Mandelmans Monthly Museletter – ISSUE #2.0

1. Will the Real Scammers Please Stand Up?

Charging advance fees for loan modifications… Telling homeowners to stop making payments because they must be in default to be eligible for a loan modification…. Starting foreclosure proceedings even while a homeowner is under consideration for a loan modification.

What’s this?  They must be talking about some scammer loan modification company, right?

WRONG!  But thank you for playing…

Those are the charges leveled in Congress last week against MORTGAGE SERVICERS that have signed on to participate in President Obama’s HAMP program, administered by Treasury, whose lofty goal is to modify millions of mortgages for struggling American homeowners.  I, on the other hand, want to be 6’8”.

Sen. Chris Dodd, D-Conn., has politely requested that the administration investigate the alleged abuses of the program.  Well, bless his heart.

“If true and widespread, abuses of this kind threaten to undermine the effectiveness of the HAMP program and deny the relief on which so many Americans are depending for their financial stability,” Dodd, Chairman of the Senate Banking Committee, wrote in a July 23rd letter to Secretary Geithner and Housing Secretary Shaun Donovan.

Really?  Now why would that be the case?  Don’t you need “effectiveness” before you can “undermine effectiveness?”  How do you undermine something that isn’t even there?  Oh, never mind… I’m probably being to particular again… you know me and words.

And besides all that… I’m sorry, Senator… but that’s just not enough.  Not even close.  Why aren’t these servicers being branded as “scammers” as so many private sector firms were when similar allegations have arisen against them?  It’s not funny either; it’s a big part of why so many Americans don’t trust you or anyone else in government today.  Do you think no one notices?

So, I assume you’ll be following the investigation carefully and reporting publicly on your findings, right?

Well, I will your Senatorship… I most definitely will.

(Oh, and by the way… how do you sleep at night?)

2. JPMorganChase & their loan mod numbers… true patriots, every last one of them.

JPMChase says that they’ve modified 131,000 mortgages… so, yay!

Except that only 11,000 were done as a part of President Obama’s Making Home Affordable program and therefore are from Fannie and Freddie.  So, I’m confused… maybe someone could help me here…

I wonder which loans JPMChase modified first?  No, not the ones they own?  Ya’ think?  No, they wouldn’t do that, would they?  And which ones came second?  The ones on which they have the servicing contract?  Well, now you’re just being cynical.  And how about last?  Go ahead, JPMChase… throw us taxpayers a bone, would you?  I guess since the GSEs are now owned by the government they can wait, right?

Of course, right.

3. Mortgage Servicers Pledge to Accelerate Modifications

Extra, Extra… Servicers called to a command performance in Washington D.C.  Timmy G. to the rescue.

The Obama administration said that more than 200,00 trial loan modifications have begun, and is setting a goal of starting 500,000 by November 1st.  These guys really inspire confidence, don’t they?  When they say they’re going to take action, they mean it.  They get everyone together, roll up their sleeves and commence goal setting.  Then they go to lunch.

So far, they claim to have started 200,000 trial loan modifications, and what… now they’ve set a goal of starting 500,000 trial loan modifications by November 1st?  I heard they set another goal too: To begin thinking about starting up to 1,000,000 pre-trial partial modifications by some time in the future.  It’s good to have a goal, I suppose.

The Making Home Affordable modification program has been promoted as being designed to help 4 million struggling borrowers save their homes.  4 million… Well, that’s a relief.  There’s a light at the end of the tunnel… at this pace, only 8 more years and we can start to put this downturn behind us… assuming they stay on plan, of course.  Everything’s coming up roses.

According to Mr. Timmy G… “Today’s meeting was an opportunity to identify ways to accelerate the program and bring relief faster”.

Thanks for effort boys. I’ll be here on the sidelines holding my breath.

4. Countrywide’s Promised Loan Relief Falling Short For Many

As part of a court ordered settlement, the now defunct sub-prime mortgage giant, Countrywide, promised $1 billion in relief to its legions of struggling Florida customers.  Eight months later, borrowers trapped in problem loans say Countrywide is not living up to the terms of the deal.

Look, I know what you’re thinking… that I’m going to be mad.  But I’m not mad at all.  In these uncertain times nothing makes sense to me anymore and I’ve started to appreciate a little consistency in my life.  The way things have been going if Countrywide starts living up to stuff, I’ll probably have a stroke.

The $8.4 billion settlement between Countrywide, Florida and ten other states, allowed Countrywide to avoid prosecution for using “deceptive sales and marketing practices to sell borrowers risky, high cost mortgages.  Perfect… even the settlement allowed Countrywide to avoid stuff.  Well, I’ve always said one should play to one’s strengths.

“My 1 year-old nephew has more teeth than the settlement agreement”, said Dennis Donet, a Miami foreclosure attorney.  Lord, how I do love a funny foreclosure attorney.

