Principal Reduction Coming to AZ?

Wall Street got their bailout, that’s bitter, yet old news; however the outspoken thought on the minds of the rest of America remains, where’s the bailout for Main Street? Under a new plan called Save My Home AZ, expected to launch in September of 2010, some Arizona homeowners may finally get some much needed help in reducing the balance of their mortgages by $100,000 or more. The program is a trial run, paving the way for a broader reaching program to keep homeowners in their homes.

Back in February, the Arizona Department of Housing received $125 million in federal funds to help stabilize Arizona’s declining home market. Recently, Washington, D.C. gave its blessing to allow Arizona to use the money to reduce mortgage balances for up to 1,850 households. Here are the details:

• Borrowers can receive up to $50,000 in state-issued funds to use towards what they owe on their mortgage
• 75% of the funds will be issued in Maricopa County
• These “loans” will in all probability not have to be repaid in full
• Households that have seen their incomes slashed can receive up to $12,000, to be applied to up to 1,000 households
• Incentivize lenders to work with homeowners to settle second mortgages by offering the lender up to $5,000 if they settle with the homeowner

 

Though this plan will certainly not neutralize the foreclosure situation across Arizona, it is a start. The pilot-program promises to show what outcomes can be expected by directly helping distressed homeowners instead of the trickle down bailouts we have seen over the past year that seem to only benefit the banks.

However, like any bit of good news that sounds too good to be true, the devil is in the details. The biggest red flag is that participation by the lenders is optional. Additionally, the program relies on a matching system where the lender matches the dollar amount of federal funds received by homeowners. With so many big lenders out there refusing to negotiate mortgage modifications, there is definitely cause for skepticism as to whether the big lenders will capitulate and participate. Moreover, eligibility guidelines are quite narrow (see “Guidelines” below), meaning the majority of the 50,000 expected foreclosures in AZ this year will not be stopped by this program.

On its face, this plan does offer a bit of pragmatism, which has been noticeably absent throughout this entire housing crisis. For example, homeowners who receive these home-saving funds would be obligated to repay portions of the “loans” if they sell the home within ten years or if the home appreciates in value.

I remain skeptical for several reasons. First, why now? Where was this program last year or the year before? It almost seems as though it is too little too late. Like previous modification programs, this plan seems plagued by strict and narrow guidelines, disqualifying most homeowners. When I worked as a mortgage banker, supposedly modification programs were available to homeowners with Freddie or Fannie backed loans; however never once did I connect with a client who qualified, regardless of whether their loan was Fannie or Freddie.

Second, is $125 million in funds enough to spur any sort of a noticeable correction in the Arizona housing market? With an expected 50,000 foreclosures in AZ this year alone, $125 million sounds like a drop in the bucket. Just for a simple comparison, figure the mortgage balance of each foreclosure averaged over the 50,000 expected foreclosures is $50,000 (completely hypothetical, just a round figure to use as an example). That yields $2.5 billion, so the $125 million in federal funds covers a mere 5%, hardly enough to correct the housing crisis here in AZ.

My biggest skepticism lies with the lenders; with participation optional, it seems unlikely that most big lenders will voluntarily take part in this plan. If they will, why wouldn’t they just negotiate with homeowners to settle a modification from the get go?

Guidelines:

Foreclosures must be imminent. Households must have exhausted all options for remaining current on payments.

Modest primary residences. Assistance may only be used for borrowers’ primary residences, and may only help households with incomes at or below 120 percent of the area’s median income.

Personal responsibility. Money may not go to borrowers who face foreclosure for “self-inflicted” reasons, such as refinancing to take out equity or basing mortgages on undocumented income.

Hardships. Applicants must demonstrate hardship, such as reduced income due to underemployment, medical condition, divorce or death.

Source: “Proposal for use of HFA Hardest-Hit Fund (Third Revision),” Arizona Department of Housing

If you have any questions, please feel free to email me at matt@desertedgelegal.com.

