Hundreds seek mortgage relief at workshop

Hundreds of area homeowners poured into the Sacramento Convention Center on Friday with tales of financial distress, worry, fear and anger.

They were looking for hope at an eight-hour foreclosure prevention workshop matching up borrowers with more than a dozen mortgage lenders and nonprofit home loan counselors.

About 300 people were in line when the doors opened at 12:45 p.m. Some cradled stacks of home and loan documents in their arms; others dragged small carry-on bags behind them.

One of those in line, Peggy Tripp, said, “I just don’t know who else to turn to. Nobody else will talk with me. So I’m hoping I can get some satisfaction here today.”

Tripp, a mother of three, said she has no financial reserves remaining to save her home.

Mary Pendleton, who said she lives in the Rosemont area east of downtown Sacramento, said she has been struggling to make a $2,200-a-month payment “for a long time, long before all this began. We don’t have any savings left.”

Bob Tull of the El Dorado County community of Cool said he was hoping to get his nearly $3,000-a-month payment modified, having “burned through about all I have.” Tull said he worked more than 30 years as a contractor, and now he’s delivering mail to help out.

Several attendees openly expressed anger.

One man randomly told passers-by that he had been “scammed” by his bank. Another carried a small, handmade sign that read, “Why bail out banks when they won’t bail out us?”

Lenders attending Friday’s gathering included Bank of America, Wells Fargo, JPMorgan Chase, Citi, GMAC, HomEq, PNC, Select Portfolio, Saxon, Suntrust and Ocwen.

Workshop organizers said lenders mailed invitations to borrowers, but Jonelle Smith of Sacramento said she showed up with home loan documents “because a friend of mine told me this was going on. … I’m hoping to get some help from somebody, anybody.”

A couple of hours later, a disconsolate Smith walked away, saying, “I couldn’t get help today.”

The workshop was a repeat of a December 2008 convention center event that attracted more than 1,000 area borrowers to visit with representatives of 19 lenders. Back then, some borrowers reported help on the spot and others remained frustrated.

Friday’s event was a collaboration that included the U.S. Treasury, the U.S. Department of Housing and Urban Development, the Obama administration’s Making Home Affordable program, the Hope Now Alliance and NeighborWorks America.

The Hope Now Alliance includes counselors, mortgage companies, investors and other mortgage market participants that help homeowners who may not be able to pay their mortgages. NeighborWorks America is a national nonprofit organization created by Congress to provide financial support, technical assistance and training for community-based revitalization efforts. Both are based in Washington, D.C.

Andrea Risotto, a spokeswoman with the U.S. Treasury Homeownership Preservation Office, said she was hopeful some attendees could get loan modifications on-site or within a short amount of time.

“It’s also important that they’ve come here to get help … bring their paperwork and start that process,” she added. “I know that some (attendees) have not talked to their lender … so just getting their foot in the door is a start.”

Risotto said some homeowners who attended Friday’s workshop but need follow-up visits with paperwork or other issues will be asked to return today for additional help.

Eric Selk, director of outreach with the Hope Now Alliance, said organizers also were warning homeowners to avoid people seeking payment to rework loans or modify foreclosures.

“We know that’s been happening in California,” he said. “… There are unscrupulous operators out there. The (services) here are free.”

Friday’s workshop commenced amid some progress.

The U.S. Treasury said mortgage lenders permanently modified 116,297 home loans nationwide in January, far exceeding 66,465 in December and 31,382 in November. About 20 percent of the January modifications were in California.

The federal government and various agencies are encouraging lenders to reach out to distressed homeowners, particularly in California, where the real estate crisis has had a profound impact.

The California Association of Realtors said this week that 67 percent of all home sellers in California in 2009 did so as a result of difficulties related to meeting their mortgage obligations.

