IRS Supporting Commercial Modifications?

There’s good news for the beleaguered commercial real estate market:

Some distressed borrowers will have an easier time renegotiating mortgages, now that the IRS has eased its stance. The agency decided to let lenders modify loans without taking a big tax hit, even if borrowers are current in their monthly payments.
Until now, lenders would be free from penalties only if borrowers had fallen behind. Lenders successfully argued that they need to modify loans before that happens. The appetite for loan modifications is growing as high vacancy ratesand falling rents take a toll.
More lenders in commercial real estate will modify termsthan in housing markets because they believe most owners just need temporary help. Subprime home buyers, in contrast, are likely to have trouble even with easier loans.
Not all commercial borrowers will get enough help. Servicers will ease terms, but not write down the principal. They can’t afford to stick investors with steep losses from commercial loan modifications.

FDIC Loan Modification Program for Unemployed

FDIC Encourages Loss-Share Partners to Provide Forbearance to Unemployed Borrowers

As part of its loss-share agreement with acquirers of failed FDIC-insured institutions, the FDIC is encouraging its loss-share partner institutions to consider temporarily reducing mortgage payments for borrowers who are unemployed or underemployed. This program will provide additional foreclosure prevention alternatives to these borrowers through forbearance agreements that will give them an opportunity to regain full employment and avoid an unnecessary foreclosure.
"With more Americans suffering through unemployment or cuts in their paychecks, we believe it is crucial to offer a helping hand to avoid unnecessary and costly foreclosures. This is simply good business since foreclosure rarely benefits lenders and would cost the FDIC more money, not less," said FDIC Chairman Sheila C. Bair. "This is a win-win for the borrower, who can remain in his or her home while looking for a new job, and the acquiring institution, which continues to receive payments on the loan. Ultimately, by reducing losses under our loss-share agreements, this approach helps reduce losses to the FDIC as well."
The recommendation to loss-share partners applies where unemployment, or underemployment, is the primary cause for default on a home mortgage. In such cases, the FDIC is urging its loss-share partners to consider the borrower for a temporary forbearance plan, reducing the loan payment to an affordable level for at least six months. The monthly payment during this period should be established based on an affordable payment – given the borrower's circumstances – and it should allow for reasonable living expenses after payment of mortgage-related expenses. The reductions in mortgage payments during a temporary forbearance period are not covered losses under the loss-share agreement with the FDIC, though losses incurred from subsequent permanent loan modifications are covered. If the home preservation efforts are ultimately unsuccessful, losses incurred in subsequent foreclosures or short sales also are covered losses.
Acquirers of failed insured institutions who agree to a loss-share arrangement with the FDIC must abide by the FDIC Mortgage Loan Modification program for assets purchased from the failed institution. The program's objective is to modify the terms of certain residential mortgage loans to improve affordability, increase the probability of performance, allow borrowers to remain in their homes and increase the value of the loans to the FDIC and assignees. The program provides for the modification of "qualifying loans" – those that meet certain criteria – by reducing the borrower's monthly housing debt to income ratio (DTI ratio) to no more than 31 percent at the time of the modification and eliminating adjustable interest rate and negative amortization features.
Congress created the Federal Deposit Insurance Corporation in 1933 to restore public confidence in the nation's banking system. The FDIC insures deposits at the nation's 8,195 banks and savings associations and it promotes the safety and soundness of these institutions by identifying, monitoring and addressing risks to which they are exposed. The FDIC receives no federal tax dollars – insured financial institutions fund its operations.

ARM Alarm from WSJ

ARM Alarm
The performance of option adjustable-rate mortgages is likely to get worse, as payments on $134 billion of these loans recast over the next two years, according to Fitch Ratings.
Option ARMs allow borrowers to make a minimum payment that may not be large enough to cover even the interest due. Monthly payments are expected to increase when the loans recast, although lower interest rates have blunted the pain. Loans typically recast after five years or when the outstanding balance reaches a preset amount.
Many borrowers with option ARMs are underwater and are falling behind even before payments jump. Forty-six percent of option ARMs are now at least 30 days past due, even though just 12% have recast, according to Fitch, which examined loans packaged into securities. Option ARM borrowers owe on average 126% of their home's value, Fitch said.
Roughly $10.5 billion of the $15 billion in securitized option ARMs that recast in 2008 are delinquent or in foreclosure or have defaulted, it said.

—Ruth Simon Printed in The Wall Street Journal, page C6 9/6/09

Arizona Foreclosures Drop - For Now

For the first time this year, all three key measures of home foreclosures in the Valley have fallen. What that may mean is still unclear.
In August, the number of homes foreclosed on by lenders in metropolitan Phoenix dropped 26 percent from a month earlier.
The number of pre-foreclosures - homeowners notified of a pending foreclosure - dropped 4 percent.

