Another falls for A Loan Modification scam and see how the Obama Administration is trying to keep defaulting owners in their homes.
Caller: Dear Ken, I just recently read your article about loans being in a Negative Amortization Adjustable Mortgage. I am so depress and don’t know what to do, my husband passed on and I am handling our finances by myself with two children in college. I went to a Loan Mod Company and paid them $ 3000.00 to modify my loan. I was told specifically to stop my mortgage payments and now I am 6 months behind my payments. I then was told to Short Sale my property thru the same company, because they claim that I don’t qualify for the Loan Mod. I cant sleep at night and I really am very depress and don’t know what to do.
Ken Go: For my readers, this is the first time I have had a caller sound like this, from the time I heard her voice I knew she was completely devastated. I was having diner and immediately move to another room to speak with her. This is her situation, she has a “Pick-A-Payment” Loan with a minimum payment of about $800.00 a month payment, her property is not upside down but has very little equity. She lives in a descent area that I am sure will recover faster than other cities. She is currently still working but has concerns about her mortgage recasting (adjusting) to a higher payment next year. She is also worried about her job security now. I told her that if she would have called me last year, I would have told her to keep her money and keep paying the $ 800.00 a month for now. Per advise of the Loan Modification Company, they wanted her to list the property for sale with them ( to line up more money in their own pocket if you ask me ) and if she listened to the Loan Mod company and short sales her property, she still has to pay around 1200-1400 for a two bedroom apartment. So, why sell right? My take on this is that the Loan Modification Company wants to short sale to make another commission. Not caring about what happens to the homeowners. I told her not to talk to the Loan Mod Company and gave her the name, number and address to :
Call State consumer protection agency 800-952-5225 –
You have to call FTC – to complain by phone or internet and then call Ca. State consumer protection to take action.
File a complain in writing detailing your situation with all name and company names to :
Office of the attorney general – public inquiry unit
PO Box 944255
Sacramento CA 94244 –
Shortcut to: https://www.ftccomplaintassistant.gov/
To file a complain and I gave her the number to her lenders Presidents Office to complain and ask for help.
Her two children will be graduating this year and I told her to sit them down and tell her about the financial trouble she is in. I told her to continue to payments and make arrangement with her lender to continue the loan. Because she has till next year before the loan will actually recast or adjust, for now that payment is affordable. By next year her children are both graduating and hopefully will be able to help make the mortgage payments.
Even if the adjusted Mortgage payments will be around $ 1600 a month, that should be affordable for a three income family. With the market condition now a days, she will have a nice size equity in 5-7 years and then hopefully can sell and retire.
This is a case of real abuse where as the Loan Mod company saw an opportunity to take money from this person who might not be too sophisticated or familiar with their own financial situation. Mainly due to her husband passing who was the main financial person of the household.
The crooks in this situation probably wants the property for themselves and will have no mercy or conscience in kicking these hardworking family from their home for many years, which is not underwater and has a minimum payment of $ 800.00.
Lesson learned, don’t stop paying your mortgage unless you are certain that by doing that it actually helps and not puts you in a worse situation
The Obama Administration in an effort to end the foreclosure crisis has a new approach: “Paying some of the them to leave”. This is latest program, which will allow owners to sells for less than what they owe and will them a little incentive to speed up the process. Now, there are more than five Million households behind on their mortgages and risk foreclosure. Come this April 15th, a program could encourage hundreds of thousands of delinquent borrowers who have not been rescued by the loan modification program to sell their houses through a process called Short Sale. Lenders will be compelled to accept the arrangement, forgiving the difference between market price and amount owed. “We want to streamline and standardize the short sale process to make it much easier on the borrower and much easier on the lender,” said Seth Wheeler, a Treasury Senior Advisor.
This process will allow the borrowers to suffer less damaging credit remarks and ratings. And as part of the transaction, they will get the lender’s assurance that they will not later be sued for the unpaid mortgage balance.
I will look into this new program and will be discussing about Mortgage Deficiency next week. Seems like there is a new fear amongs homeowners being foreclosed on. Which is will the lenders have the right to go after the deficiency balance even after Foreclosures? Some experts says yes and I will discuss that next week.
Thanks so much for your support, please call Ken Go of 1st Innovative Finance for your loan questions or modification or short Sale inquiries. Call Ken at 562-697-7028 or write to: kennethgo
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måndag 4 juli 2011
Short Sale Deficiency Judgements
Will I be liable for the deficiency balance on my defaulted mortgage balance?
Caller: My property was foreclosed 6 months ago and I am still getting a bill for the mortgage balance of my property. What can I do about the debt? The bank already sold the house to another buyer.
