Peter Schiff Talks GDP – Cash for Clunkers – Great Depression
Catch Peter Schiff in the green room before he goes live on CNBC. Topics discussed: GDP, cash for clunkers, dollar, debt, depression
Classic quote from the video “This is an adjustable rate mortgage. We got a one year ARM on a 13 trillion dollar sub prime mortgage. This is a big problem.”
Very interesting counter point to the Cash for Clunkers success. Plus while everyone is talking about the success of the Cash for Clunkers program, we over look the fact that the U.S. Dollar index hit an all time low today.
The Truth About Why More People Aren’t Getting Loan Modifications
Finally, people are starting to tell the truth about why lenders aren’t doing more to help homeowners. In a previous blog post, I mentioned that it was more profitable to foreclose on a home than to work out an agreement with the homeowner.
Yesterday the Obama administration held a meeting with mortgage industry executives, telling them they need to do more to help homeowners stay in their homes. The administration told them to hire more people, expand their call centers and work harder to help homeowners.
The problem lies with servicers of loans. Most people don’t realize this, but when you buy a loan product, there are two parts: the servicing rights, or the company who collects the payments on the loan, and the actual owner of the loan. Given that many mortgages are in securitized mortgage pools, there may not be an actual owner of your note, but many investors who own a part of the mortgage pool.
Servicers receive lucrative fees for collecting your payments, handling your paperwork and tracking your payments. Apparently, they too have an incentive to avoid working out problems with borrowers: higher fees.
A New York Times article written by Peter Goodman, published yesterday, says:
“Even when borrowers stop paying, mortgage companies that service the loans collect fees out of the proceeds when homes are ultimately sold in foreclosure. So the longer borrowers remain delinquent, the greater the opportunities for these mortgage companies to extract revenue — fees for insurance, appraisals, title searches and legal services.”
The Federal Reserve Bank of Boston recently published a paper that said the way in which loan servicers are reimbursed for expenses provides a perverse incentive to foreclose rather than modify.
It works like this: the closer your home gets to foreclosure, the servicers have to pay for services required to take control of the property, such as title searches, insurance policies, appraisals and lawyers to companies they own or share revenue with.
This isn’t a new way for lenders to make money. If you received a Countrywide loan, chances are you paid their credit company for your credit report, their title company for escrow and their appraisers for your appraisal. Most people don’t realize this happened because it wasn’t disclosed in your closing paperwork.
The NYT article says that Ocwen, a loan servicer (who happens to have the WORST record of customer service in the US) started its own title company to keep more of the revenue from foreclosures.
So how do they make money from the foreclosure of your home?
The title company gets paid when the home is transferred to the servicer during the foreclosure.
When the home sells, that same title company again charges fees to the new buyer. In addition, that same title company sells the buyer title insurance.
I think it’s interesting how the lenders are screwing not only the homeowners, but their own investors. The NYT article says that the investors “accept whatever is left. Investors typically don’t notice how much money they give up to the servicers, because fees are embedded in the complex sales.”
Apparently homeowners aren’t the only people screwed by the lenders with undisclosed fees and hidden charges. The lenders also lied to the people they sold their toxic assets to. I’m less sympathetic to those investors than I am to homeowners but they were taken advantage of too.
It’s clear to me that we have a BIG problem on our hands in this country, and this NYT article just confirms it.
The banks profited by writing bad loans, they profit when you fall behind on your mortgage because they have NO INCENTIVE to modify your loan, then profit when they foreclose on your home and they profit again when they sell it to the next buyer.
At risk of sounding like a conspiracy theorist here, the real estate boom and bust has been a big profiteering scheme perpetrated on United States citizens by the largest banks, and we are all to blame for not paying attention to what’s happening.
WAKE UP AMERICANS! We have been asleep at the wheel and our country is headed off the road! There is no more time to wait – we have to take action as individuals.
Fix your mortgage mess – ForeclosureIndustry.com has plenty resources and information to help you help yourself. Get a loan audit and force your lender to work with you to keep your home if it serves your best interests.
Tell your elected officials you’re mad as hell about the way things are going in this country. I’m counting on you!
A Win For Arizona Homeowners! SB 1271 To Be Repealed!
