Lie? Scam? Take your pick.
Thinking you have a shot at modifying your mortgage?
On 12/5/09, the New York Times reported:
"AFTER months of playing pretend, the Treasury Department conceded last week that the Home Affordable Modification Program [HAMP], its plan to aid troubled homeowners by changing the terms of their mortgages, was a dud. The 10-month-old program is going nowhere, the Treasury said, because big institutions charged with implementing it are dragging their feet."
As of 1/26/11:
Neil Barofsky, the special inspector general for the government's bank bailouts, bluntly labeled the mortgage program "a failure" in testimony before the House oversight committee.
Applied for a mortgage modification...but feel like you're getting jerked around by your mortgage company?
Join the club. You probably are. Most people feel the same way.
Likely...they have no intention of modifying your mortgage...and never did. We'll explain why.
Let's face it. There are only 3 main resources for mortgage modifications. One, scams. Two, what now looks like a government sponsored scam. And three, modification using the powerful Bankruptcy Laws.
Need to modify your mortgage?
Sick of being jerked around by your mortgage company?
Think bankruptcy. (See yellow box below.)
The obvious mortgage modification scams:
The foreclosure crisis spawned a whole new kind of scam, this time worked on unsuspecting consumers who cannot afford their mortgages and who desperately want to keep their homes. Companies who claim to be able to get you a mortgage modification, but who just take your money and do nothing. Basically, it seems, it the company is based out of Florida, Texas or California, it may well be a mortgage modification scam.
You know the ones. Until recently, the tv and radio teemed with commercial promising you a mortgage modification.
Fortunately, State and Federal governments have stamped out at least most of the biggest offenders and that's why you see less commercials on tv and hear less commercials on the radio.
But...beware. New scammers will always spring up as long as there are desperate consumers.
That said, the sad truth is that there is very little in the nature of mortgage loan modifications out there to help you.
Not what you want to hear? Sorry, but I'm not going to lie to you. Wish I had great news for you, news that would guarantee you get to keep your house and keep it for an affordable mortgage payment...but I don't.
The truth is that...for the time being...the banks have learned their lesson...that loose underwriting requirements for home mortgages are a recipe for disaster. Now, in order to get a mortgage, you just about have to be in a position where you don't need one.
And it gets worse.
HAMP: The less obvious, emerging government sponsored lie.
So, along comes President Obama and the Home Affordable Modification Program (also known as "HAMP"). Sounded good on paper. Even fooled me. Supposed to help save homes for millions of Americans. It even got funding by the Treasury Department to the tune of an estimated $42.5 billion of the $50 billion in available TARP money.
The HAMP goal: to provide financial support for about 2 to 2.6 millions mortgage modifications, to save homes and drive down the number of foreclosures.
The reality: Another huge disappointment for millions of American families.
Sorry. Just thought you ought to know.
The problem is that the Home Affordable Modification Program has no teeth. It's completely voluntary. Being completely voluntary, the banks don't really have to do or modify anything.
And...as it turns out as of 9/1/09, they haven't.
Instead, being voluntary, the banks can go on doing what they do best: putting their best interest ahead of yours...like always. Business as usual...greed over need.
Under the HAMP program, you apply for a mortgage modification. Then, if approved, you are only 'approved' for a 'trial modification', not a 'permanent' modification. Being approved for a trial modification, you are given a lower "trial" mortgage payment, which they tell you, you must make on-time for 3 months.
If we stop right here, it sounds like, if you pay the trial mortgage payment on-time for 3 months, the mortgage modification is yours. That's what I thought too. Not so.
Remember, the program is entirely voluntary. The banks don't have to do anything....and they haven't. The following numbers speak volumes.
As of 9/1/09, Fannie Mae (Treasury's agent for HAMP) there were 362,348 loans 'approved' for a trial modification. Wow, that's a pretty big number, right? That sounds great, right? Sounds like the banks are really trying to be a part of the solution. Right? Wrong.
Here's the kicker. As of 9/1/09, only 1,711 loans have been turned into 'permanent' modifications.
That's not 1,711 in your town. That's not 1,711 in your County or even your State. That's 1,711 mortgage modifications actually completed in the whole, entire United States.
