MARS shines on short selling homeowners

Homeowners facing foreclosure could enjoy greater access to short sales and less confusion about the foreclosure alternative, thanks to new federal regulatory relief for real estate brokers and agents.



by Broderick Perkins
© 2011 DeadlineNews.Com

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Deadline Newsroom - Homeowners facing foreclosure could enjoy greater access to short sales and less confusion about the foreclosure alternative, thanks to new federal regulatory relief for real estate brokers and agents.

The Federal Trade Commission (FTC), on July 15, announced it will immediately stop enforcing most of the provisions of the "MARS" rule against real estate professionals representing homeowners in short sales.

A short sale occurs when the bank allows the sale of a home for less than the existing mortgage balance, provided the seller finds a qualified buyer. Such homes are often held by homeowners struggling with "underwater" mortgages -- mortgages with balances larger than the value of the home.

MARS, the federal "Mortgage Assistance Relief Services" rule, protects homeowners from fraud by forcing mortgage assistance relief services to disclose information about their services. It also mandates certain business practices.

The FTC ordered the stay of enforcement because real estate brokerages' distinctive relationship with homeowners selling short conflicts with many of MARS disclosure requirements.

The full story is here: "MARS Shines on Short Selling Homeowners"

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Californian homeowners get short sale relief

"Jerry Brown stopped (open-ended short sales) that. God Bless him. This is a continuation of plugging a loophole that kept people on the hook even after a short sale," said Raffi Tal, a real estate broker and Vice President of Operations of iShortSale.com, in Woodland Hills, CA.

by Broderick Perkins
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Deadline Newsroom - California lenders who agree to a short sale must accept the agreed upon short sale payment as payment in full for the outstanding balance of all loans, including the first and second mortgages.

That's the law.

On July 15, Gov. Jerry Brown signed SB 458 into law to make short sales more viable. It was authored by State Senate Majority Leader Ellen Corbett (D-San Leandro).

A short sale occurs when the bank allows the sale of a home for less than the existing mortgage balance, typically, provided there's a qualified buyer in the wings. Such homes are often held by home owners struggling with "underwater" mortgages -- mortgages with balances larger than the value of the home.

In terms of the impact on a homeowner's credit report, there's no guarantee, but a short sale can be less harmful than a foreclosure. The homeowner should be aware of how the sale will be reported to the credit bureaus.



Previously, protections offered by SB 931 only required the first lien holder in a short sale to accept an agreed-upon payment as the full payment for the outstanding first loan balance and did not address second lien holders. Also, even the first lien holder could come after home owners for some or all of the balance left over from the short sale on the first mortgage.

"We faced that for the last four and half years. Jerry Brown stopped that. God Bless him. This is a continuation of plugging a loophole that kept people on the hook even after a short sale," said Raffi Tal, a real estate broker and Vice President of Operations of iShortSale.com, in Woodland Hills, CA.

However, without the ability to go after homeowners for a second mortgage or balance on the first, it's not clear if the growing number of short sales will stall or fall.

Short salesmade up an estimated 17.6 percent of all California resales in June, according to DQNews.com . That was the same as in May and down from 20 percent a year earlier. Two years ago, however, short sales made up only 13.5 percent of the resale market

"The signing of this bill is a victory for California homeowners who have been forced to short sell their home only to find that the lender will pursue them after the short sale closes, and demand an additional payment to subsidize the difference," said California Association of Realtors' President Beth L. Peerce.

"SB 458 brings closure and certainty to the short sale process and ensures that once a lender has agreed to accept a short sale payment on a property, all lien holders -- those in first position and in junior positions -- will consider the outstanding balance as paid in full and the homeowner will not be held responsible for any additional payments on the property," Peerce added.

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Uncle Sam outs lenders' poor mortgage modification performance

In its latest "Making Home Affordable Housing Scorecard," the Treasury says the Bank of America, JPMorgan Chase, Ocwen Loan Servicing, and Wells Fargo need “substantial” improvement in their Home Affordable Modification Program (HAMP) efforts.

by Broderick Perkins
© 2011 DeadlineNews.Com

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Deadline Newsroom - The U.S. Treasury is outing mortgage servicers who fail to meet federal mortgage modification program guidelines and is withholding financial incentives for the worst performers.

In its latest "Making Home Affordable Housing Scorecard," the Treasury says the Bank of America, JPMorgan Chase, Ocwen Loan Servicing, and Wells Fargo need “substantial” improvement in their Home Affordable Modification Program (HAMP) efforts.

Reporting how individual servicers failed to reach HAMP goals is new and long overdue on the monthly scorecard.

“Beginning this month (June), the Treasury Department is withholding financial incentives for three servicers: Bank of America, NA; JP Morgan Chase Bank, NA; and Wells Fargo Bank, N.A.,” the Treasury reported on the May scorecard.

