I have been meeting with many homeowners recently regarding their financial difficulty in making mortgage payments. Everyone is asking me about how Obama's Homeowners Plan for saving homes is working in saving homes from foreclosure. Their comment is usually that everyone is getting some assistance, but us.

     I can only say that in reality very few people are receiving loan modifications and if they do their loan modification looks like a forbearance plan. The interests rates may be knocked down a notch, but the lender is asking the homeowner for a lump sum within six months to bring their payments current. The lender may be willing to roll the lump sum into the loan itself, but the lender definitely wants to see that the homeowner can make house payments at a reduced rate for about 6 months. Rarely is the principal reduced to reflect the decline in the house value. In Michigan, a lot of struggling homeowners accepted interest only or variable arms not really realizing what these loans would actually look like in 3 to 5 years. Many are now adjusting or needing to be refinanced. However, property values have plummeted and homeowners' salaries and income have been reduced substantially. What is the homeowner to do? Many are thinking maybe it would be better just to walk away, but that would ruin their credit.

     Although not a guarantee, I suggest that their best chance is to ask for a forensic loan modification. Their loan documents and appraisal is evaluated and audited. Many interest only and ARM mortgages have violations involving RESPA laws. Finding the errors or showing inflated home values can provide leverage when dealing with the bank or lender. A forensic loan modification bypasses the servicing company and is directed to the lender's legal team or attorney. A team of attorneys representing the homeowner talk and negotiate directly with the banks' attorneys. Business suggests working out a solution to keep the homeowner in their home if their income supports the handling of the mortgage and the hardship is over or at least the situation has stabilized. However, it may take from 1 to 3 months to obtain a loan modification. If the lender chooses not to negotiate then the homeowner has no choice but to just walk away or possibly obtain a short sale if a buyer can be found within the time frame of the foreclosure.

     Call 1.800.826.1929 for more information regarding Forensic Loan Modifications or visit http://ForeclosurePreventionInstitute.com. Foreclosure Prevention Institute, LLC will answer questions regarding foreclosures and loan modifications.

P.S. We never recommend that you not pay your mortgage even when attempting to obtain a loan modification.

 

Hi Readers and Homeowners,

I thought I would change the message today to one of inspiration.  I am always working trying to instill hope in my clients who have been beaten down in life from differing circumstances.  Well, I have finally found an international sensational story to provide hope and the desire to follow one's dream.  If you haven't met Susan Boyle, then please follow this link and you will know never to give up.  I cry and smile everytime I watch this.  Susan became a STAR within a 48 hour time period at the age of 47+ years over incredible odds.  Enjoy:  http://www.youtube.com/watch?v=Ow-1Xl5Ttu0

         
     To Turn this economy around and clean-up the subprime mess will require new financial & mortgage ideas from the best financial university think tanks or financiers across America.  At ths time, I am curious to know what's cooking from our political and financial leaders as to what to do to turn our economy around.  Before the financial bubble burst, I would always shake my head when hearing that the economy was strong when all around me in the State of Michigan I saw the exact opposite with plant closings, lay-offs, jobs permanently lost or moving South beyond our borders.  I, too, wondered after interviewing many potential clients for mortgage loans how they could possibly survive in this "growing but inflationary" climate when debt to income ratios were at 50% or above.

     The "average" Michigander seemed to be living paycheck to paycheck or on credit with little savings available.  In terms of "Main Street" I think the doubling of gas prices pretty well altered spending habits and life as we knew it.  How could a person without a job afford food let alone have money to pay for auto insurance and gasoline search for a job?   Even commission-type salesmen or construction workers were struggling to have enough gas in their tank to go out and making a living.

     I also questioned why lenders and mortgage companies pushed adjustable rate mortgages to almost everyone in the subprime market.  To me it was illogical to sell ARMS to the "marginal" homebuyer.  All I heard was it had to with the "risk factor" in terms of defaults.   This kind of thinking and policy in my opinion bred failure.  Using FICO scores, the lenders'secret index charts, and the need to make a profit prevented the subprime borrower from obtaining a fixed-rate and/or a low interest rate. The fees charged to refinance left homeowners with stripped equity.   Now the marginal homebuyer basically had a home, but with large adjustable rate mortgage payments.  Forget their need to save and pay high property taxes as assessed in Michigan.   People in this category weren't able to save before, let alone now.