And the number of foreclosure homes for sale fell 6 percent to its lowest level of the year.
This is the first time in 2009 all of those indicators have fallen during the same month. Though they are positive signs, the numbers do not necessarily mean the local housing market has finally started to recover.
"The foreclosure numbers are headed in the right direction," said Tom Ruff, analyst with Information Market. "It's just not clear why yet."
The numbers could be down due to the federal government's loan-modification program or possible changes to Arizona's foreclosure law.
The drop could also be attributed to the flood of paperwork faced by lenders related to foreclosures, loan modifications and other housing activity.
If the system is just bogged down, that could provide extra time for homeowners trying to avoid foreclosure.
Each possible reason has merit, but beneath the surface there still seem to be major problems in the Valley's housing market, which has been in a downturn since 2007. Home values and sales have plunged as record numbers of foreclosures have been taken back by lenders and put on the market at cut-rate prices.
Foreclosures fell to 3,939 last month, after a record in July, according to real-estate data from the Information Market/Cromford Report. Pre-foreclosures dipped to 8,810. The number of foreclosure homes for sale dropped to 4,900.
Loan help
Lenders have stepped up efforts to help homeowners avoid foreclosure through loan modification and short sales.
The 6-month-old $75 billion Making Home Affordable program to slow foreclosures has had a slow start, frustrating many Phoenix homeowners. In early August, the federal government came out with a report showing only 15 percent of U.S. borrowers eligible for a loan modification had been offered help from their lender. Of those homeowners, 9 percent have participated in a trial loan modification.
The government is pushing lenders to ramp up their efforts and help 500,000 more homeowners by November.
Non-profit housing groups in the Valley are starting to see lenders offering more loan modifications but not enough to account for a significant drop in area foreclosures.
Short sales allow borrowers to sell for less than they owe to avoid foreclosure and likely account for part of the drop. The government is also encouraging lenders to approve short sales for homeowners who aren't eligible for loan modifications.
"It seems that lenders are devoting more resources to working on short sales," said Mike Orr, metro Phoenix real-estate analyst and publisher of the Cromford Report.
He said more Valley foreclosures are being postponed so lenders and borrowers can work on short sales.
Foreclosure law
Some lenders held off on foreclosures during August to see if a controversial new law that would have allowed them to go after some borrowers' assets survived the current Legislative session.
Arizona legislation passed in July would have made some homeowners in foreclosure liable for the difference between their mortgage and the resale price of the house starting Oct. 1. In the current housing market, the difference is generally more than $100,000 on the typical Valley home.
Real-estate lobbyists fought the legislation, and it was repealed Friday. Real-estate attorneys say there were lenders waiting to foreclose on properties until October, in case the law went into affect.
The number of delayed foreclosures alone would not account for August's drop in foreclosures but could be a contributing factor. Those delayed foreclosures could boost September's numbers.
Lender backlog
Lenders may also just be swamped with paperwork, delaying foreclosure actions.
Extensions on federally mandated foreclosure moratoriums, failed loan modifications, changes to state laws and shrinking loan-servicing staffs are all hitting lenders now.
August's drop in Valley foreclosure activity could be partially due to lenders falling behind on processing homeowner foreclosures notices, filing court documents and reselling foreclosure homes.
Some market watchers believe lenders are holding onto homes taken back through foreclosure so they don't glut the housing market and drive down prices. Early this year, lenders placed thousands of foreclosure homes on the market all at once, which depressed prices.
Housing analysts say metro Phoenix's foreclosure activity must decline for at least three months before there can be serious talk of a recovery.
"There is increasing hope that the (Valley's) housing troubles are beginning to ebb," said Jay Butler, director of Realty Studies at Arizona State University. "However, many problems continue to exist that could hinder the timing of any recovery. The impact of foreclosures on the market has been the primary concern, and it will continue to be in the coming months, especially with the weak job market."

Struggling Arizona Homeowners Left in Limbo

Five months into the $75 billion federal program meant to toss a lifeline to homeowners facing foreclosure, most people in need of help are still floundering.
Overall, about 15 percent of borrowers across the country who are eligible for the program have been offered help from their lender, according to a recent U.S. Treasury Department report. Of those homeowners, 9 percent have participated in a trial loan modification. President Barack Obama's administration is calling for lenders to ramp up their efforts and help 500,000 more homeowners by November.
For homeowners facing foreclosure, the loan modification process is slow, time-consuming and exhausting. Homeowners fall further behind as lenders, who say they are training more workers to handle the flood of requests, keep them waiting. Even when a loan modification is approved, some people discover the results are disappointing.