Think you will be the 1,718th permanent modification. Don't hold your breath waiting for your modification. It ain't gonna happen.
Think about it. 1,711 permanent mortgage modifications out of a total of 362,348 loans 'approved' for a trial modification.
Are you thinking what I am? This has scam written all over it.
So, what's the deal?
The deal is that apparently banks don't really, really want to modify mortgages. Why would that be? What's in it for them? Why do all the work of taking applications and approving trial modifications?
There are a number of likely reasons:
First off, there is more and more evidence that banks make more money just stringing you along than foreclosing on your house.
With a lower payment in hand (the trial payment), they know you will keep paying, and as long as you keep paying they get what are called "servicer fees".
You see, most mortgage are held in big trusts, trusts full of thousands, if not tens of thousands, of mortgages. These trusts are owned by investors. However, someone needs to represent the trust owners in order to "service" all the loans in the trust, to collect and account for the payments, and to pass on the money (or what's left) to the owners. In most cases, the servicers are large banks like JP Morgan Chase.
Chances are that your mortgage is held by one of these trusts.
For servicing the mortgages in a trust, these servicer banks get paid fees, lots of fees. We're talking major money here, and banks being banks, they don't want to kill off the golden goose. Allowing a mortgage modification to go through kills off some of these fees.
Second, the servicer banks don't want to get sued. You see, the servicer banks are supposed to be working for the owners of the mortgage trusts. If the servicer messes up or does something the servicer is not allowed to do (like modify a mortgage), the servicer can get sued by the trust owners. In most cases, the servicer does not have the authority to 'modify' your mortgage, and doing so could expose the servicer bank to lawsuit...a huge and expensive lawsuit.
Approving only a trial modification that the servicer bank never approves doesn't get them into trouble enough to get sued...appparently.
Can you see why the 'servicer' banks, the ones you apply to for your mortgage modification, have no incentive to modify your mortgage?
So, you say, why bother taking all those applications for mortgage modifications?
Well, I can think of a number of reasons.
One, the banks have been handed a lot of your money by the government...I mean a lot of your money. Remember the bailout. Remember TARP. Well, when you have been given a lot of money to bail you out, you have to at least make it look like you are doing something in return.
So, the banks take a lot of mortgage modification applications.
(1) By giving you false hope, the banks can keep you paying something on your mortgage. I mean, it's a pretty cool scam. Keep you thinking they really do intend to approve a permanent, an impression fostered by Congress and the President, and, the result, you keep paying and paying, even in the face of the mounting evidence to the contrary;
(2) To the government, it makes it at least 'look' like the banks intend to do massive numbers of mortgage modifications, even in the face of evidence that they apparently have no intention of doing so. Yeah, sooner or later, we will all catch on to the scam, but in the meantime, it looks like they're doing something to help and raking in the money they need to stay in business. Remember all those servicer fees they get;
(3) By keeping you paying something, they can put off finishing the foreclosure on your home, and that makes it look like, at least for the time being, that there are less foreclosures, making it look like the politicians are doing something to stem the foreclosure crisis;
(4) By keeping you focussed on the false hope of getting a mortgage modification, they keep you distracted from the real solution...making the hard decision to give up a home you know in your heart you really can't afford...or deciding to file bankruptcy to fully and finally get past the worst financial mess in your life, so that you and your family can get on with life.
All that aside, all you have to remember is the number 1,711.
As of 9/1/09, that was the total number of mortgage modifications completed under HAMP in the whole, entire country.
It's a joke. Unfortunately, the joke is on you and me.
So...how do you know you're being lied to?
The answer is that you are probably being lied to if you get the feeling that you are being jerked around.
Here are other warning signs:
- Your "trial mod" just keeps getting extended...and never seems to go permanent. What's this
mean? They're just milking you for more money...until they're ready to move on the
foreclosure of your home.
- Every time you call...you get a different person.
- They never seem to be able to find your paperwork.
- They keep saying that there is something wrong with your paperwork.
- They tell you they have lost your paperwork.
- They tell you, you missed some odd deadline, and that you have to submit new paperwork.
- No matter who you talk to...your file is always in another department or on another person's
- They keep you waiting on the phone every time you call.
