According to the complaint, Lloyds says it should not be obligated to defend Allied in HUD’s fraud case because the policy excludes “deceptive trade practices” and because the fraud suit does not arise from Allied’s performance of professional services.

Since we are involved in the underlying lawsuit against Allied, we are unable to comment specifically on Lloyd’s suit. We can say, however, that insurance policies typically exclude claims of fraud from coverage. This is exactly what Lloyds says in its suit.

The complaint brought by the government against Allied and Hodge alleges that Allied “originated loans out of hundreds of branches never disclosed to HUD, submitted knowingly false statements to HUD concerning its branch operations and accumulating sanctions, and lied to conceal its dysfunctional operations from HUD.” In simple layman’s terms, it claims that Allied engaged in massive fraud.

Lloyds says it has no duty to defend Hodge nor to pay any claims arising out of the lawsuit based on the language in its policy. The complaint says they not only want to get released from defending the case they also want the defendants to pay back any money spent by the insurer for Allied’s legal bills to date.

The noose continues to tighten around Allied, Hodge and his henchmen.
Although Hodge has apparently started another mortgage company, its remains extremely unlikely that he could ever earn enough to pay all the claims against him and his companies.

Reading between the lines, the complaint suggests that Allied is funding its defense through insurance. If Lloyds is able to pull out, Allied will face a much tougher road ahead. While we sincerely believe that Allied has no defense and that the government holds the upper hand, having access to expensive lawyers often prolongs cases by years.

First of all, you may want to log onto your NMLS website page because they have made some changes and enhancements.  Forms have been updated to include additional legal wording, and easier search features make it easier for you to update your info.

Secondly, you’ll want to read the latest Consumer Finance Protection Bureau bulletin regarding transitional mortgage licenses … basically saying that states have the option to allow it.  Here’s something to think about … if you are not licensed—meaning that you are registered and working for a financial institution—you may want to consider getting your license in case you want to change employment or move to another state.

FHA and VA have not changed anything this month.  But here’s the cool thing—we went back to the FAQ’s regarding how FHA and VA underwrite rural properties and created a great Mortgage Talking Point™ called, “What You Need to Know About Financing Rural Properties.”  Yes, they can be financed, and yes, give a copy of this great chart to your real estate agents so they know what homes they can offer FHA & VA financing on.

Moving on to Fannie and Freddie—HARP continues to haunt everyone.   Fannie has just published a new FAQ regarding appraisals and field work waivers.  Right now, you’ll find eight questions, such as:

Does the number of submissions impact the eligibility of a field work waiver? 

Or, when DU issues an estimated value message, can I update the value in DU and resubmit to underwriting? 

Stay tuned because any time we have a new FAQ issued, it generates more questions, and I see it happening here too.

Now, we generally don’t write about Fannie and Freddie servicing issues, but we thought this one was important enough not only to write about … but create a Mortgage Talking Points for you and your real estate agents.  It’s about establishing time lines for processing short sales.  As you know, it’s a frickin’ mess out there—and has been for years.

So Fannie and Freddie got together and said “Hey servicers,  you need to follow these time lines so consumers and real estate agents who sell homes can see a light at the end of the tunnel.”

Why is this important?  Because I don’t think that all servicers are going to follow the rules.  If you or your agents know what they are, you can notify the servicers that they have a 60-day deadline they have to meet.  This goes into effect on June 15.

And finally, on to USDA and some really important clarifications when it comes to both their Pilot Refinance program and their regular streamline and non-streamline refinance program.  USDA has provided detailed instructions on how each loan is to be processed and underwritten.  (They have a new matrix, so you can throw your old one away.)  Just a reminder, the pilot program is the USDA version of HARP, but only available in 19 states and does not require a credit report or an appraisal.

Oh, and USDA has really gotten high tech and enhanced their eligibility map to the point where you can easily find if the property qualifies. It also has a zoom feature, an aerial view, and allows you to print the area you’ve pinpointed.  Use the automatic tweet within the article and share the link with your real estate agents.

Remember, getting a loan approved and closed these days IS Rocket Science – and if you are not a subscriber, you can take a test drive for just one dollar.  www.MortgageCurrentcy.com.

