Loan Modification – Miami Real Estate Attorney Blog

Was the Denial of your Loan Modification Part of a Plan by the Banks to Generate a Denial and Ensure a Foreclosure? Bank of America’s Wrongful Conduct in Denying Modifications Exposed

The Home Affordable Modification Program (“HAMP”) was President Obama’s plan for attempting to lower mortgage payments for distressed borrowers in order to prevent foreclosures. The HAMP program gives homeowners trial modifications to prove they can make the reduced payments before the change becomes permanent. In 2009 the Obama administration fell well short of the stated objective to avert three million foreclosures by implementing HAMP.

Why did the plan not work?

The leading cause for HAMP failure was Bank of America’s role in following through with HAMP modifications. Bank of America purchased Countrywide which led to them incurring 1.4 million delinquent borrowers and cost near $43 billion. To help in aiding Bank of America get through this process they hired a company called Urban Lending to service these troubled mortgages especially the complaints. Urban Lending and similar type companies were relied upon to handle this type of work and were given extremely strict quotas.

Yet now, Bank of America and Urban Lending are both accused of using very shady tactics in the processing of these HAMP modifications. It has been told by previous Urban Lending employees that Bank of America often used extreme stall tactics. They would constantly ask for the same documentation over and over, although they had already received it. What this would do is stall the HAMP modification long enough that they could close the file and deny the modification due to a lack of paperwork. They also used incorrect income calculations while filling out customer forms, which often times resulted in additionally fees because of the delays.

Urban Lending employees alleged many dirty tactics including spotting which signatures were computer generated and which were genuine so that the complaints with genuine signatures would be treated with more importance. They also alleged that borrowers’ modifications were delayed for over a year sometimes to collect fees and interest, along with disqualifying people for HAMP modifications because their debt-to-income ratio got worse over time. Urban Lending was also forging documents and falsifying conversations in order to meet extremely strict quotas. This deceit would often lead to the denial of HAMP modifications.

Bank of America is believed to have outsourced this type of work to other contractors as well who may be partaking in the same practices. Homeowners should be aware that these are major concerns when going through the HAMP modification process, which could eventually lead to foreclosure.

Govt Places Pressure on JP Morgan, and Others, to Do More to Help Struggling Homeowners

JPMorgan Chase is coming under increased pressure from the Federal Government for not doing enough to help struggling homeowners permanently lower their mortgage payments as part of the government’s foreclosure prevention program.

JP Mortgage Chase is not alone in receiving this criticism. The Government recently also criticized Bank of America, Wells Fargo, and Ocwen, for not doing enough to help struggling homeowners.

As part of the Government’s criticism of these four banks – Bank of America, Wells Fargo, Ocwen, and JP Mortgage Chase – the Government began withholding financial incentives of up to $1,000 per modification.

The Government launched several programs back in 2009 with the intended purpose of helping struggling homeowners keep their homes. The intent of the plan was to lower the homeowner’s monthly payments.

In a loan modification, for example, homeowners start with a lower monthly payment on a trial basis. But the Government’s loan modification program has struggled to convert those that started the trial modification into a permanent loan modification.

Homeowners have complained that the program is a bureaucratic mess, and nightmare. Many say they were disqualified after banks lost their documents and failed to return their phone calls.

On the other hand, banks have blamed homeowners for failing to submit needed paperwork. They often cite incomplete paperwork and delays in getting the necessary paperwork.

More than 1.7 million troubled homeowners received trial modifications over the past two years. But as of October, more than half of them — about 880,000 people — have dropped out of the program entirely.

If you are frustrated with the process, and facing potential foreclosure, we’re here to help. Contact us today to discuss your potential options.

New Rules Imposed in an Effort to Eliminate Fraud during the Loan Modification Process

Fraudsters often target those who find themselves in difficult financial situations. During the ongoing foreclosure crisis we have seen scammers take advantage of people by promising help with loan modifications. Now, the Federal Trade Commission is intervening to prevent the public from becoming victims in loan modification scams.

Loan modifications are currently a haven for fraud. If you feel as though you have been victimized by mortgage fraud, don’t despair. Our Miami mortgage fraud lawyers will carefully evaluate the facts and legal issues in your case. If we believe that you are a fraud victim, we are prepared to aggressively represent you in fighting for your rights and seeking justice in the legal system. If you are a victim of fraud, we will use our legal experience to stand up for your rights. We want to help you keep your home.