Thousands of Valley homeowners have experienced tough going with the program.
Cheryl Edgemon was laid off from her longtime position as a legal secretary in April 2008. The 66-year-old has been looking for a new job ever since.
Savings, Social Security and unemployment benefits allowed her to scrape by at first. But in April, after a year of being unemployed, her savings were gone and she fell behind on the mortgage for her Glendale home.
Edgemon has contacted her lender multiple times, asking for a loan modification. Because she has income from her monthly Social Security check, she was told that she qualifies for a loan modification under the Obama plan.
"At first, they wanted me to be three months behind before I applied for loan modification," Edgemon said. "I can't understand why they would want me to ruin my credit first. I have worked hard to have good credit."
When she did fall behind, her lender offered to let her skip a few months and then make a balloon payment.
"How did they think I could afford a balloon payment? I just wanted them to extend the terms on my loan, drop my interest rate, something to help me keep the house," she said. "I will pay, but my Social Security is $1,244 and my unemployment is about to run out. I am trying to find a job, but it doesn't help to spend so much time trying to save my home."
She contacted housing groups and her congressman, asking for help. But her pleas for help weren't enough.
Edgemon's home was sold in a short sale a few weeks ago. She is now renting a house in her neighborhood for $500 less then her old monthly mortgage payment.
"It was going to be my retirement home," she said. "Not only did I not receive help, the people who I talked to at my lender were nasty and made the process harder than it had to be."

Kasey Broach applied for a loan modification right after the new plan was announced. She sent her lender documentation on her income and expenses, including a student-loan statement and bill for the homeowners-association fees on her Phoenix condominium.
Broach, a public-relations specialist for a Valley law firm, was required to show receipts on everything from groceries to doctor bills. Her lender also required her to meet with a loan counselor. The counselor recommended her for a loan modification.
Broach bought her condominium in 2006, at the peak of the Valley's real-estate market, right before she was about to start an MBA program.
She had a roommate who helped with the bills. But her roommate moved to New York last year, and Broach hasn't found another. Payments on her student loans started this year.
"When I purchased my home, part of the deal was that I didn't have to pay HOA fees until 2009," Broach said. "The condo is in a great location. I thought I would be able to easily sell it in two years, allowing me to pay off my student loans and never have to pay HOA fees."
Her HOA fees are $150 a month. Her student-loan bill is $250 a month. Overtime at her job used to supplement her monthly income, but that stopped with the recession.
Broach's lender promptly processed her paperwork and modified her loan. However, her new monthly payment is only $40 lower than her old payment, not enough to help her.
Because condo values in her complex have fallen, Broach can't sell and break even, so she is a considering a short sale or deed-in-lieu-of-foreclosure deal with her lender. A deed in lieu requires a borrower to give back a house to the lender. In exchange, homeowners take a slightly smaller hit to their credit than they would with a foreclosure.
"What bothers me most is that I didn't mess up and could not have seen this coming," Broach said. "I have worked full-time since I was 19. I bought a small condo, which no one would consider lavish. I have had great credit and paid my own bills my entire adult life. However, I'm still stuck in this position."

Rick Scott asked his lender for help in October, before he fell behind on his mortgage payments. His annual income had dropped by $30,000. His roommate girlfriend was out of work.
Scott was trying to be proactive. He still had a job at Boeing, earning $50,000. But before the housing crash, he had also worked part-time as a loan officer. When that extra income stopped, he saw trouble ahead.
But the lender said he didn't qualify for help. He later fell behind on his $2,000 monthly mortgage payment and feared a foreclosure notice would come any day on his Mesa home.
When President Barack Obama announced the new loan-modification program in March, Scott immediately checked the details and found he was eligible. He faxed information on his income and bills to his lender, which told him he would have an answer in 30 to 60 days. By then, his savings were exhausted.
The foreclosure notice came several weeks later. He called his lender. The foreclosure was postponed for a month while his application for a loan modification was considered.
"So then I thought, OK, this is going to work, despite all the confusion," Scott said. "We are going to keep our home, and get a payment that's not more than 31 percent of my income like the program calls for."
Next, Scott received a Fed Ex package from his lender. Inside was a contract he was to sign that required him to pay half his current monthly payment for six months to show he could afford that amount.
"I happily signed the contract and sent them a check," he said. "A week letter, I received another Fed Ex with a letter saying congratulations, my loan modification is complete. Except the new contract called for me to pay $150 more than I was paying for my original mortgage payment. My payment went up."
Scott has an adjustable-rate mortgage. His lender proposed a fixed-rate mortgage, but at a higher rate, and would not lower the principal amount, so the monthly payment went up.
Scott asked again about a modification that would lower his payment. The lender said he could reapply, but consideration would take 90 days, and it might foreclose before that.
"I asked to speak to a supervisor with my lender's loan modification department," Scott said. "I was put on hold and then disconnected."
Scott isn't sure whether he's going to apply for another loan modification.