I received another e-mail from Alan Langston from AZREIA about the repeal of SB 1271. Here’s the text of the e-mail message:
“Over the last 48 hours since my last email of this subject there has been a lot of activity. Some you have heard or read about it in the news or received emails. Much has been accomplished behind the scenes to protect your interest. I will not restate the issues with the law (see my previous email), but here is a quick update on where it stands that will give you an idea of how things get done.
Language has been inserted into the budget bill that will effectively repeal this law. The budget has to pass with the language intact for the repeal to happen. Currently there is no reason to believe the language will be removed, especially with the support that has been gained in both the House and the Senate. So, once the budget has been passed and signed by the governor, we will be successful. It isn’t done, yet, but it is close.
There were two organizations very active in the process, along with other stakeholders. The two organizations with very active lobbying efforts were the AAR and AZREIA/ARPOLA. I am grateful for the efforts of the lobbyist and the constant communication I have received from AZREIA’s lobbyist over the past couple of weeks. Success on these types of issues takes education, planning and execution with and from individuals who know how to get it done.
Thank you for your many calls and emails and your willingness to act if needed. Your membership and support of AZREIA is very important. Without it we would not have the ability to work these issues. We won’t always be successful, but we have to be part of the debate.”
Alan’s explanation of how the bill will be repealed is a little confusing, but it sounds like lawmakers are going to place language into another bill pending on Arizona’s budget.
At this point, I don’t have enough information on this situation other than what I read in this e-mail, so stay tuned for more information, which I’m sure will be available in the days ahead.
AZREIA’s members are made up of real estate investors who are regular folks who own investment property. They are probably considered a “special interest group” but in this case, I think they did Arizona investors and homeowners a big favor on getting this legislation repealed. It was a terrible piece of legislation and would have pushed a lot of people into bankruptcy to get out from under the deficiency judgments by lenders.
Lenders already have too much power, and this would have given them even more leverage and remove any incentive to work with property owners to work out an equitable resolution to their mortgage problems.
I really like Alan’s last point about “we won’t always be successful, but we need to be a part of the debate.”
If you don’t like something that’s happening, speak up to your elected officials. In this case, change came swiftly because a lot of people worked together, were involved in the discussion and engaged our elected officials to make change happen quickly.
Foreclosures Are More Profitable Than Loan Modifications?
The Washington Post printed an article today stating that in many cases, it’s more profitable for the lender to foreclose rather than work out a loan modification with the homeowner.
Finally, we have someone telling the REAL truth about why lenders aren’t modifying more loans!
A lot of people have been scratching their head trying to understand why lenders aren’t modifying more loans, especially given the government’s financial incentives to lenders to modify more loans.
As usual, the lenders are acting in their own self interests because they can. Remember, your taxpayer dollars are shoring up their bottom lines and now they don’t have to negotiate with you because they already have your bailout money.
It’s hard for me to imagine how it could be more profitable for a lender to foreclose rather than working out a loan modification given the falling home prices.
Of course, there are other reasons why modifications supposedly aren’t working. I keep hearing a lot about how lenders are woefully understaffed and underequipped to handle the sheer volume of homeowners who are asking for help right now.
This is just a weak excuse for the lender’s failure to act. Unemployment is at a record high in this country. CitiMortgage, Wells Fargo and Bank of America have a talented pool of unemployed workers who need jobs. Why aren’t they hiring more people?
So how can you fight foreclosure and save your home?
First, get a loan audit before you do anything else! Go here to learn more about how you can get a loan audit. If you can’t afford to have a professional auditor perform the audit, I’ve written a Do It Yourself Audit eBook that you can purchase.
Modifying a loan without a loan audit is a bad idea for several reasons.
First, if there are predatory lending patterns in your documents and you don’t know about them, and you modify the loan, you waive your rights to pursue the lender in court for the bad loan you originally received.
Second, if the lender lied to you by failing to disclose all the details of the loan, this is leverage against the lender to get a better loan modification instead of just accepting the standard loan modification they give everyone else.
Third, follow up with a competent professional who will aggressively represent your interests in forcing the lender to modify your loan fairly. I suggest you use an attorney for this – a good one will almost always get you a better result than you can get on your own.
I know, it sucks to have to hire an attorney. Many people got into this mess because they didn’t understand the documents they were signing, and a home is the biggest investment most people will make in their lifetimes. It’s worth it to pay someone to do it right.
