Posts Tagged ‘Mortgages’

Don’t Miss a House Payment in Hopes of Getting a Loan Modification

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.

Looking for a Loan Modification? Don’t Sweat the Numbers

In Uncategorized on July 19, 2012 at 9:26 pm

Every day I speak to homeowners who are applying to their mortgage company for a loan modification in order to reduce their mortgage payment. And many of them are losing sleep over something that may not even play that big a role in whether they get the modification–their budget numbers.
As part of the application process for a loan modification, mortgage companies require the applicant to submit a list of their income and their various expenses. I’m talking to a lot of people who are driving themselves crazy worrying about what they think these mortgage companies expect their income and expense numbers to look like.
People ask me all the time, “Is my income too high?” and “Am I spending too much on this or that expense?”
They get all wrapped up in worrying that their budget numbers they submit will disqualify them from getting the loan modification they are so desperate for. And I tell them the same thing: Don’t worry about it.
A person’s income and expenses are only one small factor that a mortgage company considers when reviewing applicants for assistance. There are a million other things they look at. For example, the mortgage company will also consider the type of mortgage it is, the value of the property, and the applicant’s credit history. Another factor is the amount of money the government will give them for putting someone in the Treasury Department’s Making Home Affordable program. And of course whenever real estate is concerned, location location, location plays a big role.
And remember, the mortgage company just services the mortgage. That’s why they’re called mortgage servicers. They’re just debt collectors who must follow the policies set by the investor who is actually owed the mortgage debt and who pays the mortgage company for their work. These investors all have different policies concerning who they want to give modifications too. And you usually don’t know who the investor is, much less what their policies are.
But here’s the biggest factor by far that determines who gets a loan modification: That is whether the mortgage company believes they’ll make more money if they modify the loan. If they think they’ll make more money modifying the loan, they do it. If not, they don’t. It’s that simple.
I don’t know why people worry so much about the budget numbers they submit. I guess it’s because it’s one of the few things in the application process they do have control over.
I’ve talked to people who were perfect candidates to have their payment reduced but got turned away. And I’ve talked to people who couldn’t afford their house with 10 loan modifications, yet they were approved. I’ve detailed a few these situations in the following page:’s-75-billion-housing-program-and-why-it’s-not-working/
Take a read, and do yourself a favor and try not to guess what some faceless analyst thinks of how much you spend on toilet paper.

Homeowner Convinced her Mortgage Company using Secret Phone Technology to Avoid her

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?”

Mortgage Company Refuses to Accept Monthly Payments

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.

Know what you CAN’T afford

In Lesson of the Day on September 8, 2010 at 9:23 pm

Banks still giving out mortgages that will never be paid back 

  Scott from Georgia called in because he was having to borrow money from his parents every month to make his house payment. Scott was 26 years old, and he brought home $1,800 per month in income. He had just bought this home a year earlier, and his monthly mortgage payments were $900. Half his income went right to the mortgage! Anybody is going to struggle when half their income goes right to a house payment. Plus you’ve got to pay utilitites, plus whatever it costs when something breaks.
 “I don’t know Scott, without a roommate or a big raise, it just doesn’t seem like you can afford this mortgage,” I said. “The house payment is half of your income. Did they know how much you made when you got the loan?”
 “Sure, I had to submit my pay stubs and tax returns,” he said. “I was pretty shocked when they said I qualified.”
“If it were thirty years ago, you probably wouldn’t have,” I said.
  As soon as he bought the house he began to have money problems. That’s because Scott’s salary simply didn’t afford him $900 a month for housing. He needed a house or rent payment that was closer to $600. And now his parents were getting tired of giving him hundreds of dollars every month to pay his bills.
 “Unless you can get more money coming in, you should probably talk to the bank about letting go of the house,” I said.
  Scott got his loan in the fall of 2008. By that time the default rate on mortgages had been climbing steadily and we were on the brink of economic meltdown. Maybe those bank executives whose bank lended Scott the money simply don’t read newspapers? Doubtful. More likely, the bank that loaned him the money turned around and immediately sold the debt for a profit, which is how the mortgage industry now functions.
  So keep that in mind if you are in the market for a mortgage. Don’t let some loan officer or broker tell you what you can afford. Know yourself what you can afford so that you don’t end up in a situation like Scott’s.

