This is attributed to increasing job losses according to Jay Brinkmann, Chief Economist of the Mortgage Bankers Association (MBA).   Brinkmann reinforced this by saying “Mortgages are paid with paychecks, not percentage point increases in GDP”.  I am sure this statement will not endear him to President Obama and Tim Geithner.  Most probably, both immediately took him off their Christmas lists.

Considering the employment picture is unlikely to improve anytime soon, it is highly likely the foreclosure numbers will continue their upward march.  For those folks expecting some additional help from the various government programs, they are likely to continue to be disappointed with these programs.  This is because according to the US Treasury Department, referencing the most recent numbers available; as of September 25^th 2009, there have been just 1,080 borrowers in all of America, who had completed the trial loan modification period and received the government’s Home Affordable Mortgage Program (HAMP) loan modification.  This atrocity will be discussed in full in my next article.

With a new record of about 4 million loans now at 90 days or more past due, the resolution of these seriously past due loans will put an additional burden in areas of the country already hard hit with foreclosures.  Once a homeowner gets 90 days past due, the most likely outcome is a bank foreclosure, as the banks will then no longer accept a partial payment and are continuing to deny the vast majority of loan modification requests.

With one of the primary criteria in obtaining a loan modification, a stable job and income on the part of the homeowner, anybody losing their job and unable to supply verification of an income, will receive a loan modification denial letter.  With the jobless numbers continuing to increase, the loan modification denials will also continue to increase.  This is actually a benefit to the banks as it has been shown in numerous cases they routinely look for ways in which to turn down modification requests.

Homeowners in the States of; Arizona, California, Florida and Nevada are the hardest hit.  The latest numbers from the MBA reveal 43% of all foreclosures started in the 3^rd quarter, originated in one of these four States.  These happen to be States which had substantial increases in home prices during the 2000-2006 time period and some of the largest declines in price since 2007.  The large decline in home values combined with staggering job losses has combined to devastate entire regions within each State.  There is unlikely to be any quick fix or return to normalcy for the millions of homeowners affected.

The advertising done by many of these loan modification companies and law firms borders on illegal, and is certainly unethical.  Many ads guarantee results and offer a money back guarantee.   Other ads talk about the past successes of the company and insinuate your outcome will be just as successful.  The reality is these ads often bring in so much business that the company doesn’t have the staff to properly handle the case loan and not much work is ever done.  Attorneys at these firms seldom spend more than 15 minutes on a file, hardly enough to actually do any real work.  Horror stories abound from homeowners who believed the sweet words of a loan modification sales person and ended up being ripped off.

If this has happened to you or if you’re considering a loan modification company or law firm for help in modifying your loan, there are steps you can take to stop these companies and protect yourself.

First, before giving anybody any money, check with of the following entities.  If you have already signed up and paid a company and you feel you have been scammed by them, you can file a complaint with all of the following;

1. The FTC at www.ftc.gov.  The FTC has taken action against approximately 100 loan modification companies and law firms nationwide.  Many of these companies and even law firms have been shut down by the FTC.

2. Your State Attorney General’s (AG) office.  Every State has an AG and they all have a web site.  Many of them have links on the first page regarding loan modification scams and other such information.  You can find your State AG here:  www.naag.org/attorneys_general.php

3. If the company should happen to be “attorney backed” or even a law firm, get as many attorney names as possible and then go to your State’s Bar association.  Every State has a Bar association which licenses attorneys and gives consumers information such as any disciplinary actions against an attorney.  Any complaints filed against an attorney are investigated by the Bar and can result in an attorney losing their license.

4. The Better Business Bureau (BBB).  You can file a complaint with them and also check on a company’s history.  While the BBB has its flaws, it does a good job of tracking complaints against companies.  Although not every company is listed in the BBB, many are and if they’re not, that should be taken as a signal that you need to continue investigating the company.

In addition, any company or law firm a homeowner is considering hiring, should be looked up in the search engines.  You can use an internet search engine such as Yahoo Search or Google and you may be amazed at what you find.  Look up the company name and also the names of the company owners, managers and attorneys.  If the agent you’re speaking with doesn’t want to give you that information, then you don’t want to do business with them.  When you start running the names through the internet search engines, if you see results come back from places like ripoffreport.com and complaintsboard.com, you probably want to stay away.