DISCLAIMER:

****MATT AZARI IS NOT A LICENSED ATTORNEY. THIS BLOG IS COMPRISED OF HIS OPINIONS, OBSERVATIONS AND INTERPRETATIONS AND IS NOT INTENDED TO BE CONSTRUED AS LEGAL ADVICE. PLEASE CONSULT WITH AN ATTORNEY BEFORE RELYING ON OR TAKING ANY ACTION BASED ON THE INFORMATION IN THIS BLOG.****

Don’t Believe the Bank’s Modification Promises

Are you on the fence about a loan audit? Go here to find out why you might want to get one.

I’ve received phone calls from half a dozen people from all over the country in the past week who are saying that the bank servicing their mortgage promised them a modification and they were foreclosed upon without any notice.

First of all, under paragraphs 18 and 22 of most Deeds of Trust, the bank has to give you proper notice and the right to cure the default. Just this past week, an audit client of mine got a Notice of Default, a copy of the Substitution of Trustee and the Notice of Trustee’s Sale from the biggest Arizona foreclosure mill lawyer, all in one day. This is a breach of the terms of the Deed of Trust. The foreclosure mills generally CANNOT do this! This is a contractual obligation and not a statutory obligation, although your state’s statues will also control the foreclosure timeline. The point is that you need to do your homework and understand the timelines.

Second, there are just too many of you who still believe what the bank is telling you. People, it’s time to listen to what I’m saying – THE BANK HAS NO INCENTIVE TO MODIFY YOUR LOAN.

The banks are talking out of both sides of their mouth. They have to make it look like they are trying to help, but they generally have no incentive to modify a loan for anyone. I know there are some of you getting mods, but I don’t see a lot of people actually getting them finalized.

If you don’t have a signed loan modification agreement in your hand and the bank sends you a Notice of Trustee’s Sale, they will take your home. Sometimes they are foreclosing on people even AFTER they agree to modify the loan, so this is no guarantee either, unfortunately.

When you look at the ugly truth, they are FINANCIALLY INCENTIVIZED TO FORECLOSE. They get nothing for a loan modification and a lot more in late charges and fees under the Pooling and Service Agreement when they foreclose. The HAMP program’s $1000 payment is NOTHING compared to what they will get after they foreclose.

If you get a Notice of Default, Notice of Substitution of Trustee, or worse, a Notice of Trustee’s Sale, this means the bank is going to take your house. No question about it. I don’t care how many promises their $8 an hour phone representative makes to you, they are planning to foreclose on your house. So don’t fall for it, people!

If you get one of these notices, it’s time to start thinking about what your action plan is…if you’re going to stay and fight, GET A LOAN AUDIT and start looking for an attorney or plan on doing it yourself. If you are in a non-judicial foreclosure state, you will need to file a lawsuit to stop the sale.

If you’re going to walk away, start looking for another place to live.

I’m not saying you shouldn’t continue to attempt to modify, just know that it’s probably NOT going to happen. I wish I didn’t have to write this blog post, but it’s the truth about what I’m seeing out there. And I can’t do anything to help any of you two days before your sale date.

So, in case you have any doubt about what the bank says, here’s your handy guide to understanding bank speak:

Bank: Sure, Mr. Smith, we’re working on a modification.

What they really mean: We’re going to take your home.

Bank: The loan mod package will be sent out in 45 days, so don’t worry about that Trustee’s Sale in two weeks.

What they really mean: We’re going to foreclose on your home.

Bank: It’s in loss mitigation/underwriting/being assigned to someone
What they really mean: We’re going to take your home.

Bank: Don’t worry about those notices you received. You’ve been approved for a modification.

What they really mean: We’re going to foreclose on your home.

Got questions? Send me an e-mail: Christine@desertedgelegal.com.