Do you know who you work for? Aurora Loan Servicing doesn’t

In Housing Horror Stories on August 26, 2010 at 8:20 pm

Customer service rep swears they have no idea who owns their borrower’s loan

  If someone asked you who you work for, can you imagine their reaction if you told them you didn’t know? They’d probably think you were a spy or something.
  Apparently, Aurora Loan Servicing literally doesn’t know who they work for. The function of a mortgage servicing company like Aurora is to collect mortgage payments from homeowners for the investor to whom the mortgage debt is actually owed. And the servicer gets a fee for performing this function.
  Today I tried to facilitate some kind of workout option between Aurora and a borrower who was in default on his mortgage, due to being laid off from work for four months. Unfortunately, we didn’t have any luck, though we did have a remarkable conversation.
  The representative who answered our phone call told us that there was something about this particular mortgage that precluded it from any kind of repayment plan or workout agreement.
  We asked what it was about the mortgage, or what the investor’s guidelines were. She said she did not know. That was when the borrower asked who the investor of his mortgage was. That was when it got weird.
  “We don’t know who owns it,” the representative said.
  “Wait a second. How can you not know who owns this mortgage?” I asked. “You just collect this man’s payment and you give it to the owner of the debt. You work for the owner of this debt. Are you telling me you don’t know who you work for and who you give his money to?”
  “We don’t know who owns it,” she repeated.
  “Look, if you’re not authorized to disclose the owner of the mortgage, that’s fine, just say it. But you have to know who you’re collecting money for.”
  “We don’t know who owns it,” she repeated for about the fifth time.

What to Expect from a Lender

In Housing Horror Stories on July 24, 2010 at 1:02 am
Half million dollar house in Salinas, Californ...

Image via Wikipedia


13 payments from paying off their mortgage, this unemployed couple are in danger of losing their home

  Many of my clients think that because they have paid on time in the past, their creditors will be lenient with them. Usually they won’t.
  You could pay on a 30-year mortgage for 29 years, never be a day late with a payment, and if you suddenly stop making that payment, they’ll foreclose to get that last year’s money they’re owed. And they’ll charge you all the normal attornies’ fees, late fees, and penalties in the process. 
  One of my clients actually was in this exact same predicament. His name was Jose, and this man had only 13 payments to make before his home would be paid off. But Jose worked in construction and as you may know, that industry has been at a standstill for almost two years. Jose hadn’t worked in a year and a half, and he’d missed six house payments by the time he called us. Now, the bank was moving to foreclose, and they were moving quickly. The home was scheduled to be sold at auction in the next month.
  Jose’s unemployment benefits had stopped, and his wife didn’t make much at her job. The $6,000 they’d had in savings was long gone. Theirs was a 15-year mortgage, so the monthly payments were rather high–$1,500 per month. They’d moved here from Mexico thirty years ago, and they’d saved a lot of money by the time they bought the house in 1996. Jose made pretty good money doing construction, so they opted for the shorter term mortgage with a big down payment in order to pay off the house more quickly. If it weren’t for all the foreclosure costs and penalty fees, they would only have owed about $20,000 on the house. It was due to paid off in mid-2011. But all the costs associated with the bank’s foreclosure action came to another $5,000. They were so close to owning their house outright, but because Jose couldn’t find another job, they were in real danger of losing their home and their investment.
  The reinstatement amount–legalese meaning the cost to stop foreclosure and bring the loan current–was about $26,000, due in a month. The mortgage company was offering one thing only: they would accept half the reinstatement amount, with the remaining half to be paid off over six months, in addition to the monthly mortgage payments. That meant a combined debt payment of $3,700 per month. It did not help. 
  “There’s nobody else I can borrow money from,” said Jose. “Isn’t there somebody at the bank I could talk to about this?”
   We called his mortgage company–one of the major ones–to find out if they would be reasonable, or if we might actually talk to a decision maker.
  I explained to the customer service rep that there was literally no way they could come up with the $13,000 by the deadline given, that they had no money left, and I asked if it was possible for them to pay some smaller amount each month, perhaps just the interest  until Jose got back to work
  “According to the notes here,” said the person on the other end, “We would need thirteen thousand, two hundred, dollars by June 26 or the house would be sold at public auction…”
  “Wait a second,” I interjected. “Are you guys really going to take his house? He’s only got 13 payments until the loan is paid. He’s never been late on a payment in 14 years. You can’t work with him until he finds a job?”
  “I’m sorry sir, the decision is the decision. There’s nothing I can do.”
  I asked to speak to a manager, and it went straight to voicemail.
  Jose and his wife were forced to declare bankruptcy in order to stop the foreclosure sale. And this was a guy who never was late with a house payment, he never had any excessive debt and had a good credit score. That’s the kind of behavior you should expect from a lender. Don’t expect anything less.