In Uncategorized on August 6, 2012 at 11:28 pm
As this housing and foreclosure crisis drags on, I know that a lot of people are desperate to get help with their mortgage. Of course there are assistance programs out there that lower people’s mortgage payments, such as the government’s Making Home Affordable loan modification program, but who gets accepted into them is a decision made on a case by case basis by each mortgage company. One policy that some mortgage companies have, or they tell people they have, is that they only modify loans that are past due. And I know that a lot of times mortgage company employees will instruct a homeowner to miss a payment or three so they can be eligible to get help.
For a lot of people, the possibility of a lower house payment can be a big temptation to intentionally fall behind on their mortgage even if there is money to make the payment.
Don’t do it.
For example, I spoke to a man named Rich who was told exactly this by his mortgage company. So, Rich did what the person at his mortgage company told him to do. He stopped paying his mortgage for three months, then he called and told them he’d like to have his loan modification now. You know what happened? He didn’t get a loan modification. His house went into foreclosure.
Rich was irate when he called me up.
“I just did what they told me I had to do if I wanted a lower payment,” he said. “Then they put me in foreclosure for it? What the hell kind of scam is this they’re running?”
You would not believe how often I encounter this. It’s incredibly common. When a client asks me if they should stop paying their mortgage in the hopes of qualifying for assistance, I always give the same answer: “Not if you want to keep your house.”
There is nothing in the government’s housing program that says borrowers must be behind on payments to be eligible for the program. And yet I’ve heard employees at mortgage companies say to my clients that that is the case. I don’t know why they tell people this. Maybe they’re misinformed. Maybe they’re crazy.
But if you’re somebody like Rich who was told by their mortgage company to skip a payment in order to get help, don’t do it.
Not if you want to keep your house.
In Scams, Uncategorized on June 21, 2012 at 9:41 pm
Today I want to talk about one of the oldest scams in the book. It’s called a bait-and-switch. Basically what happens is, the victim is offered a great deal, but when it comes time to sign on the dotted line, the deal has changed. This is what happened to one of my clients, a contractor from New York named John.
John had a nice low interest mortgage, but he wanted to add an addition on to his home, which he could rent out for some extra income. He was a building contractor and planned to do the work himself. So far, so good. But it was still a costly project in materials alone, so he refinanced his house to its full market value, borrowing an extra $40,000 above what he owed on his current loan to pay for the project, borrowing a total of $245,000.
“The brokers I was dealing with were offering a fixed rate 5 percent loan,” John said. “The day before we were set to close, a broker from the company called to reschedule it. They had me go to their office at midnight to sign the papers.”
Now, let me just pause the story, and say that if a business deal needs to be consummated at midnight, it’s probably not a good sign. Let’s continue.
“John, who was this company that was doing business at midnight?” I asked him.
“I had only spoken to them over the phone. When I showed up at midnight, their office was in a storefront in a seedy part of town. Then they told me they couldn’t get me the fixed rate mortgage; they could only get me an adjustable rate mortgage. I was all set to start work on the addition, and I even ordered some of the materials so I went through with it.”
Now, three years later, his payments have doubled because of the screwy loan terms. With his own contracting business not doing well, he is probably going to lose the house.
“I should have known better,” he said. “It’s my fault.”
That one really made me think. This guy was a building contractor from Brooklyn. And he wasn’t streetsmart enough to walk away from a mortgage loan being made at midnight, in a storefront with the terms changed at the last minute?
Now, forget the fact it was midnight in a seedy part of town. Anytime, and I mean anytime, you find the terms of a potential business transaction being changed on you at the last minute, back out of the deal. Do not fall for the old bait-and-switch.
In Housing Horror Stories on June 18, 2012 at 10:59 pm
In my line of work counseling homeowners who are trying to get help from their mortgage companies, I hear a lot of crazy stories from people who believe their mortgage company intentionally jerks them around–losing documents, giving them wrong information, things like that. I mean, some of what people tell me borders on conspiracy theory type of stuff. It’s nuts.
My personal favorite is how the fax machines at mortgage companies never work. You wouldn’t believe how often I hear a mortgage company employee tell their customer to resend documents because the fax machine was on the fritz. The people who work at the mortgage companies must beat the hell out of their fax machines.