Finally, consider filing a lawsuit against your lender if your loan stinks of predatory lending. When more people stand up to the banks, this nonsense of the banks not helping people will stop. We’re all held accountable for our actions as individuals; why shouldn’t the banks be called out for screwing homeowners and refusing to help them? I am working hard on finding attorneys who will be good partners for homeowners, so contact me for a referral if you need one.
If you have questions, post them in the forum or send me an e-mail: Christine@DesertEdgeLegal.com.
Governor Brewer Signs Legislation Gutting Anti-Deficiency Statutes in Arizona
Today I received an e-mail from Alan Langston, Executive Director of the Arizona Real Estate Investors Association, regarding Arizona SB 1271. He says :
“Undoubtedly you have heard and read a lot about legislation that was recently passed and signed by Governor Brewer that basically guts the protection of property owners and allows for ”deficiency judgments” to be entered for the difference between what the foreclosure property sells for and the amount of the loan. It is important to note that the Arizona Statutes providing this protection had been on the books since 1971 and in most states since the Great Depression. There is no question this is bad legislation. It was hurried through the legislative process through a “strike everything” that totally replaced language in an entirely unrelated bill dealing with the criminal justice system. The “strike everything” tactic was one of the primary reasons that no one who represents property owners noticed the legislation and no one other than the banking interest testified at the committee meetings.
Since this came to light we have been very active. You, as an investor, are a stakeholder in this and need to be heard. I have had many conversations with our lobbyist planning and executing our strategy. We have worked very closely with the lobbyist for the Arizona Association of Realtors (AAR). There has been plenty of maneuvering behind the scenes as different stakeholders on different sides of this issue try to build their coalitions. I sent a letter to Governor Brewer last Wednesday requesting the special session be amended to include this legislation pointing out many of the issues. Our focus is to have this law repealed, so that it (if reintroduced in the next legislature) can be fully vetted with all stakeholders participating in the debate.
There will be meetings this week with legislators to discuss this issue. We will be in these meetings representing your interest along with other stakeholders. The first meeting is tomorrow with the sponsor of the legislation, Senator Pierce.
I want to be clear. We have our work cut out for us to have this repealed. This is signed law. But, it is just as clear that all stakeholders weren’t heard. This law affects homeowners, owners of second homes and vacation property, investors, builders and others. It has the ability to devastate personal wealth, sharply increase bankruptcies, significantly slow our fragile real estate market, curtail investment in property, increase lawsuits and more. We will have a full discussion of this legislation and what has transpired during our August 10th AZREIA meeting. The workshop at 5:15 features our lobbyist. It was originally scheduled to cover all legislative activities that affected you, the real estate investor. It will be altered slightly to allow time to cover this issue in full.”
Essentially, this law removes the deficiency protections on investors of real estate. That means if you own property as an investment, and you lose it to foreclosure, the lenders can now pursue you for the deficiency. I can’t figure out why she would allow this law to be passed, because it’s going to discourage investment in Arizona and push a lot of investors into bankruptcy to get out from under these judgments. It runs counter to Arizona’s best interests.
This is a great example of our elected officials representing the interests of the BANKS and not the citizens.
Arizonans, call Governor Brewer’s office TODAY at (602) 542-4331 and tell her you want this law repealed!
Why You Won’t Get a Principal Reduction Without a Loan Audit
Christine Springer explains why most homeowners won’t get a principal reduction in their loans without a loan audit.
A Letter to Congressman Shadegg of the Third District of Arizona
The Honorable John Shadegg
2400 E. Arizona Biltmore Circle, Suite 1290
Phoenix, Arizona 85016
Re: Foreclosure Crisis in Arizona
Dear Congressman Shadegg:
My name is Christine Springer. I am a freelance paralegal specializing in mortgage loan audits. I live in Scottsdale, Arizona and am one of your constituents.
As I’m sure you know, many of your constituents, myself included, have lost or are losing their homes to foreclosure. I have studied your record on this issue and I’m angry that you that you and the rest of our leaders in Arizona and the United States are standing by while people are losing their homes due to the devastating economic crisis.
