SASHA KATZ, ESQ DAILY BLOG

Mr. Obama insisted the government should help only responsible borrowers, and his administration offered aid to fewer than half of those facing foreclosure, excluding landlords, owners of big-ticket homes and those judged to have excessive debts.

He decided to rely on mortgage companies to modify unaffordable loans rather than have the government take control by purchasing the loans, the approach advocated by his chief political rivals in the 2008 presidential race, Hillary Rodham Clinton and John McCain.

The administration did not push for legislation to make mortgage companies help borrowers. The financial incentives it offered were often insufficient. And it responded slowly to warnings, including those in letters homeowners sent to Mr. Obama, that companies were not cooperating.

The result was a plan that failed to meet even its own modest goals, data shows. Mr. Obama said in Arizona a few weeks after taking office that the government would help “as many as three to four million homeowners to modify the terms of their mortgages to avoid foreclosure.” As of May, 4.3 million people had applied for aid, but only one million had received government-sponsored modifications, according the the most recent data. About a third of those turned away lost their homes, were facing foreclosure or filed for bankruptcy.

In June 2011, Mr. Obama conceded that his administration had not done enough. And so, we are going back to the drawing board.

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Many clients come to us after they have accepted a modification, but they can't keep up with the payments.  If you have a Fannie Mae or Freddie Mac loan and you default within the first twelve months of the modification, you are likely barred from obtaining another HAMP modification for some period of time.  If you have obtained an in-house mod from your lender, it will be up to the lender whether they will consider a new modification.

Review your financial condition and weigh your options with a legal represenative. This can be done in the office ot over the phone (954) 340-5310.  We'll schedule a 15-minute review of your financial so we can better assess your financial position.

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There are good answers to your negative equity problem.   The first question to ask is . . . Can you chip away at your loan balances?

Second Lien or Line of Credit Negotiation:  If you are in a position to make a one-time lump sum payment, then you may consider settling a second mortgage or line of credit.  Often times, eradicating the second lien through paying a lump sum in exchange for release of the mortgage and waiver of deficiency is the answer.  If you can wipe out the second lien for less than the full balance due, you may get back to equity or at least a breakeven point.

Loan Modification: Another option to chip away the underwater amount is to request a principal balance “reduction” through a loan modification.  I quotate the word reduction because the most common programs do not reduce the principal balance, but recapitalize the loan over 40 years so that you can enjoy a lower payment with a lower, fixed interest rate.  So, how does that chip away at a loan balance?  Well, if you are committed to over paying and reducing the term, you actually have created for yourself the ability to pay down principal. 

Short Sale:  If you don’t have a lump sum to settle a second mortgage or line or credit and you don’t want to go through the long, tedious process of modification, there is yet another powerful answer to eradicating negative equity.  The answer is short sale.  Short sale is a fairly quick and painless means to eliminate, not just the negative equity, but the entire loan.  If your sights are set on waiver of deficiency and the price tag associated with walking away debt fee, short sale is an intelligent alternative. For over ten years, Sasha Katz, Esq. has been working out client’s debt and real estate matters.  Short sale is one of the most active practice areas at the law firm.  If you are thinking about resolving your negative equity issues, be sure to call me at (954) 340-5310 to schedule a free consultation.  There is no better way to fight the Elephant in the Room, than to address it full on. 

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The Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP) and U.S. Attorney for the Western District of New York William J. Hochul, Jr., today announced that Lori J. Macakanja, 35, of Dunkirk, New York, who was convicted of mail fraud and theft of government money, was sentenced to 72 months in prison and three years supervised release by U.S. District Court Judge Richard J. Arcara. Judge Arcara also ordered the defendant to pay $298,639 in restitution to the victims.

Assistant U.S. Attorney Trini E. Ross, who handled the case, stated that Macakanja, in her capacity as a housing counselor employed by HomeFront, Inc., inappropriately requested money from clients. The defendant told HomeFront clients that the money would be used toward loan modifications to prevent foreclosure on their homes. However, after receiving the funds, Macakanja used the money for her own personal use, including gambling, and failed to obtain the loan modifications for the victims.

A total of 136 HomeFront clients were defrauded with losses totaling approximately $300,000. In addition, Macakanja also obtained federal grant monies from the Buffalo Urban Renewal Agency (BURA) for HomeFront clients. On two occasions, she diverted $2,000 worth of BURA money to pay her own personal mortgage.

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According to the experts, the average American will go into debt $750 this holiday season.  This does not tell us how much each American will likely spend in TOTAL.  This tells us approximately how much debt each of us will incur - - $750.