In multiple cases across the country judges are stopping the foreclosure process cold! Most homeowners don’t know about the legal requirement that a bank must possess the Note, which is the legal document, signed by the borrower, outlining the terms of the loan. For those homeowners who know about this requirement, it can stop the foreclosure process indefinitely. It would seem to be a simple request, that the foreclosing bank produce the original Note on the borrower’s home, to show that they are legally entitled to collect the borrower’s money and foreclose on the borrower’s home if they can’t pay.

However, in the late 1990’s the banking industry got greedy. What a surprise. And instead of giving out loans and then collecting on them as had been done for many decades, the banks decided to give out the loans to homeowners and then turn around and sell the home loans to investors for an even bigger profit. The investors in these mortgages bought them in huge quantities, often buying $100 million, or more, in mortgage loans at a time. They would keep the loans for a short time until some other investor came along offering to buy them at a price that let the first investor make a substantial profit. And this game went on and on with the loans often sold to a new investor every year or two.

We all know this game collapsed in 2007 but how does this impact the distressed homeowner today, who is facing foreclosure? It’s very simple. The typical home loan was sold so many times the current investor and their servicing company has no idea as to the location of the original Note on individual loans. Even if they do have an idea as to the location of the original Note, it can often take them months to actually produce it in court.

The homeowner who is aware of this requirement is now in a very powerful position. If they are being foreclosed upon, they can demand the bank produce the Note and prove they have the legal right to collect money from the homeowner and instigate foreclosure proceedings.

A Federal Judge in San Jose, California stopped a foreclosure this Summer (Isabel and Richard Caporale, May 29, 2009), when the homeowners said “Produce The Note”, and Saxon Mortgage Services couldn’t produce the Note. This same process has played out in numerous courtrooms from California to Ohio to Florida and throughout the Nation.

The combination of an increasing loan balance and a decreasing property value leaves many homeowners owing more than their property is worth. Attempts to refinance out of these loans are usually met with failure as tightening lending standards prevent a refinancing from occurring when there’s no equity in the property. In addition, many of these loans were given to people on Stated Income loan programs, which have disappeared in the current banking climate. Currently, borrowers must prove their income to have any hope of obtaining a mortgage loan.

The latest figures show almost 10% of all homeowners stuck in a Neg Am loan are now in default. This is almost 3x’s the default rate on loans which are not negatively amortized. These homeowners are soon going to be foreclosed upon in massive numbers as the majority of Neg Am loans will “reset” in 2010 and 2011. This is when the loan payment jumps up to a mandatory principle plus full interest payment amount. States where real estate values skyrocketed between the late 1990’s and 2006, such as California, Nevada, Arizona and Florida, will be especially hard hit. Throw in the rising unemployment rate, which is now at 10.2% Nationally, and over 12% in California and Nevada, and homeowners unable to obtain a loan modification will find it increasingly difficult to keep their home.

Educating yourself as a homeowner on how to successfully complete a loan modification, is the only way most people with a Neg Am loan are going to be able to keep their home. 90% of all people eligible for a loan modification are being turned down by their bank. All that is needed to turn that around, so that 90% of the eligible people are successful in their loan modification attempt, is the application of the right techniques and strategies. The bank must be made to understand the legal and financial costs of foreclosing are greater than the cost of modifying the loan.

A large increase in foreclosures has pushed the reserve fund at the Federal Housing Administration to a record-low level, according to an independent review of the federal agency’s books released Thursday.

The FHA’s reserves dropped to 0.53% of its total insured mortgages, less than the 2% required by law. The reserves measure how much capital the FHA has beyond the funds it has put aside for expected losses over the next 30 years.

Under most economic scenarios, the reserve fund would remain positive, the independent actuarial review said. The baseline scenario assumes that home prices will fall another 6.5%, leading to a significant increase in foreclosures. However, it is acknowledged that the full impact of future foreclosures is unknown and could create a situation where the reserve funds are negative.  This would then require a BAILOUT from the government, which really means from you and I, the American taxpayers.