- And THE BIG ONE: Even though "supposedly" they are working with you...they go ahead
and start the foreclosure on your home anyway. When this happens...there should be
huge alarms going off in your head...big loud alarms telling you that they have no
intention of modifying your mortgage...and that... all along...they have just been stringing
you along...making a fool out of you. Think about it. The same company that is
"supposedly" working on your mortgage modification...has just turned the dogs loose on
you to take your home. Wake up...you're being lied to.
Think It's All Just Happening To You...Ask The Turlingtons
Getting the run around? You are NOT alone.
See the box at the bottom of this page and find out what happened to another good, hard working family, right here in North Carolina...the Turlingtons.
So, what do you do?
First, stop trusting them and stop waiting on a mortgage modification that's never gonna happen. The evidence is in: "It ain't gonna happen". The mortgage modification promise is just a lie from the get go. Oh...I expect that they'll be a few here and there that get modified...probably just enough to keep Congress and the Treasury Department off their backs.
Second, look at other alternatives....like bankruptcy.
Bankruptcy is the real deal...and always has been.
Bankruptcy is so powerful that the banks and other creditors will do everything in their power to keep you from finding out.
If you can afford your home, but just need time to catch up on payments, a Chapter 13 bankruptcy can be the answer.
And, if you can't afford your home, bankruptcy can do 3 things for you:
(1) Buy you some more time in your home "for free",
(2) Get rid of the debt you will owe when your house sells at foreclosure for less than what you owe. You see, when a house sells for less than what is owed on it, your mortgage lender can come after you for the difference. This is called a 'mortgage deficiency'. Without bankruptcy to help you, not only will you lose your house, but you will still owe money on it. That's no fun, and
(3) In addition, as an extra bonus, filing bankruptcy can also get you out from under other debts like credit cards, unsecured personal loans, certains types of judgments, and medical bills. And, when I say "out from under", I mean for good, forwever, without having to ever pay them back. That's right. If you need to file bankruptcy, you might as well get the most out of it. God knows we all needas much help as we can get in this bad economy.
The bottom line:
If you can't pay all your debts.
Bankruptcy isn't right or wrong....it just is.
Whatever you do, there is no use just sitting there doing nothing.
Call today for a FREE Debt Consultation and at least find out how all this bankruptcy stuff works. You won't be disappointed...I guarantee it.
During normal business hours...call toll free
Don't want to wait? Want to set up an appointment...right here...right now! You can, using our "online" Appointment Scheduler...available 7 days a week, 24 hours a day.
Just click on this button:
In 5 easy steps, you will have an appointment in one of our offices.*
* You must be a resident of North Carolina. We have offices in Raleigh, Durham, Fayetteville, Wilson, Greensboro, Garner or Wilmington
Need to modify your mortgage?
Sick of being jerked around by your mortgage company?
What? That's right. Think bankruptcy because...using the bankruptcy laws...we can do some amazing things to lower the amount of your mortgage payment or even get rid of certain mortgages.
Using the bankruptcy laws, we modify mortgages all the time. We do it several times every month. Depending upon your situation we may be able to reduce your mortgage (called "cramdown") or even get rid of it (called "strip off").
Mortgage Strip Off: Say you have a second or third mortgage that is completely "under water". Using the unique qualities of what is known as Chapter 13, we can "strip off" the "under water" mortgage, for good and forwever. For many clients, this is a huge benefit of filing bankruptcy, so big in some cases, that it is even worth filing bankruptc...if just for this benefit.
By "under water", what we mean is that there is no value in your real property above the payoff balance of the prior mortgages. Let's look at an example: Say your home is worth $150,000, and that your first mortgage is for $152,000. And let's say you have a second mortgage for $50,000. Since there is not even $1 in home value above the payoff balance of the first mortgage, if you file bankruptcy, we can get rid of the entire second mortgage of $50,000. This is huge!!
Mortgage Cram Down: Normally, we cannot modify mortgages on your home (other than for when we can "strip off" an under water mortgage). However, there are exceptions.
One exception is where the mortgage company got greedy and listed as collateral, not only your home, but also something else, like your mortgage escrow account. We estimate that as many as 20% of the home mortgages in North Carolina do this. If so, pursuant to a new Bankruptcy Court opinion (as of 2/2010), we can modify your mortgage to perhaps lower the amount owed, lower the interest rate, provide you with a "fixed" interest rate, and/or possibly even extend the length of the mortgage.
