Things I think homeowners should know about loan modifications & HAMP-2
If you already know who I amâ€¦ great.Â If you donâ€™t, you can find out after you read this, but for the moment suffice it to say that Iâ€™ve had a front row seat for the foreclosure crisis.Â Over the last four years, Iâ€™ve watched literally thousands of homeowners go through the loan modification process.Â And not only have I watched… Iâ€™ve watched closely.Â
Iâ€™ve taken calls from homeowners residing all over the country at all hours of the day and night, and Iâ€™ve written over 700 articles, many specifically having to do with loan modifications… how they work when they do, and why they donâ€™t, when they donâ€™t.Â I think itâ€™s safe to say that when it comes to the topic of loan modifications, there is very little that I havenâ€™t heard about more than once.
Knowing a lot about loan modifications doesnâ€™t make you popular.Â The only people who like you are those you help get through the process, preventing them from losing a home to foreclosure.Â Those people actually love you for a time, but afterÂ their house is saved, andÂ they send you a very emotional thank you email, you donâ€™t hear from them very often if at all.
I canâ€™t blame them for moving onâ€¦ they donâ€™t want to keep reading about the subject of foreclosures, they want to put their horrific experience behind themâ€¦ forget the whole scary, stressful and entirely unpleasant time.
Donâ€™t get me wrong, I have a lot of fans, people send me the nicest emails you can imagine almost every single day.Â I can’t say that those emails make it worth it, but they do make it hard to quit, at least for me.Â I have a hard time turning my back on someone who is desperately in need of something I may be able to provide.
Not many people know a lot aboutÂ real life loan modifications.Â There are a lot that know a little, and a lot that have heard all the terrible stories about homeowners losing homes while in the loan modification process.Â And there are many ready to tell people that itâ€™s impossible to get a loan modifiedâ€¦ and many who will say that they shouldnâ€™t even want their loans modified.
When some in these groups read what I have to say about loan modifications, they often accuse me of hawking them, or say that I’m delusional because I don’t refer to HAMP as a total failure.
None of those things are even remotely true, in fact as it pertains to homeowners, I am only interested in three things:
- Accuracy â€“ This crisis is bad enough when described accurately.Â We donâ€™t need people hyping things up, or misleading people into thinking things that arenâ€™t exactly true, or as a practical matter, are very unlikely save a house from foreclosure.
- Truthfulness â€“ I donâ€™t care what a homeowner decides to do about their homeâ€¦ as long as theyâ€™ve been given accurate information, and know the truths about the path theyâ€™ve chosen.Â After that, I support whatever they want to do.
- Helpfulness â€“ Most bloggers just write and allow others to comment.Â My blog is different.Â I only write about things that I think matterâ€¦ things that I imagine will be helpful in a meaningful way, and then I actually help if I can.
Most homeowners tell me that they are trying desperately to save their homes.Â They want to keep them regardless being underwater… they donâ€™t want to lose their homes to foreclosure, nor do they want to short sale.
Many â€śexpertsâ€ť will tell a homeowner that wanting to keep a home thatâ€™s underwater by 30, 40, or 50 percent is just plain dumb.Â I never think it’s dumb to want to keep a home.Â Like I said, if information is accurate, and theyâ€™ve been told the truth about the alternatives, then whatever they choose to do is fine by me.
I donâ€™t have an opinion about whether anyone should or shouldnâ€™t apply for a loan modification. Â But, if someone asks me about the best possible chance of staying in a home… my answer? Â A loan modification, for sure.
Thatâ€™s not debatable, but by the way.Â Itâ€™s a factâ€¦ an indisputable fact.
Some will say that loan modifications are all scams because of such factors as a clouded title, or some sort of failure in the securitization process, or because documents were signed by Mickey Mouse and notarized by Donald Duck.Â Theyâ€™ll tell you that you should file a lawsuit against your servicer or lender, because thatâ€™s the best way to save your home from foreclosure.