The FHA has become a major factor in the housing industry, stepping in to guarantee about a fourth of all mortgages sold in the past year. As of the second quarter, about 50% of all first-time buyers had a mortgage insured by FHA.  Considering the flexible and minimal credit score requirements to obtain a FHA loan, this may well be creating a second round of “sub-prime” problems for the mortgage industry.

In response to the deteriorating position of the reserve fund, the FHA has stopped guaranteeing loans in which the seller provided the funds for the down payment. These are among the most risky mortgages.  It is amazing that this practice of allowing borrowers to put nothing down was ever allowed for a FHA loan, and stopping this now could well be too little, too late.

“There are real risks to the FHA and we are aggressively addressing those real risks with real reforms,” FHA Commissioner David Stevens said. The agency has increased its credit standards and has suspended lenders who violated FHA requirements. Again, the typical adult should be asking “why has it taken so long for them to see the obvious?”

Let us hope that the millions of FHA insured loans do not become another cross for the American taxpayer to bear.

For those who are hoping for a quick rebound in the job market, there is likely to be a lot of disappointment. Janet Yellen, president of the Federal Reserve Bank of San Francisco, warned rising unemployment is likely to continue for a sustained period of time and could crimp consumer spending. As consumer spending accounts for about 70% of the American economic activity, this could substantially delay any real economic recovery.

Currently, it appears to me all this talk about an ongoing economic recovery is a bunch of smoke and mirrors. I do not see any sign of it in my area of Southern California and in talking with people all across the country, I have yet to hear of any real recovery. Occasionally I speak with somebody who says their industry or company is doing a little better but that is probably less than 5% of the people I hear from. About 95% of the people I hear from tell me their industry or company is doing no better or even worse than ever. Most are fearful for their jobs.

In his speech, Dennis Lockhart, president of the Federal Reserve Bank of Atlanta, said that “With such a slow rebound, unemployment could well stay high for SEVERAL YEARS to come,” and went on to say that “In other words, our recovery is likely to feel like something WELL SHORT of good times.”

With the U.S. unemployment rate now at 10.2%, the highest rate of unemployment rate in 26 years, and the actual unemployment rate estimated at close to 18%, when accounting for those unemployed who have given up hope and are no longer looking for employment, there is no way we will see an end to our foreclosure crisis for years to come. We are seeing unemployment figures march steadily upward and with rare exception, the business world is not adding jobs.

My best wishes go out to those who are unemployed. I know you are fighting to save your homes and keep your families fed. I have been there myself so I know your pain.

If only we could see the Future! Here we go again on this merry-go-round of wasted taxpayer dollars.

Five more banks, including a California-based institution that reportedly received federal bailout funds in 2008, were closed Friday by regulators, bringing the 2009 total to 120 failed banks.

The latest banks to be taken over were United Security Bank of Sparta, Ga.; Home Federal Savings Bank of Detroit; United Commercial Bank of San Francisco; Gateway Bank of St. Louis and Prosperan Bank of Oakdale, Minn., according to the Federal Deposit Insurance Corp.

United Commercial, which had branches across the U.S. and also in Hong Kong and Shanghai, focused on the Chinese-American market in the U.S. and had obtained a very difficult to get banking license in China, the Los Angeles Times reported.

The Times said United Commercial received $299 million in federal bailout funds last year.

The FDIC estimated United Commercial’s failure would cost its insurance deposit fund $1.4 billion.

The last time more than 100 banks failed in a single year was 1992. By number, banks in Georgia account for one-fifth of all U.S. institutions closing in 2009, with 21 failures, followed by Illinois with 209, California with 14 and Florida with nine.

This is really amazing. We are propping up big banks with taxpayer money and they later fail anyway. While millions of American homeowners are being foreclosed on, banks suck up our tax dollars through these bailouts, and then continue to make bad decisions and cost everybody even more money.

Here’s a novel idea, one that our socialist government may want to think about: What if we didn’t prop up companies like AIG, Fannie Mae, Freddie Mac, GM, GMAC, and all the too numerous to mention by name banks?