Get the full story: "Uncle Sam Airs Lenders’ Dirty Laundry In Mortgage Modification Mess"

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Fannie Mae hones assistance for homeowners facing foreclosure

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In a detailed set of new standards, Fannie Mae declares servicers must take a more consistent, time conscious and customer-centric approach to homeowners facing foreclosure. Fines put teeth in the new standards.

by Broderick Perkins
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Deadline Newsroom - If only the growing reams of new mortgage regulations, disclosures, standards and legal settlements would actually reach and aid the teeming throngs of financially struggling homeowners.

One of the latest attempts to get mortgage servicers (often lenders) to behave like they have customers' best interests at heart comes on the heels of a recent settlement that was supposed to cure some of the same ills.

In a detailed set of new standards, Fannie Mae declares servicers must take a more consistent, time conscious and customer-centric approach to homeowners facing foreclosure.

"We want homeowners to be able to understand their options when facing foreclosure, and we want servicers to reach homeowners early in the process, communicate frequently and clearly, and help homeowners avoid foreclosure," said Jeff Hayward, Senior Vice President of Fannie Mae's National Servicing Organization.

Read the full story: "Fannie Mae Hones Assistance for Homeowners Facing Foreclosure"

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Housing counselors thumbs down on mortgage modification operations

The U.S. Government Accountability Office' (GAO) report, "Troubled Asset Relief Program: Results of Housing Counselors Survey on Borrowers’ Experiences with the Home Affordable Modification Program (HAMP) ," is an unsettling revelation of workplace incompetence that borders on malpractice.

by Broderick Perkins
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Deadline Newsroom - Housing counselors are wringing their hands after giving a stout vote of no confidence to mortgage modification makers.
That's not surprising.

Work performance conducted by mortgage servicers, if a new survey is any indication, should be enough to get them roundly fired and quickly replaced in today's workplace, but they just continue not to work for their money.

At least government transparency is working.

The U.S. Government Accountability Office' (GAO) report, "Troubled Asset Relief Program: Results of Housing Counselors Survey on Borrowers’ Experiences with the Home Affordable Modification Program (HAMP) ," is an unsettling revelation of workplace incompetence bordering on malpractice.

More than three out of four housing counselors surveyed about their experiences with a $50 billion government sponsored (read taxpayers' money) mortgage modification program, HAMP, said their clients' overall experiences with the program ranged from "negative" to "very negative."

The culprits are both the mortgage servicers for their shoddy work and the government for not enforcing the guidelines.

After Congress established the $700 billion Troubled Asset Relief Program (TARP), $50 billion in TARP funds were allocated in 2009 to help struggling homeowners avoid foreclosure. Unfortunately, during the first two years of the program, more homeowners were denied or canceled from trail modifications than those who received permanent modifications.

Along with others critical of HAMP, GAO's report is its third attempt to study the problematic U.S. Treasury program and make recommendations to improve it.

In the current study, which calls for sanctions against mortgage servicers who don't get the job done, GAO surveyed nearly 400 housing counselors from NeighborWorks' National Foreclosure Mitigation Counseling Program (NFMC).

The survey found:

• Roughly 76 percent of the counselors said borrowers looking for a mortgage modification suffered a "negative" or "very negative" experience.

• Approximately 40 percent of counselors who provided written comments said they experienced difficulties working with servicers.

• Some 39 percent of counselors said mortgage servicers regularly lose sensitive personal financial documents and repeatedly request that homeowners resubmit them. In addition, over 78 percent of the counselors ranked "servicer lost the borrower's documentation" as one of the three highest challenges they face assisting homeowners.

Servicers appear to be passing the buck on the issue.

• One of the most common servicers' reasons for canceling trial modifications is insufficient documentation, but the U.S. Treasury can't determine if borrowers have not submitted the required documentation or if servicers lost or misplaced it.

• A whopping 86 percent of counselors said servicers often miss the mandated 30-day deadline for notifying homeowners that they've been approved or rejected for a modification, and don't get around to the job for several months to as long as seven months.

• Trial modifications are supposed to last only three months, but many drag on for six months or more. HAMP guidelines require that borrowers successfully complete a 90-day trial period, during which they make all the required payments on time before they can become eligible for conversion to a permanent modification. Nearly all of the counselors surveyed (96 percent) said trial periods typically lasted longer than 3 months, and 50 percent of these counselors said that trial periods typically lasted 7 months or more.

Some 60 percent of servicers were found not to be complying with HAMP guidelines, prompting counselors to insist that the Treasury enforce sanctions on servicers that did not comply.

"The Treasury told us that it had asked servicers to rectify issues associated with noncompliance and in some cases had withheld financial incentives, but had not yet finalized consequences for noncompliance," the GAO report said.

Counselors also cited the need for Treasury to require mortgage modification servicers to make more timely decisions (51 percent) and to ensure that servicers worked with borrowers who were not yet 60 days delinquent (41 percent).

Borrowers who are not helped by HAMP may be helped by non-HAMP, or proprietary modifications, which may offer greater flexibility, if they get to them in time.

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Californians, ethnic minorities hit hardest by foreclosure rescue scams

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Nearly one-in-four complaints from foreclosure scam victims come from Californians and virtually half of all complaints nationwide were from homeowners who voluntarily identified themselves as African-American, Hispanic, or Asian.

by Broderick Perkins
© 2011 DeadlineNews.Com

Unauthorized use of this story is a copyright violation -- a federal crime

Deadline Newsroom - If you live in California and find yourself facing foreclosure, chances are greater than in any other state, you'll be the victim of foreclosure rescue fraud.