Watch Out For Negative Equity

Do you own a home which has negative equity and are wondering how this occurred? The answer is simple. Negative equity occurs when you purchase a home using a home loan and the home prices begin to decline due to economic slowdown. The home value now decreases below the value principally on mortgage. This condition is called negative equity. It can be calculated by taking the value of the home, less the balance on the remaining loan.
An important aspect in the performance of home loans in the third quarter of 2009 was the high resale of foreclosures. This came up to one fifth of the total home sales in the real estate market. Also 26.5% of homes were sold for prices lower than what the original owner had paid.
Year after year, the prices of homes are declining. The recent fall was recorded at 6.9% reaching $194,000. The percentage of homes in negative equity was read to 21% in the third quarter, unlike 23% in the second quarter. It was when home values stabilized that many homes were also foreclosed in the same period. The third quarter readings show a dramatic decline in the negative equity conditions. This decrease in the percentage of home owners with negative equity is a positive sign to the economy. This is directly related to the stabilization of home prices in the next two quarters. This also indicates the percentage of home owners who have lost their homes to foreclosures in the second and first quarters.
The following months are expected to be crucial for the real estate industry. The winter analysis had predicted a rise in the percentage of foreclosed homes in the slow market, leading to a decline in the prices. But now with the extension of the tax credit period and sanction of $8000 tax credit for first time home buyers and $6,500 tax credit for repeat buyers, there could be an increase in the demand for homes that would lower the percentage of foreclosed homes. This is likely to bring stability in the prices of homes all through the state. But the major question is how long this stability will last after the tax credit period expires? This is likely to create a demand that would be weaker than the normal demand.
The recent survey on negative equity had the following statements to make:
· As on September 30th 2009, negative equity indicated that present home prices are lower than the original credit.
· Foreclosed homes that were resold were mostly homes foreclosed by banks in the previous year.
When facing negative equity, you can approach realtors and mortgage professionals, who will help you to recover from negative equity.

For additional resources and information please visit the following sites.

Resource Links:
http://www.gmacrealestate.com
Bill Fields All Star Coaching Program: http://www.AllStarCoaching.net
GreatWest GMAC Search all MLS Listings: http://www.LocalHomeLink.com
GreatWest GMAC Consumer Buyer/Seller Blog: http://www.GreatWestBlog.com
T. Sami Siddiqui (Broker/ Owner) Buzz About Sacramento Blog: http://www.samisiddiquiblog.com
Brodie Stephens (Executive Vice President) One Stop Blog: http://www.brodiestephensblog.com
GreatWest Podcasts- Weekly Updates on new REO, Short Sale, Bank Owned Foreclosure Listings: http://www.HouseTalkOnline.com
GreatWest Videos: http://www.youtube.com/brodiestephens
Facebook Brodie Stephens Profile Page: http://www.facebook.com/brodiestephens
Facebook GreatWest Profile Page: http://www.facebook.com/searchmlshomesforsale
MySpace Brodie Stephens Blog: http://www.myspace.com/brodiestephens
MySpace GreatWest Blog: http://www.myspace.com/greatwest
Picasa Web Album: http://picasaweb.google.com/brodiestephens
GreatWest Real Estate Careers- GMAC is looking for Professional Realtors to Join Us: http://www.CareersWithUs.com
Global Employee Relocation: http://www.employeerelocation.blogspot.com
Apply for a Loan: http://www.choice1funding.com
ActiveRain Blog Brodie http://activerain.com/blogs/brodiestephens
ActiveRain Blog Company http://activerain.com/blogs/greatwestgmac
Sacbee http://www.sacbee.com
Company WordPress Site http://www.thehomeholders.com
Real Living http://www.realliving.com

First Time Home Buyer Tax Credit

News Flash

Homeowners win big with extension and expansion of federal tax credit

The U.S. House of Representatives today voted 403 to 12 to extend and expand the home buyer tax credit. The bill passed the U.S. Senate late yesterday and now will go to President Obama for his signature, where it is expected to be signed this week.

