L is for Lie, in the Alphabet Game, blogs by experts across the country on various issues.  Scroll to the bottom for more topics.

No news to loyal readers:  the story about mortgage modifications being told by the mortgage industry is bogus.

Gee, why would they lie about this?

Hmm.  Let’s ponder that one.

Well, in March of 2009, the House passed judicial mortgage modification, and the screams of the mortgage industry reached record decibel levels in the Senate, who knuckled under and declined to pass real reform that would have addressed the foreclosure crisis, stabilized the housing market, and saved us taxpayers trillions of dollars.  Hey, why would our leaders pass something like that?

When they can keep bailing out their golf buddies with our money?

Why isn’t America too big to fail?  Why is it just the haves, and I mean, the haves with political access who use it to subvert the free market to line their pockets at public expense.

Oooh.  Guess I am not quite in a holiday mood yet.

So they lied to the politicians, you don’t have to make us do anything, see, we are voluntarily suspending foreclosures, doing modifications, blah, blah, blah.

The mortgage modification successes predicted, and even reported, by the mortgage industry, simply didn’t happen.

I spend my life helping the collateral damage, the lives wrecked, by the cavalier crooks, whom our President defends.

“I can tell you, just from 40,000 feet, that some of the most damaging behavior on Wall Street, in some cases, some of the least ethical behavior on Wall Street, wasn’t illegal.” as quoted in (www.nakedcapitalism.com)

Maybe Fearless Leader should get a little closer to planet earth once in a while.

Fraud is illegal.  Deceiving people to get their money, or their home, telling investors you are selling them quality mortgages which you know are anything but, I could go on and on.

And I do; hey, it’s my blog!

If there is some topic you want me to rant about, uh, discuss intelligently, let me know.

But sooner or later I will resume raking the bad guys over the coals.  Seems to be the only punishment they will get.

image credit:  dreamstime

Lien Stripping    Omaha and Lincoln, Nebraska Bankruptcy Attorney, Ryan D. Caldwell

Lien    New York Bankruptcy Lawyer, Jay S. Fleischman

Lift the Stay    Marin County Bankruptcy Attorney, Catherine Eranthe

Luxuries    Colorado Springs Bankruptcy Attorney Bob Doig    http://springsbankruptcylaw.com/?p=1193

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Let’s stroll down memory lane.

Mortgage refinancing was all the rage.  Home prices kept going up, interest rates were going down, you re-financed periodically to cash in home equity, or, just to get lower monthly payments.

Then came 2008 and the bursting of the real estate bubble.

Home prices crash, mortgage lending standards return, and, just to top it off, interest rates go up.

So, now you need actual equity in your home to re-finance your mortgage.  You are not trying to get equity out of it, like the old days.  You just need to get a lower payment, maybe, so you can keep your home.

Michigan mortgage refinancing rates are currently low, as they are across the US.

You would think your mortgage company would want to help you stay current, paying them, by getting lower payments.

But, they tell you, no go, no re-financing without equity in the house.  That is, your home has to be worth more than the balance on the mortgages, and you are turned down for refinancing.

Rumors of government programs that would end this logjam persist.

Supposedly, the government would, through those taxpayer subsidized money pits, FNMA and Freddi Mac, push the banks to cash out the old mortgages buy giving homeowners new ones.

Hey, what could go wrong with that idea?  Though it does sound like the same philosophy that got us into this mess.

The federal government decided to put, it turns out, trillions, of dollars behind the idea of home ownership for everyone.

The mortgage crisis was made in Washington.

I talked to someone this week who is 22 months behind on a 3 year old mortgage.  Most likely, he never should have been given that mortgage in the first place.

The economy will not straighten out until the housing market is allowed to hit bottom, which cannot happen if the taxpayers are compelled to prop up people in homes they cannot afford.

There is a role for the government in resolving this crisis:

Judicial mortgage modification.

photo credits:  www.dreamstime.com and

dreamstime

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Instead of “Guest Host”, we have a Guest Post.