Nearly one-in-four complaints from foreclosure scam victims come from Californians, according to the Homeownership Preservation Foundation (HPF).

HPF is a U.S. Department of Housing and Urban Development (HUD)-certified, independent, national non-profit dedicated to helping distressed homeowners avoid mortgage foreclosure.

Since February of last year, HPF found that 22 percent of complaints about foreclosure fraud came from California, followed by Florida, with 7 percent of the calls, Texas and New York, both with 5 percent, and Georgia with 4 percent.

While California's reported fraudulent activity was significantly higher than other states, only one city from the Golden State, Los Angeles, ranked in the top five, indicating foreclosure scams can hit anywhere and aren't concentrated in any one area.

"Although California was among the states most hard hit by the housing crisis, the reported foreclosure rescue scam activity seems disproportionately higher than we would have expected," said Colleen Hernandez, HPF's CEO.

Hernandez said other than Los Angeles, there isn't a concentrated scam area in California, but virtually half of the complaints were from homeowners who voluntarily identified themselves as African-American, Hispanic, or Asian.

"Repeated studies have shown that minorities were disproportionately targeted for predatory lending during the housing boom, and we have compelling evidence indicating that minorities are bearing the brunt of an unusually high percentage of mortgage scams," said Hernandez said.

Effective Jan. 31, 2011 the Federal Trade Commission's (FTC) "Mortgage Assistance Relief Services (MARS) Rule," went into effect to protect consumers from being taken by all kinds of foreclosure rescue services, including negotiating a mortgage modification, short sale or deed-in-lieu of foreclosure and intervening in a foreclosure or repossession; a forbearance or repayment plan; an extension of time to cure default, reinstate a loan, or redeem a property; a waiver of an acceleration clause or balloon payment and other related services.

HPF says consumers facing foreclosure and looking for help should know the law bans service providers, including real estate agents offering the services, from collecting fees until a home owner agrees with a finalized, written foreclosure or modification plan approved by their lender or loan servicer.

MARS allows licensed attorneys to charge advance fees, provided the fees are held in an escrow (trust) account and provided the attorney complies with state laws and regulations related to the federal rule.

In addition to not paying money up front, consumers should expect a host of disclosures required by the law, including disclosures:

• Of the proposed cost of the service.

• Telling consumers they have a right to reject any offer from the service or the lender without charge and can stop doing business with the service company at any time.

• Stating the service is not affiliated or associated with nor approved by any government entity.

• Revealing the lender can reject any change to the home owner's loan.

• Explaining the home owner could lose their home and damage their credit rating if they follow a service's advice to stop paying their mortgage.

Despite the new rule, HPF said numerous companies and individuals flagrantly violate the rule, asking for an average upfront fee of more than $2,500 to modify a mortgage. In virtually all instances, either no mortgage reduction was achieved or no work was actually performed, according to HPF.

Hernandez says companies illegally demanding upfront fees to renegotiate mortgages are often run by individuals who were responsible for facilitating highly dubious mortgage loans during the housing bubble.

"They profited on the front end and now they are seeking to cash in on the back end," she said.

Also exacerbating the problem, reductions in federal housing counseling funds have reduced the availability of previously limited free counseling services. That's likely to lead to a surge in mortgage scams as consumers scramble for help.

"Being scammed out of thousands of dollars is often a knockout punch for already distressed homeowners. Reducing funding for counseling would be tantamount to giving foreclosure rescue scam artists a major subsidy as they will be able to operate virtually unfettered," Hernandez.

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Broderick Perkins, an award-winning consumer journalist, parlayed 30 years of old-school journalism into a digital real estate news service, the San Jose, CA-based DeadlineNews Group, including DeadlineNews.Com, a real estate news and consulting service and Web site, and the Deadline Newsroom, DeadlineNews.Com's news back shop.

Under the DeadlineNews Group umbrella:

Perkins was the first Examiner to cover three beats for the Examiner.com news service:
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'Flopping' works other side of the 'flipping' street

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Following in the footsteps of foreclosure rescue scams and mortgage modification schemes, flopping is one of the latest scourges of the housing market.

by Broderick Perkins
© 2010 DeadlineNews.Com

Unauthorized use of this story is a copyright violation -- a federal crime

Deadline Newsroom -

Real estate investors who legally cash in on rising home values by buying and quickly reselling, or "flipping" properties shouldn't be confused with an offshoot band of "floppers" working the other side of the street.

Honest flipping profits from a true increase in property value. Conversely, flopping illegally profits from a false decrease in property value.

Following in the footsteps of foreclosure rescue scams and mortgage modification schemes, flopping is one of the latest scourges of the housing market.

Flopping takes aim at the short sale sector of distressed housing.