I have had personal experience with this in trying to refi my rental property that qualifies for HARP. I went to the first lender they wanted full doc and an appraisal. Because my rental property is in a remote area of South Dakota, nobody would do the appraisal. So, a few weeks later, I applied again, LP came back with no appraisal—and a paycheck stub.

While there are rumors that LP is updating their HARP underwriting, FHLMC has not released anything formally at this time. The media has latched onto some information that Brad German (Media spokesperson for FHLMC) has addressed in a Chicago Tribune story. Here’s an excerpt and the link to the full story below. Mortgage Currentcy will continue to monitor for any formal announcement coming from FHLMC on this topic. Brad German only alludes to ‘waiting a few weeks before attempting again’. This story was published on 4/14/12. One could argue that it is already been a few weeks, but they (FHLMC) may make the changes without any fanfare.

Full story: http://articles.chicagotribune.com/2012-04-15/business/ct-biz-0416-freddie-harp-20120414_1_freddie-mac-refinancing-program-largest-servicers

Excerpt: “…..In response to complaints from lenders, Freddie Mac this week will undertake a “fine-tuning” of its underwriting process, according to Freddie Mac spokesman Brad German. Specifics of how the automated underwriting models will be altered aren’t being disclosed, even to lenders, but some homeowners who have been turned down for the program may now qualify, he said.

“It will be a noticeable, positive change for the homeowner,” German said. “It will help increase the number of borrowers who can refinance under HARP and take advantage of today’s rates.

Freddie Mac’s German suggested that borrowers with Freddie Mac-backed mortgages who have been rejected for HARP may want to wait a few weeks before possibly reapplying for the program.”

Bottom line, based upon my experience, this info might be true and help you get more loans approved the second time around—so wait a few weeks—and run your loan thru LP again!

“Don’t sell yourself short, Judge. You’re a tremendous slouch!”

As President of Top of Mind Networks, I’ve found there are two disparate types of firms:

1. Organic: Your traditional “referral” and “database” driven model. Organic LO’s know how to bait their hook, clean the fish and prepare the meal.
2. Lead-Gen: These firms depend on third-party prospecting sources. I’ve found many Lead-Gen firms to be incredibly savvy and process driven. Many are hugely profitable. I still think most are tremendous slouches when it comes to maximizing their return on investment. Here’s why.

Talk to a Lead-Gen mortgage pro and their primary metric is “cost per funded deal”. Many can tell you down to the decimal what it cost them to purchase the lead, purge out the waste, process the loan, pay the LO and satisfy the overhead. Meanwhile, ask an Organic LO his “cost per funding” and you’ll probably get a blank stare.

This is because the Organic LO simply needs to grab his fishing pole and a luge every morning in order to fuel his mortgage business. Not so with the Lead-Gen firm. The Lead-Gen firm must reach for the checkbook every morning.

Yet, the Lead-Gen firm thrives today. Refinance leads are abundant and rates are low. Why fix a model that is not broken? I believe I have the answer. You fix a model that isn’t broken today in order to preserve your financial future tomorrow.

Tenet #1: A borrower is a borrower.

Lead-Gen firms often tell me they cannot loyalize a shopper. This is false. What they really mean to say is that they cannot loyalize a shopper in fifteen minutes and for fifteen dollars. And if it cannot be done that quickly or that cheaply, the typical Lead-Gen mentality says it cannot be done period. I emphatically disagree with this mentality. A shopper is a shopper because they had nowhere else to go. It’s your job to change that, not theirs.

Tenet #2: Every bucket leaks.

However, no bucket leaks quite like the Lead-Gen bucket. As opposed to the Organic bucket, which only begins leaking upon loan funding, the Lead-Gen bucket begins leaking (more like hemorrhaging) the instant the lead is delivered. Thus, the Lead-Gen firm applies CPR on the front end of the process. In other words, the typical Lead-Gen firm aims to improve front-end closing ratios. Ironically, a phenomenal lead-to-close ratio for Lead-Gen firms is in the 5% to 10% range. Ninety percent of the leads purchased are left to die on the vine. Even Bob Eucker batted over 20% didn’t he?

Tenet #3: Loyalty is not granted. It is earned.

Borrowing from Tenet #1 – why should a customer who entrusted you with the *largest purchase most people ever make* reinvent the process the next time they are in the market? The simple answer – they shouldn’t. However, it’s up to YOU to tell them their shopping days are over. You must reinforce this message early and often – and into perpetuity (ie: well after the transaction has funded). You must shift from a sales-driven process to a relationship-driven process.

