I was very surprised to learn that industry estimates find that half of all homeowners who lose their homes to foreclosure have no contact with their loan servicers. If you are at risk of default or already behind on your mortgage payments, I recommend that you contact your servicer at the first sign of trouble. Ask to speak with someone in the home retention department.
You may be able to work out a loan modification, short-sale, or repayment plan. Servicers will ask you to explain the reasons why you can no longer make the mortgage payments. You should be honest and realistic. The servicer also will need to verify your current income, unemployment benefits (if any), household expenses, tax returns, property taxes, hazard and flood insurance premiums, and condo or HOA dues.
Whether the loan servicer requests it or not, you should include a letter authorizing the servicer to speak with your REALTOR®, another family member, or perhaps your attorney, as this can help speed up the process.
If you have any questions about this process, please don’t hesitate to contact me. I’m here to help.
Fannie Mae has announced a new Deed for Lease™ program. The new program allows borrowers to voluntarily transfer their property back to the lender and then lease back the house at market rate. The lease period is for up to 12 months, with month-to-month contract extensions after that period. The program is designed for borrowers who do not qualify for or have not been able to obtain other loan-workout solutions, such as loan modifications.
To participate in the program, borrowers must live in the home as their primary residence and must be released from any subordinate liens on the property. Tenants of borrowers in this circumstance also may be eligible for leases under the program. Borrowers or tenants interested in a lease must be able to document that the new market rental rate is no more than 31 percent of their gross income.
Homeowners thinking of participating in the Deed for Lease™ program should visit Fannie Mae’s loan look-up Web site at http://loanlookup.fanniemae.com/loanlookup/ to see whether their loan is owned or guaranteed by Fannie. Mortgages backed by the Federal Housing Administration and other government agencies are not eligible for the Deed for Lease ™ program.
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The DRE recently issued a fraud warning alerting consumers about loan modification scams and informing consumers of what they can do to protect themselves. The alert is available in both English and Spanish. Last July, the DRE had fewer than 10 complaints involving loan modification companies; today the department has 750 pending investigations. In addition, since last October, the DRE has filed more than 200 Desist and Refrain Orders. A list of the companies and persons the DRE has filed an action against can be viewed at http://www.dre.ca.gov/cons_drs.asp
It is worth noting that not all firms who collect advance fees for loan modification services do so illegally, the DRE said. In general, only licensed real estate brokers and attorneys operating within the scope of their license may collect advance fees. Real estate brokers must have their advance fee agreement reviewed by the DRE prior to its use to ensure it is compliant with real estate law.
The California Association of Realtors (CAR) also has learned of what appears to be a loan modification assistance program and lead generator, from a company using the legislative bill number 3648, that looks as if it’s a government entity. It even has a seal closely resembling a governmental seal but it is not affiliated with the government.
Be on the alert for schemes seeking funds and making claims that might be misleading or unlawful. If you have any suspicions or questions, feel free to contact me or your personal real estate consultant.
Mystery shoppers hired by the National Community Reinvestment Coalition have found that troubled borrowers who turned to so-called foreclosure prevention specialists paid an average of $2,900 for “poor advice” that “bordered on theft.” The advise provided by these firms is “horrible,” NCRC executive vice president David Berenbaum told the NAREE Conference in Washington. “For every legitimate one, the next three border on theft.” Among other things, these scam artists told borrowers not to pay their mortgages and not to speak with their lenders. (This is this one of the worst things you can do if you are in trouble.) CDC plans to announce these and other findings uncovered by their 200 mystery shoppers later this month, Mr. Berenbaum said. He also told the group that nine out of 10 subprime refinancings “did not expand home ownership,” and that many seniors are being “misguided” into high-cost reverse mortgages.
Be sure to consult with me, or your trusted real estate advisor, before pursuing a loan modification. We can refer you to reputable people who can really help.