The tax credit will be extended through April 30, 2010, with a 60-day extension if a binding contract is in place prior to the deadline. First-time home buyers will continue to receive a tax credit of up to $8,000, while existing homeowners will receive a credit of up to $6,500. Existing homeowners will be eligible for the $6,500 if they have lived in their current residences for at least five years. The bill also will increase the qualifying income limits from $75,000 for single tax filers and $150,000 for joint filers to $125,000 and $225,000, respectively. The purchase price of the home is capped at $800,000.

Under additional provisions in the bill, taxpayers can claim the credit on purchases completed in 2010 on their 2009 income tax returns. The bill maintains the provision that home buyers do not have to repay the credit, provided the home remains their primary residence for 36 months after purchase, and waives this requirement for active duty military personnel who move due to a military order.

For weeks, the CALIFORNIA ASSOCIATION OF REALTORS (C.A.R and its members have urged Congress and the U.S. Senate to extend and expand this crucial piece of legislation.

Nationwide, more than 1.4 million first-time home buyers were given the opportunity to become homeowners as a result of the Federal Tax Credit for First-time Home Buyers. According to C.A.R. research, nearly 40 percent of first-time home buyers surveyed said they would not have purchased a home without the federal tax credit, and approximately 70 percent said the tax credit was “the most important” or a “very important” factor in their decision to buy a home.

To read stories about the extension and expansion of this valuable home-buying incentive, please visit the following:

Aid for jobless, homebuyers clears Congress
To read the full story, please click here.

Congress Extends Jobless Benefits, Home-Buyer Credit
To read the full story, please click here.

Congress passes bill extending unemployment insurance, home buyer tax credit
To read the full story, please click here.

Articles above have been provided by the listed author immediately following the article. For additional resources and information to the authors, please visit the following sites.

Resource Links:
Bill Fields All Star Coaching Program: http://www.AllStarCoaching.net
GreatWest GMAC Search all MLS Listings: http://www.LocalHomeLink.com
GreatWest GMAC Consumer Buyer/Seller Blog: http://www.GreatWestBlog.com
T. Sami Siddiqui (Broker/ Owner) Buzz About Sacramento Blog: http://www.samisiddiquiblog.com
Brodie Stephens (Executive Vice President) One Stop Blog: http://www.brodiestephensblog.com
GreatWest Podcasts- Weekly Updates on new REO, Short Sale, Bank Owned Foreclosure Listings: http://www.HouseTalkOnline.com
GreatWest Videos: http://www.youtube.com/brodiestephens
Facebook Brodie Stephens Profile Page: http://www.facebook.com/brodiestephens
Facebook GreatWest Profile Page: http://www.facebook.com/searchmlshomesforsale
MySpace Brodie Stephens Blog: http://www.myspace.com/brodiestephens
MySpace GreatWest Blog: http://www.myspace.com/greatwest
Picasa Web Album: http://picasaweb.google.com/brodiestephens
GreatWest Real Estate Careers- GMAC is looking for Professional Realtors to Join Us: http://www.CareersWithUs.com
Global Employee Relocation: http://www.employeerelocation.blogspot.com
Apply for a Loan: http://www.choice1funding.com

Ask the Experts: Do your homework on reverse mortgages

Our three new “Ask the Experts” writers have been busily answering financial questions this month from online readers.

Here’s a sample of their advice on personal finance, wills/estates and investing.

To see more questions or to get advice from our other financial experts on taxes, banking and investment clubs, go to: www.sacbee.com/ask.

Pamela Christensen, Certified financial planner

I expect to retire in about four years and will have a small Sacramento County retirement. We also have about $150,000 in CDs to live on. My parents got a reverse mortgage a couple years ago for the extra cash to live on and to have no mortgage payment. It seems to be working for them and we are considering it as well. Is this type of mortgage safe?

As with most financial planning, these issues are very individual. I like reverse mortgages in some situations, although it’s always wise to get lots of counsel on your particular circumstances and the ramifications. For instance, do you have heirs in line to inherit your house? Do they want or need it? How much equity do you have in the home?