IndyMac's mortgage struggle

Bank's new owners are required to adjust mortgages to get government aid. But getting a modification is not easy, borrowers and housing counselors say.

NEW YORK (CNNMoney.com) -- Five months after securing a sweet deal to buy IndyMac Bank, the new owners say they are fulfilling their obligation to modify troubled home loans.
Some frustrated borrowers and housing counselors, however, say it's anything but easy to deal with the institution, now known as OneWest Bank. They say the bank needs to do more for its troubled customers because of the perks it is receiving from the government.
"They're less responsive, more difficult to get affordable workouts from, and their reps are ruder," said Alexa Milton, homeowner advocacy director at Acorn Housing. "They have a responsibility to do better."
While many banks are getting a helping hand from Washington, OneWest is enjoying a special deal.
Once one of the nation's largest lenders of Alt-A mortgages made to borrowers who did not need to verify their income or assets, IndyMac was taken over by the Federal Deposit Insurance Corp. in July 2008. The FDIC used the institution to put into practice the affordable loan modification efforts championed by the agency's chair, Sheila Bair.
When the group of private investors bought the Pasadena, Calif.-based bank earlier this year, the FDIC promised to cover a majority of the losses in the institution's home loan portfolio. In return, the investors agreed to continue the loan modification efforts.
OneWest says it is committed to working with homeowners to modify their mortgages. The bank announced last week that it will extend President Obama's modification program to all qualified loans in its portfolio, not just those owned by Fannie Mae (FNM, Fortune 500) and Freddie Mac (FRE, Fortune 500).
OneWest has modified 3,605 loans under the president's program and 14,570 mortgages under the FDIC and other initiatives between March and July, the bank said. This compares to 16,158 loans adjusted under the FDIC between September and February. It did not provide details on the non-government modifications being done.
Responding to borrowers' complaints, OneWest said it is making significant investment in its servicing operations, adding customer service staff and increasing call center capacity.
"At OneWest, meeting the needs of our customers is our highest priority," the bank said in a statement.
The FDIC said it conducts periodic reviews of the bank's modification efforts. The agency also follows up on complaints that OneWest representatives are not being responsive or are denying loans that should be eligible for modification.
"We have not uncovered any indication that they are not complying with their agreement, but we are continuing to monitor their performance," said Michael Krimminger, the FDIC's point person on loan modifications.
Not getting help
Housing counselors and borrowers have a different view. While they acknowledge that modification efforts are bumpy at other servicers as well, they say that OneWest is worse than most.
"The counselors have to constantly call and check the IndyMac files," said Shawna Nelms, interim program director of the national homeownership sustainability fund at the National Community Reinvestment Coalition. "They really, really have to advocate for the modifications to take place."
Liz Caton, who works with distressed borrowers at the Northwest Side Housing Center in Chicago, said OneWest is constantly sending homeowners automated modification offers, only to deny them after they send in their paperwork. After a few rounds of this, homeowners lose hope, she said.
"There's no reason to trust them," said Caton, who has met several times with OneWest representatives with little result. "It doesn't seem they have any incentive to work with homeowners. They've shown no effort."
Borrowers have also contacted CNNMoney.com to say they are getting the runaround.
One of them is Sharon Clark. The Myrtle Beach, S.C., resident has gotten a different story every time she calls OneWest. In April, she was told the bank would cut her monthly mortgage payment to $3,000 from $4,800, since her family's income was cut in half.
The next month, Clark got a default letter and sent in her paperwork again. In June, she received a denial letter for the modification. A few weeks later, she was told to send proof of her husband's income, which she did, only to be denied again.
"OneWest made a lucrative deal with the FDIC," Clark said. "They should be working with all homeowners."
After CNNMoney.com contacted the institution, Clarkreceived an e-mail saying she was eligible to apply for the president's loan modification plan. But the representative warned that since OneWest only recently started participating, it "may take a bit longer to receive the decision."
Clark laughed when she received the package, since it's the same paperwork she's filled out before. But she said she'll submit it.
"I hope it's not another stall tactic," Clark said. "I'm just trying to get IndyMac to do what they're supposed to be doing."

