Another Loan Modifcation

We got a Chase Hamp Modification today HAMP Tier 1 Loan Modifcation Offer today

with a $177, 934.78 principal forgiveness,and a   2% interest rate to start capped in 5 years at 4.875%!

Bank of America Lied to Homeowners and Rewarded Foreclosures, Former Employees Say

Bank of America employees regularly lied to homeowners seeking loan modifications, denied their applications for made-up reasons, and were rewarded for sending homeowners to foreclosure, according to sworn statements by former bank employees.

http://www.propublica.org/article/bank-of-america-lied-to-homeowners-and-rewarded-foreclosures

Loan Modification Update

New Modification Program

The Federal Housing Finance Agency will require mortgage servicers to offer a streamlined modification program to borrowers with loans owned or guaranteed by Fannie Mae and Freddie Mac, starting in July. The offers will be sent to homeowners who are at least 90 days behind on their loans but no more than two years behind. To qualify, borrowers must owe at least 80 percent of the home's value.

The modification reduces the loan's interest rate and extends the loan term to 40 years.
Minimal paperwork:  Borrowers won't be required to submit any financial documentation to the lender to get approval. The loan modification becomes permanent after three payments are made during the three-month trial period.


Ginnie Mae Loans

Your just screwed- no mod for you!



Borrowers seeking low-payment mortgages will be charged for mortgage insurance for the life of their loans if they don't get their Federal Housing Administration mortgages by June 2.

The FHA currently requires borrowers to pay for mortgage insurance on FHA loans until the balance reaches 78 percent of the original value of the home.

Pay forever:  Once the change goes into effect, all new FHA loans with less than a 10 percent down payment will carry mortgage insurance until the loan is refinanced or paid off. Loans with a 10 percent down payment or greater will have to pay for mortgage insurance for at least 11 years.
For borrowers who plan to stay in their homes for less than 10 years, the new rules won't make that much of a difference, says Cameron Findlay, chief economist at Discover Home Loans. That's because normally, it takes borrowers about 10 years to reach the required loan level for the insurance to cancel anyway.

Mortgage Rates

The Mortgage Bankers Association estimates the 30-year fixed rate will reach 3.9 percent by the end of the first quarter this year. That's not as good as the superlow rates that borrowers got in December 2012, when the 30-year fixed hit a record low of 3.5 percent in Bankrate's weekly survey

Freddie Mac Rolls Out New Standard Modification

http://www.freddiemac.com/sell/guide/bulletins/pdf/bll1116.pdf

The Standard Modification replaces Freddie Mac’s classic modification, which is a debt coverage ratio mod, and is part of the Servicing Alignment Initiative underway to bring the two GSEs’ protocol for handling defaulted loans in line with one another.
Freddie Mac says the new formula will help servicers simplify underwriting by using a standard set of modification terms, including a 5 percent interest rate, for all eligible borrowers.


The new Standard Modification is available to borrowers who don’t qualify for the government’s Home Affordable Modification Program (HAMP), and includes a trial period to help ensure borrowers can sustain their modified mortgage payments and reduce re-default rates in servicers’ Freddie Mac portfolios

Shared Appreciation

Ocwen Financial Corp. has initiated an equity-sharing loan modification program designed to assist underwater borrowers. Under the Shared Appreciation Modification (SAM) program, which Ocwen began piloting last August, the principal of a delinquent loan is written down to 95% of the current market value of the home. The written-down portion is forgiven in one-third increments over the next three years, provided the borrower stays current on his or her mortgage. When the house is later sold or refinanced, the borrower must share 25% of the appreciation with the investors that own the loan.


http://www.globenewswire.com/newsarchive/ocn/ocn_news.html


http://realtormag.realtor.org/daily-news/2011/07/27/bank-we-ll-reduce-your-loan-you-share-future-appreciation

Wells Fargo Relies on Own Programs for 86% of Mods

Eighty-six percent, or 568,548, were through the California-based lender’s own modification programs. Loans restructured through the federal government’s Home Affordable Modification Program (HAMP) tallied 95,647.


Eighty-six percent, or 568,548, were through the California-based lender’s own modification programs. Loans restructured through the federal government’s Home Affordable Modification Program (HAMP) tallied 95,647.