Do your homework and learn as much as you can. Start by going to the federal Department of Housing and Urban Development Web site (www.hud.gov) and search for “Reverse Mortgages.” There’s also information on the state Department of Real Estate Web site (www.dre. ca.gov). Click on “Consumers”, then “Home Buyers/Borrowers,” then “DRE Publications and Resources.” Talk to your estate planning attorney and other financial professionals to get their opinions. Talk with family and friends only if you know they are well educated in reverse mortgages.

Gina Lera Estate planning attorney

My brother passed away, with no assets other than his car, which has a salvaged pink slip. He has credit card debt of about $15,000. Do I have to sell the car to pay off his debt? He’d said he wanted my son to have the car if anything ever happened to him. A couple credit card companies have already cleared him of the debt he owed. He lived with me, has no children and no other assets. What do I need to do?

I am sorry about your loss. Since your brother died without a will, his assets will pass as provided by the laws of the state where he resided at the time of death. Assuming he died in California and was not survived by a wife, children or grandchildren, his estate would pass to his parents (or, if both parents are deceased, to his siblings in equal shares).

Because the estate’s value is less than $100,000, the heir(s) can assume the vehicle’s title by making an appointment with the DMV, completing a “small estate affidavit” form and providing a copy of the death certificate.

The heir can then assign the car to your son without gift tax consequences, assuming the car’s value is less than $13,000. Your brother’s statements about wanting your son to have the car after his death have no effect, since California does not recognize oral wills.

Be careful in this process. The credit card company can collect up to one year following your brother’s death. You indicated some debts were voluntarily discharged by several card companies, which is common in more modest estates. Be sure to get this confirmed in writing, to ensure you are not taking on additional problems. Even after the car is transferred to your son, the heirs are still liable for any debt up to the value of the car.

Cameron I. Beck, Investment adviser

I’ve read that people with defined pension plans should consider them as the short-term or fixed part of their asset mix, in terms of an overall retirement portfolio.

For instance, if 60 percent of your retirement income was in a defined pension, the other 40 percent could be placed in more aggressive investments to round out the portfolio.

Because of the recent market meltdown where investments may have shrunk 40 percent or more, is it still wise to think that way? Or should the rest of the portfolio be invested totally separate from the pension? I guess it goes back to how much risk I should be willing to accept.

In this day and age, you are very fortunate to have a defined benefit pension plan. Many employers find them too costly and are switching to employee-directed plans or defined contribution plans. At retirement, most of those fortunate enough to have a traditional defined benefit pension plan can expect to receive a fixed-income stream for their lifetime. It can be considered a fixed-income part of an asset mix. Unlike stocks, which fluctuate in value, pension plan distributions usually remain steady.

Whether your income comes from a pension plan run by your employer or from interest-bearing investments like CDs, it is important to practice diversification, which includes both growth and fixed-interest investments. Diversification, if practiced wisely, can lead to a prosperous retirement regardless of where your income comes from.

For Mortgages, 620 is The New Magic Number

Near historic low mortgage rates, favorable home prices, and the federal tax credit for first-time home buyers have contributed to home purchases in the past year. However, the onset of the credit crisis, new regulations for home appraisals, and more stringent guidelines for purchases and refinances have resulted in confusion for some potential home buyers.

While using a mortgage broker to find the best loan may work for some buyers, it may not always be the best route. In the past, mortgage brokers could “shop” a loan to multiple lenders to help find the best deal. However, new practices and procedures under the Home Valuation Code of Conduct (HVCC) have hampered mortgage brokers’ abilities, namely that lenders may no longer accept home appraisals commissioned by brokers. As a result, consumers may have to pay for new appraisals with each lender, which costs time and money. However, consumers who are very busy or need guidance may find that working with a mortgage broker is the easiest solution.