Frustration rising over mortgage relief

Government's latest effort to stem rising tide is mired in problems
By John W. Schoen

After months of dead ends, rejections and runarounds from bank representatives, Dan Binder is still in loan modification limbo.
When Binder lost his job as a media researcher, he and his wife left their southern California home in July 2008 and relocated to North Carolina where he found a new job in the media business.
Since then, he’s never missed a payment on the three-bedroom home in Riverside County, Calif., he said, though it's lost about half its value since he bought it in 2005 for $418,000. When his wife lost her job after the move, he called his lender, Wells Fargo, to see if the bank could rewrite the loan to lower the monthly payments.
Since then, he said, he’s gotten conflicting responses from multiple bank representatives, one of whom said he was days away from a new loan that was subsequently rejected.
At one point, after assurances that he submitted all the appropriate paperwork, he was told a form was missing. When he provided it, he was told the remaining paperwork was more than 30 days old and he would have to update and resubmit each document. At another point, he said, he was told his file showed a sizable credit card debt he didn’t owe.
After his latest rejection he asked for an explanation.
“They said the notes from the investors (holding the mortgage) said, ‘You spend too much on food,’ ” he said.
If all this sounds familiar, it's because homeowners around the country have been jumping through similar hoops with the same fruitless results.
Nearly two years after the federal government’s first program to slow the relentless rise in the pace of home foreclosures, the latest attempt, known as Making Home Affordable, is turning out to be another painful disappointment for millions of Americans at risk of losing their homes.
Dozens of e-mails from msnbc.com readers report months of futile effort to modify their loans. The list of problems includes misdirected calls, lost paperwork and conflicting advice from multiple representatives for the same lender.
A Wells Fargo spokeswoman said the company can't comment on individual customer's loans due to privacy restrictions. But she said the company is "working with all of its customers who experience hardships and need assistance with their mortgage payments up the point of actual foreclosure sale.”
“As the government guidelines have changed and as we have gotten more options to help people, there has been some communication confusion that we are working to absolutely get on top of and correct for customers,” she said.
HUD-approved housing counselors — the frontline professionals trying to help borrowers modify mortgages — have expressed frustrations with a variety of roadblocks, bureaucratic snafus and ongoing confusion about the program.
“Even if (the homeowner) gets hold of somebody, that person might not necessarily understand the complexity of (the program),” said Helene Raynaud, an executive at the National Foundation for Credit Counseling, an umbrella group that certifies and sets standards for housing counselors. “Counselors end up talking to different people as well, which makes it very difficult. Depending on who they talk to, and the level of seniority and the level of training and the different servicers (they deal with), they get completely different outcomes."
Downward spiralDespite recent signs of a bottom in the housing market, the pace of foreclosures shows no signs of slowing.
More than 13 percent of homeowners with a mortgage are either behind on their payments or in foreclosure, the Mortgage Bankers Association said Thursday. As of June, more than 4 percent of all borrowers were in foreclosure and about 9 percent had missed at least one payment. A separate report found that more than 272,000 borrowers were at some stage of foreclosure in July, up 8 percent from June and 55 percent from July 2007, according to RealtyTrac, which maintains a national database of foreclosure filings.
The continuing rise in foreclosures delays any meaningful recovery in the U.S. economy, in part because housing typically leads the economy out of recession. Although there have been recent signs of life in home construction and housing sales, they have been weak and from extremely depressed levels. Every new foreclosed home increases the unsold inventory on the market and cuts into demand for new construction.
Foreclosed homes sold in distressed sales or auctions also push nearby home prices lower. Unless the pace of foreclosures can be slowed or stopped, millions more homeowners who are current on their loans will be forced "under water" — owing more than their house is worth. Those homeowners become new candidates for default. One recent research report from Deutsche Bank estimates that roughly half of all U.S. homeowners will be under water by 2011.
Falling home prices also destroy billions of dollars of consumer wealth as homeowners watch their home equity evaporate. That loss of consumer spending power creates another major headwind to any economic recovery.
The collapse of home prices in high foreclosure neighborhoods also slows economic activity by forcing owners to make tough choices when they sell their house. Readers in high-foreclosure areas report that they're unable to relocate for a new job, buy a bigger house for an expanding family or downsize for a planned retirement because they can’t afford to sell their home at a loss.
When Carol Hardee’s daughter Laura died last year, she faced an uphill battle selling the daughter's Atlanta home, which was purchased in 2000 for $150,000. In February Hardee got an offer for $140,000. But with so many foreclosed properties in the neighborhood, the appraisal came back at just $75,000, and the deal fell through.
“There was a house just around the corner from her — it was like a three- or four- bedroom house — that sold for $25,000,” she said.
Hardee said she was unable to work out a loan modification with her lender, and the house eventually sold at a foreclosure auction for $100,000, which still left her with some equity to settle her daughter’s estate.
“I had no choice,” she said. “I had to sell the house. There were bills to pay with it.”
Frustration with mortgage relief efforts also has led desperate homeowners to fall victim to a variety of foreclosure "rescue" scams. Since April, the Federal Trade Commission has brought 14 cases over these schemes, while 23 state attorneys general and other agencies have taken action against 178 companies. Last year, reported incidents of all forms of mortgage fraud hit an all-time high — up 26 percent from 2007, according to the Mortgage Asset Research Institute.
Making Home Affordable is supposed to offer troubled borrowers two possible solutions. The Home Affordable Modification Program (HAMP) is designed to lower payments on existing loans by cutting the interest rate and stretching out the term. The Home Affordable Refinance Program (HARP) gives borrowers who are current on their payments but “under water” a chance to refinance into a new loan for the same amount, with lower payments.