Do you think that if we had just let all these companies either make it or not… just like the millions of smaller companies and millions of homeowners are expected to do… that as a country we might actually be better off?

Because I don’t know about you but I am a little concerned about us taxpayers ultimately being on the hook to repay the $700 Billion in bailout money!

Let me know what you think.

Fight the good fight,
Pete Mitchell

Some Information Compliments of MarketWatch, Inc

Apparently those thoughts turned to reality for one LA area homeowner and his wife.  The couple going through foreclosure proceedings, are charged with torturing two loan-modification agents they suspected of fraud, authorities said on Monday.

The couple, Daniel Weston and Mary Ann Parmelee, and three other people are accused of luring their two victims to an office where the men were tied up, held for hours and beaten, a spokeswoman for the Los Angeles County district attorney said.

Police were called after one of the victims managed to escape, said the spokeswoman, Shiara Davila-Morales. The incident occurred on Wednesday in the town of Glendale, just north of Los Angeles.

Weston, Parmelee and the three other defendants each were charged with two counts of torture, two counts of false imprisonment by violence and two counts of second-degree robbery, according to a criminal complaint filed against them.

Weston, 52, and Parmelee, 51, both arrested last week and jailed on $1 million bond, shared a house in the suburb of La Canada-Flintridge that is in foreclosure, authorities said.  “The two allegedly sought loan modification assistance from the victims but believed that nothing was being done and wanted their money back,” a statement from the district attorney’s office said.

Considering the problems this couple now has, anybody who feels they have been scammed should keep thoughts of revenge in their mind, and not act out on them.  Taking the law into your own hands is never a good idea and as we see in this case, has done nothing but cause even more serious problems for these homeowners.  I think it is fair to say that losing their home is now the least of their worries.  I guess the bright side is they won’t have to worry about being homeless.

I have previously written articles detailing where to report possible loan modification scams.  To recap that information, file complaints with the following: 1. The FTC, 2. The State Attorney General, 3. The State Department of Real Estate, 4. The State Bar Association if a lawyer is involved, 5. The Better Business Bureau (BBB) and let these agencies deal with following up, getting the word out to alert others, and prosecuting the people as justified.  It is also a good idea for those who paid with a credit card for services not rendered, to contact your credit card company and request a charge-back for services never delivered.

The subpoena is for records related to Countrywide’s VIP program, which provided mortgages to several Senators and other officials with preferential terms.  Apparently while most of the homeowners in this country were being given mortgages they could not actually afford, and that would cause them to later lose their homes, some of our elected “public servants” were gorging themselves at the mortgage trough!

Countrywide Financial Inc., and undoubtedly others who just haven’t yet been caught, essentially bribed public and regulatory officials with mortgages and loan terms unavailable to the general public.  What was the bribe for, some may ask?  The answer is simple.  These mortgage companies could only fleece America as long as these elected officials and others involved in regulating the mortgage industry were willing to look the other way, while the mortgage companies ripped off unsuspecting homeowners with outrageous loan fees and points, pre-payment penalties, and negative amortization loans that could never be refinanced out of.

It would almost appear to have been an orchestrated move, for the banks to become the major real estate owners of America.  What better way to take over Billions of dollars worth of real estate than by saddling homeowners with so much debt that they would obviously default at some point, thereby allowing the banks to take over the real estate at rock bottom prices.  They could then hold onto the property until they could turn around and sell it at a profit.  This is exactly what is happening as records show the banks are holding onto a higher percentage of their foreclosed properties, rather than putting them on the market at current prices.

Considering that the banks are not really losing anything from their loans defaulting, after all the government bailed them all out and is reimbursing them for any losses, many loans also had Private Mortgage Insurance, aka PMI, to cover any losses, and it is easy to see how the banks are coming out ahead while the American taxpayers are left holding the bag.  And it is not actually the current group of American taxpayers who will have to pay the piper in full.  Sure, there will be higher taxes soon and significant pain for American taxpayers going forward but it is our children who will bear the full cost!  Because the Trillions of dollars of debt our government is pushing onto our backs is so much that it will never be paid off in our life time.  It is our children and even our grandchildren who will suffer the primary burden of paying this money back.

