Archive | January, 2009

$8.4 Billion Countrywide Settlement… and why they only lower the interest!

31 Jan

I have gotten a number of calls asking if the home ownership retention program announced by Bank of America is likely to have an impact on foreclosures in CA. This program is a settlement with the CA Attorney General, Jerry Brown, and other state attorney generals that were suing Countrywide / Bank of America for predatory lending practices. It is expected to provide up to $8.4 Billion to 400,000 borrowers nationwide, with $3.5 Billion to 125,000 borrowers in CA.

While $8.4 Billion is a huge number – roughly 7.75% of BAC’s market cap today – it is literally a laughable amount. Problem is that it equals only $28,000 per loan in California. I compared that number to the average amount a California homeowner is upside down at the time of foreclosure – the average total debt is $26,200 more than they originally borrowed.(all that negative amortization) So in the best case scenario this puts borrowers back where they started, in loans they fundamentally can’t afford.So really it is nothing. The best thing is that it is admission of fault that could be used in individual cases against the lender in an individual action.

Note that they clearly state that principal balance reduction will only be available on a limited basis to restore negative equity from pay option ARMs – which makes sense given that they really don’t have enough money to do much more. Instead the primary goal is to ensure “modifications are affordable”. Given that they simply don’t have the money to lower principal balances to affordable levels, that means more artificially low payments… the exact thing that got us into this problem in the first place.

So back to the original question, will it likely impact foreclosures? Sort of, but only temporarily. It could impact your foreclosure if you were to copy the complaint and file your own case against countrywide at least you would not get a demur to the complaint. I posted the text of the complaint on Dec 31, 2008 California and everybody else V Countrywidecountrywide-complaint-form

They have graciously committed to not pursue foreclosure until they have contacted the owner and made a decision on program eligibility. So it appears to impact foreclosures, except that the recently passed SB1137 re codified as civil code 2923.5 and 2923.6 required them to do that anyway – so this claim is little more than spin.

Since this completely fails to address the underlying problem of the original loan amounts often exceeding current market value by $100k or more I’d also say the impact will only be temporary. Though that may still be a long time. In one case I recently reviewed Countrywide had a loan balance of over $900k on a home worth $550k – they modified the payment to 2% interest only for 5 years. The homeowner can afford it for now, but what happens in 5 years? Your’e kidding yourself if you think values are going back to those levels that quickly. Do we really still want to be cleaning this mess up 5 years from now?

Bottom line, Jerry Brown and the other state’s attorney generals have given Bank of America a gift. The opportunity to avoid litigation while getting the state’s endorsement for a plan that will never work and buying them precious time to find a way out of their dire predicament. Like the bailouts it’s possible it may help save this financial institution, but it will only delay our return to a stable and healthy real estate market.

Make them stop CALLING !!!

25 Jan

If you are in debt and getting harassed by bill collectors, there is a way to help get the debt collector harassment calls to stop. You can send a copy of the letter found below filled out to the collector notifying them of your wish for them to terminate communications with you. This is option is available to you under the Fair Debt Collections Practices Act under 15 U.S.C. Sec. 1692c (FDCPA).

Under the FDCPA, if a consumer notifies a debt collector in writing that the consumer refuses to pay a bill or that the consumer wants the collection agency to cease from further communication with the consumer the bill collector can no longer communicate with the consumer except for the following cases:

1. To notify the consumer (debtor) that the bill collector or collection agency may invoke specified remedies which are ordinarily invoked by such a bill collector or credit agency. These include wage garnishment or lawsuit.

2. To let the debtor know that future attempts to collect the debt will be ended.

3. Only where applicable, to let the debtor know that the bill collector intends to invoke a certain remedy. If the consumer cease and desist notice is done by mail, it shall be complete upon receipt of the creditor (hint: send the letter by certified mail).

Once you hire an attorney all calls from the bill collector must be directed to the attorney. By the statutes of the FDCPA or Fair Debt Collection Practices Act, the collector must follow these rules. If you do get a call from a bill collector just let them know that you have retained an attorney to handle the debt for you. Let them know to contact that attorney.

Most collection agencies will back off at this point and just call the attorney. If they do continue to call you, the creditor would potentially be subject to a $1,000 fine for violating the FDCPA. The creditors know this and probably will follow the proper rules.

Sample Cease and Desist Letter
Below, you will find an example of a Cease and Desist Letter to mail to a bill collector. Copy and paste into a word processor to edit it. Make sure that you change it according to your personal information. Then mail it certified mail so that the bill collector gets it and it is acknowledged by a received signature.

* Date: ________

(Your name)
(Your Address)

(Name(s) on the credit account)
(Account #)
(Creditor name)

To: (Collection Department, Creditor, Bill Collector – whichever applies)

Since approximately (date when you got the first call), I have received many phone calls and letters from you concerning my overdue account with the above-named creditor.

Accordingly, under 15 U.S.C. Sec. 1692c of the Fair Debt Collection Practices Act, this is my formal notice to you to cease and desist all further communications with me.