Given the housing market, state of unemployment and reduced incomes, I am puzzled by these statistics.  From time to time, we all incur debt.  A new tire after a nail punctures the old one . . . Air conditioner replacement in the heat of a Florida summer.  It is one thing to incur debt for an unexpected necessity.  It is another matter entirely to willingly charge it up for gifts.

Why do I say this?  Not because your kids would not be thrilled by a new IPad or guitar lessons.  I say this because, come Spring time, American Express and CitiBank (and the other creditors) are going to blast you with rates that even the Mafia doesn't charge.  You probably already know that you are going to spend about $4,100 in interest to pay off your holiday shopping.  Why do it?  Save the interest for Disney World next summer. 

I am not a grinch.  Please CELEBRATE with your family this season.  Set out to be creative with your holiday giving.  Carve a plan that does not include paying Capital One and Discover five times the price of the holiday gift.  Don't get me wrong, our office has a strategy for dealing with greedy creditors, but we'd much rather see you with the money in your pocket in the first place.   

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While a quick fix may sound like a good idea, the long haul is usually the better route.  In loss mitigation, whether modification, short sale or deed in lieu, the path from A to B is not always a straight line.  However, it does not have to be a bumpy road in vain.

The nuts and bolts of it is that there is a debt that needs to be dealt with.  The tools to resolve the debt may include foreclosure defense, strategic default or court mediation to name a few.  Over the time line of the debt, tools that were initially unuseful may become essential and vice-versa.

For example, a presuit mediation, where there have been few missed payments and no litigation, may be unsucessful. However, add six months of foreclosure defense and good proof of borrower income, you may settle with a reasonable monthly payment and a long term plan for negative equity.

The bottom line is that if you can overcome the daily gnawings of stress as you venture through loss mitigation, you may find your situation resolved with surprisingly good terms.  Stay the long haul - - it is usually worth it.

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Have you been served a foreclosure notice?

By Sasha Katz, Esq.

Welcome to my blog page.

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SIGTARP SHUTS DOWN 85 ONLINE MORTGAGE MODIFICATION SCAMS

ADVERTISED ON GOOGLE

WASHINGTON, DC - The Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP) today announced that it has shut down 85 alleged online mortgage modification scams that prey on vulnerable homeowners through Web banners and other Web advertisements. SIGTARP investigates mortgage modification schemes in which companies charge struggling homeowners a fee in exchange for false promises of lowering the homeowner’s mortgage through TARP’s housing program known as the Home Affordable Modification Program (HAMP). Google, in cooperation with an ongoing criminal SIGTARP investigation of these scams, has suspended advertising relationships with more than 500 Internet advertisers and agents associated with the 85 alleged online mortgage fraud schemes and related deceptive advertising.

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That's a common question and it depends on whether you plan to keep the property or short sale. As to your unpaid escrows (tax/insurance), your lender will not have sufficient funds to pay due to missed mortgage payments. Some clients decide to obtain insurance on their own so the lender does not force place insurance.  Force placed insurance is much more costly than insurance obtained by the homeowner.  However, any payments you make could be "lost" if you decide to short sale in the future.  

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By Jane Hodges

The U.S. foreclosure rate has climbed to its highest level in seven months, suggesting that lenders are moving beyond a "robo-signing" scandal that had temporarily slowed bank takeovers, according to a private firm that tracks the activity.

Foreclosure filings — including default notices, scheduled auctions, and bank repossessions — were issued on 230,678 homes in October, up 7 percent from September but 31 percent below the level of October 2010, according to the report issued by RealtyTrac Thursday.

RealtyTrac CEO James Saccacio said the uptick represents more "unclogging of the pipeline," as foreclosure activity suppressed by the robo-signing scandal eases its way out of the system and the process reaccelerates. Many lenders and servicers were forced to slow or halt foreclosure activity after revelations of the improperly signed documents.

"We expected this uptick to occur, since the pipeline was 'suppressed,' so to speak," Saccacio said in an interview.

Foreclosure auctions scheduled in October rose 8 percent from September but were down 38 percent from this time last year. Auction activity was notably higher in Florida (57 percent), Minnesota (43 percent) and Illinois (38 percent), but those states' activity levels were still lower than in October 2010.

Lender repossessions rose 4 percent in October but remained 27 percent below October 2010 levels. Major increases were seen in  Michigan, Oregon, New Jersey and Indiana.

Here is RealtyTrac's September "heat map" of foreclosures. We'll update it when we get the October map.

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NEW YORK (AP) - The lawsuits against Bank of America are piling up.