Others will tell you that you should file for quiet title, because no one knows who really owns your loan. Â Theyâ€™ll say that you could pay off the loan and still never own your home.Â Or, theyâ€™ll tell you that your loan has already been paid off by insurance or even credit default swaps, or theyâ€™ll talk about forcing your lender to â€śproduce the note.â€ť
There are a lot of legal theories floating around out there, but it just doesnâ€™t matter. To be entirely accurate, the only way people stay in their homes in any number is because they get their loans modified.Â In fact, the goal of most of the lawsuits brought against banks is to get a modified loan as a settlement offer.
Is it possible to stay in your home through some other means, litigation, bankruptcy, or even quiet title?Â Yes, there have been cases where litigation has prevailed.Â There are certain cases where bankruptcy courts have ruled in favor of homeowners.Â And there are even instances where homeowners were awarded quiet title… and some cases where homeowners have walked away with the coveted free house.
But, you could take all of those successful cases, stack them on top of each otherâ€¦ and then right next to them stack all the homeowners who have saved their homes through a loan modification, and it would look like a doll house placed next to the Empire State Building.
Thereâ€™s always a chance you could file some sort of lawsuit and end up winning your home free and clear, but when someone recently asked me what the chances were, I compared the odds to the odds of being struck by lightingâ€¦ while seated in your car… in an underground parking lot.Â And if you want me to be more serious, I suppose just being struck by lighting while underground would cover it.
Look, itâ€™s trueâ€¦ the odds, absent any specific facts, based on what has transpired to-date, make the possibility of winning in court remote, and that sentence is why I recommend that homeowners consult with a knowledgeable and ethical attorney if they feel their specific situation should prevail in a courtroom, or if they just feel like they want their day in court.
And as long as theyâ€™re told the truth and provided withÂ accurate factsâ€¦ then Iâ€™m fine with whatever they decide to do.
Hereâ€™s what Iâ€™m not okay withâ€¦ people telling homeowners who want to stay in their homes that filing a lawsuit alleging document fraud or issues related to the chain of title is the best or only way to keep the homeâ€¦ as long as they have a forensic loan auditâ€¦ but without telling them that the chances of winning are very small, based on whatâ€™s happened in the courts to-date.
And the same goes for quiet title, or lawsuits claiming a failure in the securitization process. Â When you compare the number of “wins” in court with the number of loans modified, well… it’s not even close. Â Does that mean that no one should turn to the courts… certainly not. Â But, it does mean that you need to consult with experienced legal counsel and recognize that it’s never fast, easy, or in any sense, a sure thing.
Iâ€™m not saying thatâ€™s the way it should be, Iâ€™m only saying thatâ€™s the way it is… todayâ€¦ or has been to-date.Â I spend a significant time each month calling lawyers all over the country, asking them if anyone is winning and if so, how are they winning.Â But admittedly, I donâ€™t have a crystal ball, so as far as predicting the future goes, all I can do is play the odds.
Hereâ€™s what I do know for sure.Â As solutions go, lawsuits against banks are never three things:Â quick, cheap or certain as to their outcome.Â I also know that the further you are behind on your mortgage payments, the more difficult it is to get your loan modified.
So, if a modification would achieve your goal of staying in the home and you appear to be qualified, it would seem that you are much better off to start by applying for a loan modification, because if you start with litigationâ€¦ and loseâ€¦ the odds of you getting your loan modified will have gone down significantly as compared with where they would have been had you applied before you filed the suit.
Should I stay or should I go?
Again, I really donâ€™t have an opinion on this question one way or the other.Â Obviously, if you owe $500,000 on your mortgage and the house is only worth $250,000 today, itâ€™s going to be a long, long time before you have equity in your home. Â But, that also doesnâ€™t necessarily mean you shouldnâ€™t stay in the home, especially if you plan on staying for 20 years or whatever.
People have all sorts of reasons for wanting to keep their homes that have nothing to do with equity… they’re homes we’re talking about… not stocks and bonds. Â My car has no equity, but that doesn’t mean that I want to lose it to a repossession.