(Sign it)

(Print Full Name)
(Full Address)
(Home phone)

The Doan deal

25 Jan

California Civil Code 2923.6 enforces and promotes loan modifications to stop foreclosure in the state. California Civil Code 2923.6 (Servicer’s Duty under Pooling Agreements) went into effect on July 8, 2008. It applies to all loans from January 1, 2003, to December 31, 2007 secured by residential real property for owner-occupied residences.

The new law states that servicing agents for loan pools owe a duty to all parties in the pool so that a workout or modification is in the best interests of the parties if the loan is in default or default is reasonably foreseeable, and the recovery on the workout exceeds the anticipated recovery through a California foreclosure based on the current value of the property.

Almost all residential mortgages have Pooling and Servicing Agreements (“PSA”) since they were transferred to various Mortgage Backed Security Trusts after origination. California Civil Code 2823.6 broadens and extends this PSA duty by requiring servicers to accept loan modifications with borrowers.

How does this law apply?

Attorney Michael Doan provides this example of how the new law applies in his article entitled “California Foreclosures: Lenders Must Accept Loan Modifications” on the Mortgage Law Network blog. We removed the borrower’s name from the example for the sake of privacy.

A California borrower’s loan is presently in danger of foreclosure. The house he bought 2 years ago for $800,000 with a $640,000 first and $140,000 second, has now plummeted in value to $375,000. The borrower can no longer afford the $9,000 per month mortgage payment. But, he is willing, able, and ready to execute a modification of his loan on the following terms:

a) New Loan Amount: $330,000.00

b) New Interest Rate: 6% fixed

c) New Loan Length: 30 years

d) New Payment: $1978.52

While this new loan amount of $330,000 is less than the current fair market value, the costs of foreclosure need to be taken into account. Foreclosures typically cost the lender $50,000 per foreclosure. For example, the Joint Economic Committee of Congress estimated in June, 2007, that the average foreclosure results in $77.935.00 in costs to the homeowner, lender, local government, and neighbors. Of the $77,935.00 in foreclosure costs, the Joint Economic Committee of Congress estimates that the lender will suffer $50,000.00 in costs in conducting a non-judicial foreclosure on the property, maintaining, rehabilitating, insuring, and reselling the property to a third party. Freddie Mac places this loss higher at $58,759.00.

Accordingly, the anticipated recovery through foreclosure on a net present value basis is $325,000.00 or less and the recovery under the proposed loan modification at $330,000.00 exceeds the net present recovery through foreclosure of $325,000.00 by over $5,000.00. Thus, California Civil Code 2823.6 would mandate a modification to the new terms.

This new law remains in effect until January 1, 2013. Restructuring your mortgage will stop foreclosure and lower mortgage payments. Depending on your circumstances, you may also be able to lower your interest rate, as well. Visit the “Get Started” page to find out if you can benefit from this new California law and avoid foreclosure.

I HAVE A PLAN If the foreclosure has occured and you are now facing Eviction I HAVE A PLAN

25 Jan

The next thing you can expect is a knock on your door. It will be the friendliest guy or gal that you would ever want to meet. Its the real estate agent with orders to get you out of the house. They may offer you cash for keys or whatever remember they are not your friend they have one purpose and one purpose only. TO GET YOU AND YOUR FAMILY OUT.
They may say things like don’t worry we can get you back in the house and you can buy it back. I had one Realtor promise that the people could buy back the house they just needed to move out over the weekend and the lender would work things out for them. They did only to find the Marshall had posted the house and nobody could get back in except a 3 hour period to get their stuff to the curb. Don’t let it happen to you.

In California tenants have 60 days and former owners 3 days before an eviction can be stated.

Step 1 send the party that gives you this notice a rental agreement showing someone as being a tenant in the house. (This will get you Sixty days)

Step 2 File a lawsuit for fraud and improper sale in that 2923.5 was not complied with prior to sale. sample-bank-final-complaint1
Step 3 File a Lis Pendenslisp-for-client

Step 4 Make motion to consolidate eviction with Superior court case.galejacksonconsolidation Alternative to Step 4 would be to apply for a temporary restraining order to hold the eviction till Fraud Case determined. Alternative to step 4 actually a Step 5 would be a motion in the unlawful detainer court for a stay of the judgment till the outcome of the Fraud case.

What will this do?

In the worst case it will keep you in your house and you may have to post a bond equaling the reasonable rental value of your house. Let me take that back just remember Judges have the power and the can disregard the law and the constitution and put you out without even a trial. This is the extreme and some days are extreme. The lenders lawyers are in front of that judge all the time, but as a whole you can expect a fair minded judge.

In the best case you could be in your house without having to post a bond and you will be offered the house back at today’s value and a low rate of interest.