Loan modifications are currently a haven for fraud. Many fraudsters make every attempt to make themselves look completely legitimate. They will give themselves names that look like federal foreclosure intervention programs such as “Making Home Affordable” or “Home Affordable Modification”. Some scammers even go so far as to use photos of President Barack Obama or the seal of the United States in order to promote their scams.

However, effective January 1, 2011, the Federal Trade Commission (FTC) has adopted new rules to prevent homeowners from falling prey to loan modification scams. Under the new rules a loan mod agency cannot accept up-front payments. Further, they also must implement mandatory disclosure rules. For example, mod agencies will be required to make clear that they are not connected with a government agency or program. Also, they will have to disclose that you’re free to reject any offer from the lender without having to pay the agency a fee.

The FTC believes that fake modification agencies have stolen millions of dollars from homeowners who are severely delinquent or deeply underwater in the past two years. Sadly, as the federal government has broadened its efforts to establish legitimate foreclosure relief programs the amount of fraudulent schemes has risen. So far, the FTC has brought more than 30 cases against these operations. With these new rules, the FTC will have finally have a way to control the widespread advance-fee requirements.
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Consider Your Options. Contact Us Today.

We have been successful in defending many foreclosure cases when given an opportunity to develop a plan to properly defend the foreclosure.

If you are on the brink of foreclosure, need a real estate attorney, or just need to assess your legal rights, please contact our office today.

Call us today toll free at 1-866-518-2913 or at 305-263-7700.

Loan Modifications: Reports are Mixed on Whether They are Working to Help Families Save Their Home

Shortly after taking office, President Barack Obama announced an ambitious plan to help rescue the housing market from total collapse. The plan centered on the restructuring of distressed mortgages to help keep struggling borrowers in their homes while also inserting a floor beneath the plummeting property values. Put differently, the plan was intended to keep many borrowers in their homes, even if the property value for that home was “upside down”, and this in turn would slow the flow of foreclosures entering the marketplace thereby stabilizing the “freefall” of housing prices.

Unfortunately, the plan has not helped as many people as the administration would have hoped or originally projected it would help. On the other hand, it is important to note that the plan was never intended to be a cure for the pains felt by every single distressed homeowner, so it was never intended to “end” foreclosures and “stop” real estate values from plummeting further. But it was intended to reach more people than it has currently. Indeed, the administration’s plan even provided financial incentives for many financial institutions to help modify mortgages, and the more mortgages that are modified, in theory anyway, should help slow the decline in real estate values.

The Wall Street Journal was recently critical of the administration’s loan modification program. But while it was it critical of the program as a whole, it did conclude that the plan is nonetheless still useful and should continue to be pursued.

But the USA Today also recently reported that many financial institutions have taken it upon themselves to modify, and restructure, many mortgages while not participating in the administration’s plan.

Those internal, or private, modifications are not reported, and are therefore not counted towards the figures used, by the government, when determining whether or not the government’s modification program has been a success, or at least reaching more people each passing day. Far less is known about these private alternatives because they are often times done privately by lenders using different criteria and methods than those laid out by the administration in their plan to rescue the real estate market.

Hiring a Miami foreclosure defense attorney is the best course of action for homeowners seeking to save your home or for those seeking to avoid or prevent a foreclosure sale, as well as to assess your viability in the loan modification process. As reported in our Miami Real Estate Attorney Blog, there are many options for homeowners to potentially save your home.

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We have been successful in defending many foreclosure cases when given an opportunity to develop a plan to properly defend the foreclosure.

If you are on the brink of foreclosure, and need to assess your legal rights, please contact our office today.

Saving Your Home: Alternatives to Avoid Foreclosure

Hugo V. Alvarez will be a speaking at a Foreclosure Clinic sponsored by the Florida Bar’s Consumer Protection Law Committee, in conjunction with the Legal Aid of Palm Beach County. The clinic is scheduled to take place on June 24th from 6pm to 8pm at the Boca Raton Community Center.

Mr. Alvarez will be speaking on alternatives to foreclosure, and specifically discussing (a) options to retain one’s home, while avoiding foreclosure, and (b) options to dispose of one’s home, and avoid foreclosure.

