Scammers Archives – Refinance – Mortgage Refinancing Rates And Information

Loan Modifications Eligibility Criteria, The Rules Explained.

September 27th, 2009 No comments

Providing loan modifications to those that need them and are eligible according to the current criteria is the goal of the cash happy loan modification aid program.

The goal is to keep out scammers and those who wish to take advantage of the system while not letting the “deserving” fall through the cracks. This is an ambitious goal. As we have discussed in previous blogs making good rules that keep out the cheats and welcomes the eligible is very hard.

Here is the current ten point criteria for loan modifications:

1.) Loans must be conforming conventional loans or conforming jumbo mortgage loans and they must have been contracted before January 1, 2008. What is a “conforming” loan is changing all the time.

2.) You must be three payments past due. This requirement was happily dropped. You don’t need to be behind in your payments although you must be able to prove you can’t pay your mortgage payments but could afford those of a modified loan.

3.) The loan is secured by a one-unit property and must be the borrower’s primary residence.

4.) The current mark to market LTV must be of 80 per cent or more.

5.) Property must not be abandoned, vacant, condemned or in serious disrepair as well as being the borrowers primary residence.

6.) The goal of the loan modification is to reduce monthly payments to 33% of the homeowners monthly income. In order for this to occur, servicers may:

7.) Capitalize accrued interest, escrow advances and costs as far as state law allows.

8.) Extend the term of the mortgage (tenure) by up to 480 months (40 years).

9.) Reduce the mortgage loan interest rate in increments of .125% to a fixed rate of no less than 3%. If this causes the rate to be below market rate it will step up in annual increments to a market rate after 5 years have passed.

10.) As a last resort eligible borrowers will be provided principal forbearance which will result in balloon payment. This means payments will be kept low while the big money is paid when the house is sold or the loan matures.

Some of the points of this criterion are under their third or even fourth revision so checking for accuracy is wise. The key criteria is to be able to afford the reduced monthly payments. If you can’t afford a reasonable loan modification there is little hope. This does not mean unemployed borrowers are automatically barred from loan modifications but they must provide some proof of income or prove they are likely to find employment soon.

The methods the government suggests to reduce monthly payments are rather bold which explains why many banks are doing their best to drag their feet as in many cases it actually costs them money to provide the loan modification.

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Loan Modification Scams: Oregon AG Comes To The Rescue

September 2nd, 2009 No comments

Loan Modification Scams are high up in the priorities of the administration and public authorities. Loan Modification Scammers target some of the weakest members of our society, charging high fees for services that either are not carried out or offers no help to the ailing economy of the desperate home owners.

In the last months we have seen a number of institutions and AG’s hit loan modification scams throughout the country. The most recent AG to threaten and attack loan modification scammers is John Kroger, Attorney General of Oregon.

Attorney General John Kroger said that Oregons Financial Fraud and Consumer Protection Unit has “opened more than half a dozen investigations” into loan modification companies, two of these loan modification companies received a sanction.

How do these loan modification scams work?

The secret is to target the weak. Homeowners so desperate they will do anything to reduce their monthly payments and save their home. Loan modification companies and consultants will send official looking documents and cold call home owners they know are struggling with their mortgage payments.

This is not to say that all loan modification companies are useless. Some do provide valuable information and help clients make sound decisions with their home. However many use deceptive measures to dupe potential customers. For instance some loan modification companies will send paperwork that will make it look like they are associated with official government organizations like HUD o HAMP. Don’t let them confuse you. Only the bank can approve your loan modification and the government will not contact you through covert methods.

One of the largest loan modification companies, National Homeowners Assistance Services Inc. was also charged with using illegal and covert measures to receive payments they did not work for. In order to set things right the National Homeowners Assistance Services Inc. company was asked to pay $4,000 in legal costs besides changing their code of practice. These measures are designed to force loan modification companies to improve their standards of client service. Another measure some states are trying is demanding upfront bonds from loan modification companies of around $100,000 as a type of license and security for any problems the companies cause to borrowers and other citizens.

Whatever measures the government takes nothing can substitute common sense (not so common unfortunately). Make sure you use reputable companies that are truly experts in loan modification. There have been so many loan modification companies popping up like mushrooms that it seems impossible they are all experts.

Another giveaway for a loan modification company you want to keep away from is unreliable promises. Companies that promise and guarantees the loan modification of your dreams as long as you are willing to pay a “small” fee. These fees tend to be enormous making many homeowners get deeper into debt without getting any results.

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Mortgage Scams: How To Avoid Them

August 4th, 2009 No comments

Mortgage Scams have been on the headlines of the news as the nationwide raid on mortgage consultants arrested high profile loan modification consultants and firms. This has created a panic among homeowners that need a loan modification creating insecurity among those that need the most help.

In response to this situation the Federal Trade Commission has teamed with local and state authorities in a nationwide crackdown on conmen consultants and loan adjustment scams.

The biggest challenge authorities have is actually reaching the people at risk from these scams before the scammers knock on their door and dupe them to pay for services and loan adjustments they never provide.

One avenue the Federal Trade Commission (FTC) and local authorities have embraced is providing videos under the theme “Real People, Real Stories” in Spanish and English. See at www.ftc.gov/YourHome.

These videos illustrate the steps homeowners can take to either save their home from foreclosure or save on their monthly payments without being taken for a ride by unscrupulous “consultants”

The FTC and the California Attorney General’s office has also put together a list of tips of how to avoid scams here is an excerpt from the the release that is worth reading:
• The first thing anyone seeking to modify an existing loan should do is call his lender.

• Lenders want to hear from homeowners and will probably be more willing to work directly with them than with a foreclosure consultant. Do not ignore letters from your lender. Many lenders are willing to work with homeowners who are behind on their payments.

• Contact housing counselors approved by the U.S. Department of Housing and Urban Development, who may be able to help you for free.

• It is illegal for foreclosure consultants to demand money before they give you a written contract and before they actually perform all the services described in the contract, such as negotiating new monthly payments or a new mortgage loan.

• However, an advance fee may be charged by an attorney, or by a real estate broker who has submitted the advance fee agreement to the California Department of Real Estate for review.

• Do not transfer title or sell your house to a “foreclosure rescuer.” Fraudulent foreclosure consultants often promise that if homeowners transfer title, they may stay in the home as renters and buy their home back later.

• Fraudulent foreclosure consultants claim that transfer is necessary so that someone with a better credit rating can obtain a new loan to prevent foreclosure. Beware — this is a common scheme so-called rescuers use to evict homeowners and steal all or most of the home’s equity.

• Do not pay your mortgage payments to someone other than your lender or loan servicer, even if he or she promises to pass the payment on. Fraudulent foreclosure consultants often keep the money for themselves.

• Do not sign any documents without reading them first. Many homeowners think that they are signing documents for a new loan to pay off the mortgage they are behind on. Later, they discover that they actually transferred ownership to the “rescuer” who is actually a scammer.

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