5 Lenders and AG Settlement: MODIFICATIONS

admin Uncategorized

Here are some bullet points on the 27 page settlement agreement between 49 states and Bank of America Corp., JPMorgan Chase & Co., Wells Fargo & Co., Citigroup Inc. and Ally Financial Inc. (formerly GMAC).

When the settlement agreement addresses Modifications it is basically the HAMP Guidelines with the word “shall OR must” substituted for “may”.

As is the case with settlements with major lenders, the lenders basically agree to do what they are already doing. And the regulators, since they have no idea what servicer is doing, says “that sounds good.”

State AG and (CFPB) are to supervise and enforce. Which means we can use them to escalate files. The CFPB has their site up and running and ready for complaints. Lets see how efficient they are.

There are some great changes which give us in the industry a few more tools. However it is also more important than ever to make sure you are submitting good clean applications that qualify. Because these changes will also get servicers to foreclose more efficiently.

So here they go.

1. No more robo signing!

2. Pre filing servicer to produce affidavit detailing loss mitigation activities to date and activity.

3. Establishes an “attorney letter” 14 days prior to filing requirement that servicer will be referring to foreclosure attorney. NEW

4. Must document standing prior to filing.

5. Upon receipt of loan mod application before 120 days in arrears servicer SHALL not refer to foreclosure. (lets see what judges think about this one)

6. Banks MUST review and make determination on borrowers application with in 30 days. (LOL THAT WILL BE THE DAY!) NEW

7. No more “dual track!” (again lets see what judges think about this one) NEW IN SOME STATES

8. Requires lenders to create portals for communications and uploading of documents for (housing counselors and borrowers)

9. Mandates NPV Test on all loans GSE and NON GSE. NEW FOR NON GSE

10. If borrower had a trial plan pending review of docs (not prequalified, per hamp guidelines before june 2010) SERVICER SHALL SUSPEND ANY FORECLOSURE ACTIVITY (Lets see how this works) NEW

11. For borrowers on trial plans that were pre qualified/underwritten , permenent plans SHALL be offered immediately. The effective date will be the 4 month payment. NEW

12. Single Point of Contact Mandatory.

13. Single Electronic Record System Required.

14. Servicers shall disclose and provide accurate information to borrowers relating to the qualification and eligibility factors for all loss mitigation programs. NEW

15. When denied shall be in writing and substantive, makes it clear that NPV Data and Calculations must be provided. So Borrower can challenge. Within 30 days.

16. When Denied because of “investor”, must disclose investor name, reason for denial, and copy of limiting language in psa and must make avail electronic access to complete copy. NEW

17. Sales date must be 30 days from denial.

18. Servicer shall implement an automatic internal review process to review all loss mitigation denials, which shall include review by an ombudsman or review panel, which is independent of the group who initially conducted loss mitigation evaluation. Subject to monitoring by AG and CFPB. NEW

19. Where warranted on facts and circumstances servicer shall consider for FHA short refi program. (The last time I saw numbers on short refi I believe 300 had been done in the entire country.) NEW

20. Servicer shall evaluate all delinquent mortgages with a loan to value ratio of greater than 105%, or combined loan to value of greater than 115% using both standard and waterfall and a waterfall that includes principal reduction as the required first or second step in the waterfall. Servicer should use whichever results in a better NPV.

21. Material violations of agreement constitutes an unfair and deceptive trade practice and breach of duty of good faith and fair dealing.

Being Prepared for Interview with Attorney or Consultant for Loss Mitigation Matters