Options to Retain Your Home

1. Payment or Repayment Plan – the quickest method of avoiding foreclosure is to come up with the necessary money to bring the delinquent loan current. In some instances, banks are willing to provide the delinquent borrower with a repayment plan in an effort to bring the mortgage current. This will typically involve an agreed upon time frame in which to make the regular payments, plus a little extra, to repay in the delinquent amount in full over time.

2. Refinance – in the event that you actually have equity in your home today, you may be in a position to refinance your mortgage. Refinancing your mortgage may actually provide you with a lower interest rate, and a lower monthly payment. If you do not qualify for a government-sponsored loan modification, you may also be eligible for a government-sponsored re-financing plan (HARP – Home Affordable Refinance Program).

3. Forbearance – some banks may offer you a forbearance plan. This option typically provides for a temporary reduction or a suspension of monthly payments for a specified length of time, and with an agreement that the amount that was forgiven will be paid back at a later date.

4. Loan Modification – a loan modification is a permanent change in one or more of the terms of the mortgage. It also allows the mortgage to be reinstated, and results in a payment that the borrower can afford. This can include anything from a reduction in interest, adding years to the mortgage (from say a 30 year mortgage to a 40 year mortgage), reduction in the principal amount owed, or any combination of the aforementioned. It should be noted that many financial institutions are provided with financial incentives from the government to modify loans. Additionally, the current loan modification program is not designed to save every home, but only geared toward saving the homes of individuals that can still afford to be in that home.

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Options to Dispose of Your Home

1. Sell the Home – if there is sufficient equity in your home, you may be able to sell your home in today’s market for more than the amount you currently owe on your mortgage. If you can do this, you will actually reap a profit.

2. Short Sale – if your home is “underwater”, i.e. you owe more than the home is worth, then you will have to pursue a short sale if you are interested in selling the home. A short sale is when a bank allows you to sell the home for a contract price that is less than the amount owed on the mortgage. In many instances, however, banks may reserve the right to pursue the difference between the short sale contract price, and the amount owed on the mortgage, from the borrower directly. This is commonly known as a “deficiency”, or “deficiency judgment”. So when trying to sell a home via short sale, it is important to understand whether the bank will continue to pursue the borrower, for monies owed, even after the transaction is completed, especially if the home was “underwater” at the time of the short sale. Don’t assume that just because the bank approved the short sale that they won’t pursue you for the difference after the deal is done.

3. Deed in Lieu of Foreclosure – this is accomplished when the property owner voluntarily gives the property back to the bank in exchange for the bank canceling the mortgage. In other words, the deed is transferred from the borrower to the bank in an effort to shorten the length and costly process of foreclosing on the property. As with a short sale, the bank may reserve the right to pursue any deficiency against the borrower directly even after the deal is done.

4. Tax Issues – all tax issues should be consulted in great detail with a certified public accountant. However, if you lose your home to foreclosure or short sale, where you sell your home for less than you owe, the IRS won’t add insult to injury by counting the difference as income. At least until 2012.

However, there are four major exceptions to the rule:

A. You did a cash-out refinance and splurged.
B. You have a home-equity line of credit.
C. You lost your vacation home or investment property.
D. You owned a multi-million-dollar home.

But again, these are issues to be covered in greater detail with an accountant.

If you are on the brink of foreclosure, and need to assess your legal rights, please contact our office today.

Fraud at Countrywide Found Leading to the Foreclosure Crises in Miami and Beyond

More evidence has come to light of Countrywide’s fraud and misconduct during the height of the real estate boom. Federal charges were brought against Bank of America, who acquired Countrywide nearly two years ago, alleging fraud, insider trading, and a host of other unethical activities.

In an effort to address the federal charges, Bank of America agreed to pay $108 million to settle the various federal charges brought against Countrywide. The settlement was announced by the Federal Trade Commission, and the settlement is intended to refund money to approximately 200,000 borrowers. This is the largest mortgage industry settlement for the Federal Trade Commission and its history.

The Federal Trade Commission’s chairman, Jon Leibowitz, accused Countrywide of “callous conduct, which took advantage of consumers already at the end of their financial rope.” Countrywide’s unethical practices included requiring borrowers who were already late on their mortgage payments to pay additional fees of several thousand dollars at a time. In other words, Countrywide collected several thousands of dollars from many borrowers on the brink of foreclosure, and economic collapse.

