Posts Tagged ‘foreclosure prevention’

HAMP Loan Modification Program Results Continue To Be Underwhelming

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The Treasury released its latest set of numbers today for the Home Affordable Modification Program (HAMP) through April, 2010.  According to the Treasury, 300,000 American homeowners have received permanent loan modifications under HAMP. This number has grown in recent months and that is good news. However, in light of the fact that foreclosures have continued at a rate that exceeds 300,000 for the 14th month and counting, the number of homeowners who have received help remains miniscule when compared to the number of homeowners who have lost their homes.

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New Efforts To Aid Homeowners Won’t Cost The Taxpayers Another Dime

Further efforts to abate the foreclosure crisis won’t cost the taxpayer any additional money is the word from the Obama Administration. This includes the new HFA Hardest Hit allocations and revisions to HAMP to reward lenders who write down principle balances.

This is because all of the money that is being used is coming out of  TARP (Troubled Asset Relief Program) funds. $50 billion, to be exact, and the government has come nowhere close to that allocation.

While the Wall Street Journal calls this $50 billion a “slush fund,” it is a good thing that further outlays from that fund need no congressional approval. If they did, it would be likely that programs like HAMP, designed to help struggling homeowners would get bogged down in congressional politics.

It is also a good thing for taxpayers already laboring under massive budget deficits run up in the last decade.

The Myth Of The “Responsible” Homeowner

blame We hear it everywhere, even President Obama says it. Only “responsible” homeowners deserve help. Yet, does anyone really know what “responsible” homeowner means?  I don’t think so.

Naturally, there are some situations where no help should be provided, such as for people facing foreclosure on vacation homes or multi-million dollar residences. Such people don’t really need the help since alternatives exist for them that don’t include homelessness and, further, represent a small fraction of people facing foreclosure today.

Other than those situations, everyone else deserves help,  regardless of the circumstances that lead up to the problem. Why? Well, beyond the moral reason that we should help our fellow Americans where we can, it only makes economic sense on the broader scale.

As the foreclosure crisis continues largely unabated by the President’s HAMP program, housing values continue to take a dive. This has a number of effects, including more people becoming underwater on their mortgages, or sinking them deeper underwater, which in itself leads to more mortgage defaults, and you guessed it: more foreclosures.  Another effect is that the housing market remains depressed, meaning  new home construction remains dormant and therefore no new construction jobs are available. No new construction jobs means no real stimulus to the economy which would spur more consumer spending and create more jobs, which in turn leads to continued high unemployment for everyone.

While not the sole problem facing our economy, the foreclosure crisis remains a major threat to any sort of meaningful recovery. We need to tackle it in order to set the economy back on track. This means we need to stop trying to assign blame and just fix the problem.

At the end of the day, does it really matter that a low income family bought a home they never should have qualified to buy in the first place? Does it really even matter who is at fault or who has the greater share of fault? The result is still the same: another family out on the street, another foreclosed home driving property values down further, another nail in the coffin of our economy.

Forensic Loan Audits: An Important Tool In Fighting Foreclosure

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Considering that a startling 90% of mortgages have some sort of error that could potentially make them void, or at the very least cost the bank considerable money in fines and damages to correct, the loan audit is a crucial tool in negotiating with your bank for a loan modification. Common errors include:

Incorrect Interest Rate

RESPA and TILA require that lenders disclose the cost of borrowing money to all borrowers before the borrower commits to the contract. Especially in the case of subprime loans and loans with teaser rates, you may have been shown one interest rate on the documents you signed, but the interest rate you are actually being charged could be quite different.

Junk Charges

A junk charge is any charge that has no legitimate basis or does not add anything of value to the processing of your loan documents. For example, on top of charging you a document recording fee for recording your new Deed of Trust at the County Recorder’s Office, your broker also charges you a document filing fee. Such a fee only serves to further line your broker’s pocket and adds no value to your transaction.

Undisclosed Broker or Loan Officer Compensation

Especially in the case of subprime loans, many brokers received compensation in the form of yield spread premiums, which means that they were compensated a percentage of the loan amount for originating a higher interest loan.  As of this writing, yield spread premiums are not in and of themselves illegal as long as they are disclosed to the borrower. Most brokers did not disclose their yield spread premium compensation.

The first step in getting a loan audit is to gather your loan paperwork together. If you don’t have it, you can sent a Qualified Written Request to your servicer requesting copies of your loan documents. Your servicer must acknowledge receipt of your Qualified Written Request within 20 business days of its receipt and must correct any errors within 60 business days.

Once you have your documents, you can hire a loan auditing company to look them over for violations. If any are found, and unless you’re one of the lucky 10% whose loan documents are pristine, you will have an excellent bargaining chip to use against your servicer when negotiating a loan modification.

Pennsylvania Helps Unemployed Homeowners Avoid Foreclosure

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In the midst of the foreclosure crisis that has swept all across America, one state has in place a program that has been helping families stay in their homes since its passage in 1983.  The state is Pennsylvania, and according to this article,  the program prevented foreclosure for 3,250 families last year. 

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