Roberto Rivera Uncategorized

  1. Determine who is the investor on your note. Determining the investor of your loan is one of the most important things in the process. The investor sets the guidelines for loss mitigation (Modification, Short Sale, Partial Claims, Forbearance Plans etc), who and how to be eligible, and many have published guidelines.
    1. Call your servicer and ask them. Some servicers will give you the information, however some will not.
    2. Go to the Fannie Mae look up tool and the instructions. This will tell you if Fannie Mae is the investor.
    3. Go to the Freddie Mac look up tool andfollow the instructions. This will tell you if Freddie Mac is the investor.
    4. However, the best way to determine the owner of your note is by finding your Mortgage. This is a 13 – 15 page document you received at closing. The mortgage, if registered with MERS, will have an 18-digit number on the first page. It is called the Mortgage Identification Number (MIN). Again, it should be on the first page of mortgage and will look like this “MIN 123456789101113141”. Once you have this number go to the MERS Servicer ID and follow the instructions.
    5. If you do not have the MIN you can also do searches based on property address and social security number. However, if you use the social security and property address be extra careful to make sure you identify the note by the date on the note as well. In other words, make sure you know the exact date you signed the note, because MERS may illustrate various notes you had in the past.
  2. Determine property value. Many loss mitigation programs have property valuations guidelines. This is a significant factor is the process as well, and it is impossible to determine exactly what value the servicer will come up with. But we must have an idea of value to set realistic expectations and determine if there is a potential for denial due to excessive forbearance. When visiting these sites take special notice of when comparable sales occured. Take notice of the size of the property as well, jump in your car and take a look at the comparable sales so you can estimate how much your property is worth. This is no substitue for broker price opinion or an appraisal, however in my opinion at this point neither is necessary if you take your time and follow these directions. If you do not have the time then call a local realtor or simply pick up the phone and hire an appraiser. If hiring an appraiser, I would recommend one that is FHA certified.
    1. Call your servicer and ask them. Some servicers will give you this information however some will not.
    2. Ask a realtor or use any popular AVM, like Zillow or Realtor.com.
  3. Find your closing documents. Make sure they are the documents you had when you last completed a refinance or when you purchased the home whichever occurred last.
    1. Find HUD statement.
    2. Find Note and any additional Riders
    3. Find Pre-Payment Penalty Clause
    4. Find Truth in Lending Statement
    5. Find Mortgage
  4. Find Mortgage Statement.
    1. If taxes and insurance are not included with the mortgage be sure to verify amounts.
  5. Income
    1. 1 month worth of pay-stubs (For all adults in home that contribute income towards home)
    2. If self employed, last three bank statements (personal and business, and if contributor is self employed their last three bank statements)
    3. Tax Returns for last two years filed (contributors as well)
    4. If receiving social security, or pension, provide verification of such income.
    5. List of rental income.
    6. A note on income: it is important to disclose all income received even if you can not document it at the moment, so please make sure to disclose.
  6. Make a list of all credit obligations.
    1. Credit Card Balance and Minimum Payment per statement
    2. Car Loan’s Balance and payment
    3. Any other installment loans you maybe make balance and payment
    4. If you have ever been sued or have accounts in collections please disclose. If you are not sure, we recommend that you get a copy of your credit report.
  7. Make a list of your household expenses. Food, Utilities, Cable, Home Phone, Internet, Cell Phone, Gas for vehicle, Insurance for vehicle etc.
  8. Take a few minutes and answer the questions below.
    1. Borrower (s):
    2. Current Loan is a Refinance or Purchase?
    3. Why did you refinance?
    4. Do you own any other properties?
    5. Are there any non borrowers who contribute income to household?
    6. Did you get your loan from a broker or from a bank directly?
    7. Where you told one rate or term and then at closing it was different?
    8. Property Type: 1 , 2, 3 or 4 Family
    9. When did hardship occur?
    10. Is hardship permanent?
    11. Have you resolved hardship and how?
    12. Can you document hardship?
    13. Have you applied for a modification? Y or N
    14. Do you have an active application with servicer? Y or N
    15. Did you retain a company or attorney to represent you? Y or N
    16. When was the last time you submitted bank statements and pay-stubs to lender?
    17. Have you ever been granted a modification and then re-defaulted? Y or N
    18. If granted a modification previously do you have a copy of it? Y or N
  9. Once you have all this information you are ready to have a professional analysis of your file completed. Some Law Firms and Loan Modification Consultants offer this service from $500 – $1500. Of course you can go to the government’s website at www.makinghomeaffordable.gov and use their tools. However using a Law Firm or reputable Loan Modfication Consultant is invaluable. They will know up-to-date trends and new programs that may not be published or well circulated. However, be very careful when selecting. If at initial consult, or shortly after, a complete interview has not been completed with the data above addressed and discussed, RUN RUN RUN!
  10. Remember “help” is available for free from NON Profit HUD Counselors. Unfortunately in my opinion they are not very effective. Most simply gather your documents and send it to the lender and provide little or no technical guidance. If you decide to submit an application on your own, I would suggest using DMM Portal (www.dclmwp.com); for a small fee of approximately $150 they will upload your documents in a portal system that lenders will have full access to. And be prepared to wait. With the back log servicers have you will be in review 4- 9 months. Not to worry, with DMM it is very manageable. Every month you simply upload your pay-stubs, and bank statements and it only takes a couple minutes.

