ISSUE #1.0 of Mandelman’s Monthly Museletter!

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1. NACBA, the National Association of Consumer Bankruptcy Attorneys has joined the Crisis Commission on Homeowner Representation in opposing California’s SB 94, as currently written, which would prohibit attorneys from accepting retainers when representing a homeowner in a loan modification negotiation. Read more here:

2. Banks & Servicers Are Charging Homeowners for Loan Modifications? I thought President Obama said loan modifications were free? What happened to call your bank directly? And no one should ever have to pay for a loan modification? What up with this? Well, it’s true though… and I’ve got the proof right in my hot little hands (it’s like 95 degrees here, which explains the temperature of my hands at the moment.). I’ve seen “contribution fees up to a few grand! A few grand? Yep, like $3500! And one company says they’ve seen a $5,000 loan modification fee. WAMU… $1500 loan modification fee. Would someone please notify the President… the banks are making him into a liar. I guess it depends what the definition of free is, right?

3. Ohio Attorney General to Sue Lenders and Servicers who Don’t Help Homeowners… According to THE COLUMBUS DISPATCH, mortgage lenders who promise to work with homeowners facing foreclosure and then don’t may soon find themselves in a courtroom facing charges. It’s happening in Ohio. The state’s Attorney General, Richard Cordray, has said publicly that he will file suit against lenders who are alleged to have violated consumer-protection laws.

“Many lenders are pledging to work with customers and failing to do so,” Cordray said. “They’re not returning calls, paperwork gets lost, payments misappropriated.” Really? Why I never…

He said that his office is looking at the largest 10 or 12 lenders in Ohio. “The goal of the lawsuits is compliance with their promises,” Cordray said. “We want there to be accessible personnel, a reasonable process, clear steps. What we want is a change in behavior.” Are you listening to this? I feel flush… parched… is it warm in here?
Woohoo! We’re going to be watching this one closely.

4. Homeowners Confused as Can Be… What’s okay and what’s not… If you’re a mortgage or real estate professional and you’re confused about what’s okay and what’s not when it come to helping homeowners obtain loan modifications, just imagine how the homeowners are feeling. I’ve heard from quite a few of them and let me tell you… they’d find it easier to tell me the square root of 113,886,990 in Base Eight, than answer any question about a loan modification. So, I’m writing a story about it to see if I can’t help the situation a bit. Look for it on Mandelman Matters on Monday, July 20, 2009.

5. Homeowner Reports Giving Up Negotiating With Lender After 7 Months… Hires Firm to Help… I spoke with a woman from Northern California the other day. She didn’t want me to use her name, but she told me the story of how she’s been trying to obtain a loan modification from her servicer for the past seven months. SEVEN MONTHS! She’s in her sixties and doesn’t want anyone to know. I told her that was fine, but for the record… the only people who don’t know are the one’s that haven’t tried it themselves.

6. Wells Fargo’s $50 Loan Modification – Mandelman Matters has learned of a loan modification granted by Wells Fargo that saved borrower $50 per month. Which column do you suppose that goes in when they report their numbers to the government? Would that be classified as a modified loan? Or, does that just go straight into the re-default column, where they prove that loan modifications don’t work? Just thinking out loud over here…

7. What’s NOT a Loan Modification? Obviously, we need to nail down a few definitions here. Maybe we did need to make English our “national Language” after all. Okay, for the record… a loan modification is NOT when the mortgage payment ends up higher than before. Period. If your payment was $2,000 a month, and the bank changes it for whatever reason to $2300 a month… that is NOT a loan modification. Got it? Seriously. Stop including arrangements that result in higher payments in loan modification figures… it’s confusing me and everyone else who’s trying to follow this embarrassing mess. I mean it. Don’t make me explain this again. It’s bad enough that banks think “recasting” means your monthly payment doubles, when everyone knows that “recasting” is what you do when you’re fishing and your first cast leaves you flat. It’s not just me… ask anyone.

8. Do Homeowners Need Legal Counsel or Not? The answer is: It’s up to you. You want to handle your own divorce, that’s your call. But in point of fact, the 26-page document that you have to sign when the bank or servicer offers you a loan modification looks to me to have been written by a lawyer, so I’d suggest having a lawyer read it before you sign it. How do I know it was written by a lawyer? Well, here’s what it says in Section 3 on page 13 of 26:

“The Modification. I understand that once Lender is able to determine the final amounts of unpaid interest and any other delinquent amounts (except late charges) to be added to my loan balance and after deducting from my loan balance any remaining money held at the end of the Trial Period under Section 2.D. above, the Lender will determine the new payment amount.If I comply with the requirements in Section 2 and my representations in Section 1 continue to be true in all material respects the Lender may send me a Modification Agreement for my signature which will modify my loan documents as necessary to reflect this new payment amount and waive any unpaid late charges accrued to-date. Upon execution of a Loan Modification agreement by the Lender and me this Plan shall terminate and the Loan Documents as modified by the Modification Agreement shall govern the terms between the Lender and me for the remainder of the loan. To comply, except to the extent that they are modified by this Plan, with all covenants, agreements, and requirements of Loan Documents, including my agreement to make all payments of taxes, insurance premiums, assessments, Escrow items, Impounds, and all other payments, the amount of which may change periodically over the term of the loan.”

Should I stop there, or should I go onto Section 4? Or perhaps I should have started at page one? Look… I’m getting tired of being the only person pointing stuff like this out. Plus, tonight I had to sit here and read all 26 pages of a loan modification document, and who knows what the long-term effects of that will be. What if I can’t write anymore? What if I start talking like that and I lose all my friends as a result? This isn’t funny… someone’s going to get hurt.

The bottom-line… the bank obviously has an attorney and a mortgage expert hanging around… maybe you should too. Maybe? Don’t be ridiculous. Signing papers presented by a bank without having an attorney read them is how you got here in the first place. I don’t care what the President says… he’s apparently lost his mind.

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