The latest comes from U.S. Bancorp, which wants Bank of America Corp. to repurchase poorly-written mortgages sold by Countrywide Financial in 2005.

Bank of America bought Countrywide Financial Corp. in 2008.

The lawsuit, which was filed in New York on Monday, claims Countrywide sold U.S. Bancorp a pool of over 4,000 loans originally valued at $1.75 billion. U.S. Bancorp claims Countrywide ignored its own mortgage underwriting guidelines when issuing those loans.

According to the complaint, Countrywide agreed to repurchase loans within 90 days if any of the statements made in the loan contract wound up being untrue. Those statements included an assertion that the loans complied with the bank's underwriting guidelines.

U.S. Bancorp says Countrywide's loans began to "become delinquent and default at a startling rate," soon after it sold the loans. U.S. Bancorp has asked the court to ask Countrywide to repurchase either just the defective loans or all of the loans in the pool.

A U.S. Bancorp spokesman, Thomas Joyce, said the bank filed the lawsuit as a trustee on behalf of several investors who bought the loans. He wouldn't identify the number of investors the bank represents. "Because the matter is in litigation, I can't comment on the specifics in the lawsuit," he said. Bank of America didn't comment.

The nation's largest bank is facing several other lawsuits. On Aug. 8, American International Group Inc. sued the bank for more than $10 billion, claiming Bank of America deceived the insurer by selling it faulty mortgage investments. Bank of America has already paid a total of $12.7 billion this year to settle similar claims.

Worries that similar lawsuits would further drain the bank's cash reserves led to a sell-off in the bank's shares by 36 percent this month to a low of $6.01.

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Bank of America - On February 4, 2010, the New York Attorney General charged Bank of America Corporation (“Bank of America”), its former Chief Executive Officer Kenneth D. Lewis, and its former Chief Financial Officer Joseph L. Price with civil securities fraud. According to the allegations, in order to complete a merger between Bank of America and Merrill Lynch & Co., Inc. (“Merrill Lynch”), the defendants failed to disclose to shareholders spiraling losses at Merrill Lynch. Additionally, after the merger was approved, it is alleged that Bank of America made misrepresentations to the Federal Government in order to obtain tens of billions of dollars in TARP funds. The investigation was conducted jointly by the New York Attorney General’s Office and SIGTARP, and the case remains pending in New York state court. SIGTARP also assisted the Securities and Exchange Commission (“SEC”) with its Bank of America investigation. On February 22, 2010, the Honorable Jed S. Rakoff, United States District Judge for the Southern District of New York, approved a $150 million civil settlement between the SEC and Bank of America to settle all outstanding SEC actions against the firm. The court found that Bank of America failed to disclose adequately to its shareholders, prior to their approval of a merger with Merrill Lynch, the extent of additional material losses that Merrill Lynch had suffered. Additionally, the court found that the proxy statement sent to shareholders in November 2008 failed to disclose adequately Bank of America’s agreement to allow the payment of bonuses to Merrill Lynch employees prior to the merger. In addition to the $150 million payment, Bank of America also agreed to the following settlement requirements:

Engaging an independent auditor to assess and report on the effectiveness of the company’s disclosure controls and procedures.

Furnishing management certifications signed by the chief executive officer and chief financial officer with respect to proxy statements.

Retaining disclosure counsel to the audit committee of the company’s board of directors.

Adopting independence requirements beyond those already applicable for all members of the compensation committee of the company’s board of directors.

Retaining an independent compensation consultant to the compensation committee.

Implementing and disclosing written incentive compensation principles on the company’s website and providing the company’s shareholders with an advisory vote concerning any proposed changes to such principles.

Providing the company’s shareholders with an annual “say on pay” advisory vote regarding the compensation of executives.

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Many clients come to us after they have accepted a modification, but they can't keep up with the payments.  If you have a Fannie Mae or Freddie Mac loan and you default within the first twelve months of the modification, you are likely barred from obtaining another HAMP modification for some period of time.  If you have obtained an in-house mod from your lender, it will be up to the lender whether they will consider a new modification.

Deciding to default on a modification is a difficult place to be.  On the one hand, you may have accepted a modification that really didn't fit your ability to pay.  Or, you may be experiencing another wave of unexpected hardship.  The most important thing to do is to reassess your income and expenses to make an accurate determination of where you are at.  Looking at your options in light of a true picture of your financial condition may help you make a better decision of how to move forward.

If you need a fresh look at your financial condition and your potential options, send us an email or give us a call.  Mention this blog and we will provide a complimentary financial analysis.  We'll fax or email you a copy of your financial statement so that you and your family can make an educated decision as to your home options.

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