooms in the past to make ends meet, or a job loss has prompted them to tap into their inner landlord for the first time, many people say their rental income is the only thing keeping them from losing their homes. And for many homeowners — even those whose property is worth less than their loan amount — losing their home is not an acceptable option.

“I can’t imagine life anywhere else,” said 71-year-old Margaret Licon, who bought her San Jose house 40 years ago and raised six kids in it before losing her husband 25 years ago. With no job, dwindling savings, and rising loan payments, Licon

now relies on a houseful of renters to stay afloat — a couple with three kids, an ex-Marine with health problems, and two grandsons shoe-horned into the garage.
“Without my tenants, I couldn’t make it,” said Licon, who’s hoping her lender will modify her $400,000 loan. “But I’ve been here so long, this house is a part of me. I’d even move into my garage and rent out my own bedroom if it meant keeping my home.”

While it’s hard to know precisely how many struggling homeowners have turned to renting out rooms, housing advocates have seen a surge in the past year in the number of people desperate enough to give it a try. Especially among the recently unemployed, rental income — along with family loans — has become a godsend.
“Renting out bedrooms is a growing trend,” says Sunnyvale housing counselor Maritza Wong, who works for the nonprofit Project Sentinel. “And it’s not just lower-income people doing it, but even people who were making good money before losing their jobs.”

At Project Sentinel, where staffers report as many as 20 percent of their clients becoming landlords under their own roof, counselors are recommending the practice as a way for homeowners to tweak their debt-to-income ratio in order to qualify for a modification.

But a word of caution: becoming a landlord, especially for someone with little or no experience, can bring headaches, from tenants who fail to pay rent to those who are just a pain in the neck to live with.
Before finding his current tenant this month, Porras, a waiter at Original Joe’s, took in a roommate last year, “but I didn’t like it because he was messy. He was watching too much TV. I couldn’t even change the channels in my own house.”
The situation became untenable, said Porras, because “he took over the place, sleeping in the living room. I had to force him to leave because we were arguing so much. It didn’t turn out well.”

Often, it’s family members moving in together for shelter from the recession. Patty Guertler with Surepath Financial Solutions in San Jose, a center that offers credit and foreclosure counseling, says often it’s “adult sons and daughters moving back in with their parents who are facing a financial crisis. It’s always been fairly typical in the Latino population to keep the family circle close, but now the recession has made it even more dramatic.”

And all that drama can spell trouble. For Milpitas homeowner Charles Jackson, sharing some of his most intimate space with three non-family tenants is both a necessity — he’s living mostly on Social Security and trying to keep up with a mortgage that’s mushroomed because of refinancing — and a challenge. He’s renting to a couple, who keep to themselves, and a neighbor who needed a room after the house he was living in went into foreclosure.

Jackson and his roommate, Frank Marquez, are still learning the delicate art of sharing an 1,100-square-foot home. “We’ve only got one bathroom that we share, so we both got gym memberships to take some of the pressure off. And I’ve had to set up rules for him so we’d get along.

“Laundry, for example, became an issue,” says Jackson. “Frankie works in a body shop and he didn’t realize that when you wash something really dirty, like his uniform, it leaves a ring. So he’s lost his washing privileges. ‘Go the laundromat,’ I told him. ‘You might meet a nice lady.’ ”

Article Source: Mercury News

But that night an unwanted visitor arrived: a process server delivered papers that ordered Mrs. Bagnarol and her family to get out. The bank had foreclosed on their property, and they were all being evicted.

Emotions exploded. Not now, the family cursed. A sheriff’s deputy was called to keep the peace. Mrs. Bagnarol died a day later.

But the unfortunate timing of the official visit was not the only source of the anger. More troubling were the financial deals that led to the visit — and the decision by lenders to sign Mrs. Bagnarol up for one exotic mortgage after another.

“It’s definitely elder abuse,” said Carolina Bagnarol, her daughter. “There’s predatory lending here.”