On the other hand, many people decide that they donâ€™t want to keep their underwater homes.Â They often plan to short sale their home, rent for three or four years, and then maybe buy another home near the marketâ€™s bottom.Â And thatâ€™s a fine strategy too… if thatâ€™s what someone wants to do.
I don’t think anyone should judge what another adult wants to do when it comes to keeping a home or leaving it. Â People have their own reasons for doing what they do, and it’s no one’s job to sit in judgment of those things. Â I only care that they have accurate information upon which to make decisions.
Heck, I donâ€™t even care if homeowners want to strategically default, meaning they stop paying their mortgage payments and delay foreclosure as long as possible while they save money.Â They know theyâ€™ll end up with a foreclosure on their credit history, but sometimes saving that $3,000 a month outweighs all other concerns.
I know… banks hate that, but that’s just tough cheese. Â All’s fair in love and foreclosure, that much has become pretty darn clear.
So, back to loan modificationsâ€¦
Iâ€™ve never heard the process of getting a loan modified described as â€śpleasant,â€ť and I donâ€™t think I ever will. Â It’s just not something that’s easy to do for anyone involved, and if it were easy… well, then everyone in the country would sign up immediately, whether they had a hardship or not, which is what they’re talking about when they apply the term “moral hazard” to the ideas for various programs.
I hate when that term is applied to homeowners by the way, because it’s usually someone in the banking industry that’s doing so. Â It’s obnoxious to imply that regular people that are truly struggling and suffering due to no fault of their own, are somehow looking to game the system, especially in light of what’s transpired these last few years.
But, I do understand the concept. Â It’s not easy to design a program to help save homes by reducing the amount of mortgage payments because while everyone would like a lower mortgage payment, you have to make sure that the program’s limited resources go to help those truly in need. Â Not easy to do, I realize, and it has divided the country into “responsible and irresponsible” homeowners, which only serves to make it that much harder.
I also understand how this whole mess happened…
It started with President Obama’s speech back on February 18th or 19th, 2009, when he introduced the Making Home Affordable program. Â Millions of people had waited through the last year of the Bush Administration on pins and needles… they needed help or they would lose their homes to foreclosure, and finally Obama was going to come to their rescue.
If you click that link to the president’s speech above, you find a video of that speech in Â two parts, and I’d very seriously suggest that you watch both parts, if you don’t remember what it was like… the only other time I’ve heard cheering that loud at a political event,Â Leni RiefenstahlÂ made a movie out of it. Â (That was funny, by the way… click Leni’s name and you’ll see why.)
The point is that the president described a program that has never existed, and that started the problem snowball rolling downhill.
Next, President Obama appointed Treasury Secretary Tim Geithner to head up the housing program, but Geithner was much more concerned with ensuring the financial stability of the country’s banking system, and his propensity to communicate is roughly equivalent to that of a squirrel while eating an acorn.
President Obama had promised the program would be ready sometime around April of 2009 and by late May he felt enormous pressure to get his HAMP program launched. Â The banks, however, were saying that they were not ready.
Secretary Geithner finally forced the issue, telling the bankers that they should just put everyone into trial modifications. Â Bankers resisted and questioned the wisdom of such a policy, but at the end of the day, Treasury won the faux debate. Â HAMP would launch, but from that moment, it was sure to launch badly.
The numbers involved tell the story. Â President Bush’s Hope-4-Homeowners program was announced to be funded with $320 billion. Â It accomplished essentially nothing, in fact six months into the program only one homeowner had been helped. Â President Obama’s Making Home Affordable program was funded to the tune of $75 billion and was to help at least four million homeowners. Â Later the funding was reduced to $50 billion… then to $37 billion… to-date we’ve spent about $2.4 billion, and have only helped around one million homeowners.
In point of fact, I don’t think I’ve ever seen a government program under-spend to such a degree.
What we all can agree on… Â
Everyone can agree that something should be done to mitigate the damage being caused by foreclosures, and everyone would like to be able to do something to stop future loan defaults. Â The problem isn’t agreeing that those are important objectives, the problem is agreeing on what to do to achieve those objectives.