Tenet #4: Client retention warrants moderate investment.

Here’s what really burns my britches: Lead-Gen firms are not afraid to invest. In fact, I think most Lead-Gen firms overinvest on the front end. Most Lead-Gen firms care about the client as much as Organic LO’s. But for some reason, they refuse to plug their leaky buckets.

Conclusion: Create a Client-Retention System.

This idea intimidates most Lead-Gen firms because it deviates from what they do best. However, a client-retention system does not have to be intimidating, complex or expensive. In fact, it should be affordable, efficient and turn-key. Best of all, client-retention investments are only made when the revenue is there to warrant spending. In other words – does it make sense to invest in 100% of clients rather than 100% of strangers (95% of whom will not do business with you)?

Bank of America, N.A.
5401 N Beach St
TX2-977-01-34
Forth Worth, TX 76137

borrower name
address

Right corner will have notice date and loan number

Dear Borrower:

We have reviewed your request for a home loan modification under the freddie mac modification program. Unfortunately, your home loan is not eligible for modification assistance for the following reason(s):

Ineligible Mortgage. Your loan is not eligible for a modification because the loan-to-value (LTV) on your property (calculated as the total principal amount you owe on the loan divided by our estimate of the vlaue of your home) must be 80% or higher to qualify for the program.

We want to work with you to determine what other options may help you avoid foreclosure. If you remain ineligible for a home retention option and you cannot afford to stay in your home, the below alternatives to foreclosure may be available to you:

A Short Sale. With this option, you satisfy your mortgage debt by selling your home at fair market value, even if the sale is for less than what you owe on your mortgage.

A Deed in Lieu of Foreclosure. With this option, you avoid foreclosure on your home and satisfy your mortgage debt by voluntarily transferring ownership of your property to us.

These options have different requirements and guidelines, and not all loans qualify. Also, these options may offer financial assistance for your relocation and less damage to your credit than a foreclosure.

Important information about foreclosure proceedings.

Please call us as soon as possible to determine if you qualify for one of the options listed above. We are now returning your loan to normal collection activity, which could include referral to foreclosure and a foreclosure sale. Do not ignore any legal notices about your home. We may be able to postpone foreclosure proceedings; however, foreclosure postponement is not guaranteed and you will need to respond to all notices to protect your legal rights.

If you have any questions about the collection or foreclosure process, please call us. If you do not understand the legal consequences of foreclosure, we encourage your to contact an attorney or housing counselor for assistance.

We are here to help

We want to make sure you understand all options available to you. If you would like to discuss your options, or if your situation changes, please call 1.800.669.6650.

You may also seek assistance at no charge from housing counselors, who are approved by the U.S. Department of Housing and Urban Development (HUD), by calling the HOPE Hotline Number at 1.888.995.HOPE. Assistance in understanding this notice is available through the HOPE Hotline.

<Representatives name>
Home Loan Team
Bank of America, N.A

Bank of America, N.A. is required by law to inform you that this communication is from a debt collector. However, the purpose of this communication is to let you know about your potential eligibility for programs to help you avoid foreclosure sale.

Required Disclosures

Bank of America, N.A., is required by law to inform you that we are unable to fulfill your request for a loan modification and the federal Equal Credit Opportunity Act prohibits creditors from discriminating against credit applicants on the basis of race, color, religion, national origin, sex, marital status, or age (provide that the applicant has the capacity to enter into a binding contract); because all or part of the applicant’s income derives from any public assistance program; or because the applicant has in good faith exercised any right under the Consumer Credit Protections Act. The federal agency that administers compliance with this law concerning this creditor is The Office of the Comptroller of the Currency, Customer Assistance Group, 1301 McKinney Street, Suite 3450, Houston, TX 77010-9050.

Our credit decision was based in whole or in part on information obtained from an affiliate or from an outside source other than a consumer reporting agency. Under the Fair Credit Reporting Act, you have the right to make a written request, no later than 60 days after you receive this notice, you should call us at or write to us at:

Bank of America, N.A.
5401 N Beach St
TX2-977-01-34
Forth Worth, TX 76137

***********************
END OF LETTER

The letter is a mistake as the information for home value is being extracted from the home appraisal in the system at loan origination.

