Posted by kevin on November 26, 2016 under Foreclosure Blog | 
Since the election, interest rates on residential mortgages are up by over 1/2 of 1 percent (0.005 or 50+ basis points, if my math is correct). As a result, refinancings are down significantly. Increased mortgage interest rates will make homes less affordable, so it is likely that home prices will not advance in 2017 like they have from 2012 to 2015.
A WSJ article indicates that since lenders are not going to be making as much money on re-fi’s, they are starting to push more risky adjustable rate mortgages and increasing loan to value ratios. Didn’t that lead to a meltdown in 2008?
At the same time, MHA or, more specifically, the HAMP mortgage modification program is phasing out as of 12-31-2016. With Trump being elected, it does not appear that this program will be renewed. Under HAMP I and HAMP II, interest rates can be reduced to 2%. What I have been seeing, however, is that servicers are trying to push my clients into so-called “proprietary modifications” which are not subject to MHA guidelines. With interest rates rising, the proprietaries are starting at 3% or more, usually, for 5 years, and then are being stepped up to over 5%.
At that rate, it would seem that many consumers will be priced out of mods.
There is still time to get a MHA/HAMP but time is running out
Posted by kevin on September 8, 2016 under Foreclosure Blog |
If I had $10 for every client or potential client that told me that they sent $1500, $3000, $5000, as high as $8000 to a mortgage modifier in California or Florida or wherever and not only never got a mortgage modification but just got a run around by the company that was supposedly representing them. Needless to say, they never got their money back.
The National Mortgage News just ran a story about a man from California who was ordered to pay $2.4 million in restitution and sentenced to 52 months in federal prison over his role in an alleged mortgage modification scam. He operated a series of California based companies that claimed to provide home loan modifications and other debt services to consumers across the country. They would cold call consumers and offer modifications for $2500-4300. Then, after they got their money, they would tell the consumer that they were approved for a modification. That was a lie.
I am not saying that there are not reputable companies on the internet that are performing mortgage modifications. What I am saying is be guided by the old saying, “Let the buyer beware”. Make sure you check out the background of the person you hire to do your modification.
The MHA mortgage program, sometimes called the HAMP program, is due to expire at the end of this year. If you had problems but are back on your feet, you may want to consider looking into a mortgage modification or refinancing under HARP before the program expires.
Posted by kevin on December 24, 2014 under Foreclosure Blog |
MHA (Making Home’s Affordable) was set up by the government to induce lender’s to make deals with borrowers whether it be mortgage modification, dealing with second mortgages, short sales, deeds in lieu.
Oh excuse me, MHA may be about modifications, short sales and the like, but the inducement is not to the lender but the servicers. Not the guy that owns the mortgage, but the bean counter who collects the payments and sends them to the appropriate party.
What’s the big deal? Well, in defending foreclosure cases for the last 5 years, and reading pooling and servicing agreements, I have concluded that the interests of the servicer is many times in conflict with the interests of lenders or investors in securitized trusts. Investors and lenders usually fare better if they can work out a deal with the borrower. Servicers, on the other hand, seem to do better if there is a foreclosure.
That is why I was not too surprised to read the numerous stories about Ocwen getting hammered by the New York Superintendent of Financial Servicers. As part of the 150 million dollar settlement, William Erbay, the founder of Ocwen, is being forced out as CEO. Ocwen must come up with one hundred million in foreclosure relief and fifty million is going to be paid to Ocwen customers in NY. Do we have any governmental agency in NJ that protects borrowers? Heaven forbid. Moreover, Ocwen’s operations are to be monitored by an independent monitor for two years. Stock prices have fallen by 30% in that last week. Moreover, a $39 billion deal with Wells Fargo may be down the crapper.
What did Ocwen do? Basically, what most servicers do; that is, jerk around borrowers. However, Ocwen did it on a scale that made other servicers look like the JV (stealing a term from the Prez). For example, complaints against Ocwen were two times more frequent than complaints against BOA and 5 to 6 times more frequent than complaints against Wells Fargo. ( I have dealt with BOA and WF, and they are not what I would call “user friendly”).
Ocwen ran up costs by farming work out to affiliates which had strong ties to Ocwen and its executives. They backdated letters to borrowers which made it look like they were responding in accord with regulations under Dodd-Frank. According to Richard Cordray, the head of the CPFB, Ocwen took advantage of borrowers at every stage of the process. Another strategy attributed to Ocwen is that they would accept a package of documents and information from a borrower, wait 29 days, and then, instead of deeming the package complete for review by underwriter, Ocwen would send a deficiency letter to the borrower and request updates. What was not in the articles, but what I fear happened, was that Ocwen used the incomplete application as the basis for extracting additional monthly payments out of the borrowers during the so-called trial period. If you were to cross-check those payments against the servicing agreement, I would not be surprised to find out that the servicer kept a portion (if not all) of those payments.
Ocwen is not only servicer that plays games, but they got nailed. I would not be surprised if other servicers wind up on the wrong side of regulators in the future.