Get the full story here: "Fraudulent ‘Flopping’ Takes Cue from Legal ‘Flipping’ "

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MARS' loan modification protections extend to short sales, other foreclosure relief

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MARS news has been focused largely on the cottage industry of private companies offering modification services to consumers, but the rule impacts all mortgage assistance relief services including those offering short sale services and other assistance.

by Broderick Perkins
© 2010 DeadlineNews.Com

Unauthorized use of this story is a copyright violation -- a federal crime

Deadline Newsroom - Rules protecting consumers from being taken by modification services also extend to short sale services and other forms of mortgage assistance, including some assistance offered by real estate agents.


Effective Jan. 31, 2011 modification assistance firms have been banned from collecting fees until a home owner agrees with a written foreclosure or modification plan approved by their lender or loan servicer.

The ban and other related disclosure and regulatory provisions are part of the Federal Trade Commission's (FTC) "Mortgage Assistance Relief Services (MARS) Rule", designed to curb fraud, scams and rip-offs in the distressed mortgage services industry.

While MARS news has been focused largely on the cottage industry of private companies offering modification services to consumers, the rule impacts all mortgage assistance relief services including those offering short sale services and other assistance.

Some real estate agents must comply

Laurie Janik, National Association of Realtors' general counsel, recently reviewed the new rule at a forum during the Realtors 2011 Midyear Legislative Meetings & Trade Expo in Washington, D.C. and put on notice, real estate agents who provide short sale services, according to a recent DSNews report.

"As the leading advocate for homeownership, NAR supports efforts to ensure that mortgage assistance relief services truly benefit consumers. Nevertheless, NAR has some concerns about the rule and its application to real estate professionals involved in short sales transactions," Janik told DSNews.

But it's not just short sales. The official Federal Register Vol. 75, No. 230 rendition of the rule is pretty clear, as federal regulations go.

"The Rule is intended to regulate for-profit providers of mortgage assistance relief services...defined as 'any service, plan, or program, offered or provided to the consumer in exchange for consideration, that is represented, expressly or by implication, to assist or attempt to assist the consumer' in negotiating a modification of a dwelling loan…stopping, preventing, or postponing a foreclosure or repossession; or obtaining one of several other types of relief to avoid delinquency or foreclosure... (including) a forbearance or repayment plan; an extension of time to cure default, reinstate a loan, or redeem a property; a waiver of an acceleration clause or balloon payment; and a short sale, deed-in-lieu of foreclosure, or any other disposition of the property except a sale to a third-party that is not the loan holder."

One question is obvious: If a company doesn't charge for mortgage relief services, does the MARS rule apply?

"Most of the local short sale specialists advertise this as a free service to our sellers and understand that the cost of the professional negotiations will be paid out of the hired Realtor's commission," said Julie Larsen Wyss, broker associate, Intero Real Estate Services, Los Gatos, CA.

Janik acknowledged to DSNews that real estate agents who do offer fee-based services must not take upfront fees, as the law requires, but she also voiced concern that other MARS rules could also apply to real estate agents helping with short sales, including rules that touch on disclosures, advertising, communicating with clients, negotiating a short sale or arranging for a short sale negotiation.

"NAR is discussing with the FTC some language in the second and third disclosures as well as some other requirements found in the MARS rule," Janik said, according to DSNews.

"The FTC is considering possible options to help make the rule more applicable to a real estate brokerage…when they are performing traditional real estate functions in a short sale transaction," she added.

A history of fraud

Too many foreclosure rescue and loan modification services became a festering outgrowth of the mortgage market meltdown that left many home owners underwater with a mortgage balance greater than the value of the home.

The operations often promised to be a go-between and negotiate with the lender to obtain a modification, short sale or some other relief from foreclosure. Some also duped home owners into believing they were affiliated with real government assistance programs.

Now, without up front fees, many fly-by-night operations don't have the capital to resume operations.

MARS does allow licensed attorneys to charge advance fees, provided the fees are held in an escrow (trust) account and provided the attorney complies with state laws and regulations related to the federal rule.

MARS rules are disclosure heavy. The rules say mortgage assistance relief services must disclose:

• The proposed cost of the service.

• That consumers have a right to reject any offer from the service or the lender without charge and can stop doing business with the service company at any time.

• That the service is not affiliated or associated with nor approved by any government entity.

• That the lender can reject any change to the home owner's loan.

• That home owners could lose their home and damage their credit rating if they follow a service's advice to stop paying their mortgage.

If services are offered or negotiated in Chinese, Korean, Spanish, Tagalong or Vietnamese, the disclosures must also be provided in the same language.

Foreclosure rescue and loan modification services are also prohibited from making any false or misleading claims about their services, including claims about results, government affiliation; the consumer's financial obligations; refund and cancellation policies; legal representation and the amount of savings a consumer can expect, among others.

Home owners should also check with their state rules for the services. Some states have stronger regulations than the federal MARS rule.

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Broderick Perkins, an award-winning consumer journalist, parlayed 30 years of old-school journalism into a digital real estate news service, the San Jose, CA-based DeadlineNews Group, including DeadlineNews.Com, a real estate news and consulting service and Web site, and the Deadline Newsroom, DeadlineNews.Com's news back shop.