Those of my generation will remember Jay Leno got his Tonite Show start as a guest host for Johnny Carson.

Today, I welcome Paris Mitchell as guest poster.

Let me know what you think?
If you are frantically looking for a way to trim down your current mortgage payments and save some bucks, refinancing your mortgage might be a great option for you. With refinancing your existing mortgage at a lower or fixed interest rate or a longer repayment plan, you can reduce your monthly payments considerably. Refinancing has its complexities as well and you might needmortgage calculators to sort things out. However, if you are planning to hire an attorney to navigate the process, you are making a tiny storm in a tea cup.  You can certainly handle the mortgage refinancing procedure on your own without any external help and support of an attorney.

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Did you know we lend money to the big banks for nearly nothing?

And the big banks turn around and buy 10 year Federal treasury bonds that  yield about 3.5%?

Do you think you could make money doing this?

Yes, no insult to you, but you can train a chimp to do this.

So, how about you and I go to the Federal Reserve and ask for some free money?

That we will pay back, of course.

Not.

Can you or I get a mortgage modification to help us save our house from these same big banks?

Hell, no!

Just to be clear who we are talking about:  Bank of (everything in) America,  J. P. Morgan Chase, Citigroup, and, of course, the company we all work for, well, at least, the one who profits from all of us, Goldman Sachs.

Can you say, corruption?

Isn’t the Federal Reserve System supposed to smooth out the economy, keep it on a steady, but upward, course?

Well, yes, that was the excuse back when it was created over the panic of 1907.

Well, maybe some of the other government agencies set up to protect us are picking up the slack.

Don’t bet your underwater house on it.

The Officer of the Comptroller of the Currency is also supposed to regulate banks.

Back in 2004, it said we will handle that, and pre-empted state regulations of mortgage companies, and credit card companies, and some others.

One size fits all, we will handle it.

Of course, that was one more step in the mortgage mess that has derailed our, make that the world, economy.

The Dodd-Frank legislation of last year reversed that regulatory ruling.

See, the Founders envisioned a system of checks and balances, a federalist system, in which the states handled most laws and regulations.

Check out the 9th and 10th Amendments to our Constitution some time.

No one in the federal government, including the court system, has seen them for quite a while.

And, in our system, Congress is empowered to make laws, NOT the executive branch, which is what the OCC and other agencies belong to.

But, hey, the OCC knows better than Congress what the country needs, so, as noted by the NCLC

“. . . OCC proposed to make only superficial changes to the 2004 regulation while continuing to give national banks immunity to violate state laws.”

The country is in the very best of hands.

Big Banks Helped, Consumers Screwed

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How are you doing with that loan modification you requested last year?

How is that big bank treating you?

Are they sympathetic to your financial difficulties?

Willing to lower your interest rate?

Help you through these tough times?

Yeah, right.

Hey, its the real world, deal with it, nobody helps them out, right?

Those poor mortgage companies have to make it on their own, nobody helps them.

Not so fast my naieve friend.

Turns out you, in your taxpayer role, have been lowering the interest rate the big banks pay for their money to, literally, next to nothing.

.01%

That’s right, not 1%, not .1%, but .01%.

Well, of course, Credit Suisse, Royal Bank of Scotland, and, the company we all work for, Goldman Sachs, are too big to fail.

You and me:  not so much.

Like the Deltas on double secret probation in “Animal House”, nobody knew about these loans.

The Federal Reserve, actually being a bunch of private banks, did not bother to tell the government.

The banks, not wanting to needlessly worry the stock market, did not even tell its shareholders.

And us?

The poor suckers who are subsidizing the rescue of one criminal class, the mortgage industry, by another criminal class, the federal government?

Hell, no, nobody bothered to check with us.

These “special” loans, from a “special” fund, were given out at a time when the Fed was charging everyone else .5%, of half a per cent.

Which is still cheaper than you and I can get on our mortgages.

But, hey, that is how the banks make all that money, the government lends it to them at artificially low rates, so they can lend it to us, and pocket the difference.