Ms. Bagnarol has filed a lawsuit against a lengthy list of lenders she said took advantage of her mother. The loans plunged her mother deeper into debt with each mortgage payment, to the point of financial ruin. The lawsuit contends that Mrs. Bagnarol was pursued and persuaded — twice over — to take out ultimately disastrous loans on the family’s property.

In recent years, 70 percent of the elderly have been solicited to take out new mortgages, according to a survey by AARP.

“Older people seem to be targeted in part because they own their houses and have owned them for a long time and have equity in their houses,” said Jean Constantine-Davis, senior lawyer for the AARP Foundation.

Mrs. Bagnarol was in her late 70s and suffered from the onset of dementia when she signed the loans, family members said.

“This is one of the most egregious cases I’ve ever seen,” said Michael Rooney, the San Francisco lawyer representing the family in the lawsuit. “The terms were so horrible — negative amortization and adjustable rate — no one would believe this loan was good for her.”

The types of loans Mrs. Bagnarol received were popular at the time. Sold under names like Option/ARM and “Pick-a-Payment,” borrowers could make minimum payments that did not cover the entire amount due. The balance was then added back into the loan, increasing the overall debt.

Eventually that debt would come due, creating huge monthly payments that many homeowners could not afford. Critics blame these loans for helping to cause the housing market crash. Lawmakers agree — as of Jan. 1, it is illegal to write this type of loan in California.

Mrs. Bagnarol first bought the property in 1994 for $535,000, her family said, and for most of the intervening 15 years had a conventional 30-year fixed-rate mortgage. As the property’s value skyrocketed in the boom years, she refinanced to take out money for a family business and to build a new main structure.

This eventually led to a $1,365,000 negative amortization loan in 2005. Its low interest rate soon expired, and she refinanced with another $1.5 million loan on Dec. 29, 2006; under its terms, her monthly payments eventually spiked to $14,541.32 from $5,176.81. When Mrs. Bagnarol fell behind, the debt spiraled to $1,640,000 by December 2008.

Family members say that when they tried to pay on behalf of their mother, the bank was uncooperative. Events snowballed into foreclosure, followed by eviction notices. Eight people live at the compound, including Ms. Bagnarol and her three children.

The situation has torn the family apart. It was Mrs. Bagnarol’s son-in-law, Michael Polizzi of Residential Pacific Mortgage in Alamo, who promoted the loans. He bristled at the notion that he had taken advantage of her.

“If Miss Bagnarol is alleging any improper conduct by RPM or by me, those allegations are false,” Mr. Polizzi said, reading a prepared statement after conferring with his lawyer.

Efforts to save the family homestead have been further complicated by changes in bank ownership. The loan started with World Savings, an institution acquired by Wachovia, which itself was bought by Wells Fargo, a bank that had a policy against negative amortization loans, but now finds itself dealing with the debris.

Giuseppa Bagnarol, 82, was in her final hours in August, dying at home surrounded by the large family she presided over as matriarch.

Wells Fargo is paying attention to the Bagnarol case. On Tuesday afternoon it offered a reprieve. Teri Schrettenbrunner, a spokeswoman for Wells Fargo Home Mortgage, said the bank had halted the eviction process “while we work with her mother’s estate to bring the mortgage payments current.”

Carolina Bagnarol, a former business manager for the rock group Journey who is no stranger to vicissitude, is skeptical. But she is grateful that her mother never knew that her homestead was in jeopardy.

Carolina’s brother, Franco, agreed. “It would have killed her sooner,” he said, “and she would have died unhappy.”

Article Source: New York Times
Scott James is an Emmy-winning television journalist and novelist who lives in San Francisco.

“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.

Mediators participating in this program will have to be certified by the Supreme Court and then participate in special foreclosure training. Mediation costs no more than $750, and about $350 of that typically goes to the mediator.

Although many mediators are attorneys, that is not a requirement under Florida law. Petrey said many mediators have backgrounds in personal finance, banking or social service.