One homeowner received the letter after being approved and making one trial mod payment on a Freddie Mac standard trial period mod and the other homeowner received the letter while waiting for the decision on his loan mod application.

The homeowner should write a letter back in response asking for home value used to determine the loan-to-value and the source of the home value, especially if denied.

Not all representatives will have the information about home value used in the loan modification case but you can request the value in writing by faxing in the request and response to this letter to 800-520-5019.

The single point of contact on the case you are assigned to may not be aware of the letter either.

To summarize, this letter was sent out in error to at least two homeowners with Freddie Mac loans serviced by Bank of America, and Fannie Mae loans may also be affected as well.

Additionally, there is another letter that went out to homeowners telling them they are not eligible for the national mortgage settlement aka the AG settlement, and that letter was also in error.

Apparently, the mail merge that made these auto generated letters come out to homeowners is a system programming mistake.

www.loanmodhelpcenter.com and www.restreportmatters.com

There were two major housing data releases today. One of them is important. The other was a misleading misdirection play, as it usually is.

Due to its peculiar and excessive smoothing methodology, the housing Case Chiller is always behind the curve. It uses a 3 month average of sale prices closed in the 3 months up to the last reported month, in this case December, January, and February. That means that the data represents the average price of contracts closed over a 3 month period with a time mid point of mid-November. Need I remind you, it is now the end of April. The Case Chiller data represents the market more than 5 months ago.

This would be like the Wall Street Journal reporting only the Down Jones Industrial Average 65 day moving average as of November 16. Really, who gives a crap about what the 3 month average of the Dow was 5 months ago? Do you? I didn’t think so. So why pay attention to the Case Chiller?

This is totally worthless data, yet the media continues to report it as if it means something.

Actually, there was a third release today. The Federal Housing Finance Agency (FHFA aka Foofah) monthly price index was also released today. The Foofah data is not quite as slow. It uses sales only from the last available month which in this case is February. It at least recognized that a turn took place for sales closed in February.

The Conmerce Department released its new home sales data. This is really crappy data because it uses a tiny sample survey that gets revised every month for 5 months until the sample size is statistically significant. That being said, it does have certain advantages, and the revisions have not been so large that they change the absolute direction of the index.

The new home sales price data, while more volatile than the ultrasmooth and useless Case Chiller, uses contract prices from the previous month, not closed sales from two, three or four months ago that went under contract two months before that. It is the most current index of actual contract selling prices, released with a lag of just a month. Trends can be isolated by deriving year to year changes. Median and average annual price changes in new home sales have shown consecutive steep increases in both the February and March data.

New House Sales Price Chart- Click to enlarge

I watched an interview of Robert Shiller today. It was painful. He seemed confused and uncertain about what’s going on. Due to the painfully slow data collection and excessive data smoothing of the index bearing his name, Shiller has missed the turn. Professor, the supply demand equation has two parts. Low prices have cause supply to be withdrawn from the market, bringing it into equilibrium with historically weak demand. Bernanke inflationary policies are causing house prices to inflate, just like oil prices. Housing is a necessity. When it’s as cheap to own as it is to rent, and there’s too much free money around, guess what? Prices for necessities rise.

New house median sales prices were up 6.3% year over year in March. That was the second straight year over year increase. The new house average sale price was up 11.7%, also the second straight increase. Average price is skewed by product mix. The market isn’t up 11.7%, but it’s the direction and consistency of the data that’s important.

The NAR’s data for March showed its second straight monthly increase, at +5.7% for the month, with a year over year increase of +2.5%. And now the FHFA shows slight a year to year increase for sales closed in February mostly contracted in December, the weakest month of the year.

Current, real time national listing price indexes (Housingtracker. net) have shown excellent predictive value in reflecting in real time the direction of the lagging closed sale data. They have shown year to year increases since December and are up 3.7% year to year through this week. In March, at the time corresponding with the March new home sales contract data, they were also up 3.6%. In January, at the time corresponding with the NAR’s March closed sales data (on average, January contracts) they were up 2.9%. The NAR’s corresponding closed sales data showed an increase of 2.5%. A wide variety of data is consistent in showing year to year increases in prices for the first time without the benefit of tax giveaways, or pending increases in FHA fees.