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Perkins is managing editor of HomeAway.com's Gulf Coast Response Center.

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Mortgage modification makers get poor grades

Mortgage servicers get sloppier during the loan modification process than they do during the loan origination process, according to the recently released J.D. Power and Associates study.

by Broderick Perkins
© 2010 DeadlineNews.Com


Unauthorized use of this story is a copyright violation -- a federal crime


Deadline Newsroom - If you thought it was tough getting up to snuff on the mortgage application process, wait until you get a load of the mortgage modification mine field.

Mortgage servicers get sloppier during the loan modification process than they do during the loan origination process, according to the recently released J.D. Power and Associates' "2010 U.S. Primary Mortgage Servicer Satisfaction Study".

That means you'll need to take the initiative and learn the ins and outs of the mortgage modification process before diving in.

"This will not come as a great surprise to many homeowners who have had to endure the tribulations of loan modification," said Bruce Hahn, president of the American Homeowners Foundation.

A mortgage modification occurs when the lender reworks the terms of an existing home loan, typically to lower payments and make the home more affordable, according to a helpful and inexpensive resource, Silver Spring, MD-based mortgage expert Peter Miller's "The Quick & Dirty Guide To Successful Mortgage Modifications" (Silver Spring Press, $2.99).

To get the payment down, mortgage modification lenders lower the interest rate, extend the loan term, reduce the principal or use any combination of those approaches. Modification are often use as an alternative to foreclosure.

"With more than a million borrowers signed up for mortgage modification programs the overall result is that most are wildly unhappy with their loan servicers," says Miller, whose publication uses an easy-to-understand linear approach that takes the mystery out of the mortgage modification process, a process which apparently stymies even lenders.

According to J.D. Power, compared with the loan origination process, mortgage servicers do worse in mortgage modifications in a host of areas.

• In terms of providing and meeting a time frame for approval.

• In terms of asking for information more than once (in order to be sure to obtain information crucial to the modification).

• When explaining the entire process during application.

• In terms of providing proactive status updates during the process.

The study measured customer satisfaction with five areas of the mortgage servicing experience: fees; the billing and payment process; escrow account administration; website; and phone contact. The study is based on responses from 4,516 homeowners queried May through June 2010.

"While the loan origination process is already a milestone event for most homeowners, the stakes are even higher for those going through the modification process," said David Lo, director of financial services at J.D. Power.

J. D. Power says there are several key service practices that can have a particularly strong positive impact on customer satisfaction:

• Fee transparency. Communicating all fees in a concise way to ensure complete understanding and no surprises.

• Informative account statements. Providing account statements to ensure that the most important information customers need is easily found.

• Billing and payment by preferred method. Ensuring that customers are able to receive account statements and make payments through their preferred method.

• Problem resolution. Ensuring that once a problem is identified, it is resolved quickly and efficiently.

Says Miller, "You can easily understand that clarity is required with the first three items, it’s the fourth which is a problem. "Resolution" may not possible and in cases where a borrower has lost a job there’s nothing the servicer can do to help the homeowner short of offering them employment."


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Broderick Perkins, an award-winning consumer journalist, parlayed 30 years of old-school journalism into a digital real estate news service, the San Jose, CA-based DeadlineNews Group, including DeadlineNews.Com, a real estate news and consulting service and Web site, and the Deadline Newsroom, DeadlineNews.Com's news back shop.

Under the DeadlineNews Group umbrella:

Perkins is managing editor of HomeAway.com's Gulf Coast Response Center.

Perkins was the first Examiner to cover three beats for the Examiner.com news service:
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California gets $700 million slice of special $1.5 billion homeowner bailout pie

Spontaneous orgasms real

Earlier this year, President Obama announced a $1.5 billion infusion for state housing agencies in Arizona, California, Florida, Michigan and Nevada. The Golden State scored $700 million of it.

by Broderick Perkins
© 2010 DeadlineNews.Com


Unauthorized use of this story is a copyright violation -- a federal crime


Deadline Newsroom - California struck gold, receiving the biggest chunk of a special $1.5 billion federal fund pie for programs that target struggling homeowners in states hardest hit by the housing crash.

California Housing Finance Agency (CalHFA) recently announced the fat $700 million slice would go toward four different programs ultimately assisting 40,000 homeowners.

Earlier this year President Obama announced the $1.5 billion infusion for state housing agencies in Arizona, California, Florida, Michigan and Nevada, where home values have fallen more than 20 percent from peak 2006 and 2007 markets.

The $1.5 billion will be withdrawn from funds set aside for housing under the Emergency Economic Stabilization Act of 2008 (EESA).

The money is earmarked for state agency programs that reduce so-called "preventable" foreclosures faced by unemployed home owners, so-called "underwater" home owners and home owners struggling with second mortgages.

In addition to California's $699.6 million stake, Florida gets $418 million; Michigan, $154.5 million, Arizona, $125.1 million and Nevada, $102.8 million.