Qualifying for a mortgage under current lender standards is more difficult nowadays than in years past. Beginning Nov. 1 or Dec. 12, depending on the type of loan, Fannie Mae is tightening its lending standards to the 620 credit score benchmark—including loans backed by the Federal Housing Administration and Veterans Affairs. Borrowers with credit scores of less than 620 will find it very difficult to qualify for a mortgage. However, to qualify for the best rates, consumers generally need credit scores of 720 and must have verifiable, steady income.

As for loan type, most real estate professionals agree that a fixed-rate mortgage is the best choice for buyers and refinancers.

Mortgage rates below 5 percent fuel re-fi boom

Every dollar counts in this economy.

Homeowners hustled last week to refinance their mortgages after interest rates fell below 5 percent for the first time since May.

Refinance applications climbed 18 percent from the previous week, the Mortgage Bankers Association reported Wednesday, as rates on 30-year home loans dropped to their lowest level in four months to 4.89 percent.

With extra cash lining their pockets each month, homeowners could help the economy recover. Since the recession began, American consumers have reined in spending, which accounts for up to 70 percent of the economy. A refinance savings of a couple hundred bucks could go a long way in boosting household finances.

“A lot of people are thinking: “If I can get something right now, let’s get it and run,’” said Pava Leyrer, president of Heritage National Mortgage in Michigan.

But more than 16 million homeowners owe more on their mortgages than their properties are worth. To refinance they would have to cover the difference and then some. In some cases, that could mean forking over tens of thousands of dollars. Others simply don’t qualify under stricter credit and income standards. And requirements for refinancing certain government loans will get tougher in November.

The Federal Reserve started buying mortgage-backed securities in January to drive down mortgage rates. But it plans to slow its purchases of mortgage-related debt and extend the program through the first three months of 2010, which will likely push rates higher.

Still, current low rates helped borrowers like Kimberly Austin in Kalamazoo, Mich., cut her monthly payment by more than $300 to $934. Austin, a 40-year-old accounts receivable clerk, ticked off a list of where that extra cash will go. A new roof, updating the electrical system and other improvements on the older house she bought in June of last year.

“That money would be a huge help,” said Austin, who is set to complete the refinance on Thursday.

For Tanya Schlicht in Greenfield, Wisc., refinancing her mortgage will help cushion the blow from her husband’s job loss earlier this year. He’s working at a temp agency now, but makes less than before.

Schlicht, who works in a nursing home, is in the process of qualifying with just her income and wants to roll a costly second mortgage into just one loan. The move will save them a much-needed $200 a month.

“We’re going to need it for the electric bill,” she said.

She’s a lucky one.

Many calls mortgage brokers received last week came from borrowers who couldn’t qualify for a new loan because of lower incomes, higher credit standards or falling home prices.

New rules designed to limit conflicts of interest in the appraisal industry also are scuttling refinance applications because appraisals are coming in low, said Les Berman of EB Financial in Beverly Hills, Calif.

Lenders are stricter too. Before, Berman said they would accept a refinance application if the mortgage payment, taxes, insurance and all other debt added up to half a borrower’s income. Now, the magic number is 41 percent.

The Obama Administration launched a plan in April to help borrowers refinance, even if their home has lost value. Fannie Mae and Freddie Mac are accepting borrowers who owe up to 25 percent more than their home are worth. But so far, only about 85,000 homeowners have had their loans refinanced under the plan, well below original expectations of 5 million.

“I personally haven’t seen one yet,” Berman said.

And on Nov. 18th, new requirements go into effect for borrowers who want to refinance a loan insured by the Federal Housing Administration. The so-called “FHA streamline” loan will require at least six months of payments before a borrower can take advantage of the program, and verification of assets, job and income. Also, more borrowers will need to come up with more cash to refinance because of new rules to calculate the maximum loan amount relative to the home’s value.

“That’ll stop up to 85 percent of my streamline borrowers,” said Leyrer of Heritage National Mortgage.

Mortgage brokers say a refinancing is worthwhile if you can shave off at least $100 from your monthly payment or get a full percentage point rate reduction.