Ken Go: That is what happens if you let your property go to foreclosure, you did not request for debt forgiveness and the lender is after you for the deficiency judgment. Meaning, if you owe $500K on your property and the lender after paying all the fees, interest, legal and agent fees net about $400K only, you will owe them $100K. I am advising my readers to consider a short sale after failing to modify their loans and rates, and letting the property go into foreclosure as a last resort. Think about it, if you let go of the property just like that, the bank will have to wait for the legal process to kick in before taking over the property, that means you would have incurred legal fees, let alone the wait time that is wasted due to the process of bank take over. Then, the bank will also hire an agent and pay their commission to sell the house, all those cost of the bank selling will also go on your bill. So, you basically just increased your debt balance and hopefully your property is not damaged or vandalized where there will be again incurred cost, because again you will have to pick up those cost. Therefore, do I make sense when I say lets short sell it and ask the bank to accept a smaller payoff? What to do then, maybe talk to the lender to discount the balance if you have money to settle, or talk to a lawyer as far as how to avoid the debt.
Caller: I wrote about this caller a few weeks ago, who wanted me to help her request for a loan modification, she is $18K behind and have no way to pay the debt off to be current. I assisted in calling and providing the lender with the necessary documents to have her loan modified. Just recently the lender approved her modification package. What they did was they put the loan balance of 18K on top of her loan and kept her rate and increased her payments by about $100.00. I her case, she wanted to keep the house and has the ability to pay her mortgage but not to bring the loan current, so this will work out for her and now she wont have to worry about the 18K debt.
She got an advice from someone saying that don’t pay your mortgage for 2 months before calling the lender and asking for a loan modification. Problem is the 2 months quickly became 6 months and now she can’t keep up. So, before you get an advice make sure that person is qualified to make comments.
Caller: I was defrauded by a countryman, I was behind on my home that I owned for 18 years and was lead to believe that this person was going to use a straw buyer (fake buyer) to buy that property back for the caller. The Agent requested for $10K as an escrow deposit for the supposedly straw buyer. After a few months of communication with the agent, he suddenly stops calling. When chased after, the office has no record of the escrow ever being opened. What should I do? My home was foreclosed because I have a notice to move already and the bank won’t talk to me any more.
Ken Go: At this point, you have to report that agent to Federal Trade Commission, www.ftc.gov or call 1-877-ftc-help. I can’t even tell you if you will ever get your money back. I would report them to the local authorities too. Unfortunately, as far as your house, since the Trustee sale occurred you are out of options. Best is to report this person to avoid other people to fall for their scams. This is by the way a Federal offense for those who are getting ideas about scamming other homeowners.
Caller: I was approach by a lawyer’s office to who wanted to help me do a loan modification with my houses that I have. I own a vacation that is still ok but due to my interest rates being high, I might not be able to afford it anymore. I refinanced my home to be able to buy the vacation home and my current residence also has a high interest rate that I am paying.
Ken Go: Before paying someone $2-4K to help you do loan modification, take note of these things. There are non profit agencies out there that will help you negotiate with your lender for free. You can also do that yourself, of course when you have to do it yourself you have to be patient and much disciplined to follow up on those calls and documents the lender might require. But for you that could save you $5K, don’t you think it’s worth it, having a Law Office behind you doesn’t always mean success? My suggestion is for you to try to sell the home and at the same time request for a loan modification, vacation home you can’t afford is not a vacation home. If you sell see how much money you will have saved not having to pay the mortgage on that property, truthfully how often to visit your vacation home? Be frugal, now is not the time to spend carelessly. There was an article about a Law firm that targeted Filipino homeowners in distress and they were soliciting for Loan Modifications. I believe they are knee deep in trouble with the Law and I am curious to see how they get out of this mess.
If you have a Freddie Mac or Fannie Mae loan there is a Making Home Affordable program that you might qualify for, please inquire with us. I have seen rates as low as 2% approved for 5 years from this program.
Please call me for your inquiries; I am waiting to write more success stories than distressed once. So, if you are able to do a work out plan with your lender thru an agent, office or lawyer that you are happy about, send me a message this way we can refer them more people in need of good citizens. Call me at (562) 697-7028 or write to kennethgo
View the Original article
Caller: My property was foreclosed 6 months ago and I am still getting a bill for the mortgage balance of my property. What can I do about the debt? The bank already sold the house to another buyer.
Ken Go: That is what happens if you let your property go to foreclosure, you did not request for debt forgiveness and the lender is after you for the deficiency judgment. Meaning, if you owe $500K on your property and the lender after paying all the fees, interest, legal and agent fees net about $400K only, you will owe them $100K. I am advising my readers to consider a short sale after failing to modify their loans and rates, and letting the property go into foreclosure as a last resort. Think about it, if you let go of the property just like that, the bank will have to wait for the legal process to kick in before taking over the property, that means you would have incurred legal fees, let alone the wait time that is wasted due to the process of bank take over. Then, the bank will also hire an agent and pay their commission to sell the house, all those cost of the bank selling will also go on your bill. So, you basically just increased your debt balance and hopefully your property is not damaged or vandalized where there will be again incurred cost, because again you will have to pick up those cost. Therefore, do I make sense when I say lets short sell it and ask the bank to accept a smaller payoff? What to do then, maybe talk to the lender to discount the balance if you have money to settle, or talk to a lawyer as far as how to avoid the debt.