Well, to be fair, they do not keep all of it.

They share a bunch of it with the crooked politicians who keep bailing them out.

Who Gets A Loan When Needed?

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I have been blogging for a long time about how difficult it is for my clients to get mortgage modifications, how the mortgage companies don’t answer questions, lose paperwork, give trial modifications that last forever only to be denied for no reason.

Well, get this:  the Arizona state senate passed a bill, 28-2, that would require mortgage companies to prove clear chain of title, that is, documentation from the original mortgage company all the way through to the mortgage company that was foreclosing, for a foreclosure to go through.

And, if they could not produce that documentation, they would have to pay the homeowner’s attorney fees.

Wonder why this had the mortgage companies quaking in their boots.

But, not to worry, the state representative who was supposed to introduce the amendment to a bill in the state House was late, and missed the session, and the bill died in the state House.

Representative Seel stated that he had decided not to propose the amendment, because he was told it would have no chance to pass anyway.

A realtor constituent of Seel had him pushing the bill, and happened to check the mortgage records on Seel’s house after this apparent switcheroo.

This realtor constituent had been helping Seel try to get a mortgage modification from Ocwen, his mortgage company.

Seel had been turned down twice and was about to lose his home.

Then, two days before he missed his chance to introduce the legislation in the House, Ocwen changed its mind, and gave him a modification.

Not just any modification:  they knocked the principal from $190,000 to $88,000.

Can you connect the dots?

I can.

Corruption.

Government bailing out mortgage companies and homeowners getting screwed.

I wish this were a unique story, but, it mirrors what the federal government has been doing since the real estate bubble burst, bailing out the big boys while foreclosures run rampant.

Politician Gets Mortgage Modification

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A client, who works for one of the big mortgage companies, told me they really do not have a modification department, just a place where a bunch of faxes land.

Which jives with everything I hear.

He mentioned one of the big problems with the HAMP program.

To be eligible, your loan has to be escrowed for taxes and insurance.

That is, even if you are, and have always been, current, paying your own taxes and insurance, if you want to get into a HAMP loan, you have to change that.

This will increase your monthly payment, as the mortgage company now has to collect enough to pay your next tax bill, and next insurance bill.

This is what we call counter-intuitive:  you are trying to get a LOWER mortgage payment.

And, if you get a trial payment, and make the lower payment for a period of time, but don’t get the permanent modification, now you have to catch up the difference, plus late fees.

That whacks your credit rating.

You can expect lost paperwork, and SLOW response time from your mortgage company.

I have heard of the three month trial period lasting 18 months or more.

Most homeowners do not get modifications, and most who get them default again.

So, the truth is: just applying for a mortgage modification can hurt you.

The alternative?

If you cannot afford the payments, stop making them.

But, then the mortgage company will foreclose, right?

Maybe, and, after a long time.

The average foreclosure does not happen until the homeowner is almost a year and a half behind.

That is a lot of money you can save toward buying or renting another place to live.

But, you say, how can I get another mortgage?

Why, I say, do you want one?

Land contract, owner financing, is another option.

A lot of homes out there have been for sale for a  long time.

The Truth About Mortgage Modifications

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(image from Bank of America complaint site)

Rumor is the mortgage industry has been offered $20 billion to get out of the mortgage fraud mess they created.

Offered by whom?

Why, the captive regulatory agencies, which were either (1) incompetently asleep at the wheel while the looting went on, or (2) have been bought off.

Take your pick.

You gotta love the reaction of Mark Hanson on his blog:

The $20 Billion Multi-Agency Mortgage Servicer Settlement – A Pee-Hole in a Snow Bank

As an example of why this enormous amount of money is so insignificant compared to the crisis at hand, new foreclosures in California were $9 billion worth of mortgages.

For January, 2011, alone.

And this is after the mortgage servicers slowed down foreclosures while they allegedly “checked” their work, after the scandal broke about how employees were signing hundreds of affidavits a day, purporting that they had knowledge of a particular mortgage account’s default status.

Robo-signers.

