Posts filed under 'foreclosure'
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Many homeowners are finding it hard to make their mortgage payments. At the same time, house prices are falling. A loan modification is the best option for these desperate homeowners.
HAMP is generally the first choice for homeowners. If this fails the borrowers will then ask their lenders to give them a direct loan modification. To give your loan modification the best chance of being approved, there are a few important steps you should take.
Do not make big purchases before applying for the loan modification.
You have to convince the lender that you have a hardship. This hardship prevents you from making your scheduled mortgage payments. How can you explain a 7-day cruise to the caribbean? Or the purchase of a new car, or a 52-inch flat screen TV?
Always submit a hardship letter.
Many loan modification applications are lacking a hardship letter. The hardship letter explains why you are having problems paying your mortgage. A hardship is a chronic illness resulting in large medical bills, or a job loss, or even a demotion which resulted in a smaller salary. Be honest, be precise and be prepared to prove your hardship.
Do not have an extraordinary amount of credit cards.
Credit cards are red flags to lenders. They put fear in underwriters. More time is spent analyzing credit cards than on other aspects of the application, such as employment. If you are maxed out the decision for the underwriter is easy. You are declined. If you have small balances but high limits, the lender has to determine if you will go on a spending spree after the approval. So keep a minimum of credit cards.
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Imagine getting the exterior of your house painted for free. And to top it off the painting company pays your mortgage. So what is the catch?
The company, Adzookie, will turn your house into a billboard advertising it’s mobile advertising service. The whole house will be painted. However, the part that stands out is the company’s logo and contact information.
The ad will remain on your house for a minimum of three months. If all parties are happy with the arrangement, the agreement can be extended to one year. If you are dissatisfied, you can cancel the deal and the company will repaint your house to the original color.
To qualify for the program, the homeowner must own the house. Rentals and leases are excluded. It also helps if your house is on a high traffic street and in a prominent zip code.
This sounds like a good marketing idea. There have been over 3,000 applications since the program was launched three weeks ago. Does the company have the funding to pay 2,000 mortgages? This is a relatively new company and chances are that it is still in the “getting established phase”. My guess is that less than 200 deals will be done. Neighbors pressure will force homeowners to rethink this venture and eventually opt out. The costs to the company will be high. First, painting a house, then repainting the same house, and finally paying the mortgage of the homeowner.
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April 10th, 2011
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Continue Reading February 9th, 2011
It is happening too often. Banks are foreclosing on too many military families. The Servicemembers Civil Relief Act is supposed to protect our men and women while they are on active duty. The last thing we want our men and women to think about is losing their homes while they are fighting our enemies in a foreign land.
Last week JP Morgan Chase admitted to wrongfully foreclosing on 14 military families and overcharging about 4,000 families. Under the Servicemembers Civil Relief Act (SCRA) the most a lender can charge on a mortgage is 6%. The bank said this was a mistake and will refund $2 million to the families. All this improper activity has lead Federal Prosecutors to launch an investigation.
Deutshce Bank also ran into problems when they foreclosed on military families. The bank foreclosed on a Michigan home, forcing the family of four to seek shelter with family and friends. The bank sold the house for $76,000.
In March 2009 a federal judge ruled that the foreclosure violated federal law. In simple terms the foreclosure was illegal. Remember that the foreclosure took place in 2004. So why is Sergeant Hurley, of the US Army, still fighting for his house?
“There is a fundamental disagreement over damages” was the response from the bank’s camp. There are too many cooks in the kitchen in this case. Saxon Mortgage is the lead in this case. This company services the mortgages. Saxon Mortgage is a subsidiary of Morgan Stanley and Morgan Stanley is the co-defendant with Deutshce Bank.
The bank wants to pay what the house is worth in today’s market. There is nothing fundamentally wrong with this argument. We all see what the recession has done to house values. So why not screw a soldier and his family.
Sgt. Hurley’s lawyers want punitive damages and rightfully so. This is the only way that banks will get the message. The law applies to everyone!
What is interesting in the two cases, JP Morgan Chase and Deutshce Bank, is how the law and our service men and women are viewed. JP Morgan Chase did the right thing. They issued refunds and reversed the foreclosures. Deutshce Bank on the other hand is willing to fight and prolong the issue.
My take on these specific cases is very simple. You break the law you pay a fine. The fine should be set at a minimum of $30,000. You break the law 10 times that’s $300,000.