The order is the result of recommendations made by a Supreme Court task force that studied the issue. As part of that study, the Collins Center handled mediation for three of Florida’s 20 circuit courts during a six-month period.

More than 20,000 mediations were referred to the center during that time, and only half of the homeowners chose mediation. Of those cases, mediators were successful in working out a deal with lenders and homeowners in about 65 percent of the situations.

Shari Olefson, a mediator and Tampa real estate lawyer with Fowler, White and Boggs, said she worries that too many inexperienced mediators will jump into the business.

“Having a mediator who knows what they’re doing is like having a judge who knows what they’re doing.”

Reporter Shannon Behnken can be reached at (813) 259-7804.

Article Source: TBO

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.
Make sure to understand that this process is not easy. You’re going to have to submit several documents and you’re going to have to dig up some things that you have likely never done in the past. It is well worth in the long run as it is going to help you save lots of money and possibly even help you avoid foreclosure.

As stated earlier, you must be very persistent with this process and make sure that your lender knows just how badly you want this mortgage modified. If you just submit some documents and do not follow through there’s a good chance that your home loan modification will not go through. You need to take action and make sure that your modification gets completed.
If the current economy and your financial struggles have gotten you down make sure to check out the inspirational blog My Life After Retail. The blog is an account of the journey to find peace of mind and happiness in today’s society.

Author: Mike Garner Source: Subprime Blogger

Let me know what you think

The new program, at least in concept, is simple. If your home is in (or headed for) foreclosure and you don’t qualify for a rescue in the form of a refinance or a loan modification under other federally-subsidized programs, you can deed your home to your lender and then lease it back. This will save the lender the cost of a foreclosure — maybe $2,000 to $4,000 — and, according to Fannie Mae’s public relations department, help stabilize home prices and minimize neighborhood deterioration caused by vandalism of and theft from vacant homes. The leaseback can be for up to a year, with possible renewal options after that. Rent will be at a market rate.

Whether Deed-for-Lease will have much of an impact remains to be seen. To qualify, a borrower will first have to jump through numerous hoops associated with the deed-as-alternative-to-foreclosure part of the program. (See Fannie Mae Servicing Guide, Part VII, Section 506.) If the borrower makes it past that, and is in fact interested in a leaseback, a Fannie Mae representative then will contact the borrower, visit the property, and evaluate both. If, after this evaluation, the lights are still green, a lease will be signed and the loan servicer will complete the process of obtaining a deed to the property.

For the lights to go green, numerous conditions must be met, to wit:

• The loan must be a first-
mortgage loan. If there is a second mortgage on the property, the second mortgage lender will have to release its lien.

• The borrower must either occupy the property as a primary residence (no Beaver Creek ski condos here) or have leased the property to someone else who occupies the property as a primary residence.

• The market rent the borrower will pay can’t exceed 31 percent of the borrower’s verifiable income. In addition to paying rent, the borrower must be able to — and willing to — cover the cost of regular maintenance during the term of the lease. (This strongly suggests that borrowers who are in foreclosure because they no longer have an income will not qualify for the program.)

• The borrower must have made at least three payments on the loan in question, and can’t have more than 12 payments past due.

• The leaseback must not cause a violation of zoning or homeowner association rules. The property must be in reasonably good condition. The number of occupants at the property must be appropriate for its size.
Special rules apply if there are pets.

• There can be no signs of illegal activity at the property and all occupants older than 18 must undergo a satisfactory background check. This includes clearance from the Office of Foreign Assets Control. (Apparently Fannie Mae, which has not had good press in recent years, does not wish to be accused of harboring terrorists.)

If you think the Deed-for-Lease program might be of benefit to you, contact your loan servicer. Information about Deed-for–Lease can be found at Fannie Mae’s Web site, www.fanniemae.com; search for “deed for lease.”
—
Jim Flynn is a private attorney at Flynn Wright & Fredman LLC in Colorado Springs. The firm primarily represents clients in the real estate, financial services and small-business sectors. Reach him at jtflynn@fwflegal.com.