     In hindsight, my pessimistic views were right on - people were not able to keep-up with their current life style and I don't see it getting any better soon.  The Internet may be the only "saving grace" for those with an entrepreneurial spirit.  Wages will be decreasing and medical insurance costs will continue to sky-rocket.   I can't blame people for voting for a "change" and seeing Obama as their only "hope!"   The cynic in me says that this all was a "planned" conspiracy (you'll understand this better if you keep reading).   The only thing that surprised me was the proportionate size of the bubble...like a sunami wave it went global.

     To better explain the many reasons for the "global" economic bust, I suggest you read Robert J. Shilling  The Subprime Solution.   It is an easy read and explains bubbles from a historical perspective.   There have always been real estate and stock market booms and bubbles.   He doesn't put blame on any one act, but gives many reasons for why all of the speculative markets (real estate, Wall Street, oil and grain) collapsed.   The old adage plays out, "What goes up, must go down" to a point.  How can we learn from this recession (or depression if living in Michigan) to protect, secure and grow our economy?  Shilling agrees that the bailouts are necessary to shore up International confidence and instill public trust in our institutions, realizing though that bailouts act only like a band aid...a temporary fix.  The real "fix" will be through education and using unbiased mathematical financial engineering.

     I am all for educating the public in financial affairs and providing financial advice and planning to all.   Shilling shows how if individuals were taught to think in terms of a "basket" that represents the value of the goods and services upon which the consumer index is calculated, we would learn to do inflation indexation and know that the prices of homes doubled due to the fact that inflation doubled.   We wouldn't then be duped, as an example, into believing all of the mass marketing campaigns involving the buying of real estate and refinancing of mortgages  In actuality, real estate may not be the best investment except for providing shelter and a place to call your own.

      I find mathematical financial engineering a little dangerous since we lose privacy and decisions are determined through mathematical formulas and data collection on a massive scale.  It's to be recognized that the Government now has the capability and is collecting huge amounts of data involving every human endeavor and that could easily be used to build multi-financing theories to determine risk factors and economic decisions.   Out of the 1930's came long term mortgages (the 30 year fixed-rate).  Now due to this economic bubble and due to job insecurity, Shilling proposes a continuous work-out mortgage to autonomously manage people's money and to prevent foreclosure.  Mortgage payments would be adjusted each month and based on IRS returns, occupation (what the average person makes in a particular line of work, demographics (by neighborhood, city and state), and health stats (easily now obtained through nationalization of our healthcare).   He also tells of forced savings too that is experimentally being done by companies.  When one receives a pay raise it automatically goes into a savings plan - this could certainly help the bankrupt social security program.

     Shilling also addresses the debt of Governments.  He says they need to issue debt to their Gross Domestic Product (GDP).   "This could be perpetual debt that pays a share of GDP as dividend.   These dividends would go up or down through time depending on the level of economic success of the country. ...Thus countries could hedge their financial risks and free up resources to deal promptly with an emergency like the subprime crisis. ... This would be risk management applied on a national level."

      The bottomline is that no matter what formula is used, Banks are in the business of making money and the Government will keep your (actually its) money.  Furthermore, Americans do need to improve their mathematical skills, and diversify their investments with sound financial planning.  Certainly there will be plenty of job openings for financial planners and staticians.   If you want to be a real estate investor be sure to collect lots of data and plug-it into various mathematical formulas to determine if the house you are buying  is in a geographical location where prices are going up or down and if the local real estate market falls within the boom or bubble...not much different than looking at green or red arrows when buying and selling stocks.

      I leave you with some questions.  Will it be possible for the individual to maintain privacy, make informed decisions, and manage his/her own financial affairs, or will we collectively permit the government to take over and run our financial lives?  Who knows best - you or the governmental policy makers?  What's your solution for 2009 and beyond?   If you nee help stopping foreclosure or a real solution to your home situation such as a loan modificationa visit Foreclosure Prevention Institute LLC .

     Homeowners and investors need to know that it is getting more difficult for a third party to intervene on their behalf to stop foreclosure or to attempt to do a short sale to lessen one's financial loss.  If you call a lender today such as Ocwen, you will get a message that says that Ocwen will no longer talk to a real estate agenst or investors regarding short sales.  For one, the servicing companies and lenders just do not have the man power to talk to one about "would you take X amount." However, lenders or the investors behind the mortgages will consider faxed/mailed short sale packages, but they want to see a buy/sell agreement with an "honest" offer.  Secondly, the lenders and private investors are also being pro-active and see that they too can make money, by working with a real-estate company selling these properties after the redemption period.   They'll make money on the sale and by insisting that they hold the new note formed by the new owner.   Offers made may not always initially be accepted or binding too.  The lender will hold-out to see if they can get a better offer. 