"We are very grateful that the Obama Administration recognizes that California and several other states have been severely impacted by the twin problems of unemployment and home price depreciation," said Steven Spears, executive director of CalHFA

The details aren't finalized and homeowners, who needn't be CalHFA loan holders, must otherwise quality before approval. CalHFA's federally approved "Keep Your Home" programs are:

• Mortgage payment assistance for jobless. Up to six months of mortgage payment assistance, with a $1,500 cap for homeowners who have lost their jobs.

• Mortgage payment assistance for past-due homeowners. Up to $15,000 each, with a mandated match from the mortgage lender, the help those with past-due payments.

• Mortgage principal reduction. Underwater borrowers, who owe significantly more on their loans than their homes are worth, get a mortgage principal reduction to "market levels."

• Transition assistance. For those who can't afford to stay in their homes and are completing a short sale or handing over the deed in lieu of a foreclosure, financial assistance for the transition will be provided.

For more details contact CalHFA's Keep Your Home program online or by phone (916) 373-2585.


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Broderick Perkins, an award-winning consumer journalist, parlayed 30 years of old-school journalism into a digital real estate news service, the San Jose, CA-based DeadlineNews Group, including DeadlineNews.Com, a real estate news and consulting service and Web site, and the Deadline Newsroom, DeadlineNews.Com's news back shop.

Perkins was the first Examiner to cover three beats for the Examiner.com news service:
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Most mortgage modifications doomed to failure

Quick! Click my head!

Global rating agency Fitch Ratings recently reported that mortgage modifications are likely to fail 65 percent to 75 percent of the time within 12 months, because other debts owed by the homeowner remain in place and untouched.

by Broderick Perkins
© 2010 DeadlineNews.Com


Unauthorized use of this story is a copyright violation -- a federal crime


Deadline Newsroom - A mortgage modification doesn't come with a guarantee that it will save your home.

Chances are, the same conditions that make it tough for you to afford your mortgage payment, also force you to stretch to pay other bills.

If that's the case, a mortgage modification alone won't be enough to bail you out of your financial hardship.

That doesn't mean you should forego a modification. It means you should have a full grasp of what you may need to do beyond a mortgage modification to keep your home and your house in order.

Global rating agency Fitch Ratings recently reported that mortgage modifications are likely to fail 65 percent to 75 percent of the time within 12 months, because other debts owed by the homeowner remain in place and untouched.

A mortgage modification occurs when the lender reworks the terms of an existing home loan, typically to lower payments and make the home more affordable. To get the payment down, lenders lower the interest rate, extend the loan term, reduce the principal or use any combination of those approaches.

Since the onset of the Obama Administration's Home Affordable Modification Program (HAMP) approximately 300,000 of a potential 2 million eligible homeowners have received permanent mortgage modifications of the federal program.

A similar amount of modifications have been completed under other programs.

While the HAMP program and others come with a round of mandated counseling that includes budgeting, planning and wise credit use, it does nothing to directly address other debts homeowners may be suffering.

The modifications cut homeowners' monthly mortgage debt by an estimated $550 or more and it reduces housing expenses to 31 percent of net income.

However, because of other debts, including auto loans, credit cards and other household expenses, homeowners spend an estimated 64 percent of their net income before they go food shopping, according to Fitch.

Small emergencies, say, an auto repair bill, medical bill, even a temporary loss of some or all income can sink mortgage modification homeowners who don't have cash reserves.

The Mortgage Bankers Association revealed similar findings over the course of several years -- mortgage modification default rates from 40 percent to 60 percent.

Fitch also reported moratoriums and mandated mediations can help some homeowners prolong the inevitable or get through hard times with homeownership intact.

Federal and local government moratoriums will delay final resolution on many properties until 2012, Fitch said. That means distressed sales will maintain a toehold in the housing market for at least another two years -- more by some estimates.

Homeowners can consider the ever more popular short sale alternative to foreclosures. Foreclosures often follow failed modifications.

Fitch reported half of prime borrowers who lose their homes now do so through short sales -- selling a home for less than the amount owed. Among the short sales are also deed-in-lieu sales, a transaction where the bank repossesses the property and forgives any balance.

Both modifications and short sales can negatively impact a consumers credit standing, but often not as badly as a foreclosures.

The Fitch findings underscore the importance of paying off debt, carrying as little credit as possible and living within one's means.

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© 2010 DeadlineNews.Com

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You are reading a sample of "News that really hits home!", now available from several beats and published in a growing number of locations.

Broderick Perkins, an award-winning consumer journalist, parlayed 30 years of old-school journalism into a digital real estate news service, the San Jose, CA-based DeadlineNews Group, including DeadlineNews.Com, a real estate news and consulting service and Web site, and the Deadline Newsroom, DeadlineNews.Com's news back shop.

Perkins was the first Examiner to cover three beats for the Examiner.com news service:
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Site to See: PreventLoanScams.com targets mortgage modification fraud

The Loan Modification Scam Prevention Network, led by Fannie Mae, Freddie Mac, the Lawyers' Committee for Civil Rights Under Law, NeighborWorks America and a host of other agencies, recently announced a national campaign to prevent loan modification rip-offs and other scams.

by Broderick Perkins
© 2010 DeadlineNews.Com


Unauthorized use of this story is a copyright violation -- a federal crime


Deadline Newsroom - Days after a federal economic stability agency said the Obama administration's mortgage assistance program was vulnerable to fraud, a coalition of federal, state and community organizations launched a new campaign to fight that fraud.