The challenges are many and varied, any time the discussion involves forgiving debt. Â The only place we forgive debt is in bankruptcy court where the borrower pays a price to have their debt forgiven. Â In this situation, however, a homeowner would not be paying the price of having a bankruptcy on their credit report for a decade, and if there’s no price to pay… well, then who wouldn’t want their mortgage payment lowered?
If you were going to forgive debt across the board… meaning, for everyone… that would be easy, just write down every loan in the country by 25 percent… the government writes a check, holds the servicers harmless from any future claims by investors… piece of cake.
But, that wouldn’t actually accomplish the objectives, would it? Â At least half of the loans you’d write down would be written down unnecessarily as these people are not in default or at risk of foreclosure. Â And for many of those underwater by 50 percent, reducing the principal wouldn’t even stop their foreclosure… stopping foreclosures is really more a function of reducing the payment, not the principal balance.
They’re only mortgage servicers…Â
In addition, as a practical matter, servicers are restricted by contractual limitations, accounting regulations, underwriting requirements, and by automated systems that were not built with today’s realities in mind. Â They are companies that work on very small margins with high volumes of automated transactions. Â Loan modifications are the equivalent of asking General Motors top start building millions of hand made cards.
And we should all remember that loan modifications didn’t really exist a few years ago, so there aren’t exactly millions of people in the job market that are experienced loan modification processing experts, and I think it’s safe to say that the precious few who are experienced are all employed.
Even so, Bank of America has hired something like 55,000 people to work on loss mitigation programs that are changing all the time, and often with very little notice. Â Just changing a dental plan in a company with 55,000 employees would require a year of planning and careful implementation, imagine having to contend with hundreds of thousands of stressed out homeowners, half close to tears and the other half ready to storm the Bastille with torches and pitch forks.
Back in 2007, the Mortgage Bankers Association communicated with the Financial Accounting Standards Board, known as FASB, to explain that mortgage services were not in any way prepared to handle large numbers of loan modifications… because of something homeowners were never told about… the accounting requirements in FAS 114. Â Here’s a quote from December 5, 2007, that tells a good part of the story…
“As the FASB is no doubt aware, the mortgage banking industry is under tremendous pressure to modify loans, particularly adjustable rate mortgage (ARM) loans with initial, below market fixed rates, to avoid a further escalation of mortgage defaults and foreclosures in this country. Â In recent months, MBA has been working closely with regulators, legislators, consumer advocates and others in seeking viable alternatives for modifying great numbers of loans as quickly as possible. Â In considering the many challenges associated with the prospect of unprecedented loan modifications, MBA has identified the guidance in FAS 114 as an obstacle that most companies could not overcome.
Specifically, FAS 114 requires modified smaller balance, homogeneous residential mortgage loans that represent troubled debt restructurings to be evaluated for impairment on a loan-by-loan basis although loans that share risk characteristics may be evaluated on an aggregated basis. Â Under either scenario, a mortgage lender would likely be required to measure impairments of the loans using discounted cash flow analyses because in many cases, the values of the underlying collateral and observable market prices for the loans would be unobtainable or unavailable timely. Â The vast majority of MBA members, however, do not have the systems capability to project the cash inflows to be received on enormous numbers of loans either initially or on an ongoing basis. Â
This is because mortgage banking companies have not had the need to project cash flows on large numbers of modified loans until now.”
(You can read the entire 25-page document HERE. Â And don’t be afraid, it won’t bite you.)
My point in showing you this is to illustrate that we don’t know about all of the obstacles services face when modifying loans in large numbers. Â Not only is it something that’s never been done before, but its never even been thought about before this crisis.
An executive at one of the country’s largest servicers told me the story of her company’s CEO sending word from Washington D.C. that all foreclosures were to be stopped for some period of time at the request of a legislative committee chair, I believe. Â She said it was the worst week or two of her life as they set to work trying to stop foreclosures all over the country. Â She told me…
“It’s not like I’ve got a big switch on my wall that I just throw to stop foreclosures all over the country. Â We’ve never need to do that before. Can you imagine how many went through that we simply couldn’t stop?”