No guaranatees here. Every situation is different, but if you want to keep your home and need some sort of modification to your home affordable, you will want to come see us and let us take a look at your particular mortgage. It may well be that you fall in that 20%. And this is in addition to whatever rights you have to "strip off" a mortgage.
HAMP only promises...but where it works...the Bankruptcy Laws provide.
And...we can prove it. Just ask to see files where we have modified mortgages.
We are the Turlingtons and this is our story...
"Christopher Turlington, 28 Moon Run, Sanford, N.C. 27332. My name is Chris. My wife Krysti and my 7 year old son Dylan live in a middle class gated community just north of Fayetteville North Carolina. I am the son of an Army colonel and have a strong belief in hard work and a trust and faith in our country and its financial systems. We are the "Turlingtons" and this is our story: In early April 2008 due to the declining economy, my job position was dissolved. I was fortunate enough to gain immediate employment with a new company, but at half the annual income. For the upcoming months, I admit it was a struggle. As a family, we downsized on our expenses in an effort to stay ahead of the growing bills. In November of 2008, we applied for a home re-modification and were pleased to find out we were eligible. In December, Washington Mutual sent us the re-modification packet for us to sign along with sending a $500 "processing fee". We immediately had the documentation notarized and purchased a cashier's check for the processing fee. Our first payment was for approximately $957 and after that the monthly mortgage due would be $877 per month. This was what we considered a "life saver" for our current situation. My wife Krysti made the monthly payments on time over the phone, paying the full amount each time. In March of 2009, I received a knock on the door. It was a county sheriff with an 'intent to foreclose' notice. I immediately called Washington Mutual and they informed me that due to a mortgage balance discrepancy, the re-modification did not finalize. This was the first we had heard anything about any issues. We were under the impression that since Washington Mutual cashed the processing fee that everything was processed. Not only did the re-modification not go through, but now the finance company showed me delinquent of over $7000! I continued to attempt to fix the situation, but to no avail. I could not contact the same person twice. Washington Mutual was purchased by Chase etc. We finally contacted a Chase representative that suggested that we go back into the 're-mod' application process. So we did. For the next NINE months we were in 'mortgage purgatory'. Not knowing where we stood, continuously resending info we have already sent due to lapses in time and lost paperwork, the person 'in charge' of our account [supposedly] quit and left without finishing our paperwork, etc. We tried to attempt to refinance but my credit score has been destroyed because of these issues. Finally, in November of 2009, we received a response from Chase. Chase gave us 'trial' period while we went through another try at a re-mod. Throughout this trial period our monthly mortgage was $1179.53 per month, which we paid in a timely manner every month. On Thursday, March 25th, 2010, we received notice that we were not eligible for re-modification. Not only were we not eligible, but the $1179.53 per month payments were registered as only partial payments of our original mortgage amount, therefore showing us delinquent over $13,000 at this point. We only paid $1,179 per month because that is what we were instructed by the same lender. Now, we have been in the 're-modification process' for 15 months with three different mortgage totals we were instructed to pay. My faith in the financial system has taken a big hit. My credit score has been severely destroyed. There has been severe stress on a daily basis not knowing an outcome or where to turn. We have a large amount of equity in our home that we are at risk of losing. I wonder if Chase would be less anxious to foreclose if we were 'upside down' in our residence. I wanted to contact some representatives of the State of North Carolina in an effort to ask for assistance and guidance from this point forward. I will no longer be bullied by my mortgage company and have my family and home torn apart for a situation that is not our fault. I would be more than happy to go back to paying my original mortgage amount rather than to stress daily about foreclosure. I want the delinquent amount removed and my credit status reinstated immediately. In dire need of help and assistance in this matter. Thank you for taking the time to hear my voice. Christopher Turlington Chase loan#695363754. Cell: 910-336-1499. Wife: 910-580-0952. Work: 910-692-1131. Property address: 28 Moon Run, Sanford N.C. 27332
*This memo has been sent to ALL representatives in North Carolina, the Complaint dept. at Chase and Housing and Urban Development, President Obama, and the Attorney Generals office as instructed by Governor Purdue."