The program pays incentives of several thousand dollars for each modified loan to mortgage servicers, which often are not the same as the lenders who hold the mortgage.
Lenders and servicers report their own frustrations with the MHA program, which was unveiled by the Obama administration in March with no advance notice to allow these companies to gear up and train workers. As recently as last month, key components of the program were still not in place, and some of the initial guidelines limit the program’s "potential to help homeowners," according to a July report from the Government Accountability Office, the investigative arm of Congress. The report also found that "a number of HAMP programs remain largely undefined."
Though many servicers had already increased staff to work on troubled loans, they've been overwhelmed by the volume of applications for affordable loans.
“The number of calls coming in is staggering,” said a representative from one of the 10 largest servicers, who asked not to be identified because she was not authorized to speak publicly. “You’re talking about call after call after call after call after call of people in bad economic circumstances needing attention for their loan.”
Servicers say they also have been frustrated by the tepid response to their efforts to reach out to homeowners at risk of default. The servicer representative who asked not to be identified said her company sent out one round of 45,000 packages to homeowners believed to be at risk; only 15 percent of them responded.
Staffing is also an issue at the Treasury’s Homeownership Preservation Office, which was set up in November to address the sharp rise in foreclosures. As of mid-July, the office still had no permanent executive in charge, according to the GAO. Eleven positions had been filled with permanent employees and three with temporary workers borrowed from other agencies while 17 positions remained vacant, the GAO said.
The Making Home Affordable program was proposed by the Obama administration and enacted by Congress after two previous government-sponsored efforts, the Hope Now Alliance and the Hope for Homeowners program, failed to make a significant dent in the foreclosure rate. Hope Now, launched in October 2007, has modified several hundred thousand mortgages, although the “redefault” rate from this first round of modifications ran as high as 50 percent.
The Hope for Homeowners program, launched in July 2008, was expected to reach 400,000 distressed mortgage holders. At first the program was hampered by cumbersome terms and red tape, and only one homeowner got help. Terms were loosened in November without any meaningful impact. This month, the government announced it is rewriting the program again.
The unchecked rise in foreclosures also is destroying the value of assets backed by mortgages that are held by banks and private investors. So far, most investors have refused to take that loss upfront and reduce the loan amounts for homeowners who owe more than their house is worth. Though most major lenders and servicers have signed on to the MHA program, the decision to make a loan more affordable or forgive some of the principal amount is entirely voluntary.
“(Investors) have already suffered this loss: They’ve suffered it on paper,” said John Taylor, president of the National Community Reinvestment Coalition. “They’re waiting for this loss to begin to dissipate as the housing market recovers. What it’s doing, though, is continuing to exacerbate the foreclosure problems and drag down the economy.”
That deep recession has amplified the pace of foreclosures. When the mortgage market began melting down in late 2006, many of those in default were subprime borrowers and others who were sold adjustable loans that “reset” to unaffordable payments. Now, with 7 million jobs destroyed by the housing-led recession, lost paychecks have become a much thornier problem for groups working to slow the pace of foreclosures.
“The (MHA) program is still not fitted to people who have experienced a severe reduction in income,” said Raynaud of the National Foundation for Credit Counseling,
That has cast doubt on just how many homeowners may ultimately get help. The White House has estimated that as many as 40 percent of the more than 10 million homeowners who are likely at risk of default and foreclosure could be helped. But the GAO, in its July report, found that estimate “problematic.”
The servicer representative who asked not to be identified estimated that only 20 percent of the loans serviced by her company were good candidates for modification or refinance. Under current guidelines, borrowers must show they can devote 31 percent of their income to the new monthly mortgage payment. Some servicers say that’s too high, and have suggested to the Treasury that the threshold be lowered to 25 percent to qualify more homeowners.
For whatever reason, voluntary efforts to modify loans have proceeded at a snail's pace. As of the end of July, only 9 percent of an eligible 2.7 million borrowers had seen their mortgages modified under the new program, according to the latest Treasury data. Bank of America, for example, one of the largest holders of home mortgages, had modified only 4 percent of eligible borrowers as of last month. Some lenders had not modified a single loan.
That has raised question about the need for tougher measures to determine how aggressively servicers are working to modify loans.
“What was the lever to mandate and hold them accountable?” said Taylor. “I just don’t see that. It keeps returning to what is the fundamental flaw in (former Treasury Secretary Henry) Paulson’s plan and now in (Treasury Secretary Timothy) Geithner’s: that it’s voluntary by nature.”
In its July report, the GAO agreed.
“No comprehensive processes have yet been established to assure that all borrowers at risk of default in participating servicers’ (mortgage) portfolios are reached,” the report said.
The government's "carrot" approach to stopping foreclosures — offering $50 billion in incentives to servicers to modify loans — was adopted after the financial services industry successfully fought back a powerful "stick" that would have granted bankruptcy judges authority to modify the terms of a mortgage loan from the bench. Judges can do that with any other form of consumer debt in a bankruptcy proceeding but not mortgages.
Congress proposed the so-called “cramdown” provision several times in the past two years, including separate bills introduced in the House and Senate in January. But for now, there are no proposals to revive the bankruptcy provision or adopt other measures to force lenders to modify mortgages.
“At some point we have to realize is that the voluntary efforts haven’t worked,” said Kathleen Keest, a senior policy counsel at the Center for Responsible Lending. “It’s time to make it mandatory, but that can’t happen without Congress acting.”