Article Source: http://www.gazette.com/articles/new-75512-foreclosure-association.html

The first wave of foreclosures in Northern Colorado struck people who were in bad mortgage products: subprime mortgages and adjustable-rate loans that buyers couldn’t pay even if they still had jobs.The next wave is hitting now, according to officials from agencies who help people facing foreclosure.

Those homeowners are falling behind for other reasons — they have lost their jobs, or the jobs they depended on when they received their mortgages are producing far less income.

Lending officials and organizations that can help homeowners facing the prospect of foreclosure held an open house of sorts Saturday at The Ranch, offering counseling to those who see trouble ahead in their financial future.

“Getting lenders here was key,” said Sara Gilbert, executive director of Consumer Credit Counseling in Fort Collins.

She said the number of clients served by her agency has increased by 33 percent in the past year, and she sees that second wave of foreclosures holding steady, at least.

By noon, about 40 property owners had taken advantage of the resources available to help forestall foreclosure, and another group had learned more about programs that can help homeownership.

Among the sponsors for the event was the Colorado Division of Housing, which also is a sponsor of the Colorado Foreclosure Hotline.

Ryan McMakin, communications specialist for the agency, said the foreclosure crisis is now starting to hit counties smaller than Larimer, such as Morgan and Teller counties, which will lead to higher numbers being announced soon.

“Statewide it’s going to be a big quarter (for foreclosures),” he said.

Article Source: http://www.reporterherald.com/news_story.asp?id=25731

With the present economic downturn costing many hard working people their jobs the reality that the housing market crisis could be around for a long time is setting in. Job loss can be the preliminary event in a sequence that leads to foreclosure. Although the conventional belief is that the end result of falling behind on your home loan payments is foreclosure and eviction there are some strategies available to the beleaguered homeowner facing the wrath of their lender? Foreclosure prevention is not a myth, it is tried and tested, and it works.

The reality of foreclosure is that most homeowners unwittingly assist the bank in the foreclosure process. The initial reaction when the bank starts calling is to hide and hope that they go away. The bank won’t go away; money is their business and their only concern. There is nothing personal they don’t hate you they just want to exercise the default option in the mortgage, recoup their funds and get on with their business of lending money to credit worthy borrowers.

The trouble with the banks business plan is that today’s credit worthy borrower is tomorrow’s unemployed defaulter. Very few borrowers enter into a mortgage contract with a lending institution with the intention of going into default and eventual foreclosure, eviction and possible homelessness.

The best advice that can be given to a person who finds themselves in the foreclosure is to consciously take control of their situation. If one decides to let events take their course the foreclosure process will most probably be finalized in as little as 180 days from the initial default. 180 days translates into six months which is not a long time for a family whose bread winner is out of work and whose finances are depleted.

The worst thing to do is nothing. Merely submitting an answer to the banks complaint to the foreclosure court will most probably add another 6 months onto the process. This is valuable extra time for a family trying to prepare for fiscally for the future. Foreclosure prevention translates into holding off the lender for a period of time allowing the homeowner to adequately prepare for the future.

It is true that is a small number of cases the banks so mishandle the foreclosure process that they end up paying large damage awards to the homeowner but in most cases the plan is to delay the process for the maximum amount of time possible to allow the homeowner to move on with their lives in a financially stable way.

Delaying the foreclosure process allows a homeowner time to get a new job which might allow them the possibility of qualifying for a loan modification program which would allow them to prevent the foreclosure and stay in their home long term.

The homeowners who are most successful in fighting foreclosure are surprisingly enough the ones who are willing to fight. Access the situation. Access the options and go for it.

Foreclosure prevention is a very real option for a homeowner who is willing to become involved in the events of their life. A 180 day or 6 month foreclosure timeframe can very easily be drawn out to a 24 month or 2 year. The foreclosure prevention plan allows homeowners the time to rearrange their finances which in turn may allow them to refinance through a loan modification program or to move out in their timeframe with finances for a healthy fiscal future.