A spokeswoman for Attorney General Bill McCollum, however, said that the AG’s office still has the matter under review, but that it appears the company is sufficiently complying with the settlement… one of the largest of its kind in U.S. history.

Fair enough, then.  McCollum says it’s sufficient, and that’s sufficient and will have to suffice.

5. Frank Threatens Banks to Stop Foreclosures

A senior House Democrat threatened banks Wednesday saying that if they don’t volunteer to save more homeowners from foreclosure, Congress is going to make them.  In a sternly worded statement, Rep. Barney Frank (D-MA) said that Congress isn’t afraid to revive legislation that would permit bankruptcy judges to write down a person’s mortgage.

In response, banks in Massachusetts on Thursday foreclosed on an extra 3,000 homes in Frank’s congressional district, causing a crowd of newly homeless families to burn Frank in effigy in the town square.  (Kidding, kidding… I’m a kidder… I kid.)

6. One in Ten California Homeowners Now in Default

New data from First American Core Logic shows mortgage delinquencies climbed in June, with both California posting a default rate of 10%.  That means that 1 out of every 10 mortgage holders in California has missed enough mortgage payments to receive a Notice of Default (“NOD”).

However, actual repossessions are not keeping pace with the defaults. It looks as if the Lenders are dragging their feet on foreclosures.

Lenders say that they’re trying to put the foreclosed homes on the market at an orderly pace, to keep prices from collapsing.

See… and when I started writing this story, I wasn’t sure how I was going to make it funny at the end.  “At an orderly pace, to keep prices from collapsing,” these guys slay me.

7. Bankers Reaped Lavish Bonuses During Bailout

In 2008, the bonus pools at the nine banks that received bailout money was $32.6 billion, while those same nine banks lost $81 billion.

No, don’t read that again.  Just move along.  There’s no reason to do that to yourself.

8. FTC Seeks Comment on Proposed Rules to Protect Consumers from Debt Relief

Well, well, well…  It looks as if our friends at the FTC have decided to target the Debt Relief Industry.  Now they want to prohibit law firms from charging fees until they have provided the debt relief services.  This is becoming a recurring theme… Shut down any firm that is assisting consumers with reducing their debt to banks.  If you owe a bank money and

9. Who is Doing Loan Mods in North Florida, and how many are they doing?

Here’s a list of the top 10 banks and credit unions engaged in loan modifications in North Florida.  The number of loan modifications was obtained from the respective Clerk of the Courts offices between April 1 and July 12, 2009.

1.  VyStar                                             86

2.  Wells Fargo/Wachovia            80

3.  Sun Trust                                      79

4.  Regions                                         43

5.  BBVA Compass                           41

6.  First Federal Bank of Florida  31

7.  U.S. Bank                                      31

8.  Bank of America                         29

9.  1st National Bank of Nassau   27

10. Prosperity Bank                          26

So, at this rate, the problem faced by the region should about be wrapped up by 2877, assuming they don’t hit any bumps in the road.

10. HUD Announces new Making Home Affordable Guidelines

HUD Secretary Shaun Donovan announced that the Federal Housing Administration (FHA) has implemented changes to its loan modification program to ensure consistency with the Obama Administration’s Modification Program.  So, as of August 15th, FHA borrowers will no longer receive return calls from their servicers, will have their submissions lost at least three times every 90 days, and will be illegally charged advance fees to obtain loan modifications.

I’m kidding… I’m a kidder.

As of August 15th, FHA borrowers will be able to reduce their monthly mortgage payments through the use of a partial claim, which defers the repayment of mortgage principal through an interest free subordinate mortgage that does not become due until the first mortgage is paid off.  So, we’ve now got a program that not only allows a homeowner to remain in their home, it cements them into it forever.

The FHA plans to pay servicers for each FHA loan modified under this program, which is perfectly understandable because its worked so well in the past, they have piles of extra cash laying around, and the servicers need as much dough as they can get their hands on in order to pay out billions in bonuses next year.

11. Which paragraph is the real one?

One of the following paragraphs was taken word for word from a national consumer publication.  One talks about loan modification firms, and the other about the banking industry.  Don’t rush… if it were easy I wouldn’t have put it here.  Go ahead… which one appeared as the real sentence?


“The loan modification industry is teeming with confidence men and charlatans who rip off desperate homeowners facing foreclosure,” he said. “Despite firm promises and money-back guarantees, these scam artists pocketed thousands of dollars from each victim and didn’t provide an ounce of relief.”


“The banking industry is teeming with confidence men and charlatans who ripped off desperate homeowners and caused them to go into foreclosure,” he said. “Despite making promises and even guarantees, these scam artists pocketed thousands of dollars from each victim and then didn’t provide an ounce of relief.”

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