DISCLAIMER:

****CHRISTINE SPRINGER IS NOT A LICENSED ATTORNEY. THIS BLOG IS COMPRISED OF HER OPINIONS, OBSERVATIONS AND INTERPRETATIONS AND IS NOT INTENDED TO BE CONSTRUED AS LEGAL ADVICE. PLEASE CONSULT WITH AN ATTORNEY BEFORE RELYING ON OR TAKING ANY ACTION BASED ON THE INFORMATION IN THIS BLOG.****

Qui Tam Lawsuits Filed in California and Nevada

For those of you who were disappointed when the earlier qui tam lawsuit disappeared from the face of the internet, you’ll appreciate these. As I mentioned in the post about the disappearing lawsuit, it was just a matter of time before someone else filed a similar lawsuit.

(Can you all tell how much I like Scribd? If I upload documents, no one can say I’m making this stuff up!)

Jake Naumer summarized it well:

Foreclosureblues Editor’s Note…This is about the previously sealed blockbuster Qui Tam lawsuits that freedom fighter attorney Neil Garfield has been working on. (I didn’t even know what qui tam was, so i posted the definition below).

Man, it’s good to know that TRUTH is the biggest dog in the room, and that the U.S. Supreme Court ruled that we still have the right to bear arms. Because that is exactly what we may need when the banks start to lose their stranglehold on our legal rights. I’m not sure how long they will last when honorable people and the legal system that the banks use to carry out their fraud and illusion find out that they are also victims.”

Christine here: I just got another phone call today from a group of attorneys in Florida asking for help with setting up a foreclosure defense practice there. As I told them today, thanks to technology (the internet), the walls will close in on the banks much faster than if this had happened pre-internet.

When we have real estate gridlock and no bank can foreclose, then this whole system will collapse. It’s already starting, I watch it unfold with each new audit that comes through my door.

I used to get frustrated with Josh and his gloomy predictions, but I’m starting to agree with him. I think we’re going to see all of this unfold in our courts. When the government won’t intervene and the servicing banks refuse to voluntarily work with borrowers, eventually enough of the borrowers who have the resources will go after them, and eventually enough people will start winning. We already know it’s happening and the judges already feel the pressure.

When you see statewide injunctions like the recent one in Utah, you know things are starting to fall apart. This is just the beginning, folks….. When there are no more judges who will let another bank or foreclosure mill attorney steal a house, then it will get interesting, probably more bank failures. I just don’t see how the greedy servicing banks will survive the onslaught of what’s about to happen. The upside to this is that when it does fall apart, we can start rebuilding.

California Qui Tam False Claims, Recording Fees

Here’s the Nevada Qui Tam:

Nevada Qui Tam

And another in Nevada, including False Claims:

Nevada Qui Tam False Claims Tax Exemption

Qui Tam cases are lawsuits filed on behalf of the government by private citizens for false claims or fraud. False claims generally include not delivering goods that were sold, overcharging for goods or services, making false statements about the quality of a product, improperly testing a product or any other scheme that is designed to defraud the government.

An individual filing a Qui Tam lawsuit is known as a ‘relator’ and must comply with the requirements of the False Claims Act. If the suit is successful, the relator may generally recover between 15 – 30% of the government’s total recovery along with additional civil penalties. Qui Tam verdicts and settlements can reach into the hundreds of millions of dollars, so a relator’s percentage can be substantial.

Unfortunately, you don’t just file the suit and cash your relator check. Qui Tam cases generally take years to settle or litigate. Many relators are employees reporting fraud committed by their employer and many employers retaliate against the employee. Luckily, the False Claims Act protects employees from retaliation in the workplace. Very few Qui Tam cases are brought by private citizens alone. Due to the complexity of these cases, most hire attorneys who have experience in these matters.

I got this information here.

Got questions? Please post your comments, or send me an e-mail: christine@desertedgelegal.com. Do you need a loan audit? Read this to find out.

DISCLAIMER:

****CHRISTINE SPRINGER IS NOT A LICENSED ATTORNEY. THIS BLOG IS COMPRISED OF HER OPINIONS, OBSERVATIONS AND INTERPRETATIONS AND IS NOT INTENDED TO BE CONSTRUED AS LEGAL ADVICE. PLEASE CONSULT WITH AN ATTORNEY BEFORE RELYING ON OR TAKING ANY ACTION BASED ON THE INFORMATION IN THIS BLOG.****

Homeowner Wins in Florida Against Aurora

This is from the 4closureFraud.org blog…thanks for the Scribd upload! Readers, check out the case law cited in this opinion.