Merry Christmas.
Posted by kevin on November 27, 2014 under Foreclosure Blog |
I have been quite vocal concerning how the current Administration sold out the people by backing off on Chapter 13 cramdown in 2009. Instead, we got HAMP and MHA. The first few versions were just awful. Borrowers were routinely being ripped off by servicers on trial modifications;payments were made and glommed by the servicers; permanent mods were not given; and the borrower had no recourse because the courts said absent a permanent mod (and contractual relationship) the borrower had no standing to sue the servicer.
In late 2012, with HAMP version 4, I thought that we might have something. At least on paper, it seemed better than previous versions. Well, in real life, not the improvement that I expected. Why? The servicers still run the show. The government wags it finger at the servicers and tells them to fly right, but nothing substantive happens. Finally, the GSE’s, Fannie Mae and Freddie Mac, and the VA are not covered by the government program, MHA.
Why am I saying Happy Anniversary? I represent a elderly woman in a Chapter 13. As part of the Plan, we proposed a modification which called for capitalization of arrearages and a reduction in the interest rate to 4% escalating to 5% on the first mortgage loan to JP Morgan Chase . Junior encumbrances were to be stripped for lack of equity.
If you are familiar with HAMP Version 4, you know that the proposed mod is pretty much plain vanilla. On November 25, 2013, I sent a complete modification package to Chase to modify a note payable to JP Morgan Chase. In mid- February, 2014, the servicer (also Chase) called with good news and bad news- my application was deemed complete and was scheduled to go to underwriting, however, the servicing rights were being transferred to another servicer. I was assured that my file would be forthwith sent to the new servicer and I would have a decision right away. Guess what? I did not believe the Chase people.
It took a month to find the right servicer ( the new servicer assigned the loan to a subservicer). Then it took another month to find out who the point of contact person was. BTW, the point of contact person is very cordial and smart , but he is not running the show. By mid May, I was told that Chase had not yet sent the file to the new servicer so I had to start from scratch. I sent a complete, updated application with documents and proposal in late May.
In NJ, the Chapter 13 trustees will push to confirm plans with mods conditionally. The condition is that the debtor has to get the mod within 4 months of the confirmation or the case is dismissed. Because of the confusion with the new servicers, I was able to put the confirmation off until June. However, I had to make 3 appearances (no, they would not let me do it over the phone) to plead my case and get a lecture from the trustee for not having a mod in place. Every three weeks or so, my client gets a letter from the servicer asking for an updated whatever. Within a few days, we comply with the request(s). September comes and goes and the trustee files a notice that we are in default because we do not have a mod in place and requests that the case be dismissed. I am forced to file a written response. We have a hearing in mid-December.
The point of contact persons assured me that we would have a decision by the end of November, but nothing yet. He also tells me, for the first time, that the loan was sold to Freddie Mac so we are not operating under HAMP guidelines. In the meanwhile, the paralegal at the lender files a motion to vacate the stay because we do not have a mod as set forth in the confirmation order. Thank goodness, her boss pulled the motion.
You can’t make this shit up. To add insult to injury, I checked my time records last week to discover that I have spent more time on the modification than I did on the nuts and bolts Chapter 13 case including motions to strip. Go figure. To be continued.
Posted by kevin on November 1, 2014 under Foreclosure Blog |
On October 28, 2014, the Consumer Financial Protection Bureau issued a report on mortgage servicers/servicing. It wasn’t pretty.
The report found that servicers are engaging in significant delays which lead to higher payments to the borrower. In addition, the servicers are not, for the most part, properly notifying credit reporting agencies that borrowers are no longer delinquent.
The problem has been exacerbated because major bank, which were subject to the $25 billion dollar settlement, are getting out of the servicing business and selling their portfolios to non-bank servicers such as Ocwen or Greentree.
Higher costs are incurred when servicers keep borrowers in trial modifications for more than three months at interest rates that are higher than the ultimate permanent mod. If the trial mod payment does not cover the fully amortized payment, then the difference is added on to the principal. More trial mod payment, the greater the amount that is added on to principal.
Recently, the CFPB fined Ocwen $2.1 billion for taking advantage of borrowers. The New York attorney general is investigating Ocwen for backdating letters.
I have always been leary about dealing with servicers on modifications, short sales and deeds in lieu. Back in 2011, most attorneys who brought the foreclosures actions would work with me on getting a resolution of the case. Not any more. I make proposals to my adversaries only to be told that I must deal with the servicers. Then, the games begin.
On paper, MHA (formerly called HAMP) has decent guidelines that seem to protect the consumer. However, you have no recourse if the servicer does not follow the guidelines. In addition, you are left swinging in the breeze when servicers sit on your file for 3-4 weeks, and then demand more or updated information, and then continue with this process for months. Currently, I have a modification that started last November and is still not into underwriting.
The CFPB is going in the right direction by holding the servicers’ feet to the fire. A change in the compostion of Congress, which looks likely, may have a negative impact on CFPB’s impact.