   The State of Michigan (Governor) is also trying her best to minimize the number of foreclosures by devising plans that will allow bankruptcy judges to set new rates and terms for people facing foreclosure and developing new FHA programs for homeowners who are struggling to make their mortgage payments due to adjustable rate mortgages.   In the long run though these fixes may be temporary in nature or just a delay in raising of the rate.  Lenders do not want to lose their money from the promised mortgage note regardless of whether or not their programs were predatory in nature, and they usually have the final say as to whether or not they will accept any change to the agreement.   All in all, if you are facing foreclosure, the lender wants to talk solely to the homeowner to squeeze out all nickles and dimes.   Lenders are also getting more aggressive and sending their "hungry" real estate agents out to knock on homeowner's doors who are a month delinquent or more to call their lender.  If you are an investor with a rental property be sure your payments are current, or your renter will be spooked.   Once the renter knows that their home is in foreclosure, they stop paying.  As a consequence, the lenders, in effect, are creating more foreclosures since it takes time to remove nonpaying or slow paying renters.   All in all, times are tough.  Best advice for those who are behind is to talk to your lender as soon as you get behind and explain your situation to see if the lender or servicing company can work with you.

     If you have any further questions, please contact Foreclosure Prevention Institute, LLC.  We can answer your "Biggest" question regarding foreclosures.  Our website is http://www.foreclosureinfo.bravehost.com and our toll free number is 1 800 826-1929 or 616 604-6642.  Ask for Janet or Dave.  We also help people with refinancing or purchasing of residential and commercial properties in the State of Michigan.  If you need to generate additional income online, check-out http://www.buildingtrafficonline.com.   We are specialists in foreclousre, loan originating, real-estate transactions, commercial construction, and residential/commercial appraisals.    

 

     I personally talked to  Mike Cox, the Attorney General of Michigan at the DeltaPlex in Grand Rapids, Michigan last week at the February's Homeowner's Foreclosure Workshop of 2008.   He assured me that the lenders were reaching out and doing their best to help people facing foreclosure.  To confirm his statement, he gestured and pointed to about 28 tables representing about 16 service providers or mortgage lenders talking to homeowner's in foreclosure.    Many homeowners came to this event, and one could see people waiting in line sometimes 2 to 10 deep.   Others were filling-out cards to have a lender contact them personally the next day or so and especially if their lender was not present.   Various HUD counselors and Government Agencies such as Fannie Mae, IRS & Taxpayer Advocate, and MSU College of Law Tax Clinic were also there to assist homeowners.   Listed below were the Loan Servicers who came to this event: 

Carrington Mtg Services, LLC; Chase; CITI; Countrwide; EMC Mortgage Corporation; Fifth Third; Flagstar; GMAC; Home Loan Services; The Huntington National Bank; LaSalle Bank; LaSalle Bank Consumer Lending; National City Mortgage Co.; Option One Mortgage; Saxon Mortgage Services, Inc.; Washington Mutual Bank; Wells Fargo; and Wilshire Credit Corporation.

Note:  A lender provides the funds for your mortgage.  A servicer collects mortgage payments, and may not be the same as your lender.

The message was clear that in avoiding foreclosure -- Nothing is worse than doing nothing -- reach out and ask for help!   If you are unable to talk to your mortgage company, then take action and talk to an experienced counselor to consider the best plan of action for your personal financial situation.   One can contact the Homeownership Preservation Foundation at 1-888-995-HOPE; HUD at 1 800 569-4287 or visit http://www.hud.gov.; or call Foreclosure Prevention Institute, LLC 1 800 826-1929 or visit http://www.foreclosureinfo.bravehost.com.

If you are facing foreclosure or are in foreclosure, you need to understand your options, and a homeownership counselor or loss mitigation specialist can help you understand the options available to you to help you keep your home or to move on with your life and future.   They can explain forbearance, repayment plan, loan modification,  Short Sale, Preforeclosure Sale or Deed-in-Lieu of Foreclosure, and Cash for Keys.

If you need help or want more information regarding foreclosure options or who to call for an attorney, then call 1 800 826-1929 at Foreclosure Prevention Institute, LLC.

 

 

 

 

             

From experience, it has proven to be beneficial for homeowners who may be at a time of financial hardship to attend a Homeownership workshop to avoid possible delinquency and/or foreclosure.  On Thursday, February 14, 2008 from Noon - 7:00 PM at the DeltaPlex Entertainment & Expo Center in Comstock Park, MI (just 5 minutes north of the City of Grand Rapids), various lenders and representatives/counselors will be holding an event to pass out information regarding the alternative options that one may have to avoid possible foreclosure and answer any question that one may have regarding one’s loan.  RSVP by calling 1 800 405-8067.   Get the tools needed to help save your home.  Call today!