Caller: I wrote about this caller a few weeks ago, who wanted me to help her request for a loan modification, she is $18K behind and have no way to pay the debt off to be current. I assisted in calling and providing the lender with the necessary documents to have her loan modified. Just recently the lender approved her modification package. What they did was they put the loan balance of 18K on top of her loan and kept her rate and increased her payments by about $100.00. I her case, she wanted to keep the house and has the ability to pay her mortgage but not to bring the loan current, so this will work out for her and now she wont have to worry about the 18K debt.
She got an advice from someone saying that don’t pay your mortgage for 2 months before calling the lender and asking for a loan modification. Problem is the 2 months quickly became 6 months and now she can’t keep up. So, before you get an advice make sure that person is qualified to make comments.
Caller: I was defrauded by a countryman, I was behind on my home that I owned for 18 years and was lead to believe that this person was going to use a straw buyer (fake buyer) to buy that property back for the caller. The Agent requested for $10K as an escrow deposit for the supposedly straw buyer. After a few months of communication with the agent, he suddenly stops calling. When chased after, the office has no record of the escrow ever being opened. What should I do? My home was foreclosed because I have a notice to move already and the bank won’t talk to me any more.
Ken Go: At this point, you have to report that agent to Federal Trade Commission, www.ftc.gov or call 1-877-ftc-help. I can’t even tell you if you will ever get your money back. I would report them to the local authorities too. Unfortunately, as far as your house, since the Trustee sale occurred you are out of options. Best is to report this person to avoid other people to fall for their scams. This is by the way a Federal offense for those who are getting ideas about scamming other homeowners.
Caller: I was approach by a lawyer’s office to who wanted to help me do a loan modification with my houses that I have. I own a vacation that is still ok but due to my interest rates being high, I might not be able to afford it anymore. I refinanced my home to be able to buy the vacation home and my current residence also has a high interest rate that I am paying.
Ken Go: Before paying someone $2-4K to help you do loan modification, take note of these things. There are non profit agencies out there that will help you negotiate with your lender for free. You can also do that yourself, of course when you have to do it yourself you have to be patient and much disciplined to follow up on those calls and documents the lender might require. But for you that could save you $5K, don’t you think it’s worth it, having a Law Office behind you doesn’t always mean success? My suggestion is for you to try to sell the home and at the same time request for a loan modification, vacation home you can’t afford is not a vacation home. If you sell see how much money you will have saved not having to pay the mortgage on that property, truthfully how often to visit your vacation home? Be frugal, now is not the time to spend carelessly. There was an article about a Law firm that targeted Filipino homeowners in distress and they were soliciting for Loan Modifications. I believe they are knee deep in trouble with the Law and I am curious to see how they get out of this mess.
If you have a Freddie Mac or Fannie Mae loan there is a Making Home Affordable program that you might qualify for, please inquire with us. I have seen rates as low as 2% approved for 5 years from this program.
Please call me for your inquiries; I am waiting to write more success stories than distressed once. So, if you are able to do a work out plan with your lender thru an agent, office or lawyer that you are happy about, send me a message this way we can refer them more people in need of good citizens. Call me at (562) 697-7028 or write to kennethgo
View the Original article
Emotional Stress of a Short Sale
What a seller is to expect in a Short sale
I started talking about Short Sales about a year ago. The Short Sale transaction can be frustrating for everyone involved. I think most of the frustration comes from expectations not being met. The short sale is not your every day real estate transaction. This is relatively new territory for most real estate agents and definitely a new venture for the seller. This should be one of your last resorts. Talk to your bank. You might be able to renegotiate your mortgage. Again, back to my point banks don’t want to own real estate, they just don’t realize it yet. They are going to fight you tooth and nail to keep the current condition and hope you find a way to pay. A well trained real estate agent in foreclosures and short sales will be able to assist you in this process.
There are a few things that you should be prepared to do before venturing into a short sale transaction. The bank has to qualify you for a short sale. Remember, they are going to ultimately take a loss on this. Therefore, you have to establish a hardship, if they approve, they will pass this short fall onto you as a 1099 at closing. The IRS sees this as income to you and expect you to pay taxes on it. (Tax laws are changing on this regularly, check with your Tax preparer) You might not have to anymore.
Your agent will be needing a copy of a few things from you to help streamline the whole process.