The Loan Modification Scam Prevention Network, led by Fannie Mae, Freddie Mac, the Lawyers' Committee for Civil Rights Under Law, NeighborWorks America and a host of other agencies, recently announced a national campaign to prevent loan modification rip-offs and other scams.

The group plans public education, complaint reporting services and coordination with local, state, and federal enforcement agencies to thwart scammers and come-ons that prey on homeowners struggling with mortgages.

Recent changes in the Obama Administration's mortgage assistance program may make it more vulnerable to fraud, according to the special inspector general for the Troubled Asset Relief Program (TARP).

The changes to the Making Home Affordable initiative, announced in March, are intended to make it easier for struggling homeowners to avoid foreclosure. But the administration hasn't done enough to warn the public about fraud, says Neil Barofsky, inspector general of TARP.

TARP, is a federal government program created to purchase assets and equity from financial institutions to strengthen the nation's financial sector, especially area's crushed by the subprime mortgage crisis.

"Criminals feed on borrower confusion, and frequent changes to the programs provide opportunities for experienced criminal elements to prey on desperate homeowners," Barofsky wrote in a quarterly report.

The administration's existing program has already spawned fraudulent schemes, the report said, such as one in which borrowers are tricked by "thieves" into paying upfront for modifications that never materialize.

Under the changes announced in March, the Treasury isn't requiring appraisals to determine a home's value in cases where mortgage principle is reduced to complete a mortgage modification, the report said.

That could make it easier for mortgage lenders to fraudulently qualify for incentive payments.

A mortgage modification, used to make mortgage payments more affordable for struggling homeowners, typically occurs when the lender reworks the terms of an existing home loan by lowering the interest rate and exchanging an adjustable rate for a fixed rate, or extending the term of the loan, or both. Recent changes also include the lender reducing the principal to get the payment down.

The TARP report said the U.S. Treasury should follow the Federal Housing Administration's (FHA) guidelines, which require the use of an FHA-approved appraiser.

The new PreventLoanScams.org is designed to support national, state and local law enforcement efforts as a nationwide clearinghouse for loan modification scam information on complaints filed, laws and regulations, and enforcement actions.

Loan modification scams are schemes in which people take advantage of vulnerable homeowners. Scammers prey on homeowners in distress by guaranteeing to help the homeowner obtain a modification of their mortgage to save their home. Frequently, the borrowers pay money up front but receive no help at all and their home is lost to foreclosure.

The new PreventLoanScams.org website includes:

• An electronic complaint form that can be filled out easily by an individual who has been scammed or by counselors or friends helping a victim of fraud .

• Names of individuals and organizations who have been identified by enforcement agencies to have allegedly committed a loan modification scam.

• Information on how to avoid a loan modification scam.

• State-by-state information about rules, regulations and resources available to struggling homeowners.

• News and information on enforcement efforts.

Homeowners who believe they may have been a victim of a loan modification scam, can also call the Homeowners Hope Hotline at 1-888-995-HOPE to log a complaint and to receive free foreclosure prevention counseling.

"We've joined forces with government agencies and other industry leaders to help fight loan scams across the country," said Jeff Hayward, Senior Vice President, Fannie Mae.

"This effort links homeowners to free, legitimate counseling and helps to put scammers out of business. The goal of this campaign is to educate homeowners and empower those who have fallen victim to scammers to report and prevent future fraud," Hayward added.

A feature of DeadlineNews.Com, "Site To See" reviews are occasional, but timely critiques of content-heavy real estate Web sites deemed unique, consumer-friendly, informative and easy to use.

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© 2010 DeadlineNews.Com

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You are reading a sample of "News that really hits home!", now available from several beats and published in a growing number of locations.

Broderick Perkins, an award-winning consumer journalist, parlayed 30 years of old-school journalism into a digital real estate news service, the San Jose, CA-based DeadlineNews Group, including DeadlineNews.Com, a real estate news and consulting service and Web site, and the Deadline Newsroom, DeadlineNews.Com's news back shop.

Perkins was the first Examiner to cover three beats for the Examiner.com news service:
• National Offbeat News Examiner
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• National Real Estate Examiner

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Short sale myths debunked in short order

World's first "green" Hummer

More competent short sale professionals working a greater number of short sal deals are helping bust some of the myths that have surrounded the lesser-used foreclosure alternative.

by Broderick Perkins
© 2010 DeadlineNews.Com



Unauthorized use of this story is a copyright violation -- a federal crime


Deadline Newsroom - Short sales can be a tall order, but as their numbers increase, better trained professionals working the deal are getting wise to what's needed to make them a success -- in short order.

More competent short sale professionals are also helping bust some of the myths that have surrounded the lesser-used foreclosure alternative, according to Woodland Hills, CA-based Panorex Realty affiliate I Short Sale, Inc.. As it's name implies, I Short Sale, Inc. is a real estate brokerage specializing in short sale transactions.