Not only did Countrywide profit from making extremely risky loans during the height of the real estate boom, but they also attempted to cash in during the down time by taking advantage of the same individuals that they had lured into taking risky mortgages just a few years before they fell behind. So Countrywide profited by making risky loans, and then again by securing additional payment from borrowers who were overburdened by those loans.

Indeed, Countrywide was doing very little to prevent many foreclosures in large part because of the fees that they were securing from individuals on the brink of foreclosure. In short, it became more profitable for Countrywide to allow certain individuals to actually fall into foreclosure rather than help the struggling borrowers save their home. Often times, these default fees of several thousand dollars were significant barriers to loan modifications.

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This is just another example of the ongoing mortgage crisis which has taken hold in South Florida. If you are on the brink of foreclosure, and need to assess your legal rights, please contact our office today.

Mortgage Crises Continues For Those With Adjustable Rate Mortgages in Miami and Beyond

The worst of the real estate meltdown is far from over. While the economy is showing tenuous signs of recovery, unemployment rates remain at staggering highs. With this backdrop, millions of homes will likely go to foreclosure this year, and more so this year, than in years past, as many risky adjustable rate mortgages written in 2005 are about to be reset, and yet others explore “strategic defaults.” If you are currently facing foreclosure, or need additional information regarding your home mortgage, please contact our office today.

As we previously reported, there are multiple factors that typically drive foreclosures. Those factors include the overall economy, unemployment, and a host of other reasons. However, two new factors will likely fuel additional foreclosure filings for the rest of the year, and beyond.

First, many adjustable-rate mortgages will be reset during the course of the next few months. Many prospective home purchasers agreed to exotic mortgages in an effort to purchase homes that they likely would not have been to afford otherwise. In an effort to purchase that dream home, many home purchasers agreed to financing deals that provided for low monthly payments for a few years. But after that, the mortgage would readjust with a higher interest rate. And now, we are starting to see the next wave of adjustable mortgages reset which is about to further complicate the ongoing foreclosure crises we are experiencing here in South Florida.

Second, not only will unemployment and adjustable mortgage resets drive-up foreclosure filings here in South Florida, but many more people may opt to push forward with a foreclosure by way of a “strategic default.” As we previously explained, a strategic default is when a homeowner voluntarily decides to stop paying their mortgage because their home is worth less than their mortgage. In other words, the home is “under water” and the borrower believes that a strategic default may yield a better deal for them by requiring the bank to address the borrower’s concerns by way of a foreclosure.

The next chapter in the foreclosure crisis here in Miami, and beyond, will not only impact lower income borrowers who typically purchased mortgages they could not afford, often at the advice of pushy, and sometimes fraudulent, banks and brokers. But what we will soon start seeing, and what our firm has already begun to handle with much success in Miami, and beyond, is foreclosures starting to mount for borrowers who have prime mortgages that are solidly middle-class, upper middle-class and even the rich and famous.
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The foreclosure crisis is an ongoing problem that impacts all segments of our society, and individuals of all walks of life. If you, or a loved one, are facing foreclosure, or are in need of a consultation with a real estate attorney regarding your rights, please contact our office today.

Mortgage Delinquencies Continue to Worsen in Miami

In Miami, the mortgage crises continues its ugly march into the record books. According to the Mortgage Bankers Association, more than 10% of homeowners with a mortgage had missed at least one payment between January and March of this year. That is a record high and up from 9.1 percent from a year ago.

While many are predicting an improvement soon, the continued high number of homeowners in default or at risk of losing their home to a foreclosure will have a lingering effect on the economy as a whole.

Worse yet is the fact that a Wall Street Journal report reveals that one in four in the government’s loan modification program are dropped. According to the U.S. Department of the Treasury’s April update, the Making Home Affordable Program (HAMP) has 78,356 home loans under active modification, of which 30,923 are in Miami-Dade, Broward and Palm Beach counties.

On the other hand, we are starting to see some slow progress. For instance, while loan modifications got off to a slow start, housing officials have recently created incentives for lenders and servicers which have resulted in more modifications. Additionally, the number of homeowners starting to show signs of trouble is trending downward. As of March, nearly 3.5% of borrowers had missed at least one month of mortgage payments, down from 3.8% from a year earlier.