As I said to Laurie Maggiano, who heads up Home Preservation and HAMP at the Treasury Department, as I was apologizing for being so snarky in the past and offering to help going forward… “I’m sorry I’ve been so snarky in the past, but you have to admit, the communication has been abysmal.”
The banks haven’t communicated any better, and they just have to own that, but absent any meaningful communication as to what was happening or what should be expected in the future, homeowners, foreclosure defense lawyers, and even bloggers… including me… started coming up with their own explanations for what was happening. Â The problem is that just like when Native Americans danced in the hopes of bring rain… and rain came… they started believing in the rain dances… cause and effect are often difficult to discern properly.
Then, Georgetown Law Professor Adam Levitin and Tara Twomey co-authored a paper,Â Mortgage Servicing, that explained that servicers were actually incentivized to foreclose over modifying and for a time that became the accepted fact… servicers were doing what they were doing because they were being paid well to do it. Â If true, that made them evil.
But, then I learned that Bank of America was spending some $2 billion a quarter on loss mitigation efforts, and that Ocwen was advancing billions in delinquent payments as required by their contracts with investors… and all the while, increasing numbers of homes were not selling, but foreclosures kept rising… and lawsuits naming banks were popping like popcorn… and I started to realize that no one was winning anymore.
David Stern pushed me over the edge, by the way. Â As soon as I read about this foreclosure mill lawyer in Florida, I knew something was very wrong, because theres no chance that any bank ever planned to pay a lawyer enough money for him or her to replace a 160 foot yacht with a 200 foot yacht, I don’t care what the lawyer did for the bank.
No joy in Mudville…Â
Last year I started asking myself and others, “How can any company do something for three years and not get measurably better at whatever it is they’re doing?” Â It seemed impossible, and yet that’s how servicing appeared to me as I heard from homeowners every single day.
Well, I have finally realized how to answer that question. Â The only way a company can do something for three years and not get measurably better at it, is if what they’re trying to do is impossible. Â Like, I could try to jump over the Empire State Building for three years, I wouldn’t get any better at that, right? Â Well, same sort of idea… dealing with this crisis in general, is much harder to contend with that we think.
The simple truth of the matter is that no one is going to be made happy about our situation going forward… no matter what is done or not done. Â Every conceivable action by anyone involved will leave others wanting. Â Nothing about this is ever going to be easy… nothing is ever gong to fully satisfy anyone, much less make anyone “happy.”
What we’re experiencing is not some garden variety recession caused by a hot housing market for a few years. Â And in case you haven’t come to terms with it yet, there is no possibility whatsoever that it’s going to feel anything like recovery has in the past anytime soon, and by that I mean that it won’t next year… or the year after that… or the year after that… or the year after that… or the year after … get it?
And that’s not only true for you and me… it’s true for the banks in this country too. Â We’re all going to have to get used to what “slow growth” feels like… and that’s if things go well. Â There should be no question in your mind… the next 2-3 years are going to be very difficult.
The state budget deficits are very real, and the ongoing cuts are certain to mean fewer jobs. Housing will not, in any sense, recover… no matter how much politicians wish it could be so. Â The threat of the EU’s demise isn’t dissipating as a result of band-aid bailouts either.
And God forbid the need for interest rates to rise presents itself, because I’d say it’s a pretty safe bet that quite a few of the ARMs in at least the sand states are going stop making payments faster than you can say “strategic default.”
Of course, you’re free to rail on about whatever inadequacy you find most objectionable, and I might even agree with you about whatever it is that you’re saying, but it isn’t going to change the plight of a single homeowner… and that’s where I’ve chosen to draw my own personal line in my own personal sand.
I started this blog in 2008 to help homeowners get through the hell that I knew was ahead, by helping them understand more about what had happened and would happen going forward, and by helping to deliver meaningful solutions to the problems people would face.
I never wanted to merely write about things… I wanted to create a blog that would make things better for homeowners caught up in the financial and foreclosure crises… even if I could only help one person at a time.