I thought I’d heard it all. But recently a client of mine named Janice told me a new one. Janice told me how a specific person at her mortgage company was assigned to handle her loan modification application, and nobody else at the mortgage company was allowed to speak to her about her situation. The problem was, this particular employee could never be reached and rarely returned Janice’s phone calls. Now this is another one I hear all the time. But her story got weird when Janice told me that whenever her file manager did call her, her phone wouldn’t ring. She would simply find a voicemail from the person.
“It happens all the time,” she told me. “I’m convinced they’ve got some technology that allows them to make a call and have it go right to your voicemail.”
My obvious question to her was, Isn’t it possible you were away from your phone or on the other line when the file manager called?
No, it wasn’t, Janice said.
“This has happened a lot. It just happened again yesterday,” she said. “I was home all day. There were no messages, then at some point I noticed the light on the phone flashing which means I have a message. I played it and sure enough, it was from the file manager.”
I asked her, Isn’t it possible you were talking on the phone when they called?
“I have call waiting,” Janice said. “Why does my call waiting work for everyone else? Why does my phone ring for everyone else except my mortgage company?”
In Uncategorized on June 14, 2012 at 11:32 pm
LEGITIMATE SOUNDING COMPANIES AND ACTUAL LAW FIRMS ARE SCAMMING PEOPLE DESPERATE TO QUALIFY FOR A LOAN MODIFICATION
In case you’ve been living on Jupiter for the past four years, a lot of people in America have been losing their homes to foreclosure. And the government has trotted out a bunch of programs to help people save their home. If you’ve read much of this blog of mine, you know that a lot of the stories I write about are the nightmares that people go through trying to qualify for these government programs.
Well, a whole cottage industry of scams has sprung up because of this foreclosure mess. A whole array of degenerate con artists is out there preying on people desperate to get accepted into the government’s housing assistance programs. And I talk to people all the time who’ve handed over their hard-earned money to these creeps who make people believe that they can make that happen.
So, if you have applied for a mortgage-assistance program through your mortgage company, or if you’re thinking about doing so, please, for the love of God, remember this one thing: Nobody can influence the mortgage company’s decision about whether or not to help you, no matter how much you pay them.
Now let me give a run down on how these scams work. A lot of them are operated by lawyers and law firms. Big surprise there, right? Others are operated by “loan modification companies,” or “loan modification experts.” Here’s their basic hook: They tell people that because they are lawyers, or because they are experts, they can negotiate with the mortgage company. Sometimes they’ll promise to get a house payment lowered, or sometimes they’ll just say, “Hey, you know you can’t afford your mortgage, so what have you got to lose by hiring us?”
I’ll tell you what the homeowner loses every time–the hundreds or the thousands of dollars these bums charge.
See, here’s why these lawyers and experts can’t help. The mortgage company works for the entity that owns the mortgage. That entity is called the mortgage investor. The mortgage debt is owed to the investor, and it’s the investor who tells the mortgage company the criteria for putting homeowners into these housing programs. The mortgage company doesn’t just pick people’s names out of a hat like they’re raffling off Christmas turkeys. I mean, we’re talking about hundreds of thousands of dollars at stake here.
But because the application process to get help can be such a nightmare, many homeowners feel powerless and desperate. And it’s that desperation the con artists prey on. A lot of these vultures will run very legitimate-looking advertisements. Still others solicit to homeowners directly. However you might run across them, just remember, if all it takes to save your house is a few hundred or a few thousand bucks, then why are the foreclosure rates the highest they’ve been since the Great Depression?
In Housing Horror Stories on June 8, 2012 at 12:13 am
I’ve written a lot about the trials and tribulations of people desperate to get accepted into the government’s housing program in order to have their mortgage payment reduced, and hopefully, be able to keep their home. I’ve tried to illustrate the craziness and the frustration that many people deal with as they navigate their mortgage company’s application processes, which frankly, could drive a person nuts.
Well, today I spoke to a lady who was sobbing because she was denied entry into a program that would have helped her get rid of her house. See, the government has another program called the Home Affordable Foreclosure Alternative. What this does, is it streamlines the process for people who want to give up their house through a short sale. In addition to making the sale go through a lot quicker, the homeowner gets $3,000 for relocation expenses.