Actual, not seasonally fudged, builder new house inventory was revised down for each month from November to February. At 144,000 units, builder inventory is now at it’s lowest point in 50 years. That is not a typo. Five oh. The records only go back to 1963.

Furthermore, existing inventory is being made obsolete at a breakneck pace as the scary bogeyman called “shadow inventory” removes hoouses from the market through locational, physical, and functional obsolescence faster than they can be placed on the market. Shadow inventory is like shadow boxing. It isn’t going to hurt anyone, except the banks and institutions that own them, and ultimately the US taxpayer, who will be forced to pay for the banksters’ losses because Fannie and Freddie guaranteed most of those loans.

The new home sales actual inventory to sales ratio at 4.5 is the lowest since August 2005. Demand is historically weak, but supply is now aligned with that fact. An uneasy equilibrium has been reached.

New House Sales Chart- Click to enlarge

New House Inventory Since 1963- Click to enlarge

Completed units in inventory were revised down 3 of the last 4 months. At 48,000, completed unit inventory has never been even remotely close to being this low.

Not seasonally adjusted actual monthly sales were revised up for all months November to February. That is the first time I’ve seen that in 7 years of watching this data closely. Sales are still extremely weak historically, but tight supply and Bernanke’s unholy suppression of interest rates are reigniting inflation. Shiller says that housing will stay depressed for a generation. I’d fade him. If anything, prices will surprise to the upside much sooner than anyone thinks.

Bibby and Donnelly are officers of Veterans Mortgage Company in Georgia, a company that specializes in originating loans for veterans. The two men helped many vets and active duty military personnel obtain Interest Rate Reduction Refinancing Loans or “IRRRLs.”

VA regulations prohibit vets and military personnel from being charged attorney’s fees or closing costs on IRRRL loans. Title exam fees are allowed, however.

Bibby and Donnelly got suspicious when they saw lenders charge title fees of $500 to $900 to service members on IRRRL loans. The average title exam is just $150. Lenders are required to certify on each loan backed by the VA that it has not charged excessive fees or fees not authorized by law.The men claim that many lenders were violating the law.

Ultimately the two men brought a whistleblower suit under the federal false claims act in an Atlanta federal court. Named in the complaint were many of the nation’s biggest lenders including Wells Fargo, Washington Mutual, Chase Manhattan Mortgage, Citimortgage, General Motors Acceptance Corporation, Countrywide, Bank of America, US Bank, Fifth Third Bancorp plus a dozen smaller lenders. The case was filed in March of 2006. The complaint remained under seal until October of last year when the government finally intervened.

JP Morgan Chase settled its portion of the suit last month with the government for $45 million. Bibby, Donnelly and their lawyers will receive approximately 1/4 of that amount of $11.7 million.

The mortgage crisis has brought several whistleblowers forward. There are many other frauds that haven’t been uncovered, however. The largest false claims suit in the industry is a $2.4 billion claim brought by our law firm against Allied Home Mortgage and founder Jim Hodge.

If you have non-public information about wrongful lending practices, give us a call. The False Claims Act requires there be some fraud and injury to the U.S. government and taxpayers. Because many mortgage are federally insured, most mortgage frauds qualify.

Of course the data was down! It was so warm in February and March that those months pulled demand forward from April. The current levels are still well above last year, and have not fallen back into the 2009-2011 range. Traffic is up 5 points versus April 2011, and the present conditions, which in essence represents the current level of sales, is up 11 points.  It still looks like a bottom to me. The next 3 months will tell.

That being said, the overall levels are historically horrible, but an increase in activity from any level is incremental to the industry and the economy. It the indicator subsequently turns up from these levels, then the upturn will be confirmed, and in all likelihood the Commerce Department’s new home sales data will follow by lifting off somewhat from their current extreme lows. That data lags and is only current through February.  The next release of that data will be on Tuesday, April 24, for the month of March.

The latest Wall Street Examiner Professional Edition Housing Market Update gives a more complete picture.  You can read all the Professional Edition reports risk free for 30 days. Get regular updates on the US housing market, and stay up to date with the machinations of the Fed, Treasury, Primary Dealers and foreign central banks in the US market, in the Fed Report in the Professional Edition, Money Liquidity, and Real Estate Package. Get the research and analysis you need to understand these critical forces. Be prepared. Stay ahead of the herd.Click this link and begin your risk free trial NOW!