“Only 7.22 percent of all first mortgage and home equity loans serviced by the company – including loans originated by Wells Fargo and those originated by other lenders – were past due or in foreclosure in the first quarter of 2011,” Schrettenbrunner explained.

https://www.wellsfargo.com/downloads/pdf/invest_relations/1Q11_10Q.pdf

For customers who are 60 days or more past due who choose to work with the company, Wells Fargo says it has been able to help seven out of every 10 avoid foreclosure.


The company reports that fewer than 2 percent of the loans secured by owner-occupied homes and serviced by Wells Fargo proceeded to a foreclosure sale in the last 12 months.

South Carolina Halts Foreclosures with out loss Mitigation

The Supreme Court of South Carolina issued an administrative order on Tuesday halting all pending foreclosure actions and foreclosure sales on May 9th, until the lender can demonstrate they have worked with the borrower to pursue a loan modification or other loss mitigation option. Chief Justice Jean Toal says the purpose of the statewide order is to ensure mortgage foreclosures are not inappropriately concluded while an alternative resolution is being negotiated - the practice commonly referred to as dual-tracking.

http://www.dsnews.com/articles/south-carolina-supreme-court-halts-foreclosures-without-loss-mitigation-2011-05-03

http://www.sccourts.org/courtOrders/displayOrder.cfm?orderNo=2011-05-02-01

Prevention and Sound Mortgage Servicing Act

Rep. Maxine Waters (D-California) has revised a bill she’s brought to the table several times before that would compel lenders to engage in what she says are “reasonable loss mitigation activities” for all delinquent homeowners.

“In light of the slap of the wrist our regulators are preparing to give 14 servicers who admitted to breaking the law, legislation to require loss mitigation prior to foreclosure is needed now more than ever before,” said Rep. Waters. “It’s the only way to protect homeowners and to prevent foreclosures.”


Waters has reintroduced an updated version of the Foreclosure Prevention and Sound Mortgage Servicing Act (H.R. 1567). It’s legislation she says could be a step in the right direction for ending the foreclosure crisis and holding servicers accountable.

The bill places one entity in charge of modifying primary and secondary liens and requires principal reduction for underwater mortgages.


A spokesperson from Waters’ office explained that this “one entity” refers to the servicers/mortgagee of the first lien. For example, if a borrower has two mortgages, with the second being a subordinate lien, under Waters’ legislation, the first lien holder would have primary responsibility for modifying both loans, with the second modified in proportion with the first.




According to Waters’ office, the current protocol is that when first liens are modified, generally nothing happens to seconds; or first-lien holders will refuse to modify unless subordinate lien holders modify as well, and seconds hardly ever modify.

A copy of Waters’ revised bill has not yet been logged in the congressional tracking system. Although her latest version has since been updated, a copy of the previously introduced legislation can be viewed:
http://www.govtrack.us/congress/billtext.xpd?bill=h111-3451

Good Article on Loan Modifications

http://www.mortgageorb.com/e107_plugins/content/content.php?content.8335

Banks Face More Mortgage Loan Write-Downs under Settlement Proposal

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March 3, 2011

Banks Face More Mortgage Loan Write-Downs under Settlement Proposal

U.S. banks received a proposal yesterday from state attorneys general and several federal agencies that could require them to reduce loan balances of troubled mortgage borrowers, the Wall Street Journal reported today. The document, sent to the nation's largest mortgage servicers, does not specify penalties or fines but instead represents a detailed code of conduct for how they must treat borrowers throughout the loan-modification process. Banks have yet to receive a separate settlement proposal to pay for damages prompted by the foreclosure-document handling crisis that began last fall. Yesterday's document focuses instead on improving the way that banks treat borrowers who are seeking modifications or are going through foreclosure. The proposal represents the clearest indication that state attorneys general are working with the Obama administration and other regulators to pursue a significantly broader settlement against the banks. Some state attorneys general and federal agencies are pushing for banks to pay more than $20 billion in civil fines or to fund a comparable amount of loan modifications for distressed borrowers.



http://online.wsj.com/article/SB10001424052748703752404576179272962854518.html?mod=WSJ_hp_LEFTWhatsNewsCollection#printMode