This woman, Carla, saw a huge drop in her income, I’m talking 60 percent, and she knew there was no way she was going to be able keep up with her house payments. So she approached her mortgage company about short selling the house. And they told her they would put her in this HAFA program and give her the $3,000 to move. To Carla, this was the answer to all her prayers, because she had nothing to pay for a move and a security deposit on a rental. So Carla got herself a realtor and began packing. A buyer was found, and the closing date for the sale was set.
Well, three days before the closing, her mortgage company told Carla that she was not approved for HAFA after all, and she would not be getting the three big ones. And this poor woman was scheduled to be out of the house within days after the closing. So here it was a week before she had to move and give a check to her new landlord, and the money she was banking on to pay for it all wasn’t going to be there. And now she was on the phone sobbing to me.
We called the mortgage company and were told that the investor who held her loan did not participate with the HAFA program, even though five months earlier she was told that yes, the investor does participate in HAFA and she was approved for it.
“Let me ask you something,” I said to the mortgage company phone rep. “Why did you tell this lady months ago she was approved for this program, if the investor you work for doesn’t even participate in it?”
You know what the guy answered me? He said, “I don’t know.”
“Well, she can’t move without that money, which your company told her she would be getting. And she needs to be out of the house in a week. Why wasn’t she notified earlier than three days before closing that she’s not approved for this? Do you know the answer to that?”
Of course he didn’t.
My advice to Carla was to call off the sale, and let the bank foreclose. That would take a while, and in the meantime she would hopefully save up the money to move.
That’s why I always tell my clients, don’t bank on anything a mortgage company says. As you can see, the people giving out the information don’t even know what’s going.
In Uncategorized on June 4, 2012 at 10:46 pm
Today I’d like to ask a rhetorical type of question: Would you refuse to allow somebody who owes you money to pay you back? I don’t know if this exactly constitutes a rhetorical question, but it’s kind of a nutty question, because who in their right mind doesn’t want to get their money paid back to them?
The answer is, a mortgage company.
Here’s why I bring it up: I got a phone call from a distraught woman in Florida named Carmen. Carmen missed two house payments because of some trouble her kid got into. Without going into the gritty details, what happened was Carmen had to take the money that should have paid her monthly mortgage, and give it to a lawyer to keep her kid out of jail.
With the lawyer retained, Carmen called her mortgage company to get things straight with the payments. The mortgage company told Carmen she would need to pay a little extra each month until the loan was current, and that she would be assigned a specific contact person who would take her payments over the phone. This contact person, Carmen was told, would be the only person who could accept the payment from her. They gave the contact person’s name and phone number to Carmen, and that, they told her, was that.
Except that wasn’t that. For a month, Carmen had been calling the phone number of her contact to make the payment, but each time, it went to the person’s voicemail. Carmen left countless messages saying she wanted to make a payment, but in a month this person never returned her many calls. And of course after two weeks a late fee was assessed, and now her mortgage was in danger of going three months past due. By this point, Carmen was frantic.
“I’ve called this person a hundred times,” she cried to me. “And if I call any other number and speak to anybody else, they tell me they can’t take my payment; only this specific person can.
“It’s like they want me to go farther behind so they can take my house.”
Maybe the question wasn’t rhetorical after all.
In Uncategorized on May 18, 2012 at 11:54 pm
How’s this for a housing horror story: Imagine you’re living your life, things are all hunky-dory, and then one day you come home from work to find a foreclosure notice on your front door. When you call your mortgage servicing company, they tell you that your mortgage is six payments behind, you owe them a ton of money, and they’ve begun foreclosure proceedings to sell the house. And as far as you know, you’ve been making your payments every month like clockwork.
This is what happened to a man named Tim, who called me after pulling his hair out dealing with the mortgage company for a month..
“I called the bank when I got their notice, and they said it’s no mistake, somehow my loan is behind and they want to foreclose. How can this be?”
Tim swore he had never missed a house payment, and had never been notified by the servicer that his loan was past due. Which is odd, because usually if you miss a payment on a debt, that creditor is going to hound you night and day about it.
Now, if Tim had made all the payments, this should have been fairly easy to prove. But the problem was this: Tim had his house payment automatically deducted from his bank account electronically every month. And the bank that had his checking account, which Tim’s house payments came from, was the same bank that serviced the mortgage. Some of the missed payments were from over three years ago, and they told Tim that yes, they could research the bank account to check on whether the payments had come out, but because the dates in question were so far in the past, it would take them several months to do the research. Meanwhile, the bank planned to auction the house in the next month.