URL: http://www.msnbc.msn.com/id/32479139/ns/business-reinventing_america/

Arizona Countrywide Loan Modification Program

Countrywide Loan Modification Program in Arizona
Attorney General Terry Goddard and Countrywide Financial Corporation entered into a Consent Judgment that was filed in the Maricopa Superior Court on March 13, 2009.
Countrywide customers looking for information about the loan modification program can call Countrywide, toll-free, at 800.669.6607 or go to Countrywide’s Web site, www.countrywide.com
Countrywide Consent Judgment
(Click here for a PDF of the Consent Judgment)
Countrywide Consent Judgment/Settlement FAQ's
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Which borrowers may be eligible for loan modifications?
The settlement provides for loan modifications for eligible borrowers who are 60 days or more delinquent, or become 60 days delinquent, on subprime or pay option loans that they obtained from Countrywide or from a broker working with Countrywide.
Borrowers with these loans may be eligible for modification if the first payment on their loan was due between January 1, 2004 and December 31, 2007, they live in the property that serves as security for the mortgage, they owe 75% or more of the current value of their home, and they can afford the new, lower payment under the modification.
I have a Subprime or Pay Option Loan. Does that mean I am eligible for a modification under the settlement?
The Attorney General’s Office cannot say whether or not a particular borrower will or will not get a modification. That will depend on the borrower’s individual circumstances, including whether the borrower can afford payments on the modified loan.
What if I am delinquent on my mortgage but don’t have a Subprime or Pay Option loan?
Countrywide is pledging to evaluate all other borrowers with payment difficulties for possible modifications on a case-by-case basis. If you are having difficulties making payments on your loan but do not have a subprime or pay option loan, you should call Countrywide at (800) 669-6607.
When will the modifications start?
On or before December 1, 2008, Countrywide will begin contacting borrowers who may be eligible for modifications.
Can I contact Countrywide to ask for a modification?
Under the settlement, Countrywide will contact all borrowers who may be eligible for a modification. However, you can also call Countrywide toll-free at (800) 669-6607 to ask for a modification. If you do call Countrywide, please write down the full name of the person you talk to, and the date and time of your call.
I think I should get a modification. Do I have to continue making payments on my Countrywide loan until then?
The settlement does not by itself change your loan payment or allow you to stop making payments. Borrowers who may be considered for a modification will be contacted by Countrywide and also can contact Countrywide at (800)669-6607 with specific questions about their loan.
You should not stop making payments on your loan just because you think you might qualify for a modification. If you have the ability to pay but stop making your payments, you will likely damage your credit, and may significantly harm your chances of actually receiving a modification.
What loan terms will borrowers receive if they obtain a modification?
The exact terms of a modification will vary from borrower to borrower, depending on the borrower’s circumstances (such as loan amount, the borrower’s income, and the current value of the borrower’s home). Generally, borrowers will be considered for possible interest rate reductions or conversion to an interest-only loan for five or ten years.
Borrowers with pay option loans who own only one home might also be eligible for principal reductions if they owe more than 95% of the current value of their home.
Will I have to pay a fee to Countrywide to get a modification?
No. Borrowers eligible to get a streamlined modification under the settlement will not have to pay any fees.
If anyone asks you to pay a fee in order to request or receive a loan modification on your Countrywide loan, please report this immediately to the Attorney General's office by completing our online complaint form athttp://www.azag.gov/consumer/OnlineInstructionsEng.html
What about late fees and prepayment penalties?
The settlement requires Countrywide to waive late fees for borrowers with subprime or pay option loans who receive a modification, as well as prepayment penalties for borrowers with subprime or pay option loans who receive a modification or are able to refinance or pay off their loans.
What if I am current on my loan now but think I will not be able to make my payments in the future?
The agreement requires Countrywide to make loan modifications for eligible borrowers through June 30, 2012. Also, if you think you will have any difficulties making your payments in the future, you are encouraged to contact Countrywide now at (800) 669-6607.
Can I call a local Countrywide branch or my loan broker to ask for a modification?
No. At least at this time, you should not call a local branch or broker. Instead, contact Countrywide at (800)669-6607 to ask about the modification under the settlement or to ask any other questions you may have about the settlement.
Can we trust Countrywide to make all these loan modifications?
The Attorney General's office will monitor Countrywide throughout this process. The settlement requires Countrywide to make regular reports to the Attorney General’s Office regarding which borrowers do and do not get a modification, and the reasons why.
Can I still sue Countrywide if I get a loan modification under the settlement?
Yes. Borrowers will not have to release any legal claims they may have against Countrywide in order to receive a modification of their loan.
What if I lose my house to foreclosure in the future?
The settlement also requires Countrywide to make relocation assistance payments to borrowers who lose their homes to foreclosure in the future. The amount of those payments may vary from borrower to borrower, depending on individual circumstances such as the size of the household.
Can you give me advice on whether I have other legal claims against Countrywide?
The Attorney General’s Office is not able to give you legal or other advice on this matter. If you would like advice, please consult a private attorney of your choosing, or a legal aid attorney if you qualify. The State Bar Association also has information about how to obtain a referral through its Lawyers Helping Homeowners program. Information can be found at its website,http://www.azlawhelp.org
Can I still file a complaint with the Attorney General's Office about Countrywide?
Yes. If you wish to file a complaint about your loan, or think you were denied a loan modification when you should have received one, please contact us. You can send a letter with copies of any supporting documentation to the Office of the Attorney General, Consumer Information and Complaints, 1275 W. Washington, Phoenix, AZ 85007-2926 or you can file a complaint on-line by clicking onhttp://www.azag.gov/consumer/OnlineInstructionsEng.html
Is this Consent Judgment part of the bailout passed by Congress?
No. It is a separate settlement between Countrywide and the Arizona Attorney General.
Does the settlement include non-Arizona borrowers?
Countrywide is adopting the mortgage modification plan nationwide. However, the monetary relief for borrowers who have already been foreclosed is only available in states that have formally agreed to participate in the settlement.
Where can I obtain more information about the Attorney General's Consent Judgment with Countrywide?