Bank Chief Rejects Idea of Reducing Home Loans

Showing resistance for the first time against government pressure to write off tens of billions worth of mortgage debt, Bank of America executives said yesterday that the idea was unworkable and warned that it would be unfair to borrowers who had managed to stay current on their loans, the New York Times reported today. "There's a core problem that if you start to help certain people and don't help other people, it's going to be very hard to explain the difference," said Brian T. Moynihan, the chief executive of Bank of America. "Our duty is to have a fair modification process." All 50 state attorneys general, as well as a host of federal agencies, are pushing for a settlement over investigations into foreclosure abuses by major mortgage servicers that could cost the industry $20 billion or more. Industry experts estimate that nearly a trillion dollars worth of mortgage debt is "underwater," a result of house prices having fallen since the original loans were made. Federal officials hope a settlement with the servicers will help individual borrowers and provide a cushion for the weak housing market.
http://www.nytimes.com/2011/03/09/business/09bank.html

Four Federal Foreclosure Mitigation Programs on the Chopping Block

Rep. Spencer Bachus, chairman of the House Financial Services Committee, announced this week that he has scheduled a subcommittee hearing and full committee markup of four bills that will terminate what he says are "failed and ineffective housing foreclosure programs." On the chopping block are the Home Affordable Modification Program (HAMP), HUD's Neighborhood Stabilization Program, the Federal Housing Administration (FHA) Short Refi Program, and the Emergency Homeowner Relief Fund passed under the Dodd-Frank Act.

http://www.dsnews.com/articles/four-federal-foreclosure-prevention-programs-on-chopping-block-2011-02-24

U.S. Pushes for Deal in Mortgage-Servicing Cases

The Obama administration is trying to push through a settlement over mortgage-servicing breakdowns that could force America's largest banks to pay for reductions in loan principal worth billions of dollars, the Wall Street Journal reported today. Terms of the administration's proposal include a commitment from mortgage servicers to reduce the loan balances of troubled borrowers who owe more than their homes are worth. The cost of those writedowns will not be borne by investors who purchased mortgage-backed securities. If a unified settlement can be reached, some state attorneys general and federal agencies are pushing for banks to pay more than $20 billion in civil fines or to fund a comparable amount of loan modifications for distressed borrowers.


http://online.wsj.com/article/SB10001424052748703842004576162813248586844.html?mod=WSJ_business_LeadStoryCollection#printMode

Servicers Completed 1.24 Million Non-HAMP Loan Mods in 2010

http://www.dsnews.com/articles/servicers-completed-176-million-non-hamp-loan-mods-in-2010-2011-02-02



Though servicers seem to be having minimal success with the Home Affordable Modification Program (HAMP), final 2010 data released by HOPE NOW shows that its members completed 1.24 million proprietary loan modifications last year. That number is more than double the 512,712 HAMP modifications completed by servicers last year. HOPE NOW's data show that there were 1.06 million foreclosure sales in 2010, compared to 1.76 million total loan modifications.

Cal App Allows Fraud Exception to Parol Evidence Rule in Loan Mod/Forbearance Case

The California Court of Appeals, Fifth Appellate District, recently held that the fraud exception to the parol evidence rule applies to fraudulent inducement claims, in connection with a loan forbearance and modification effort.


A copy of the opinion is available at http://www.courtinfo.ca.gov/opinions/documents/F058434.PDF

A number of commercial borrowers filed a complaint which alleged causes of action involving fraud, negligent misrepresentation, rescission, and reformation concerning a written forbearance agreement with Defendant Fresno-Madera Production Credit Association.

The borrowers alleged they were induced to enter into the forbearance agreement by “defendant’s oral misrepresentations of the terms contained in the written agreement.” These alleged misrepresentations included promises made prior to and at the execution of the written agreement, wherein the borrowers alleged that the lender stated the forbearance would be for two years, and the collateral property would consist of two orchards, not the borrowers’ residence or truck yard. The executed agreement provided only that the lender would forbear from collection until July 1, 2007, and included the borrowers’ residence and truck yard as collateral property. Following a failure to make the payments due under the agreement, the lender recorded a notice of default; however, the borrowers then repaid the loan.

The lender’s motion for summary judgment was granted by the lower court based on the borrowers’ failure to perform pursuant to the written forbearance agreement, and the parol evidence rule’s barring “any prior or contemporaneous oral agreement” which changes or adds to “the terms of an integrated written agreement.”

The Appellate Court stated that the only issue on appeal was “whether evidence of defendant’s oral statements, proffered by plaintiffs in opposition to the motion, was properly excluded by the trial court.”