That’s why rates below 5 percent are so appealing. It’s only the second time this year they dipped that low. Rates hit a record low of 4.78 percent in the spring.

“The experts say rates are going back up,” said John Stearns, vice president at Robbins and Lloyd Mortgage in Mequon, Wis. “We’re making hay while we can now.”

FHA loans soar in Sacramento area

The number of government-backed FHA loans jumped sharply last year, propping up a local real estate market otherwise saturated by loan denials.

During 2008, lenders issued 8,998 FHA loans in the Sacramento region, up from 649 during 2007, according to statistics released this week by the Federal Financial Institutions Examination Council.

“There’s been such a shift in available financing as the market bottoms out,” said Larry Bush, a regional spokesman for the U.S. Department of Housing and Urban Development.

FHA loans are primarily used by people who can’t afford a big down payment, or who otherwise aren’t able to obtain mortgage insurance. FHA buyers need put down only about 3 percent. With the credit market shot, most conventional loans require at least 10 percent down.

Other than FHA loans, there are “very few lenders out there that will even toy with 95 percent financing,” said John Arvanitis, owner of Sunrise Vista Mortgage, a Citrus Heights-based company that specializes in FHA loans.

FHA loans fell out of favor during the housing boom, experts said, because it didn’t matter much whether borrowers had enough for a substantial down payment. Banks were giving zero down, “no proof” mortgages left and right.

Also during the boom, FHA mortgages were capped locally around $360,000, which didn’t buy much back then. Now, prices have plunged, and the cap has been raised to $580,000, covering the vast majority of the local market.

“Even during the subprime era, I was trying to get people to go with FHA loans,” Arvanitis said, adding that it was a tougher sell back then.

FHA insures loans; it doesn’t make them. Like any insurer, the government tries to be careful before it acts.

There’s a pretty long list of standards that a home must meet before an FHA loan will be administered, said Scott Burton, who specializes in FHA homes and runs Burton & Co. Real Estate Appraisals, a local outfit.

For instance, homes often don’t pass muster because of lead-based paint, or roof or termite damage, Burton said.

The number of FHA loans issued locally would be even higher if the banks that owned foreclosed properties were willing to fix them up to FHA standards. Instead, “they want to sell them as is,” said Burton, adding that banks are slowly coming around.

The 8,998 loans for 2008 also includes a small number of VA loans, which have slightly different terms.

The FHA loans are one of the few bright spots in the new federal report. It showed lenders denying about one-third of home loan applications in the Sacramento region during 2008, roughly double the percentage of denials in 2005 and similar to 2007, another bad year.

Mark Van Winkle and his family recently bought a home in Carmichael using an FHA loan. He’s been in the Sacramento area for decades and has owned a house before, but got into some financial trouble around the turn of the century, forcing him to rent.

“We had no choice but to go with an FHA loan because of financial reasons,” said Van Winkle, who got his loan through Sunrise Vista.

Despite his hands being tied, “it went really smooth,” Van Winkle added.

Mortgage fraud bills sent to Schwarzenegger

As financial carnage from the housing crash continues across California, state lawmakers have sent several bills that crack down on mortgage fraud to Gov. Arnold Schwarzenegger’s desk.

In recent days, the Assembly and Senate have jointly passed bills to ban loan modification companies from asking for upfront fees and make mortgage brokers put their customers’ financial needs ahead of their own commissions.

They’ve also limited the size of pre-payment penalties and added California to the roster of states that allow prosecutors to file specific felony charges for those accused of mortgage fraud.

“No one right now is doing these risky loans,” said Assemblyman Ted Lieu, D-Torrance. “But five or 10 years from now people (will) forget, and if you don’t have these controls in place, the same thing happens again.”

Lieu carried one of the Legislature’s most sweeping mortgage reform bills this year, Assembly Bill 260, which was sent to the governor this week. It bans so-called subprime “negative amortization” loans where the amount owed grows even as the borrower makes payments.