I have audited quite a few loan documents, and I’m convinced the banks, lenders, mortgage brokers and other parties to the transactions in the last seven years were consistently predatory. It’s easy to say that the borrowers were at fault too; I agree that there is some personal responsibility involved. However, as I’m sure you understand from your legal background, most people don’t fully understand many of the documents they signed at closing.
The bottom line is that the lenders in this country have preyed upon borrowers. I see it all the time in the loan documents I audit on behalf of homeowners who are desperately looking for a way to save their home.
To make matters worse, our government authorized an unprecedented bailout of some of the largest lenders, many of whom are some of the worst offenders of predatory lending! As soon as these lenders received our taxpayer money, they stopped negotiating in good faith with borrowers who were in trouble.
Essentially, the TARP funds financed by our taxpayer dollars incentivized lenders to stop helping homeowners. Right now, very few people are qualifying for loan audits because they have lost their jobs. In many cases, it takes months to get a short sale approved. This is ridiculous!
The bottom line is that I’m tired of my elected officials standing by and doing nothing, and I’m going to start holding my elected officials publicly accountable. I’m going to call you out on Twitter, Facebook and my blog until you all do what you’re supposed to do – represent the interests of your constituents.
You can do this by helping me reach homeowners who need my help. I plan to hold a free event where I will personally conduct FREE mini-loan audits for people who are trying to save their homes. There seems to be no other way to get the lenders to work with people. I intend to have attorneys on hand who can give people legal advice and help them save their homes.
If you would like to partner with me in this effort, I welcome your input and assistance with spreading the word about the event to the people who need my help the most. Please have a representative from your office contact me directly at 602-350-2151 to discuss the details if you’re interested.
Thank you in advance for your attention to this matter. I look forward to your response.
Very truly yours,
Christine E. Springer, MA
Desert Edge Legal Services, LLC
Option Arms Are Coming
Great work from our friends at VisionVictory over at Youtube. Be sure to subscribe to our Youtube channel.
Please don’t try the “flip the monitor” trick!
Questions to Ask Before You Hire a Loan Modification Company
It’s too bad that the vast majority of loan modification companies have ruined it for the fewer numbers of companies who are legitimately helping people. It’s sickening to think that homeowners are being scammed because they are vulnerable as a result of their mortgages and the dire economic situation in this country.
I am asked a lot of questions about loan modification companies, which is why I compiled this list of things you should ask before you hire a loan mod company.
1. Are they properly licensed?
California requires that loan modification companies be licensed. Arizona, where I live, will begin requiring a license for loan modifications in 2010.
Ask to see a copy of their license or do your research online before hiring them. Run a Google search on the company and see what comes up. You can also check the BBB and your state’s Attorney General website for information.
2. Are they supervised by an attorney licensed in your state?
Beware of this one! Many loan mod shops are advertising that they are “attorney backed” or “attorney supervised.” These terms are meaningless. It means they are trying to make you believe that a licensed attorney is on staff and to give the impression that they have an edge over the next company. You should be immediately suspicious.
Bar associations have strict rules about referral fees and lawyer affiliations with non-attorneys. Attorneys are prohibited from paying referral fees to non-lawyers, so you should be suspicious of any loan mod shop who says they are “attorney backed” or “attorney supervised.”
I don’t know any attorney who is going to risk their law license for a few leads from a loan mod shop. It’s just not worth it.
I recommend you hire a law firm that specializes in loan modifications and foreclosure defense. These law firms are sometimes hard to find. I know because I spent months looking for an attorney who would even speak to me about helping homeowners. If you need a referral, send me an e-mail at Christine@DesertEdgeLegal.com and I’ll point you in the right direction.
Also, I see bloggers and other commentary on the internet from people who say that you should hire “an experienced real estate attorney.” I’m an expert when it comes to TILA/RESPA, and most real estate attorneys I’ve met with are clueless about this new area of law. Foreclosure defense has really only been around for about a year and as I mentioned in a previous post, lawyers have been slow to get into this area of law for various reasons.
Unless an attorney has been practicing in foreclosure defense for the last year, they are not positioned to get you a decent loan modification or represent you in a lawsuit against your lender. So forget all this nonsense about real estate attorneys being the best type of lawyer to hire, because is most cases, it’s just not true.