Copyright © 2012 The Wall Street Examiner. All Rights Reserved. The above may be reposted with attribution and a prominent link to the The Wall Street Examiner.

]]> http://ml-explode.com/2012/04/builder-indexes-down-in-april-but-trend-is-still-up/feed/ 0 http://ml-explode.com/2012/04/principal-reductions-and-loan-modification-without-hardship-requirements/ http://ml-explode.com/2012/04/principal-reductions-and-loan-modification-without-hardship-requirements/#comments Wed, 11 Apr 2012 23:18:19 +0000 MichaelNazarinia http://ml-explode.com/?p=1449

Mr. DeMarco, who is the head of the FHFA and is a Republican, sees such a large moral danger in people cheating by going late on their mortgage to get a principal reduction and applying for a loan... Read more

]]> Mr. DeMarco, who is the head of the FHFA and is a Republican, sees such a large moral danger in people cheating by going late on their mortgage to get a principal reduction and applying for a loan mod while lying about their hardship to get a principal reduction that he does not favor principal reductions, even though nearly a million homeowners with Fannie or Freddie as the investor, with current real hardshipswill be helped by it.

The NPV is higher on each and every loan disposition analysis we see at the REST Report Matters by doing this under the HAMP PRA Home Affordable Modification Program Principal Reduction Alternative – a program that Fannie and Freddie are not participating in but they should –  despite the higher NPVs for these types of mods.

It is my opinion that the hardship requirement for a mortgage modification on a home with an LTV of 75% or higher and FICO of 750 or lower should be completely eliminated. 

If Fannie and Freddie can make loan mods at 2% and 40 year term, that is fixed for 5 years and that goes up to today’s 30 year fixed rate of 4%, as they are doing every day, then that should be a program offered to all people seeking a refinance with a loan to value of above 80% who are not delinquent and do not have a hardship.

Its already bad enough that there is so much paperwork in the mod process and now they are making it harder to apply for a mod by requiring proving more of a hardship (see Chase’s new forms for loan mods, page 5) and leaving the decision of a hardship up to the same people who make the most money in a foreclosure sale (they collect all fees for foreclosure and delinquent servicing first before the investor gets the remaining money).

If you have no hardship and can “afford” 2% and 480 month term on the full principal of your loan by current income documentation requirements and are ok with the loan moving up to 4% after 5 years, then you should be FAST TRACKED to approval while you are current or delinquent. The only leniency should come from not having to prove more than 3 to 6 months of documented income that is stable and consistent and the “right” amount per my example below.

All that would be required is income validation and verification under current guidelines in my proposal and negative to near negative equity, a loan to value of 80% or higher, as most people with less than 20% equity have a difficult time selling their home with enough money left over to move laterally or upward to another home.

For example, if your loan is $200,000 and the home is worth between $160,000 or greater, then the principal and interest on this at 2% and 480 month term would be $604.64 and assuming $400 a month for HOA, property taxes and insurance, your PITIA payments would be $1,000.47 so you would need $3,227.32 in proven monthly income per month to qualify ($1,000.47/$3,227.32 = 31%). NO homeowner hardship should be necessary since the homeowner would be keeping a home with negative equity and the real hardship is the investor losing the $40,000 plus another 30% of the $160,000 from the foreclosure process, a total loss of $88,000. Even if foreclosure recovery yielded a 20% discount from $160,000 market value, that is still a loss of $72,000 for the investor and that is a huge hardship for the investor I would think if it were really their money they loaned out.

And don’t get me started about the investors buying and selling these mortgage notes that are worth 50% to 60% of the loan amount… that further aggravates me as that creates an incentive to generate cash by buying the mortgage at less than face value and then selling the home and getting cash because the investor only paid 50% to 60% of the principal balance to get the loan from the other investor. If an investor can buy the loan at 50% to 60% of the market value of the loan from another investor, then the homeowner should be given the option as well.

As for the mods and dropping hardship requirements, Typical HAMP or in house mods at 2% last for 5 years only then revert up to today’s 30 year fixed of roughly 4% rate over years 6 to 8 in “stepped up” manner there is already an incentive to show a hardship for a mod at the expense of borrowers who are “responsible” and keep up with their debt obligations.