Aurora Loan Services, Llc, V. Judith Mendes Da Costa

Got questions? Send me an e-mail: christine@desertedgelegal.com. Oh, and do you want to learn how to audit loans? Take one of my classes!

Securitization 101

For those of you still figuring out how securitization of residential mortgages worked, here’s an illustration. Thanks to Jake Naumer for sending this to me.

Securitization Illustration

Got questions? e-mail me: christine@desertedgelegal.com. Oh, and here’s why you might need a loan audit.

DISCLAIMER:

****CHRISTINE SPRINGER IS NOT A LICENSED ATTORNEY. THIS BLOG IS COMPRISED OF HER OPINIONS, OBSERVATIONS AND INTERPRETATIONS AND IS NOT INTENDED TO BE CONSTRUED AS LEGAL ADVICE. PLEASE CONSULT WITH AN ATTORNEY BEFORE RELYING ON OR TAKING ANY ACTION BASED ON THE INFORMATION IN THIS BLOG.****

Our Policy on Comments

You may have seen this comment on the blog today, posted in several places on the blog, as follows:

*** WARNING TO ALL, Christine is a PREDATORY BLOGGER, feel free to read her blogs BUT! Do not let her trick you into her audits, which are a joke, and do absolutely NOTHING for you. WATCH YOUR MONEY WITH THESE OR ANY LOAN AUDIT FRAUDSTERS ***

For those of you who leave comments on blogs, you should understand that you are NOT anonymous. If you register with a website, you are especially not anonymous! There is generally no privacy in the internet realm, and it’s very easy to find out who you are even if you think you’re being anonymous.

And what exactly is a “predatory blogger”? And audits are a scam? Yeah, that’s why all those attorneys are now working with us.

Anyway, Josh and I had an interesting discussion on whether to leave this comment out there or to delete it. I decided to address it publicly and to let everyone know our position with respect to comments on our blog.

I spend a lot of time writing content and it’s a place for me to write what I want to write about. I would encourage anyone out there who reads and has a legitimate comment to please comment. I would love to have an intelligent discussion with anyone who wants to participate. However, if a reader makes a negative comment that adds nothing to the discussion, it will be deleted.

Does this mean you have to agree with my opinions on the posts? Absolutely not! Again, let’s have a discussion without resulting to calling people scammers and liars. The scammers are long gone thanks to all of the legislation. I’m still around with a growing business after a year of hell! I’m not going anywhere.

You don’t have to agree with me, but please, use some logic or reasoning to back up your opinions instead of just being negative for negativity’s sake.

DISCLAIMER:

****CHRISTINE SPRINGER IS NOT A LICENSED ATTORNEY. THIS BLOG IS COMPRISED OF HER OPINIONS, OBSERVATIONS AND INTERPRETATIONS AND IS NOT INTENDED TO BE CONSTRUED AS LEGAL ADVICE. PLEASE CONSULT WITH AN ATTORNEY BEFORE RELYING ON OR TAKING ANY ACTION BASED ON THE INFORMATION IN THIS BLOG.****

Hello!

My name is Matt Azari and I am happy to be contributing to the Foreclosure Industry Blog. I recently attended Christine’s Auditing class and I was overwhelmed with all of the undisclosed charges and inconsistencies with chain of title that go into a typical mortgage.

A little about myself: my background is in Finance; I hold a Bachelor’s of Science in Business Administration/Finance from the University of Arizona’s Eller College of Management in Tucson, AZ. During my time in Tucson, I began my legal experience by working at a medium sized insurance-defense law firm. I then went to work for a business valuation and transaction advisory firm, where I learned auditing skills. I moved to Phoenix to take a job with Quicken Loans as a Web Mortgage Banker. This was an eye opening experience and I quickly learned the ins and outs of mortgage origination. After months of working at Quicken, I decided I no longer wanted to “sell” mortgages and decided to pursue my dreams of practicing law. I had already applied to law school prior to my time at Quicken and decided attending would certainly advance my career goals and get me where I want to be. I am proud to have just completed my first year of law school and I welcome the challenges ahead in my quest to succeed in the legal profession.