Our office is excited today, 1-22-08.  It's taken 2 months, but finally Ocwen agreed on a loan modification for one of our clients.  It took countless calls and many long hour holds, but with persistence we achieved what we needed to do to save a home!  If you are facing an ARM adjustment (interest rate increase) and you are on a fixed income, have had a drop in income, or are just upside down in your home due to drop in market values  then consider a loan modification.  It is certainly much cheaper than refinancing and may allow for a fixed-rate.  Lenders have no choice, but to help homeowners with this home mortgage crisis.  Call us today at 1 800 826-1929 for a free consultation.  Tell us your situation and we can offer several possible solutions.  Ask for Janet or Dave.   

 

 

     As we talk to many clients regarding their foreclosure, folks are often surprised and relieved to hear that they are not alone in trying to make-up delinquent mortgage payments and/or trying to save their home from foreclosure.   Foreclosure today is at epidemic proportions.   When we first started tracking foreclosures in Kent County, Michigan 20 years ago there may have been 8 to 10 a week.  Then it gradually crept up to about 30 a week, and then several years ago the number of foreclosures rose up to 80 and then to about 120 foreclosures a week.  Now, this first full week in January of 2008, it has hit another milestone...over 250 foreclosures were noticed/reported.   Why so many?   Nick Adama does a good job at explaining this epidemic in foreclosures and the market correction.

                                    Reasons for the Foreclosure Crisis by Nick Adama

     With the current foreclosure crisis in America still ongoing, it is becoming a common practice for people, qualified or not, to offer their explanations for what has caused such a meltdown in the mortgage industry and steep declines in property values. Many of the reasonings offered are well thought out and serve to highlight various aspects of the economy and how it is being affected by record foreclosure rates. No single discussion of the issue, though, can provide a comprehensive analysis of what has caused the problems faced by homeowners, and ours presented here is no different. However, the more that homeowners are exposed to different explanations of the foreclosure crisis, the better able they will be to prevent facing foreclosure again in the future.

     The most commonly cited cause among armchair analysts is simply greed and corruption on the part of nearly everyone in the mortgage and real estate industries. And, of course, there were massive levels of greed among the lower level workers and participants in the market. Appraisers over-valued homes, Realtors listed them for these unwarranted prices, and loan officers provided loans at higher values in order to reap higher commissions. Homeowners were also not innocent, as many of them lied on mortgage applications to increase their incomes and qualify for homes they knew they could not afford for the long term. Banks provided incomprehensible mortgages with low teaser interest rates, basing the qualifications on the applicant's ability to pay the artificially low rate, not the reset payment even based on current market conditions. These circumstances all combined to create a highly over-valued real estate market and vast numbers of homes sold families who simply could not afford them.

     Geopolitical concerns relating to oil and gas prices also began to contribute to homeowners' financial problems. Finite (and falling) energy supplies and growing populations in foreign countries pushed up demand for various forms of energy, causing an increase in costs. Prices have risen for food (grown on farms using oil-powered machines and oil-based pesticides and processed in industrial plants), gasoline (rising demand, falling quality of oil from imports), and home energy (natural gas-fired power plants), to name a few concerns. These rising prices are naturally passed along to the end user of the products, and consumers often spend more time complaining about high prices instead of reducing their dependence on such items or going without. Of course, every budget has its own break point, and many homeowners facing foreclosure who had negative savings rates for months or years before missing a payment inevitably reached theirs.

     A third cause is the falling value of the dollar, decreasing the purchasing power of ordinary Americans. Devaluation of the dollar causes imported goods to increase in price, contributing to higher energy prices, food prices, and expenses for nearly every good sold by the largest retailers. Homeowners are also robbed of their money in the form of inflation caused by the federal government borrowing money and printing money to wage war and provide social programs, thereby devaluing the dollar further. Once Congress passes a budget and realizes it will not bring in enough money to pay for every program, they rely on borrowing money. When this does not make up the shortfall, they simply print the money and have the first use of it. This inflation takes away the wealth of citizens, as their once precious dollars become as common as confetti and worth about as much.

     The complicated world of collateralized debt obligations, hedge funds, and packaged mortgage investments have also contributed greatly to instability in the market. Convoluted investment instruments have been used to package subprime loans and sell them on the market to hedge fund investors and pension funds. Now, with so many foreclosures, it is doubtful who even owns these loans in default, as they have been bought and sold so often by institutional investors. In some cases, the courts have been unable to verify who actually owns the debt and is legally allowed to collect the payments or foreclose on the homes that have defaulted.