In addition to the subpoena sent to Countrywide and Bank of America, Representative Towns also sent letters seeking information on various mortgage programs run from 2000-2008 by Citigroup Inc., Wells Fargo, JPMorgan Chase & Co., Residential Capital (owned by GMAC) and U.S. Bank Home Mortgage.  Who knows what other secrets are being held by these major banks?  Only time and determined investigators will uncover the skeletons still hidden in the vaults of these banks.  We can only hope that the fleecing of America has stopped!

An Interview With Scott Tucker

This is a special interview I conducted with Scott Tucker, a leader in reverse mortgages. He has help save many seniors from losing their homes to foreclosure through the use of a short-refinace into a reverse mortgage. Learn his secrets on this interview!

[See post to watch Flash video]

Please leave any questions or comments below:

These new California laws, and the similar laws in other States, apply to anybody working on a loan modification for a homeowner.  Whether the person is your next door neighbor, a real estate agent, a foreclosure consultant, or even an attorney, it is now illegal to charge any upfront fees until after the work is done.

It is estimated that up to half of all California companies and people involved in charging for loan modification services, stopped providing that service this week.  The other half are trying to comply or skirt the law through various means.  There are also reports of a small number of people and companies who are ignoring the law and hoping to continue business as usual.  Any homeowner coming across such a company, even if it should be an attorney, should recognize this situation as one where the law is being broken and is a probable scam.

It is of extreme importance that homeowners be aware of these new laws and do not pay upfront fees for loan modification services.  Also be aware of those companies and law firms trying to “piecemeal” their services by breaking the loan modification procedure up into four or five steps and charging a separate fee after each step. They are getting into a grey area and consumers should be wary of such companies.

Some loan modification companies, especially attorneys, are trying to get around these new laws by putting the fee for services into an escrow account or attorney trust account prior to completing all services, and saying this is OK, because the money is not actually going to the company or attorney.  However, the new laws regulating upfront fees are very clear and this tactic is breaking the law.  No homeowner should pay any upfront fee in any manner, not even to an attorney, for loan modification services and this includes the so-called “Forensic Loan Audit.”

To elaborate on that last point, whether it be called a “Review” of your loan documents or anything up to a full blown Forensic Loan Audit, there is to be No Upfront Fee charged.  I recently learned of one company now charging $600 to do a review of loan documents and then advising homeowners of any problems or violations within the loan documents.  What the homeowner is then expected to do with this information, is questionable as knowing there were RESPA or TILA violations is one thing, knowing what to do about them is something else.  At any rate, what this company is doing is a violation of the new California laws prohibiting upfront fees.  Buyer beware!

As a foreclosure survivor myself, I know how stressful a financially insecure time like this can be.  Learn how to get your loan modification done yourself.  It is said that knowledge is power and by taking my Free DVD, you are empowering yourself and taking the right step toward keeping your home!

Just read an article on bloomberg.com talking about the fact that according to the analysts at Amherst Securities Group that there are seven million foreclosures that banks are likely to take over in the coming year.

Now, why this is significant is, a lot of people believe that we are just about out of the woods, that housing prices are starting to bump back up, and we’re all going to be able to go back to business as usual. Well, the banks have seven million properties that have been delinquent and they could have foreclosed on, but they haven’t yet. And the reason is because they can’t sell them. The market is way too weak, so they’ve been holding off on taking over those foreclosures.

Seven million is really a staggering number. Just to kind of put it in a comparison, back in 2005 there were about 1.25 million homes that were foreclosed on. So seven million is significantly greater than that.

What does this mean to you? This means that if you live in a community and more of these homes start coming up as foreclosures and start to be sold, they’re being sold at a fire sale rate. This means that your home is going to go down in value.

So what happens if you’re one of these seven million homeowners who needs to stay in their home? Well, the reality is you have to learn the rules to the game. You have to learn how to stop foreclosure and you have to learn how to get your own loan modification done.