“This is a nightmare,” Tim said.
That was putting it mildly.
In Housing Horror Stories on May 8, 2012 at 8:07 pm
Ocwen admits mistake; refuses to correct it
Don’t you hate it when somebody makes a mistake, and then they refuse to correct it? Of all the ways to demonstrate you have no class, that has to be on top of the list.
That’s what Ocwen Loan Servicing did to one of my clients recently. My client, Tom, saw his business slow way down, and he couldn’t afford to pay his mortgage for five months. Lucky for him, Tom’s business bounced back relatively quickly, and his income was back to where he could afford his monthly mortgage note, plus extra to pay back the past due amount he owed.
The problem, and the reason Tom called me, was because Ocwen refused to accept any payments from him. They wouldn’t even allow him to pay extra to bring his mortgage current. Ocwen was demanding the entire past due amount of several thousand dollars, or nothing at all. And the reason they wouldn’t accept payments, an Ocwen employee had told him, was because his financial information had been entered into their system incorrectly.
Being self-employed, Tom had been required to submit a profit/loss statement for his income. The Ocwen employee told Tom that someone inaccurately entered his income as $16,000 per month. In reality Tom only made $4,500 per month. The P/L statement covered three months, but the employee who took his information thought it only covered one month. Thinking Tom made all that money, Ocwen refused to let him pay back the arrears little by little, which makes sense; I’d demand all my money back too if the guy who owed me was rolling in dough.
But here’s the thing that made me want to punch a hole in my cubicle. That wasn’t the case. Tom didn’t make sixteen grand a month. The person who took his information just made a mistake reading his statement. And even though they acknowledged the mistake, this company was refusing to correct it.
We called Ocwen to see if they would be reasonable. The conversation that followed was enough to make you question the future of the human race. The representative on the phone told us that yes, Ocwen did misinterpret Tom’s income when his information was received, but afterward Ocwen had implemented a policy not allowing repayment plans for anybody.
“But sir,” I began. “You had his information before your new policy went into effect, and you made your decision to deny him a repayment plan based on a mistake you acknowledge your company made. How can you not address and correct your mistake?”
The rep simply told us nothing could be done. So we tried to work our way up the managerial chain, speaking to a supervisor, and then a manager. As we got higher up the chain, each person seemed to understand the situation less than the one before. Also, the foreign accents got thicker with each successive person. The last person we talked to, the manager, told us that not only would they not accept payments, they were going to start foreclosure unless Tom paid the entire back due amount..
“My God,” I said. “If you order a pizza with pepperoni, but they give you anchovies, they take it back and give you a new one with the right stuff on it. How can you foreclose on this man’s house, after you made a mistake with his file? Especially since he has enough money now to pay back the arrears he owes. He’s not looking for a handout.”
But the manager just repeated that foreclosure would begin in two weeks. I advised Tom call a bankruptcy attorney to see if that would stop the sale of his home, which Ocwen seemed set on doing.
In Uncategorized on April 3, 2012 at 12:33 am
New program rules allow mortgages with lender-paid mortgage insurance to be included in program
I hate giving people bad news. I field a lot of questions from people desperate to qualify for help with their mortgage, and often I have to explain that for this reason or that, they don’t meet certain eligibility requirements for different housing assistance programs. The dejection in their voice is heartbreaking. It’s enough to make me keep a bottle of Jack Daniels in my desk drawer.
But happily, the government has rewritten one of their mortgage assistance programs, and taken out one requirement that has been the cause of a lot of heartbreak.
Under the Home Affordable Refinance Program, people can refinance their home even though they owe more on their mortgage than the home is worth, because the government gives incentive money to the lender to do the refinance. Without the incentive money, no lender in their right mind would take on collateral worth less than what they’re loaning out to refinance the collateral.
There are a few different eligibility criteria for this program, and until now, one requirement stated that any mortgage with lender-paid mortgage insurance would not qualify for HARP. Talk about a heartbreaker. Most people who get a mortgage that requires insurance aren’t given the choice of who pays it.
But that HARP requirement has been done away with. Hopefully this will keep me from going into that desk drawer so often.