Dropping the hardship requirement for mods, along with allowing the same program, at 2% and 40 year amortization, fixed for 5 years with a ceiling rate of today’s 30 year fixed, to those seeking a refinance without a job loss or underemployment that caused the hardship, would be a huge move in the right direction in housing recovery and a fantastic show of leadership.

If you want principal reduction, then the “true” investor of the loan should be happy to give that to you down to 115% to 125% of market value, maybe with a sweetener of future appreciation of some percentage if the principal were brought to 100% of market value by an appraisal. 

It sure would be nice to have the servicer actually show they requested a principal reduction from the investor, if they say to the homeowner or the homeowner’s advocate “that is against investor guidelines” since those same “guidelines” were made when home prices were going up!

Servicers don’t really seem to want to get investors involved on a case by case basis when it comes to principal reductions and if you have Fannie (look up your loan on their website) or Freddie (look up your loan on their website), then… well.. write into Mr. DeMarco and let him know you are one of the nearly million people who could be helped by principal reduction (full transcript from his speech yesterday at the Brookings Institute) because you can prove your hardship and you owe more than 115% of the value of your home and you deserve some of the $20,900,000,000 left over in TARP funds that Mr. Obama wants to use to help the homeowners who are can’t refinance and/or delinquent on their underwater mortgages.

Federal Housing Finance Agency (FHFA) 
400 7th Street, SW
Washington, DC 20024

Telephone: 202.649.3800
Fax: 202.649.1071
Email: FHFAinfo@FHFA.gov

Each homeowner is doing a “favor” to the investor by paying on a mortgage that is underwater by more than 115%-125%, in addition to being a responsible debt payer, since the investor would lose the most in a foreclosure sale.

Mods for LTV of 75% or higher should not be hardship driven (but still remain this way as a mod is a loss mitigation option that is also considered a home retention option) and should be treated like refinance loans, but with less restrictions and less documentation due to decline in income, since a short sale or foreclosure will wipe out the principal or equity through fees, and eill be marked down for sure once the home goes to a third party buyer after becoming a REO.

The current accounting treatment set by the FASB allows loans held in REO status by the servicer to be kept there at full loan value, not market value of the home when the home goes to foreclosure. The investor/bank doesn’t need to account for the loss until the home goes to third party through a sale.(real estate owned bank property).

]]> http://ml-explode.com/2012/04/principal-reductions-and-loan-modification-without-hardship-requirements/feed/ 3 http://ml-explode.com/2012/04/fha-total-scorecard-class-8-hidden-deal-killers/ http://ml-explode.com/2012/04/fha-total-scorecard-class-8-hidden-deal-killers/#comments Wed, 11 Apr 2012 18:38:45 +0000 KarenDeis http://ml-explode.com/?p=1442

Let's face it! An "approve" decision from your FHA AUS does not necessarily mean that you are "home free"! So, we've found 8 hidden deal killers that will turn your "automatic approval" into... Read more

]]>
Let’s face it! An “approve” decision from your FHA AUS does not necessarily mean that you are “home free”!

So, we’ve found 8 hidden deal killers that will turn your “automatic approval” into “manual underwriting” and maybe even into a “rejected” loan.

Complimentary Class – FHA TOTAL Scorecard: 8 Hidden Deal Killers

Join me this Thursday, April 12 while I pick the brain of an FHA underwriting expert, and in just 20-minutes of your time, you’ll learn:

• 8 things that may kill your deal
• What to do if the loan has to go into “manual underwriting”
• How to resolve issues if there is a problem
• Free Download after class – FHA TOTAL Scorecard User’s Guide (revised 3-16-2012)

Click here to register for the Thursday, April 12 Class
[2pm EST, 1pm CST, 12pm MST, 11am PST]

Oh, and if you offer FHA loans, be sure to INCLUDE your PROCESSOR, so you NEVER have to say to a real estate agent or a client that the loan has been “denied” after you’ve told them it’s been “approved”.

Karen Deis,
Publisher – MortgageCurrentcy.com

P.S. Just a reminder that this class is FREE! This class will be recorded and
will only be available to subscribers of MortgageCurrentcy.com. Here’s a link to our other training classes. You can access the other classes for $1 for 7 days!

P.S. If the link above does not work for you, please use this one.

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