I’ve put together a DVD, which is totally free. You can get it on my website. The DVD is called “The Seven Biggest Foreclosure Lies That Your Bank Wants You To Believe That Just Aren’t True.” If you or someone you know is in this situation, and is looking at, “how do I get to save my home? How do I stop my foreclosure? How do I get my loan modification done without getting ripped off?” Tell them they can get my DVD for free on the website.

I just read a really interesting article in the Chicago Sun-Times. It’s talking about the fact that when a lot of people are being foreclosed on and they’re forced out of their homes, they end up stripping the home of everything valuable.

In fact, in this article it was talking about a million-dollar home. That’s what it sold for in 2006, was a million dollars. And it just resold on the market for,  $375,000, significantly less.

Now, a big part of that is because the housing market has fallen. We all know that. But the other reason why this particular house had fallen so much is the family that lived there took everything out:  the kitchen sink, the copper plumbing, everything.

See, what a lot of people don’t know and they don’t understand is that, first of all, this does hurt the neighbors. Now their homes are going to be valued less because their home sold for so much less. So the neighbors suffer. But did you know that you can get your bank to pay you to move out,? Sometimes you can be paid many thousands and thousands of dollars to move out of your home.

It’s called the Cash For Keys program, and we talk about it in my SecretsToStopYourForeclosure.com website. In fact, if you’re in a situation where you might be foreclosed on and you need information on how to postpone or stop your foreclosure, I’ve got a great video on there, totally free, that’ll tell you how to stop your foreclosure.

Also, you can pick up a copy of my DVD for free, and your bank doesn’t want you to have this. It’s called “The Seven Biggest Foreclosure Lies That Your Bank Wants You To Believe That Just Aren’t True.”

Learn about the Cash For Keys program, learn how you can get your bank to pay you to move out of your house.

The FTC, the Federal Trade Commission, has just announced that they’re planning on doing a nationwide ban on upfront fees for loan modifications.

What does this mean, exactly? This means that all these radio commercials you hear, the TV commercials that you see, the mail that you’re getting, where people are talking about, how they can stop your foreclosure, they’re not going to be able to offer those services and charge a fee up front for it.

They’re not going to be able to charge any fee until all the services that they promise to you are done. Now, there are several problems with this, and I’ve talked about this on many other videos. One of the problems is that, this means most businesses, most legitimate businesses that are offering foreclosure prevention services are going to be out of business. There’s no way they can function if they can’t collect a fee up front. If they have to wait until the entire process is done which is routinely as long as 9 months.

Most companies can not wait that long to be paid. Their business is going to be gone. So what does this mean for the general American Homeowner? How are they going to be able to survive when there’s going to be no one out there to help them? The reality is, they are going to have to do it themselves.

That’s one of the reasons that I have my website and my blog, is that I’ve got all of this information available to you.

I just read a great article in the Wall Street Journal. It was based on a report put out by the National Consumer Law Center. The National Consumer Law Center is a non-profit advocacy group that advocates for low-income Americans. What they did was they reviewed 25 different mediation programs in fourteen different states.

Now, these foreclosure mediation programs are being sold in the States as a way to stop foreclosures, as a way to help out the consumer. See, right now the consumer is yelling and screaming at their politicians to help them out. But politicians have pretty much been bought and sold by every financial institution out there, and the financial institutions are saying, “hey, look, don’t come step on our toes.”

So the politicians are passing laws that they can use as sound bytes in their next TV and radio commercials when they to go run for reelection. The reality is, these things do absolutely nothing to help the American consumer. In fact, one of the staff attorneys for the National Consumer Law Center, his name is Jeffrey Walsh, said this, “under most of the existing foreclosure mediation programs, servicers have all the discretion, and the homeowners have little or no power.” In fact, the article went on say, “without imposing stricter obligations on servicers, it’s not likely that the mediation programs will actually lead to fewer foreclosures.”

The reality is this:  if you or someone you know needs to stop their foreclosure or get a loan modification, you’re going to have to learn the rules of the game yourself. You can’t rely on the government to bail you out, because they only bailed out big banks.