Secret to Success in Loss Mitigation

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Everyone thinks there is a “secret” to getting Modifications approved. The truth is there is none. It is hard work and requires experience in multiple fields.

  1. You must understand mortgages inside and out.
    1. How to Calculate Income
    2. How to Calculate LTV
    3. Determine Investor on Loan
    4. How to apply proper guidelines
    5. You must be a good interviewer, to get the truth from clients
    6. You must set realistic expectations for clients
    7. You must understand how to read credit reports
    8. You must understand tax returns
    9. You must have an understanding of Bankruptcy Laws as a fall back
  2. You must have experience valuating properties, specific to servicers.
  3. You must stay current with established guidelines.
  4. You must stay on top lender trends.
  5. You must understand judicial process.

Sorry, there is a “secret”! You must care!

Modification Denials: Lender Trends

Roberto Rivera Uncategorized

Denials are the bread and butter of my business.
The number one reason for denials I see is for inaccurate information.  It is amazing how even in court (mediation in NJ or Settlement Conferences in NY), lenders will deny modifications that they have never reviewed or have inaccurate information on.
Steps to take when denied.
1.  Request an NPV.
NPV is a complete list of all the data used in consideration for a modification.  To date, I have never seen a single one with no inaccuracies.  Do not be surprised if they ignore your request.  But you must insist upon it.  If you’re in court you can put in a motion and request it, or request it via a QWR if you’re not in court.
2.  Once it is received you must review it for inaccuracies and challenge any inaccurate data.
3.  Then, review the file and do a complete analysis to see what your next step should be.  Whether an appeal or a new submission.
4.  Many attorneys and borrowers understandably attempt to do this on their own, but I strongly suggest a complete analysis of the case at this point.

The Truth About Forensic Audits

Roberto Rivera Uncategorized

I am not a fan of Forensic Audits. In late 2008 I went to a training seminar in South Florida by a recognized practicing attorney who was one of the first selling the service. At that time I already had a hundred or so modifications under my belt. The idea that submitting an application with a forensic audit somehow scares lenders into a modification is absolute nonsense. Anyone with a day’s experience at a major lender will tell you that. I am no lawyer, but can it be useful in court, of course. However, in reality most homeowners do not have the resources to hire a seasoned experienced litigation attorney.

I was fortunate enough to start from day one in this industry with a passionate caring attorney, who went to as many Foreclosure Defense seminars as I went to modification trainings. And after being in the business all this time our opinion of this industry is pretty simple.

  1. Set realistic expectations with clients.
  2. Do a complete analysis of client’s financial and legal circumstances.
  3. Understand that all investors do not have the same loss mitigation guidelines.
    (You would not believe the amount of people that think they can get a 2% HAMP mod with an FHA loan!)
  4. You must understand how Bankruptcy can be used. (Most Bankruptcy Attorneys don’t have enough practical experience with Loss Mitigation to properly advise clients. And most attorneys practicing loss mitigation do not have enough bankruptcy experience to advise clients.)
  5. MARS should have made a certification or license as an LO mandatory.
  6. The idea that you negotiate a modification is also nonsense in most cases, unless you’re knee-deep in litigation. Almost always it is strictly a matter of putting together an application that is eligible and compliant with investor guidelines and making the servicer comply.