My time at Quicken afforded me a unique opportunity to connect with potential refinance and purchase clients, looking for hassle-free home loans. By this time, the housing market had been hit with waves of foreclosures, and the government was offering a first-time home buyer tax credit. Needless to say, with rates at all-time lows and government incentives in place to help homebuyers, a refinance boom was underway. We were offering any kind of mortgage one could think of; from conventional 30 year fixed loans to 3, 5, and 7 year ARM programs with rates as low as 3.99%. These ARMSs appeared quite attractive, despite the fact that with falling home prices and no end in sight for the housing mess, the ARMs made no sense for the vast majority of my clients.

I was always skeptical of any sort of an ARM program, especially during the trough of the credit crunch; what tragedy would befall unsuspecting homeowners when they attempt to refinance their ARM into a fixed rate loan, but their home value had remained stagnant or depreciated? Three years did not leave much time for home values to stabilize, especially considering that the majority of my clients were in the hardest hits states, like Arizona and California!

I look forward to getting into more detail about my experience in the mortgage lending industry, telling my story from an insider’s perspective, stay tuned!

If you have any questions, please feel free to email me at matt@desertedgelegal.com.

DISCLAIMER:

****MATT AZARI IS NOT A LICENSED ATTORNEY. THIS BLOG IS COMPRISED OF HIS OPINIONS, OBSERVATIONS AND INTERPRETATIONS AND IS NOT INTENDED TO BE CONSTRUED AS LEGAL ADVICE. PLEASE CONSULT WITH AN ATTORNEY BEFORE RELYING ON OR TAKING ANY ACTION BASED ON THE INFORMATION IN THIS BLOG.****

Fannie Mae Gets Tough on Borrowers Who Walk Away

I saw an article this morning about Fannie Mae and its new efforts to punish borrowers who walk away from their mortgages. They are extending the time you can get a new federally backed mortgage to seven years and also identifying borrowers to purse them for deficiency judgments.

This article appeared on MSNBC this morning. The article says that borrowers who do not try in good faith to find an alternative to foreclosures but have the ability to pay are being targeted by this new policy.

The article also says:

“Fannie Mae said that in locations where the law allows, it also plans to take legal action to recoup outstanding mortgage debt from borrowers who strategically default. The company plans to instruct its servicers to monitor delinquent loans facing foreclosure and recommend cases to pursue for such judgments.

A spokesman for fellow government-backed mortgage buyer Freddie Mac said its current policy requires at least a five-year wait. Freddie Mac will “take a close look” at the new Fannie policy, said spokesman Brad German. “We’ll consider it in light of current market conditions in order to manage our risk as effectively as possible.”

Fannie and Freddie were created by Congress to buy mortgages from lenders and package them into bonds that are resold to investors. Together, they own or guarantee almost 31 million home loans worth about $5.5 trillion. That’s about half of all mortgages.

The wave of foreclosures affecting Fannie and Freddie loans has caused a major problem for the U.S. government, which effectively guarantees the loans.”

Christine here: I get that Fannie Mae is losing its ass to foreclosures. The US Government now owns a large number of foreclosed homes and there are more foreclosures coming. I understand that this is a business decision for Fannie, because they are hurting.

I also understand why the government doesn’t want to interfere in the foreclosure mess. I personally don’t think we want our government to interfere with private businesses. (I don’t want them to tell me how to run my business.) However, it seems to me that the government is indirectly going after homeowners with this policy.

I understand that there’s backlash against people who walk away from mortgages. However, until the servicers of all of these loans get real and give homeowners some meaningful assistance, these types of policies are useless. If Fannie wants to encourage people to work out a meaningful solution to their foreclosure problem, why aren’t they putting financial pressure on their servicing companies to work things out with the borrower instead of pushing them to foreclosure?