Go to my website, SecretsToStopYourForeclosure.com, and on there I’ve got a great video, totally free, that’ll reveal to you the Number One technique that you can use to postpone and in many cases outright stop your foreclosure. And also on my website, you’ll find out how you can get a copy of my DVD for free. It’s called “The Seven Biggest Foreclosure Lies That Your Bank Wants You To Believe That Just Aren’t True.” Go right now to my website and get your DVD.

Get the education you need to save your home NOW!

Please post your thoughts on the page after you watch the video.

A Deed In Lieu (DIL), which is the term commonly used for Deed In Lieu of Foreclosure, is a home disposition option in which a mortgagor voluntarily deeds collateral property (their home) in exchange for a release from all obligations under the mortgage.

An interesting misconception about a DIL of foreclosure is that many people feel they can just give the home back to the bank at any time, without meeting any qualifying criteria. This is not true.

There are two primary criteria that must be met before banks will accept a DIL, instead of going through the foreclosure process of taking back a home. First, there can not be a second mortgage held by a different bank, than the bank holding the first mortgage. Think about it. In a DIL situation, the home can only be given to one bank. This is of course the bank holding the first mortgage. Therefore, if there is a separate bank holding a second mortgage, they won’t agree to a DIL because they won’t receive anything and will take a total loss on their loan. If the bank holding a second mortgage won’t agree to a DIL, then neither will the bank holding the first mortgage.

The second common misconception about a Deed in Lieu is that a homeowner who wants to walk away from their home, perhaps because the home is worth far less than what’s owed on it, can easily do so through a DIL. The homeowner often thinks the bank will agree to this as it will save the bank many thousands of dollars by not going through the full foreclosure process.

Unfortunately, this is not the case for homeowners who do not have a financial hardship. Banks will not usually agree to a DIL unless the homeowner will verifiably be unable to make their mortgage payment. Typically a homeowner will have missed several monthly mortgage payments and submit financial documents showing they can not make their mortgage payments, before a bank will consider a Deed In Lieu of Foreclosure.

The benefit to obtaining a DIL for the homeowner who has just one mortgage and is unable to make their monthly mortgage payments, is the DIL allows them to walk away from the home without a foreclosure on their credit report. The homeowner will still have any missed payments on their credit history but a DIL is much easier to rebound from and later obtain another mortgage loan, than is a foreclosure.

As mentioned earlier, the benefit to the bank is the cost savings. It costs a bank on average about $50,000 to go through the full foreclosure process. Those attorneys are expensive! So if the bank can avoid most of the expenses of foreclosure, and after exploring every option they feel a DIL is in the best financial interests of the bank, then they will grant a DIL.

Keep in mind the DIL option should only be considered by homeowners who have already explored every possible option for keeping their home. It is seldom the best option and is normally only used when a homeowner must make a decision to either apply for a DIL, or let the home be lost through a foreclosure proceeding.

The California Foreclosure Moratorium is a joke, and homeowners know it! Politicians should remember the old saying: “You can’t fool all the people all the time.” In this case, it looks like they haven’t fooled anybody.

An ongoing Orange County Poll with well over twelve hundred respondents confirms that homeowners aren’t fooled. An incredible 92% of all respondents feel the California Foreclosure Moratorium will either not stop any foreclosures, or may stop only a few. (1)

The perversely named California Foreclosure Prevention Act, also known as the California Foreclosure Moratorium, is supposed to enact a 90 day foreclosure delay on owner occupied homes, where the first mortgage was recorded between January 1, 2003 and January 1, 2008, and provided a Notice of Default has been recorded.

However, the monster loophole which makes this law such a joke is that this new law doesn’t apply if the loan is serviced by a financial institution that has a “comprehensive loan modification program” in place. Any financial institution with such a program in place, can obtain an exemption from the law. As should be known by everybody, this loophole allows every financial institution to obtain an exemption and then ignore this law.

It’s amazing how the law was conveniently written so that none of these institutions actually has to do a loan modification for any of their homeowners; they just have to have a theoretical loan modification program written out and tucked away. You know, something that the CEO can pull out if he’s ever called upon to discuss his bank’s “comprehensive loan modification program.”