Authorization to talk to you lender(s)
Most recent mortgage statement.
Most recent tax return.
Two most recent pay stubs.
Bank Account Statement(s)
A Hardship letter written in your own words.
The banks will want to see these items in order to consider your request. If there’s a second mortgage, most likely both will have to agree on a settlement before approving the short sale. Remember you agent will do their best to get the approval, but there’s no guarantees that they will accept it. It is not uncommon for one or the other lender to force it to foreclosure. The loss mitigation department sometimes have a mind of their own. They have secret formulas that they use to determine which route is more beneficial to the bank.
Your sellers agent will submit this again with another pile of documents when an offer comes through. It makes it easier on the Loss Mitigation Officer to see everything at one time (again or maybe for the first time) They have hundreds of these request coming across their desk monthly. The more your agent is organized, the quicker the response time to the sale approval. I say quicker with a little tongue and cheek. The approval process could take anywhere from 30-60 days. You don’t need any more delays than that. Especially if the foreclosure process is closing in on you. Buyers and Buyer’s agent need to be aware of this. We’ll talk about their expectations next week.
This is an emotional process, your agent should be able to help keep things in perspective and work through the hiccups of the transaction. Ultimately, you want to get someone who understand your situation, very patient and has your interest.
Watching out for your deficiency waiver and credit are both very important issues that an agent has to address. I just ran a credit on a short sale that I closed, this client had about a 720 Fico prior to the short sale, once we had closed the short sale. Their credit dropped to around 650, and both 1st and second loan showed “Account Settled”, which is what I negotiated for and got. I am very happy with the turn out of this clients credit. However, any foreclosure or short sale they will have to wait three years to be able to get another home loan.
Please call me for your inquires or concern, Call Ken Go (Short Sale Expert) of 1st Innovative Finance Group at (562) 697-7028 or write to: Kennethgo
View the Original article
I started talking about Short Sales about a year ago. The Short Sale transaction can be frustrating for everyone involved. I think most of the frustration comes from expectations not being met. The short sale is not your every day real estate transaction. This is relatively new territory for most real estate agents and definitely a new venture for the seller. This should be one of your last resorts. Talk to your bank. You might be able to renegotiate your mortgage. Again, back to my point banks don’t want to own real estate, they just don’t realize it yet. They are going to fight you tooth and nail to keep the current condition and hope you find a way to pay. A well trained real estate agent in foreclosures and short sales will be able to assist you in this process.
There are a few things that you should be prepared to do before venturing into a short sale transaction. The bank has to qualify you for a short sale. Remember, they are going to ultimately take a loss on this. Therefore, you have to establish a hardship, if they approve, they will pass this short fall onto you as a 1099 at closing. The IRS sees this as income to you and expect you to pay taxes on it. (Tax laws are changing on this regularly, check with your Tax preparer) You might not have to anymore.
Your agent will be needing a copy of a few things from you to help streamline the whole process.
Authorization to talk to you lender(s)
Most recent mortgage statement.
Most recent tax return.
Two most recent pay stubs.
Bank Account Statement(s)
A Hardship letter written in your own words.
The banks will want to see these items in order to consider your request. If there’s a second mortgage, most likely both will have to agree on a settlement before approving the short sale. Remember you agent will do their best to get the approval, but there’s no guarantees that they will accept it. It is not uncommon for one or the other lender to force it to foreclosure. The loss mitigation department sometimes have a mind of their own. They have secret formulas that they use to determine which route is more beneficial to the bank.
Your sellers agent will submit this again with another pile of documents when an offer comes through. It makes it easier on the Loss Mitigation Officer to see everything at one time (again or maybe for the first time) They have hundreds of these request coming across their desk monthly. The more your agent is organized, the quicker the response time to the sale approval. I say quicker with a little tongue and cheek. The approval process could take anywhere from 30-60 days. You don’t need any more delays than that. Especially if the foreclosure process is closing in on you. Buyers and Buyer’s agent need to be aware of this. We’ll talk about their expectations next week.
This is an emotional process, your agent should be able to help keep things in perspective and work through the hiccups of the transaction. Ultimately, you want to get someone who understand your situation, very patient and has your interest.
Watching out for your deficiency waiver and credit are both very important issues that an agent has to address. I just ran a credit on a short sale that I closed, this client had about a 720 Fico prior to the short sale, once we had closed the short sale. Their credit dropped to around 650, and both 1st and second loan showed “Account Settled”, which is what I negotiated for and got. I am very happy with the turn out of this clients credit. However, any foreclosure or short sale they will have to wait three years to be able to get another home loan.
Please call me for your inquires or concern, Call Ken Go (Short Sale Expert) of 1st Innovative Finance Group at (562) 697-7028 or write to: Kennethgo
View the Original article
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