And robo-lawyers.

Mr. Hanson is a former mortgage banker, who left the dark side when he saw what was happening.

He believes the average HAMP loan modification, is riskier than the average sub-prime loan.

And we know what happened to those.

Hanson estimates we are only a quarter of the way through clearing the bad real estate bubble loans.

Ouch.

So far, I have been giving you the truth, so, time for some lies:

The mortgage industry is modifying eligible mortgages on its own.

Uh, no.

Although not foreclosing on everyone, few homeowners are getting mortgage modifications.

The Treasury Department says the servicers are improving.

Lie.

That the proposed settlement, discussed above, will actually help.

Lie.

Homeowners owe $744 billion more than their homes are worth, and that number is headed up, according to Robert Shiller:

“My intuition rates the probability of another 15, 20, even 25 percent real home price decline as substantial,” the Yale economist told reporters.

Read more: WSJ: Bankers Trash Obama’s New Mortgage Program

Truth And Lies About The Foreclosure Crisis

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Do not fall for the con.

Con, short for confidence, as a con man first has to get your confidence before ripping you off is possible.

Warning letters have been by the federal government to 71 companies, plus the following actions:

Federal Loan Modification Center, bailout.hud-gov.us, and Home Assure d/b/a Expert Foreclosure, bringing to 11 the number of outfits it has taken action against this year already.

Of course, the hustlers guarantee they can stop foreclosure?

Bull—t.

If it sounds too good to be true, well, it probably is a scam.

There are not many situations more stressful than the prospect of losing your house.

The crooks offer, relief.

For not a lot of money up front.

But, you always have to fork over something up front.

Try getting a written guarantee from them.

Generic web site promises and phone pitches are worthless.

They will make you sign something, get a written commitment of results from the scammer.

That is one way to weed them out.

In Michigan, there are numerous non-profit housing counselors that will charge you NOTHING.

One factor that favors the scammers is how long the foreclosure process takes.

You may not realize for months that you have been taken.

I have heard of scammers actually conning people into sending them the house payment.

They can get 6, 7, 8 or more payments before the homeowner realized the house has been foreclosed.

Another hustler would file bankruptcy in the homeowner’s name, keeping even more payments.

The crooks are hard to find.

Many of the scams are run online, with no physical address.

Many are operated out of state.

So, if you cannot find the bad guy, you cannot sue him.

And if he is out of state, very difficult to collect, if you sue and win a judgment.

Better not to get involved.

Mortgage Modification Company – Help Or Scam?

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Suzy Homeowner poses the following to me this week:  My home is way underwater, worth less than what I owe, I am current on the payments, I need to move, what can I do?

Well, if you can afford the payments, you can keep paying.

But she owes $150,000 on a place worth $60,000 on a good day.

Being in the Detroit, Michigan area, most likely, that value is headed down for at least the next year.

But the neighborhood has declined, I need a bigger, safer place for me and my kids.

Hey, safety first, I always say.

Strategic default is one option.

That is walking away.

In Michigan these days, the foreclosure process usually takes over a year.

You can save your money during that time to move into the next place.

Obviously, there are moral implications to this choice, your mortgage did not say you do not have to pay if the value goes down, nor does it say you pay more if the value goes up.

You can get rid of a second or third mortgage in a Chapter 13 bankruptcy, what we call lien stripping.

But, that does nothing to the first mortgage.

Bankruptcy law still has not been changed to allow cram down of a first mortgage on your principal residence.

Now, as I told Suzy Homeowner, if you can move to another residence, and rent out your home, then, it would not be your principal residence, and you could cram down that first mortgage.

So, in her case, the bankruptcy court would determine the value of the house, that is, if the mortgage company bothered to object.

Same with the interest rate, which the court also determines.

So, if the mortgage company decides it is not worth paying lawyers and expert witnesses for evidentiary hearings on these issues, her bankruptcy plan gets approved.

And the mortgage is re-written as $60,000 at, say, 4% for 30 years.

I Want To Get Out Of My Mortgage

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