3. Does the loan modification company have a money back guarantee?
I’ve seen this one backfire too. A couple of my clients hired me to do an audit, and they found a loan modification company on their own, who told them that an attorney was on staff.
They paid the $4000 upfront fee, got the money back guarantee in writing and were happy…… until the loan mod company called and said they could no longer honor their money back guarantee because of circumstances related to the borrower’s situation.
When my clients asked for their money back, the loan mod shop refused to give them a full refund because they had already worked on the file. These “circumstances” should have been disclosed before the homeowners paid them the money.
If you don’t get an unconditional money back guarantee in writing, you should be suspicious, and even if you do, I’d still be suspicious. This is only the case if you hire a non-attorney loan modification shop.
If you hire a lawyer, they will most likely not give you a money back guarantee. However, if you get scammed by an attorney, you can go to the bar association and file a bar complaint. In my opinion, it’s worth the peace of mind. A lawyer is going to think twice about scamming clients because they don’t want to risk losing their license.
4. Does the company perform a loan audit and use the findings as leverage for a modification? What if the loan stinks of predatory lending? Will the attorney agree to pursue litigation if warranted?
I heard a statistic today that said 85% of borrowers have mistakes, undisclosed fees or hidden finance charges in their loan documents. A loan audit is ALWAYS the first step in a loan modification. If the company isn’t conducting a loan audit, don’t bother hiring them.
Any attorney who is well versed in foreclosure defense will tell you that a loan audit is always the first step, (sometimes they know what they’re talking about) because it shows you where the causes of action are to use as leverage against the lender.
Many of the loans I’ve audited have enough problems to use as leverage for a decent loan modification (not necessarily a principal reduction, however), which, for many clients, is their desired outcome.
However, there are other clients whose loans just stink of predatory lending and they should pursue the lender in federal court for violations of TILA/RESPA.
Here’s the problem: as I referenced in an earlier blog post, lawyers have become afraid to pursue lawsuits! It’s the craziest thing I’ve ever seen. Who would have thought lawyers would ever be afraid to go to court?
I know of one law firm that says they will not sue lenders because it will impact their ability to get loan modifications for their clients. I’m not a lawyer (yet) but I think this is a load of crap.
If a law firm had a reputation as aggressive and not afraid to pursue litigation, the lenders would push the mod paperwork through a lot faster because they know the law firm would sue them. The threat of litigation is usually a good incentive to move faster.
5. Who is making money on my loan modification? How many parties are involved?
I’m a firm believer that if you’re adding value for others, you should be fairly compensated. It’s completely reasonable for a loan mod shop or law firm to pay people for legitimate services provided, such as the loan audits or marketing fees.
However, I object to the multi-level marketing and other schemes perpetuated upon homeowners when it comes to loan modifications.
I attend a lot of networking events here in Phoenix, and it seems like everyone is hawking loan mods these days. It scares me to think that people with no legal experience are pushing people into loan mods without any discussion of loan audits or predatory lending. When you modify a loan, you essentially waive any claims you have under TILA/RESPA. Wouldn’t you like to know if you could pursue your lender for a better loan modification before you get their boilerplate modification agreement? I certainly would.
Or worse, the person selling loan mods is a former mortgage broker. Many of these people are partly responsible for this mess we’re all in. A lot of mortgage brokers were selling products to borrowers without fully disclosing their fees and acting in their own self interests, instead of selling the borrowers a product that was in their best interest.
My point is, you should ASK who is handling your file and who is making money on it.
Loan Modification Scams Target Desperate Homeowners
Loan modification scams are running rampant, especially in my home state of California. ABC News investigation takes on this new growing trend of scam artists.
Please Do Not become a victim of this incredible cruelty! Ask questions and get answers before you send your money.
You can even contact our very own loan audit expert and ask her questions free of charge. She has a wealthy of information and is fighting everyday to help as many homeowners as she can! Her goal is to keep people in their homes.
Call her here: 602.350.2151
Check out her profile on Linkedin: http://www.linkedin.com/in/christinespringer
Read more about her here: http://www.foreclosureindustry.com/about/
To recap, here are the four clear signs the company is trying to scam you:
1. They are asking for money in advance
2. Claim a 100% success rate
3. Pay the company instead of the mortgage company
4. They are connected to the government
