News & Events
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Monday, April 26, 2010
Home loan limbo
Andrew Tesnakis tried to do everything right. He saved a piece of each paycheck. He avoided extravagant spending. When he refinanced his Northeast Portland home in 2001, he opted for a 15-year mortgage so he could pay it down fast.
Since losing his job in August 2008, however, Tesnakis has joined millions of Americans worried about keeping their homes — and frustrated by the $75 billion federal program that’s supposed to help.
The Home Affordable Modification Program, unveiled in February 2009, is designed to reduce monthly mortgage payments for struggling borrowers. A year after its launch, only 6.8 percent of the nation’s 3.4 million eligible loans have been permanently modified to have lower payments...
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Monday, April 26, 2010
How Much Does Society Owe to People Who Don't Pay Their Debts?
One regular feature in media coverage of the mortgage loan modification process is people who either default or threaten to default, get into a loan modification program, then bellyache that doing so has lowered their credit scores.
Maybe that shouldn't be surprising in this post-shame age, but as is often the case when you look at the landscape of bad borrowing, the penalties for defaulting are not particularly onerous. In fact, you could make the case that they're not onerous enough.
Smarter people seeking loan mods are wary, with good reason, of how the process will impact their credit scores. Banks do take note when you try to change to the terms of your mortgage. But the bulk of the credit damage comes when borrowers stop paying in order to get leverage over the bank. The actual damage to the credit score based on the loan mod is modest and often temporary...
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Friday, April 23, 2010
Fannie Mae wants to help some troubled borrowers get back into home market
Fox Business has exclusively reported that it has obtained a confidential document said to have been prepared by the Treasury Department, that may indicate that the Obama Administration is considering several changes to the Making Home Affordable loan modification program.
Fox also said that the changes being considered by the administration may result in a nationwide freeze on foreclosures for some period of time for some homeowners, but that’s a bit of a reach and a misinterpretation of what the proposed changes actually include, as you’ll see in a moment.
Now, before I tell you what the proposed changes are, according to this leaked Treasury document, I think it’s very important that I stipulate to two things:
A. Yes, the Mortgage Bankers Association, the American Bankers Association, and every other lemming in the long line of groups that represent the financial services industries is going to oppose every single word in every single one of these proposed changes. Obviously. So there is no need to write to me saying stuff like: “These new rules are never going to pass, blah, blah, blah.” I know all of that, and none of it has anything to do with the point of this article...
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Thursday, April 22, 2010
Loan modification lets cancer survivor stay in the house he built
Rob Young, a self-employed building contractor, has lost a great deal in the past few years, but thanks to the Obama administration’s mortgage modification plan, he hasn’t lost his home.
Young’s was one of 331 households turning to Spokane nonprofit SNAP for foreclosure counseling in the first three months of this year, up 25 percent from the same period last year.
In Kootenai County, the Community Action Partnership also has been flooded with calls for foreclosure counseling, said housing director Barbara Leachman. The wait for appointments is two to three weeks, she added.
“The sheer volume is crazy. I’ve never seen anything like it before,” said Peggy Burrell, housing counseling program coordinator for SNAP.
February 23, 2010
Fox Business Reports: Leaked Document Shows Obama Considering Changes to HAMP Loan Modification Program
Fox Business has exclusively reported that it has obtained a confidential document said to have been prepared by the Treasury Department, that may indicate that the Obama Administration is considering several changes to the Making Home Affordable loan modification program.
Fox also said that the changes being considered by the administration may result in a nationwide freeze on foreclosures for some period of time for some homeowners, but that’s a bit of a reach and a misinterpretation of what the proposed changes actually include, as you’ll see in a moment.
Now, before I tell you what the proposed changes are, according to this leaked Treasury document, I think it’s very important that I stipulate to two things:
A. Yes, the Mortgage Bankers Association, the American Bankers Association, and every other lemming in the long line of groups that represent the financial services industries is going to oppose every single word in every single one of these proposed changes. Obviously. So there is no need to write to me saying stuff like: “These new rules are never going to pass, blah, blah, blah.” I know all of that, and none of it has anything to do with the point of this article...
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February 23, 2010
Obama Administration Announced Federal Loan Modification with Updates
Federal loan modification has become available through the Obama administration as a way for lenders to help homeowners rescue themselves from bad situations and resume making regular payments on their home. Formerly, the only option for many homeowners who hit hard times was eviction. Now, thanks to modification options made possible by federal backing, buyers can stay in their homes and resume making payments even if they are on the brink of foreclosure.
The main idea behind loan modification is that it helps lenders and buyers. Imagine that you bought a house for $150,000, and five years later the property value has dropped so sharply that it’s only worth $110,000 – but you still owe $120,000. Then your hours get cut back at work, or you take a pay cut to avoid losing your job. You miss one payment, then another. What do you do?
Many homeowners would simply let the bank foreclose at this point – unable to sell the home due to a depressed market and unable to keep up with payments, they’ll opt for walking away and facing a ruined credit score rather than keep fighting the tide. This is not necessary! Ask any lawyer – they’ll inform you that you have lots of options, and not to give up yet!
Lenders don’t want to foreclose on your home anymore than you want them to. They have no use for depreciated real estate. Truth be told, they’ll lose more money foreclosing and selling the house at auction than they would working out a reduced payment with you. This gives you leverage – and leverage can be very useful when you are negotiating. The first step in applying this leverage is to get an attorney in your corner.
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February 22, 2010
What to do when facing Foreclosure
Bloomington-Normal, that's Mid Central Community Action (1301 W. Washington St., 309-829-0691).
Lenders will allow a 30-day extension to those in default if they can verify you've talked to a HUD-certified agency, said Mid Central housing development director Rick Barrera. Homeowners who get foreclosure counseling are 60 percent more likely to avoid losing their homes, compared to those who didn't, he said.
"Don't be afraid to go talk to your lender if you're having trouble making payments," said Chuck Erickson, a defense attorney who handles foreclosure cases for locally based banks. "They might work with you. At least it's worth a shot."
Mid Central can also help you navigate the Home Affordable Modification Program, or HAMP, which can lead to lower mortgage payments.
During foreclosure
One common misunderstanding for homeowners is that they don't realize the foreclosure proceedings in court are separate from any loan-modification deal they're trying to work out with a lender or servicer, said Stacey Tutt, managing attorney at Prairie State Legal Services (316 W. Washington St., 309-827-5021 309-827-5021), which handles foreclosure cases for low-income residents and seniors.
Often, the lawyers representing the lender in court aren't even fully aware of how modifications work, Tutt said. A homeowner must pay attention to both efforts.
"They think that because they're negotiating with the lender (on a modification) that the court proceeding is on hold. But that's not true," she said.
Tutt said some people don't realize they still have a legal defense in a foreclosure case even if they have missed payments, even after a judge enters a judgment of foreclosure. That's due to strict requirements laid out in federal lending laws that sometimes offer some wiggle room in working with a lender, she said.
Visit www.modreporter.com for more news.