In Defense of HAMP…Â
I donâ€™t like being in the position of having to defend the HAMP program… Iâ€™ve certainly criticized the program as much as anyone, and quite a bit more than most. Â But, the facts are:
- HAMP is the primary loan modification program we have in place today, and by any metric, it’s better today than its ever been before.
- HAMP has led to servicers developing in-house modification programs that have been used to modify millions of mortgages.
Not that there arenâ€™t significant problems, but HAMP is much better today… people do get loan modifications every single day.Â More than 80 percent of trial modifications today turn into permanent modifications, and thatâ€™s certainly a big step in the right direction.
And HAMP Tier 2, which just became available, is much better than HAMP 1, in the sense that itâ€™s easier to qualify for, and it allows rentals to be modified too. Â Also, if you’ve failed on a HAMP 1 modification, you can reapply for a new modification under HAMP 2. Â The problem is that it is more complicated… and you can see what I mean HERE.
I guess what it comes down to is that Iâ€™m a pragmatist, in other wordsâ€¦ it is what it is – itâ€™s the best weâ€™ve got at the moment and for the foreseeable future.Â So, when a homeowner says they want to stay in their home no matter what, it would be dishonest and a disservice to say anything else but try to get your loan modified.
Beyond that, all I can do is try to prepare homeowners so they know what to expect, and if itâ€™s a servicer I know, I can often make sure they donâ€™t get lost in the system.
I can always refer them to a lawyer that I know is both ethical and experienced, so at least they wonâ€™t go searching online until they find someone who tells them what they want to hearâ€¦ before ripping them off in one way or the other. Â But the lawyers I know aren’t the type that represent just anyone for just any reason.
Iâ€™m not saying that HAMP is the best solution I could come up with, but under the circumstances, I donâ€™t see anything betterâ€¦ or frankly anything close as far as keeping people in homes. Â I end up helping a few hundred people a year, and I haven’t seen anyone lose a home yet.
Not that Iâ€™m an underwriter or any sort of loan processing expert.Â In fact, Iâ€™ve never applied for a loan modification myself, or helped anyone fill out a single piece of paper related to a loan modification.Â I wouldnâ€™t know where to begin as far as anything like that goes.
I provide something differentâ€¦ maybe itâ€™s reduced uncertaintyâ€¦ because when it comes to getting your loan modified, itâ€™s the uncertainty that will kill you.Â At least, I know whatâ€™s involved, what to expect, and for the most part, why things are the way they are.
At least I thought I did… Â
A couple of days ago, I learned something about loan modifications that I hadnâ€™t really known.Â And not some little thing eitherâ€¦ something that has changed the advice I offer to anyone applying for a loan modification.
1. The first thing involves knowing who owns your loan before you apply for a modification. Â If your loan is owned by either Fannie Mae or Freddie Mac, and roughly 60 percent of loans are, then it’s very easy to find out. Â The two links below will take you to Fannie and Freddie loan look-up tools, both are free and it only takes a few minutes to get your answer.
Just enter the very simple data fields. Â Fannie Mae’s only needs your address… Freddie Mac wants name, address and last four of the borrower’s Social Security number. Â Within a minute you’ll know whether your loan is owned by either of the failed mortgage giants.
There are a couple of reasons why you want to know whether Fannie or Freddie owns your loan. Â Â The most important one is that, assuming one of them does own your loan… then you can put the idea of getting a principal reduction completely out of your mind because it’s not going to happen… and it’s not your servicer’s fault.
Fannie Mae and Freddie Mac are basically bankrupt mortgage companies that are in what’s called “conservatorship.” Â FHFA, which stands for Federal Housing Finance Administration, is the “conservator,” and it’s all under the control of Edward DeMarco.
Ed DeMarco, in case you don’t already know this, has refused to allow Fannie or Freddie to offer principal reductions under any circumstances. Â President Obama and Treasury Secretary Geithner have both tried to lean on DeMarco, but incredibly… he said no to them too.