The Court reviewed the policy basis of the parol evidence rule, noting that the rule stems from the concept of contract “integration” whereby “the parties to an agreement incorporate the complete and final terms of the agreement in a writing.” Extrinsic evidence is thus excluded “because it cannot serve to prove what the agreement was” as the writing itself determines this “as a matter of law.” However, the Court noted that there are exceptions to this rule, such as “to establish illegality or fraud.” (Emphasis added by the Court). However, the Court noted that this exception has been limited by the California Supreme Court decision in Bank of America etc. Assn v. Pendergrass (1935) 4 Cal.2d 258, which limits the fraud exception “making it inapplicable when the evidence is offered to show a promise contradicting the written agreement.”

In their appeal, the borrowers pointed to more recent California decisions, including Pacific State Bank v. Greene (2003) 110 Cal, App. 4th 373, which drew a distinction between parol evidence of a “prior promise made without any intention of performing it” which contradicts the terms of a written contract, and “parol evidence of a contemporaneous factual misrepresentation of the terms contained in a written agreement submitted for signing.” The Appellate Court held that in the latter case, extrinsic evidence would not be admitted to “alter, vary, or add to the provisions of an integrated agreement” but would be allowed to prove that the written contract was not in fact the integrated agreement intended by the parties.

Based on the above analysis, the Appellate Court held that the Pendergrass standard “did not intend its limitation on the fraud exception to the parol evidence rule to extend beyond evidence of promissory fraud.”

In the instant case, the Court found that the borrowers' “extrinsic evidence of the alleged misrepresentations made by defendant’s representative should have been admitted in opposition to defendant’s motion for summary judgment.” Accordingly, the Appellate Court reversed the judgment of the trial court, with directions to vacate the order granting summary judgment, and to enter a new order to denying summary judgment except as to select causes of action.

Report Studies Race Differentials In Modification Efforts

hn Clapp

Vol. 4
Issue 9
January 2011

John Clapp, Monday 03 January 2011 - 00:00:00

Although many researchers have concluded that delinquency and foreclosure rates are disproportionately high among minority borrowers, do racial or ethnic disparities exist in terms of who receives a loan modification? According to a newly published report from researchers at the Federal Reserve Bank of San Francisco, only very narrow differences are discernable, and they may run counter to popular belief.

In a report titled "Who Receives a Mortgage Modification? Race and Income Differentials in Loan Workouts," authors J. Michael Collins, an assistant professor at the University of Wisconsin-Madison's department of consumer science, and Caroline Reid, a manager at the San Francisco Fed's research group, found that black, Hispanic and Asian American borrowers are marginally more likely to receive a modification and that the modifications have slightly larger interest-rate reductions than those for similarly situated white borrowers.
Collins and Reid's study focused on subprime loans originated in 2005 in three primarily nonjudicial foreclosure states: Washington, Oregon and California. The researchers matched loan-level Home Mortgage Disclosure Act data, which contain information on borrower race and ethnicity, with loan information from Corporate Trust Services (CTS) of Wells Fargo, a large trustee covering 94 servicers. Of the borrowers whose loans were at least 60 days delinquent, 11% of black borrowers, 9% of Hispanic borrowers and 6% of Asian American borrowers received a modification. By comparison, 5% of white borrowers' loans were modified.
"This provides preliminary evidence that minorities are no less likely to receive a loan modification than other borrowers," the report says of the figures, which control for delinquency status but not necessarily other variables. Even once the other variables were considered, Collins and Reid found no significant racial or ethnic disparities, adding, "In fact, blacks/African Americans are slightly more likely to receive a loan modification than whites."
The authors add an important caveat to their conclusions: Their research contains data on permanent modifications only, failing to factor in borrowers who applied for modifications but were rejected. "If black or Hispanic borrowers applied for a loan modification at higher rates than white borrowers, and were either denied a permanent modification or were thwarted by the lengthy and confusing application process, racial and ethnic disparities in the loan modification process could still exist," the authors write.

The researchers observed several noteworthy patterns in the way servicers prioritize modifications. For example, borrowers whose original loans were "high cost" are more likely than other borrowers to receive modifications. Meanwhile, servicers' loan modification decisions appear to ignore local economic factors that may contribute to foreclosure rates, leading the authors to comment that "neither the current house price index nor the local unemployment rate has any significant effect on the likelihood of receiving a loan modification." This trend persists despite research that indicates declining home values are strong predictors of default, Collins and Reid explain.