So who do we have to thank for giving us this poorly written and ineffective law? Apparently none other than Senate Judiciary Committee Chairwoman, Ellen Corbett (D-San Leandro).

It’s amazing that Senator Corbett, an attorney, could write such a law with such an incredible loophole. Which, by the way, is just the most egregious of many loopholes within the law which was apparently written so that if any financial institution didn’t have a loan modification program in place, they could avoid following the law through numerous other means.

I’m not going to say the law was purposely written by this Senator and attorney so the financial institutions wouldn’t be affected by it and wouldn’t actually have to follow it; however, that is the net effect of this law, due to the way in which it was written. The bottom line is the California Foreclosure Moratorium law is a bad joke played upon struggling homeowners, with the politicians and bankers alike well aware of its irrelevance.

(1) mortgage.freedomblogging.com/2009/02/25/will-californias-foreclosure-moratorium-work/7033/

All of the banks and servicing companies have a Loss Mitigation Department. It is the Loss Mitigation Department that you really need to speak with when you’re at that point and time where a Notice of Default (NOD) has been filed.

Often times you’ll also need to speak with the foreclosure department or an in-house legal department or outside counsel if you’re into a period of time where a Notice of Sale (NOS) or Notice of Trustee Sale (NTS) has been filed, which typically occurs a month to several weeks prior to the actual sale.

When you call your lender, if you ask for the Loss Mitigation Department then the customer service representative is going to know who you’re trying to contact and they can transfer you or provide you with a direct dial phone number.

If you are calling after a Notice of Sale has already been filed then the lender is most often going to start out saying, “There’s nothing we can do, your house is going to be sold.”

You as the homeowner have to be very determined that is not going to happen and you have to simply let the person at the bank know that’s not acceptable and that you are trying to do whatever you have to do to keep your home.

Start a dialogue with your bank and start reviewing what the options are even though you may initially be told there’s nothing the bank can do. Check into qualifying through Obama’s HAMP program and also check into your bank’s modification program, there’s often a difference.

When you hire a law firm or loan modification company to help you save your home, this is the exact same process that they do. Nothing is different. They don’t have a special phone line into someone else. They call the same people that you call and say the same things.

You as the homeowner are going to have to be very forceful and most likely need to ask to speak to a supervisor. You can alert your bank that there are certain legal steps that you may be willing to take to stop the sale if they don’t play ball with you.

The biggest difference between doing a loan modification yourself and hiring a company to help you do a loan modification is PRICE!

The process is exactly the same. There’s no difference between you doing it or paying many thousands to someone else for them to do it.

I have firsthand knowledge that despite all the nonsense advertising that you see out there, there is virtually no difference between a law firm representing a homeowner to do a loan modification, and that homeowner doing the loan modification themselves.

You need to know that despite hiring a law firm to do a loan modification for you, there is no way an attorney is actually going to personally spend all the time, and personally do everything necessary to obtain a loan modification on your behalf. What ends up happening is the attorney may oversee what is being done (if you’re lucky), but the actual work is being done by clerks. The phone calls and paperwork are being done by low-level, low-paid people, and that is just the way the high volume loan modification law firms work.

The volume of business the loan mod companies and law firms must deal with, simply doesn’t allow the attorneys themselves to do all the work. Nobody should think an attorney is going to sit on hold with the bank for 30 minutes every time they need to talk with the bank, then spend time tracking you down and obtaining your information as the bank requests it and giving you updates, and then personally handle the paperwork, phone calls and follow-up with the bank necessary to obtain a loan modification. It is the low level clerk who is actually doing all this work.

Did you know that many of the law firms specializing in loan modifications have just one attorney for every 300-400 clients? I personally know of one law firm, which has recently and fortunately been shut down by the FTC, which had just one attorney for every 1,000 clients! Pity all those homeowners. Believe me when I tell you that you’re just a number and a big paycheck to these companies and law firms.

If you are willing to spend some time on the phone with your bank, go through the necessary steps and be persistent, you can do your own loan modification and save yourself many thousands of dollars.