Freddie and Fannie are also notoriously difficult to work with, Fannie’s 2012 Servicing Manual is 1168 pages of rules and regulations, and they don’t care who likes what they do and who doesn’t. Â Basically, they are the Tammany Hall of housing finance and you should know who you’re dealing with, because they are known for being inflexible, refusing to postpone sale dates even when a servicer is asking them to delay.
Knowing that your loan is owned by Fannie or Freddie isnâ€™t the end of the world, but itâ€™s definitely reason to stay on your toes and not to let anything wait until the last minute or thereâ€™s a good chance youâ€™ll find your home staring in that movie, Gone in Sixty Seconds.
Fannie Mae Loan Look-up Tool
Freddie Mac Loan Look-up Tool
Frankly, I wouldnâ€™t stop there. Â If Fannie or Freddie didn’t own my loan, Iâ€™d go all the way and find out who does. Â The only problem is, it’s not easy to do on your own, and it won’t be free to have someone do it for you.
(I’m working on a deal to have someone find out who owns your loan right now, and it looks like it will cost around a hundred dollars, more or less. Email me at firstname.lastname@example.org for more information and look for an announcement soon, I hope.)
By finding out who owns your loan, you’ll also be able to find out whether there are any obvious restrictions on modifications, and in many cases, the percentage of the pool that has been modified.
2. The second thing I’ve come to realize is something I’ve known for a while, but now understand that’s it’s really a MUST in my book. Â I wouldnâ€™t fill out a single piece of paper without knowing exactly where you stand as related to HAMP Tier 1&2, and you canâ€™t figure that out with a calculator and a scratch pad.
If it was complicated before, now itâ€™s essentially impossible, and in my estimation, without knowing in advance about these two things, you wonâ€™t get through the loan modification process intact, if alive.
If you need help now, email me and I’ll certainly help if I can. Or call CDA Law or any of the lawyers on my trusted list. Â (Again, it’sÂ Mandelman@mac.com.)
Had you asked me last week, I wouldnâ€™t have said you needed to do either of these things before applying for a loan modification, but after learning recently about the control the GSEs have, and seeing how complex HAMP 2 is, I just had to say something about itâ€¦ and then do something about it.
Please understandâ€¦ this is not a sales pitchâ€¦ I donâ€™t care what you decide to do and Iâ€™ll be on your side and willing to help if I can, no matter what. Â I’m just telling you what I would do based on what I’ve learned.
And just for the record, I’ve never charged a homeowner I’ve helped a nickel, and no one is paying me to refer them anywhere. Â Ask around… you’ll see. Â Sometimes people ask me how I support myself, and I’ll be brutally honest with you about this issue because so many have asked the question… it’s been HELL and I want to quit all the time. Â How’s that? Â I end up working 7 days a week and I’m talking about 18-hour days all the time… far too many all-nighters. Â My wife is convinced that if I don’t stop soon…
So, I’m going to be changing how I do things… very soon, as a matter of fact.
And I do think it’s important that we start assigning blame for things more accurately. Â All of our problems these last three years have not been caused by evil mortgage servicers. Â In fact, I know people at several mortgage servicers and they had to get their mortgages modified too… and it wasn’t easy for them either. Â They’re certainly not evil.
At Bank of America and Ocwen they’re working in crisis mode pretty much all the time. Â And I can tell you that both BOA and Ocwen are very candid about their organizations having made mistakes. But, in my experience, when it’s their fault they admit it immediately… and they fix it.
This past week, I saw Bank of America do some incredible things for homeowners and one of those things in particular was not because they screwed up, but solely because it helped a young couple with two kids stay in their home. Â I don’t care what anyone says, they didn’t have to do it… and it was wonderful to see… it made me want to stand up and cheer.
Yesterday, I saw Bank of America approve a $770,000 principal reduction… and I’ve seen dozens of principal reductions come out of BOA lately, and Ocwen literally does them all the time through their SAM, or “Shared Appreciation Modification” program.
And yet, every single day someone tells me that loan modifications are a waste of time and don’t work. Â And that’s not even close to accurate. Â I mean, Bank of America has done something like 200,000 modifications, and although I’ve certainly read quite a few complaints about BOA, I for sure haven’t read 200,000.