     A final cause discussed here is the prevalence of credit as a means of financing one's life. With credit applications available in nearly every college classroom, during commercials on every television show, and sponsoring sports and community events, an incredible percentage of people have faced financial issues at one time or another due to their use of credit. This overuse of credit through cashing out equity, using home equity lines of credit, or frequent credit card use, often combined with an unexpected financial hardship, such as a loss of job or medical expense to push homeowners into foreclosure. If credit is relied on to prop up the family's budget, and then a payment is missed, one of those shaky supports falls away, interest rates increase, and it gets more difficult to keep on top of that bill and others. Miss a few payments, multiply the same experience by numerous homeowners, and it is easy to see how that can affect markets.

     Again, no discussion of the causes leading up to the declines in the real estate market can conclusively explain the effects. But, homeowners, whether they are in danger of losing their homes or not, would do well by researching some of the reasons their family and neighbors may be facing foreclosure. Only by learning from the mistakes of others, and the traps designed to facilitate the loss of their homes, can any homeowner realistically expect to keep his or her property out of the foreclosure process.

 

     How large is your vocabulary?  Are you comfortable in talking to your lender, mortgage banker, attorney, boss, client, doctor, dentist, mechanic, politician, and child's teacher?   Do you consider yourself an effective communicator?   Do you need to build your word knowledge or need help with the English language?   The other day, a colleague of mine shared a unique nonprofit vocabulary site with me.  For each correct answer to a given word, 20 grains of rice are donated through the United Nations to curb world hunger.  Advertisers pay as you play.   The site is http://www.freerice.com. 

So,  how does playing the English vocabulary game at FreeRice help you?

"Learning new vocabulary has tremendous benefits. It can help you:

• Formulate your ideas better
• Write better papers, emails and business letters
• Speak more precisely and persuasively
• Comprehend more of what you read
• Read faster because you comprehend better
• Get better grades in high school, college and graduate school
• Score higher on tests like the SAT, GRE, LSAT and GMAT
• Perform better at job interviews and conferences
• Sell yourself, your services, and your products better
• Be more effective and successful at your job"

After you have done FreeRice for a couple of days, you may notice an odd phenomenon. Words that you have never consciously used before will begin to pop into your head while you are speaking or writing. You will feel yourself using and knowing more words."

Yes, improving your vocabulary will help you to prosper in life.   Young or old, rich or poor, educated or uneducated, we can all continue to expand upon our vocabulary.  The computerized vocabulary program adjusts the level of difficulty increasing or decreasing the level of difficulty/proficiency to meet one's zone of proximal development.    Learning is truely a life-long journey and what better way to end hunger, and promote literacy in a challenging, but fun manner.

 I am a loan officer and loss mitigation specialist who still is an educator at heart.  Visit our site http://foreclosureinfo.bravehost.com to learn more about the following foreclosure terms:

• Appraisals
• Preforeclosure
• Foreclosure
• Sherrif Sale
• Special forbearance agreement
• Loss Mitigation
• Loan Modification
• Adjustable Rate Mortgage (ARM)
• Work-out solution
• Cash for keys
• Deed-in-lieu of foreclosure

We will answer your questions regarding foreclosure as simply as we can so that you will be able to comfortably talk to your lender to stop foreclosure and understand your options.   Call us today and ask for Dave, Janet or Ron at 1 800 826-1929.

Remember today, for it is the beginning of always.  Today marks the start of a brave new future filled with all your dreams can hold.  Think truly to the future and make those dreams come true.

                                                                                             -Unknown-

 

 

     Congress just approved a tax-relief bill to help families that have had a portion of mortgage debt forgiven through foreclosure, a short sale, or a loan restructuring.   In the past, homeowners who couldn't make mortgage payments were sometimes given a huge tax bill in the form of a 1099.  The "forgiven debt" was treated as taxable income.   The legislation is retroactive to Jan. 1, 2007 and is scheduled to retire at the end of 2009.  Lawmakers believe that this is a temporary problem so only a temporary solution is needed.   President Bush also signed a bill to extend a tax deduction for private mortgage insurance through 2010 and is retroactive to mortgages issued after Dec. 31, 2006.   Home buyers who put less than 20% down on a home loan have to pay mortgage insurance to protect lenders in case of default.   The tax deduction will probably amount to a savings of about $350/year and can be deducted on the 2007 taxes.   A full deduction is limited to homeowners with adjusted gross income of $100,000 or less.  

Note:  Foreclosure were up sharply in the third quarter of 2007.