The mindset of Deutshce Bank is similar to a shoplifter. He steals a loaf of bread and gets caught. So he gives the bread back and says “sorry”. This bank steals a house and doesn’t even want to say “sorry”. And they are still hanging onto the house.
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January 30th, 2011
Many homeowners haven’t missed a mortgage payment yet, but still believe that they will lose their homes to foreclosure. There are living with fear and anxiety every day. If they could only get a handle on how events will unfold will make their lives less stressful.
Here is a timeline to help you if you are one of these homeowners.
First month you miss a payment.
Lender will contact you. This is a customer service type call.
Second month you miss another payment.
Lender will contact you again. Please take the phone calls and try to work out a deal.
Third month you miss another payment.
You will get a letter from the lender saying that the mortgage is delinquent. You have 30 days to bring the mortgage uptodate. This is called a ‘demand letter’ or a ‘notice to accelerate’. If you do not pay or stick to your agreement the lender may begin foreclosure.
Fourth month you miss another payment.
The lender sends the file to their lawyers. The lawyers send you a letter. You will incur some high fees and additional costs.
Sixth month and you haven’t resolved the mortgage.
The sheriff or public trustee sale is scheduled by the lawyer. This is the actual day of the sale. This is not your move out date. But it is close enough. If you do not have any money to give the lender then you should go ahead and start making plans. Find a place to stay for a short while and contact some friends to help you move out.
I strongly advise you to contact your lender and try and work out an arrangement. You should also talk to a housing counselor.
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January 13th, 2011
Extreme Makeover homes are great gifts. But many homeowners can not afford to keep the houses. Many go through foreclosure.
Continue Reading January 5th, 2011
Buying a foreclosure is challenging in today’s market. The big question is whether clear title can be passed to the buyer. No-one knows for sure who the real, legal owner is.
Continue Reading December 22nd, 2010
The housing crisis has brought out the best and the worse of American ingenuity and creativity. We have seen thousands of mortgage relief scams where companies promise to save your house from foreclosure. We have seen hundreds of community non-profits like NACA, that are brokering deals between the banks and homeowners. Now, we see squatters trying to claim abandoned houses.
On the surface it seems like a great idea. You need a house for you and your family, including the pets. You find a house. It’s abandoned…windows are broken, doors are smashed, the grass is two feet high, the water is cut off, the electricity is shut off, and the roof needs some work.
You are up for the challenge and you move in. You fix and repair and paint the house. You even pay the property taxes, and have the utilities connected.
The neighbors are happy. They can see some hope of re-vitalization returning to their street. Where half the houses were once vacant, now there are squatters working on three or four houses.
The city is happy because there is revenue from property taxes. Furthermore, crime is down in this area, resulting is less work for the EMS, the police and the fire department.
For many people and government agencies a squatter is a savior. However, many opponents still see squatters as leeches who want something for nothing. These opponents of squatters would prefer to have the squatters charged with trespassing and evicted. If we go this route it allows the houses to be vandalized and deteriorate. Houses on the same street and in the nearby vicinities will see their values plummet.
In Florida, squatters are utilizing an 1869 statute that says if a person takes a property and the owner does not claim the property in seven years, the squatter gets to keep the property.
It seems that real estate wheeling and dealing flourishes in Florida. Mark Guerette, the owner of Save Florida Homes Inc., has taken the squatting game to a new level. He has taken possession of 20 houses using the adverse possession argument. These houses he has rented at around $289 a month each. In return the sub-squatters (tenants) fix and maintain the properties. At peak, he had 17 houses rented.
I would like to mention that squatting is illegal. Mr. Guerette has been charged with fraud and if convicted can spend about 15 years in prison. Mr. Guerette, in his defense, has pointed out that the houses he selected had the large orange sticker plastered across the door. These stickers are generally placed there by the city and they indicated that the property was a "public nuisance".
It should also be noted that Mr. Guerrette notified the owners of the properties of his intentions. Nineteen of the owners and their banks did not respond.
Opponents of squatters feel that taking the squatters to court is very expensive. They also feel that the activity of renting houses that are not yours could open the floodgates to shady real estate scams. Furthermore, additional damage will be done to an already fragile housing market.
As an outside observer, with no axe to grind, I feel that the bigger issue is how to get rid of the tenants. The easy answer is, you keep them. The house is fixed. Give them a proper lease and let them redirect the rent to you. If they were paying $289 a month, be thankful, that’s more than you were getting before.
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November 30th, 2010
Mortgage brokers are no longer necessary. A borrower can go on the internet and find a house and a lender to give him a mortgage.
Continue Reading October 6th, 2010
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