"If done right, the short sale is a winning proposition for all, including the lender because the costs involved are certainly lower than that of foreclosing," said Nancy Osborne, chief operating officer of Erate.com, a Santa Clara, CA-based financial information publisher and interest rate tracker.

A short sale occurs when the bank allows the sale of a home for less than the existing mortgage balance, typically provided there's a qualified buyer in the wings. Such homes are often held by home owners struggling with "underwater" mortgages -- mortgages with balances larger than the value of the home.

First American Core Logic says more than 11.3 million home owners are underwater on their mortgages.

Mortgage modifications and federally sponsored refinancing programs, to date, have been the go-to tools to help struggling home owners.

All are strategies to avoid foreclosure, but banks have been more likely to refi, modify or foreclose, rather than taking the short sell route.

That's because short sale bids can come in well below the last appraisal and banks don't want to take a loss. After sellers seal the deal, they can be left with a bill that's the difference between the selling price and the mortgage balance. Real estate agents and buyers fear a six month or longer transaction period that could end in a no-sale scenario that comes with the cost of lost time.

"A major reason why a short sale fails is the length of time it takes to get the lender’s approval. Long delays frequently cause the buyer to drop out of escrow and buy another home," said Zdenka Mahan, a short-sale experienced Intero Real Estate agent from Saratoga, CA.

However, as their numbers have grown, more attention is making the deals easier to close.

First American Core Logic's first monthly Distressed Sales Report released in April, reveals January's
short sales nationwide were 8 percent of all resale home sales, up from 7 percent in December and 5 percent a year ago.

Their numbers are much higher in areas hit hardest by the housing bust and account for 20 percent of resale home sales in San Diego (the nation's highest), 19 percent in Sacramento, and 15 percent or more in Oakland, CA Washington D.C. and Tampa, FL, according to First American.

Effective April 5, the Obama Administration rolled out Making Home Affordable's Home Affordable Foreclosure Alternatives (HAFA) streamlined short sale effort to give qualifying home owners up to $3,000 to defray the cost of moving. Servicers can also get $1,500 each for short sale deals that pencil.

With short sales getting more federal support and greater know-how from professionals who work them, myths about short sales are flying out the window, according to I Short Sale, which is "setting the record straight on common short sale myths."

Myths debunked

• You must be default on your mortgage to negotiate a short sale. Short sales are not a function of default status on a mortgage. They are the result of the bank mitigating a potential default situation that, in the long run, will cost more money to the investors. Defaulting is not a short sale requirement under the HAFA plan.

• Short sales are embarrassing. Home owners who "avoid" short sale "embarrassment" could face a foreclosure disaster and much greater heartache. Emoting through tough financial situations won't make the problem go away, says I Short Sale.

• Buyers aren't interested in short sale properties. Perhaps not as many as are interested in foreclosures, but the number of short sales is up, according to First American Core Logic. That's because short sale properties are often available at bargain prices compared to similar homes on the market and given the owner remains until the sale is closed, short sale properties may also be in better shape than abandoned foreclosures.

"Search for a buyer, especially those who have expressed an interest in buying short sale properties. The buyer must be willing to deal with extended deadlines and additional demands made by your lender," said Julie Larsen Wyss, a RealtyU graduate and holder of its new Certified Short-Sale Professional (CSP) designation.

• There's not enough time to negotiate a short sale before foreclosure. Federal mandates that come with paid incentives for lenders demand that lenders consider a short sale before moving to foreclosures, especially if a refinance or mortgage modification hasn't worked out. A good negotiator takes into account the timeline affiliated with a foreclosure. There is always a chance that a short sale can be negotiated. However, the only way to know for sure is to try.

"A real estate agent needs to put together the most comprehensive short sale proposal possible to minimize the back-and-forth delays," said Mahan.

• The bank would rather foreclose than complete a short sale. The bank would rather have the full mortgage paid on time. If a lender can strike a better deal with a short sale than a foreclosure, they'll go for the short sale when possible. It costs the bank money and liability risk to carry foreclosed homes. The sooner a home is off the books for the most amount of money, the better. Wherever possible, banks are seeking other loss mitigation options before foreclosure.

• Short sales are impossible and never get approved. Short sales can be complicated, but again, according to First American, short sales are increasing.

"We negotiate short sale approvals every day," reports I Short Sale.

(More short sale news that really hits home!)

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© 2010 DeadlineNews.Com

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You are reading a sample of "News that really hits home!", now available from several beats and published in a growing number of locations.

Broderick Perkins, an award-winning consumer journalist, parlayed 30 years of old-school journalism into a digital real estate news service, the San Jose, CA-based DeadlineNews Group, including DeadlineNews.Com, a real estate news and consulting service and Web site, and the Deadline Newsroom, DeadlineNews.Com's news back shop.

Perkins was the first Examiner to cover three beats for the Examiner.com news service:
• National Offbeat News Examiner
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• National Real Estate Examiner

DeadlineNews.Com's Editorial Content Is Intellectual Property • Unauthorized Use Is A Federal Crime

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