It also prevents mortgage brokers from receiving thousands of dollars in special fees for originating subprime loans and those with pre-payment penalties. The bill also limits the size of pre-payment penalties for borrowers who pay off their loans early.

Lastly, it requires that mortgage brokers have a fiduciary duty to borrowers – that is, they must place the “economic interest of the borrower ahead of the broker’s own economic interest” when making loans.

That provision is especially opposed by the California Association of Mortgage Brokers. Fred Arnold, a Santa Clarita-area broker and the group’s past president, said the bill’s definition of fiduciary duty is vague and an invitation to “frivolous lawsuits.”

“It’s not necessary. We already have a fiduciary duty under the Department of Real Estate,” said Arnold.

Last year, the governor vetoed a similar broad-based bill by Lieu to rein in mortgage industry practices. But Lieu said he worked with the Governor’s Office on this year’s version, noting, “We hope we’ve hit the sweet spot for a compromise.”

The bills land on Schwarzenegger’s desk as California continues wrestling with more than 410,000 foreclosures since the start of 2007, the aftermath of unfettered lending practices earlier this decade.

During the housing boom, unscrupulous mortgage brokers could earn fees of $20,000 or more for making risky subprime adjustable-rate loans, often to unsuspecting borrowers.

Among groups backing changes in mortgage practices is the California District Attorneys Association, which is pushing for new felony penalties for mortgage fraud. The group sponsored a bill now before the governor, Senate Bill 239, by Sen. Fran Pavley, D- Agoura Hills. It would create a specific category of felony mortgage fraud, which the DA’s group calls “one of the linchpins in the demise of the California real estate market and the related crises in the financial sectors.”

The group says Sacramento ranks seventh among U.S. metropolitan areas in reporting mortgage fraud complaints to the FBI.

Finally, Schwarzenegger faces a choice of two bills that would bar loan modification companies from asking struggling borrowers to pay upfront fees.

Both bills banning upfront loan modification fees – Assembly Bill 764 by Assemblyman Pedro Nava, D-Santa Barbara, and Senate Bill 94 by Sen. Ron Calderon, D-Montebello – passed the Legislature earlier this week. The governor has 30 days from a bill’s passage to sign it, veto it or let it become law without his signature.

Mortgage-relief program helps relatively few troubled homeowners

WASHINGTON – Major mortgage service companies boosted the number of trial modifications they offered to distressed homeowners in August, the government reported Wednesday, but the workouts still cover only a small fraction of the delinquent loans that are eligible for help.

The Treasury Department released its second monthly report on loan modifications under the Obama administration’s Making Home Affordable Program. It said that servicers had started 360,165 trial modifications through August, up by 124,918 from the modifications reported through July. The number of offers for trial modifications rose by 164,812, to 571,354 through August.

The total number of trial modifications started represented 12 percent of all loans that are 60 days late on payments and considered eligible for the Obama administration’s program. That’s up from 9 percent through the end of July.

“We think all the servicers could do more than they are doing now,” Assistant Treasury Secretary Michael Barr told the housing subcommittee of the House Financial Services Committee on Wednesday.

The program is on track to meet its target of 500,000 trial modifications by November, Barr said. That number, however, is a small percentage of the more than 6 million potential foreclosures over the next three years that many analysts forecast.

Mortgage servicers, many of them large banks like Wells Fargo and Bank of America, are essentially middlemen that collect mortgage payments on behalf of investors who own securities backed by pools of mortgages. Although borrowers negotiate with servicers as if they were the lenders, the servicers represent the interests of investors, not homeowners.

From 2005 to 2008, servicers modified just 3 percent of all delinquent loans, according to documents reviewed by the House panel.

That low number led the Obama administration to create the servicer performance report, dubbed “Name and Shame,” in a bid to pressure investors and servicers to do more. Forty-seven servicers now participate in the administration’s program, up from 38 in July.