Loan Modification Business Opportunity

Intake Officer-Nationwide/FT/PT (Commission only)
Are you an experienced professional in the industries of Mortgage, Loan, Real Estate, and/or Solution Sales and interested in expanding your earning potential? If you have a real estate, mortgage or solutions sales background along with an entrepreneurial spirit, please read on!
About Our Client
Our client has created a model to provide loan modification services for those who are desperate to save their homes; they modify existing loans allowing people to keep their homes by getting clients a lower interest rate. They have hundreds of well qualified attorneys in their network to help facilitate and close deals quickly. This allows people a sense of security and affords them to bypass dealing with stress of hassling with the banks. They process all necessary steps start to finish and have had over 5,000 successful modifications to date. Our client is in excellent standing with the Better Business Bureau and has processed hundreds of files successfully to date!
Job Description
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Compensation
25% commission of the retail rate of all completed files.
If you are interested in learning more about this opportunity, please go to http://www.crsintake.com/Real-Estate-Professionals.html and read the information carefully. If you would like to be considered as a candidate, fill out the form at the very bottom of the page (http://www.crsintake.com/Mortgage-Real-Estate-Form.html). We will contact you within 3 business days once we receive your form back.
If this opportunity is not for you but you know someone that is a strong sales person that may be a good fit for this, please forward this email to them.
Thank you and we hope you will visit the information page to read more about this incredible opportunity!

Loan Modification Business Opportunity

Link

Are you an experienced professional in the industries of Mortgage, Loan, Real Estate, and/or Solution Sales and interested in expanding your earning potential? If you have a real estate, mortgage or solutions sales background along with an entrepreneurial spirit, please read on!
http://www.crsintake.com