Although minority borrowers are generally at a higher risk of foreclosure than white borrowers prior to modification, the risk level evens out after modification, the researchers add, calling modifications "an effective way of preventing foreclosures for this population." Furthermore, Collins and Reid found that minority borrowers received slightly more generous terms post-modification. Black borrowers - whose interest rates were 11 basis points higher, on average, than white borrowers' rates prior to a loan modification - pay a slightly lower rate than white borrowers following modification. Hispanic and Asian American borrowers also receive slightly deeper rate reductions, the authors write, adding that the differences are not statistically significant.
Collins and Reid say their research should encourage future studies on how and why servicers' modification efforts have avoided the racial disparities that have historically plagued loan origination.

"Are there lessons from the loan modification process that could help us to design more sustainable paths to homeownership going forward?" the authors ask, noting that housing counselors have served an important role as trusted third parties in many modification cases, helping borrowers to understand the process and terms involved.

Collins and Reid further say that while their conclusions appear to reflect positively upon the loan modification process, "the scale of loan modification is still facing well short of impending foreclosures." The authors also caution that servicers' unwillingness to reduce principal balances will limit the effect of loan modification campaigns.

(Please address all comments regarding this article to John Clapp, editor of Servicing Management, at clappj@sm-online.com.)

http://www.hopenow.com/



Data released by the organization Monday shows that the industry completed close to 150,000 permanent loan modifications during the month of September alone – 120,000 of which were through servicers own proprietary programs and 27,840 under the federal government’s Home Affordable Modification Program (HAMP).

HOPE NOW says servicers have been granting permanent loan modifications to struggling borrowers at a steady pace of about 150,000 per month. But many consumer advocacy groups, and even federal watchdog agencies such as the Congressional Oversight Panel, say their efforts are unfortunately overshadowed by the sheer volume of delinquencies.

Loan Officers

Residential mortgage loan officers at banks, credit unions, and other federally regulated financial institutions are now required to register their names and fingerprints with a national database.


Residential mortgage loan officers at banks, credit unions, and other federally regulated financial institutions are now required to register their names and fingerprints with a national database.

Six federal agencies – including the Office of the Comptroller of the Currency (OCC), Federal Reserve, FDIC, Office of Thrift Supervision (OTS), Farm Credit Administration (FCA), and National Credit Union Administration (NCUA) – approved new rules Wednesday that say all mortgage originators who are employees of both state and federally regulated lenders must meet the requirements of the Secure and Fair Enforcement for Mortgage Licensing Act (S.A.F.E. Act).

The S.A.F.E. Act was passed two years ago and creates a central database of mortgage originators’ and mortgage brokers’ names and fingerprints in order for regulators to perform background checks and keep tabs on where individuals are operating.

http://www.dsnews.com/articles/index/regulators-issue-safe-act-rules-for-bank-loan-officers-2010-07-29

NPV Test

The Net Present Value test is a complex computer model used by loan servicers to determine whether a homeowner qualifies for the federal loan modification program. The test compares two scenarios – modification and foreclosure – and determines which would be more profitable for the lender. If it’s foreclosure, the lender has no obligation to modify the loan. But the model is a black box. What goes in isn’t entirely clear, and what comes out isn’t always reliable.




http://www.fdic.gov/consumers/loans/loanmod/FDICLoanMod.pdf

U.S. REPORTS FEWER ENROLLEES, MORE DROPOUTS FROM FEDERAL MORTGAGE RELIEF PROGRAM

The Obama administration's marquee foreclosure-prevention initiative continues to struggle, as government data released yesterday shows that fewer homeowners are enrolling in the program and more are losing their federal mortgage aid, the Washington Post reported today. Lenders enrolled homeowners into the mortgage relief effort, known as Making Home Affordable, at a slower pace last month after federal officials tightened the qualification process. Since the program's launch last year, nearly 340,000 homeowners have received a permanent loan modification that lowers their mortgage payment for five years. However, a growing number of borrowers are failing to move from the program's initial stage into a permanent loan modification. Lenders have said that many homeowners are failing to make the reduced loan payments and others have not been able to prove they qualify for mortgage assistance. The number of borrowers dropped from the program, about 436,000, eclipses those who have been helped, according to Treasury Department data. More than 100,000 borrowers lost their mortgage aid in May.

http://www.washingtonpost.com/wp-dyn/content/article/2010/06/21/AR2010062104705_pf.html