San Marcos California Foreclosure mess thier Modification department is outsourced to India

25 Jan

by nowaq
(san marcos ca usa)

My mortgage is being service by Option One Mortgage co. It started with 6.14% and first reset 1-01-07 to 9.14%. I was behind on my payment on the first resetting I called Option to make arrangement payment but I was told that I’m not qualified bec. I’ve been late a month only and loan mod. is only for people who are behind for more than 2 mos. In my situation, a mortgage of $3655 plus a second mortgage loan of $378 is hard to come up with for 2 mos. Third mo. came I called again asking for loan modification but this time, I was dealing with people from India telling me to sell my house because I can’t afford it. I explained to him whats going on my side and requested to talk mitigation officer but this person said that he is the mitigation officer. I hung up on him. I received a notice of default after that. I have a sheriff sale on 8-07-07 but filed Bk 13 so I can keep my house and hoping that things will get better soon and be on track again. Don’t deal with sales rep. from other countries. Demand to talk with US reps that at least know whats going on here. Maybe if I was dealing with US reps. I was able to do loan mod. and not to go thru this foreclosure and BK. I’m hoping also that these mortgage cos. learned their lesson of not using sales reps from other countries. My situation was doable at the beginning but once past 2 mos. My loan reset again last 7-01-07 to 11.14% and by 1-01-08 it will be 13.14%. Also, if you have hard time paying with your credit card bills, don’t use debt settlement cos. The only time they can start negotiating for you is when you are in collection, they wont tell you up front. They will only tell you that it has to be bad in order to get better.

My plan for Loan Modifications i.e. Attorney loan mod

25 Jan

Recent Loan Modification studies have shown that a large percentage of traditional loan modifications put the borrowers more upside down than when they started.
Unfortunately many loan mods are leaving people with higher monthly payments. In many loan modifcation the money you did not pay gets tacked on to the back of the loan… Increasing your loan balance and making you more upside down. This is why over 50% of all loan mods are in default. They are not fixing the problem they are just postponing it.

Before you go into default on your loans at the advice of some former subprime loan seller, make sure you understand that absent finding some legal leverage over the lender you have a good chance of seeing your payments going up.

Our Loan Modification program includes

1. Upside Down Analysis

2. Qualified Written Request and offer of Loan Modification

3. Letter informing lender of clients election to pursue remedies carved out by recent California Law under 2923.6 and or Federal Programs under the Truth in lending Act and the Fair Debt collection practices Act.

4. Letter Disputing debt (if advisable)

5. Cease and Desist letters (if advisable)

6. Follow up, contact with negotiator, and negotiation by an attorney when needed.
By now many of you have read about all the Federal Governments Loan Modification Programs. Others have been cold called by a former loan brokers offering to help you with your Loan Modification. Its odd that many of the brokers who put people into these miserable loans are now charging people up front to get out of the them.

Before you spend thousands of dollars with someone, do an investigation:

1. Is the person licensed by the California Department of Real Estate? Or, the California State Bar?

2. Are your potential representatives aware that have to be licensed according to the DRE?

3. Are they asking you for money up front? They are violating the California Foreclosure Consultant act if they are neither CA attorneys nor perhaps Real Estate brokers in possesion of a no opinion letter from the California Department of Real Estate? Note… if a Notice of Default has been filed against your residence only attorneys acting as your attorney can take up front fees. Don’t fall for “attorney backed” baloney. Are you retaining the services of the attorney or not? Did you sign a retainer agreement ?

4. If your potential representative is not an attorney make sure he or she is a Real Estate Broker capable of proving their upfront retainer agreement has been given a no opinon letter by the DRE. (As of November 2008 – only 14 non attorney entites have been “approved by the DRE.)

5. If somone says they are attorney backed – ask to speak with the attorney. What does attorney backed mean? From what we have seen it is usually a junk marketing business being run by someone who can not get a proper license to do loan modifications.

6. Find out how your loan modification people intend to gain leverage over the lender.

7. If you are offered a loan audit or a Qualfied Written Request under RESPA letter – will an attorney be doing the negotiating against the lender? Will you have to hire the attorney after you pay for your loan audit? Doesn’t that put cart before the horse?

8. Will it do you any good to have a loan audit done if you later have to go out and retain an attorney. You want to retain their services of an attorney before you pay for the audit. The loan audit is the profit center; negotiation takes time.
9. What kind of results should you expect?

10. Who will be doing your negotiating?

11. Will the Loan Modification request go out on Legal Letterhead?

12. How much will you have to pay? Are you looking for a typical loan mod result or are you looking to leverage the law in the hopes of getting a better than average loan mod result.

13. What if your are not satisfied with the loan modification offered by the lender?

14. Should you go into default on both loans prior to requesting a loan modification? Why? What happens if the loan mod does not work out to your satisfaction? (very important question.)

15. Will an attorney review the terms of your loan modification with you? Will you have to waive your anti-deficiency protections if you sign your loan modification paperwork? Will an attorney help you leverage recent changes in California law in an attempt to get a substantial reduction in the principle?

TRO Granted v Downey Savings

23 Jan


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