Wells Fargo and Bank of America improved on their July numbers but are still modifying a low percentage of eligible loans under the government program. Bank of America increased from 4 percent of eligible loans to 7 percent; Wells Fargo improved from 6 percent to 11 percent.

CitiMortgage, part of troubled Citibank, boosted its trial modification numbers to 23 percent of eligible loans in August from 15 percent in July. JPMorgan Chase, thought to be the nation’s healthiest large bank, improved to 25 percent of eligible loans in August from 20 percent a month earlier.

The government’s trial modification program seeks, through financial incentives to servicers and the investors they represent, to get borrowers into loans whose monthly payments are equivalent to 31 percent of their before-tax incomes.

Industry representatives said in testimony that their modification numbers were much higher than the report indicated, but there are no reliable breakdowns of individual servicer numbers to distinguish between, say, allowing a borrower to skip a payment vs. modifying an adjustable-rate loan into a low-cost fixed-rate mortgage.

“There may be other things going on out there, but to comply with our program rules and to count as a real modification you’ve got to get people down to an affordable (payment) level,” Barr told McClatchy.

The administration will ratchet up pressure on servicers, he said, requiring new data on why loans weren’t modified.

“We are requiring next month the implementation of denial codes by each servicer, and at that point we will be able to have good empirical data on reasons for denial,” Barr said.

Representatives of JPMorgan Chase, Bank of America and Wells Fargo acknowledged in testimony that they fold legal fees and other foreclosure-processing costs into reworked loans, upping the balance that borrowers owe.

Only Wells Fargo said it had a special program to help borrowers with strong payment histories should they lose their jobs.

Bank of America’s executive in charge of credit loss mitigation, Jack Schakett, acknowledged to the panel something long suspected but rarely spoken about publicly. Distressed borrowers who have equity built up in their homes, he said, are more likely to get foreclosed on, because there’s a greater likelihood that servicers and investors who hold pools of mortgages will profit from the sales of the homes.

“The more equity that is in the house, the more the market will actually walk away with money, the less likely you will actually modify the loan,” Schakett confirmed in an interview after the hearing.

Find The Best Deal On Home Refinancing

http://www.kcra.com/family/19402420/detail.html

(ARA) – Like so many Americans, you may have a balloon mortgage that is coming due or you’ve had an unexpected financial hit such as a large hospital bill or a job loss that has made your current mortgage payments unreasonable. If so, refinancing your mortgage can be a great way to save money every month.

Refinancing your mortgage also lets you consolidate other debt, such as credit card balances, into one low-interest loan. You may also want to consider converting some of the equity in your home to cash to use for large expenses such as college tuition or home improvement.

Online services like Bills.com make it easier than ever to find the best deal on refinancing your home. With a couple clicks of the mouse, you’ll receive quotes from up to four lenders so you can choose the best deal for your situation.

Before you refinance, ask yourself the following questions:

•How long will I be in my house? If you’re planning to move soon, it may not make sense to refinance. Calculate how much you would save monthly, and then compare that number to the costs of refinancing to make your decision. You can find a number of refinance calculators on the Internet, including at Bills.com.
•Can I afford to cash out equity in my home? Paying college tuition is a good use of your home equity. Taking the value out of your home to take the family to Disney World may be fun, but in the long run, not wise. Just remember how long it took you to build up that equity.
•Can I change my habits? Using a home refinancing to consolidate debt can be a good idea — but only if you don’t revert to your old behavior. Clearing your credit card debt and then starting the cycle of maxing them out again means you’ll end up back at the same spot. If you are consolidating debt, cut up your credit cards or resolve to pay them off in full each month.
When you’re ready to refinance, Bills.com makes it simple. Just fill out the short information form on the Web site, hit submit and up to four lenders will make you an offer. The site only asks for non-sensitive information such as the current value of your home, whether you’re employed, if you’ve ever declared bankruptcy. You will not be required to supply personal information such as a Social Security number until you get further into the process.

How can you find the best deals in home refinancing? Check out Visit Bills.com to get bids from up to four lenders.