I wonder about the people at Fannie who put this information out. Have they been living under a rock? This policy is useless and I don’t know how they are going to be able to pursue anyone for a deficiency judgment. This would mean they’d have to prove they have or had the right to enforce the Note in the first place. If they are going to pursue a deficiency, why aren’t they prosecuting foreclosures now in their own name?

I could go on and on about this…but this is another good reason to get a loan audit and an expert witness declaration if you are thinking of fighting a foreclosure or are worried about being pursued for or have already been sued for a deficiency judgment.

Got questions? Send me an e-mail: christine@desertedgelegal.com.

DISCLAIMER:

****CHRISTINE SPRINGER IS NOT A LICENSED ATTORNEY. THIS BLOG IS COMPRISED OF HER OPINIONS, OBSERVATIONS AND INTERPRETATIONS AND IS NOT INTENDED TO BE CONSTRUED AS LEGAL ADVICE. PLEASE CONSULT WITH AN ATTORNEY BEFORE RELYING ON OR TAKING ANY ACTION BASED ON THE INFORMATION IN THIS BLOG.****

Introducing Matt Azari, Our New Blogger and Auditor

For those of you who have been following this blog, we recently ran a Craigslist ad and got a lot of great candidates, one of whom is Matt Azari.

Matt took my loan audit class last Friday, and he is also a first year law student at the Phoenix College of Law. Matt is going to be helping me out with audits and will be a contributor to this blog.

Matt used to work for a mortgage origination company, (which will be named later….stay tuned) and he has some very interesting insider information on the originations of loans.

You can reach him by e-mail at matt@desertedgelegal.com.

DISCLAIMER:

****CHRISTINE SPRINGER IS NOT A LICENSED ATTORNEY. THIS BLOG IS COMPRISED OF HER OPINIONS, OBSERVATIONS AND INTERPRETATIONS AND IS NOT INTENDED TO BE CONSTRUED AS LEGAL ADVICE. PLEASE CONSULT WITH AN ATTORNEY BEFORE RELYING ON OR TAKING ANY ACTION BASED ON THE INFORMATION IN THIS BLOG.****

Introducing Three New Lawyers

I’m pleased to introduce you to several lawyers that “get it.” Two of them attended my class yesterday and the third reached out to me for help with a client issue. They are:

Barbara Forde, who is licensed in Arizona and lives in Scottsdale. Barbara totally got it in class. She’s really fired up and will be launching her own blog next week. She was totally inspired and fired up after yesterday’s class. (She left an AMAZING recommendation on my blog post here.) For now, you can e-mail her for help directly at bforde@cox.net or contact me for her phone number. I don’t yet have her permission to print her phone number but I’ll pass her information along by e-mail if you need it.

Nancy Shannon Rooney also attended my class. She is licensed in Chicago and just got admitted in Arizona. She is moving from Chicago to Arizona in a couple of months. If you’re in Chicago and need help this summer, you can call her at 773-844-5423. You’ll need to catch her in Illinois for the summer and after that she’ll be in Arizona.

I am also working with Yvonne Jaramillo Ahearn, who lives in Hawaii on Oahu. She is licensed in California, Arizona and Hawaii (WOW!). She has been mostly working in real estate. Visit her website here or call her at 808-721-8088.

Got questions? Send me an e-mail: Christine@desertedgelegal.com or 602-350-2151.

Oh, and by the way, I was not paid to post this by either of these attorneys, and I am not making any representation as to the results you may obtain from working with them. This is for informational purposes only.

DISCLAIMER:

****CHRISTINE SPRINGER IS NOT A LICENSED ATTORNEY. THIS BLOG IS COMPRISED OF HER OPINIONS, OBSERVATIONS AND INTERPRETATIONS AND IS NOT INTENDED TO BE CONSTRUED AS LEGAL ADVICE. PLEASE CONSULT WITH AN ATTORNEY BEFORE RELYING ON OR TAKING ANY ACTION BASED ON THE INFORMATION IN THIS BLOG.****

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