But the slow progress we are seeing is not enough to correct a bad situation. Therefore, should loan modifications fail to help, many homes will go up for sale either as a short sale or in a foreclosure sale. Therefore, many are forecasting that home prices will soon see yet another dip as more of these homes go up for sale at deeply discounted prices. While the mortgage crises was initially triggered by lax lending practices, today’s mortgage crises has many reasons other than just a home underwater.
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If you are facing a foreclosure, contact our office today to discuss your options. We can be reached at 305-263-7700.

Foreclosures & ‘Strategic’ Defaults on the Rise in Miami

As we previously reported, foreclosures are on the rise. But so too are ‘strategic’ defaults.

What is a ‘strategic default’? It is a decision by a borrower to stop making payments on a debt despite having the financial ability to make the payment. For instance, the large financial firm, Morgan Stanley, recently made the calculated decision to give up five San Francisco towers it purchased at the peak of the booming real estate market.

Many individual borrowers are also turning to the same strategy used by Morgan Stanley, and others, and are seeking solutions to the problems brought in by the unstable real estate market. And the reason ‘strategic defaults’ are becoming so popular are for reasons we might consider, and for other reasons we might not necessarily consider.

The two primary reasons appears to be (1) negative equity in the property, and (2) a more borrower friendly environment. The second reason should be kept in mind as we consider the current administration’s continued push to encourage more banks to offer loan modifications, and principal reduction coupled with the Fed’s continued policy to keep interest rates low.

A recent Morgan Stanley report reveals that many U.S. homeowners are opting to walk away from mortgages that they can afford, and that these ‘strategic’ defaults are accounting for an increasing share of defaults. About 12% of all mortgage defaults in February were ‘strategic’, and that is up from 4% in mid 2007. The same report indicates that borrowers will likely stop paying their mortgages the higher their credit scores and the larger their loans.

This following report that ran on the NBC nightly news provides a snap shot into this growing trend.

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If you are in a difficult financial situation, contact us today to discuss your options.

Miami & National Banks Taking a Different Approach to an Old Problem

How to get borrowers to pay?

With foreclosures filings on the rise in Miami, many Miami, Florida and national banks are taking a different approach to the on going foreclosure crisis here in South Florida in effort to get their borrowers to pay the monies that are owed to back to the banks.

It used to be the norm that debt collectors would call borrowers at all hours of the day and practically insult and scare them into paying. But with the growing financial crises in our community, such heavy handed tactics were increasingly yielding less and less results for the Miami and South Florida banks.

As a result, a trend is developing. As reported in the Miami Herald, many South Florida banks are taking a new and “nice” approach in an effort to hopefully secure payments from the borrowers that have fallen behind.

For instance, SunTrust, here in Miami, has courted struggling borrowers with care packages and $200, while West Palm Beach-based Ocwen Financial Corp. helps connect homeowners with food banks, employment services and even suicide hot lines through a nationwide social service referral company.

This new “nice” approach to dealing with borrowers that owe banks money is just another example of how the current economic down turn has led many South Florida banks to think of new ways to address an old problem – how to get its borrowers to pay. “Banks spent billions of dollars in branding, establishing a name, and it all got blown to smithereens in minutes,” said Sylvia Ayalon, an analyst at the Consumer Mortgage Audit Center in Fort Lauderdale. “The traditional banking method was, `You owe me money; pay up or else.’ Now they have to rethink; they can’t be the big bully on the block.”

Today, banks are becoming more cognizant of the fact that in this economy there are many factors that have led to a foreclosure. Often times, it is the loss of a job. As a result, many Miami banks are now contracting with mortgage referral services, and job banks, in an effort to help their struggling borrowers land back on their feet.

“People don’t just need help with housing counseling anymore,” said MortgageKeeper President Rochelle Nawrocki Gorey. “They need help with their budget, unemployment, job training, résumé writing, groceries.”

This housing crash is more complicated than prior periods of economic unrest. Unemployment coupled with bad loans and underwater mortgages have significantly contributed to the economic meltdown both nationally, and locally. If you are facing this situation, or need further advise regarding the ongoing housing crises, please contact our office today.