New Breed......Same Scam

Our company was recently contacted by a “law office” that was systematically contacting companies in the loan modification industry. After talking with the gentleman for about 5 minutes, I realized that he had very skewed ideas of how loan modifications were done and who was legal and able to do them. Just like the other firms before them, he went on to explain how licensed attorney's are the only ones that are able to successfully and legally do loan modifications. I mentioned SB94 and how it specified licensed mortgage brokers as the ones that were not only legal, but actually have a professional background in what's required to get a professional loan modification(preparation of financial statements and documents, knowing what the lenders requirements are, submission to the lender, and ultimately getting a lender to say yes!). He agreed, and conceded that they will often outsource their modifications to brokers for their assistance for that reason. This was the first of three major holes in his presentation. Aside from contradicting himself on who was legal to do them, he clearly admitted that the “Attorney” he represents doesn't do ALL of the modifications himself as his presentation indicated. After 10 minutes, I realized that I was dealing with a new breed of con artist, but essentially the same scam.
Misrepresentation is one of the largest problems plaguing the loan modification industry. Aside from outrageous fees, and companies that have no intention or proven process for completion, companies that “bait” their customers by telling that an Attorney is going to be personally working the file from start to finish is a flat lie. In his written presentation to me, it says clearly that they are offering to pay “Independent Contractors” $1000 for their “non-legal work performed”. That work performed was described as the following: 1)Document Preparation, 2)Assisting the Homeowner with the Hardship Letter, 3)Assisting the homeowner with the completing the loan workout application, 4)Confirm that all income stated matches the income documents 5)Turning in a fully completed file with all documents, forms and items listed on the check list immediately. In the end, the offer was for the Independent Contractor to “sell” the customer on the idea that they were going to have everything done by the Attorney thus it warranted an upfront charge of $2495 that went into an trust account. Yet the instructions for remittance on the agreement was a cashiers check payable to the Attorney. This is of course prior to any additional charges that he would charge the customers if they were already in foreclosure, had a sale date, or were looking to short sale if the modification was unsuccessful. If your head isn't spinning yet, wait, it get's better.....
The “loop hole”, is that Attorney's are not subject to CA DRE laws and their regulations. The trust account is in lieu of an escrow account which has been deemed illegal. So in the presentation where it says that they can legally charge the customer upfront due to the trust account, I believe they are correct and that they have in fact found another hole in SB94. He seemed pretty proud about it, and when I explained that if called to the carpet that anyone who knew better would call them on it. He then went on to say that, “The State Bar can pound sand, because we're not doing anything wrong or unethical”, my stomach started to sour. I realized that this guy felt his law office was above the law, and for the most part he's kind of right. What they didn't explain in the presentation that although they may not be subject to DRE laws, the licensed mortgage brokers that they're looking to solicit are. Although we don't necessarily agree with the absolutely no upfront fee clause in SB94, our mortgage brokers nonetheless comply with it until specified otherwise. Furthermore, mortgage brokers that were doing loan modifications previous to SB94 were typically doing progression payments with their customers, where the customers DIDN'T have to pay everything upfront, but rather a very reasonable application, submission, and negotiation fee. However, as my platoon sergeant used to say, “I say jump, you say how high?”. This is the difference in compliance between legitimate mortgage brokers that are doing loan modifications and following the rules, vs. the Attorney's that feel they are above the law, and are still trying to make their big money while they can.
PMC is not only dedicated to our customers whom we service, but also to the longevity of the industry and it's regulation. This problem didn't happen overnight, and it's certainly not going to go away overnight. If companies were half as concerned about genuinely providing a valid service for fair compensation as opposed to doing the “rip and run” business model, then the industry wouldn't be under such speculation. Furthermore, the legitimate companies that do have their customers best interests in mind would not only have more flexibility to operate without such a high accounts receivable (as most legitimate companies do), and actually be able to work with State and federal agencies to get a long term solution, and get this economy moving in the right direction. Everyone agrees that it has to start with the mortgages, we also agree that the efforts thus far have been futile yet very costly, at what point will we agree that a reasonably regulated private industry business model is the way to go? PMC has not only answered the questions plaguing the industry for customers, and business professionals looking to help, but also for the state entities that are looking to regulate. PMC without question proved the safest, most cost effective, and fairest program to all parties involved.

If Mortgage Brokers Do Loan Mods...Why Do I Need You?

"If the states are endorsing mortgage brokers to do loan modifications, why do I need PMC?" The first reason is research. PMC has literally contacted thousands of mortgage brokers throughout the country inquiring as to their standpoint on loan modifications, their fees and processes. What we found was that almost all of them had only done one or two modifications, and they were semi unclear about what direction they needed to go. The ones that were doing more than that were charging between $2500-$4000 for their services. Many of them were doing them "old school", with not only inadequate protections for themselves and their customers, but certainly making substantially more work for themselves than needed. PMC spent six months, with numerous representatives working 5 sometimes 6 days a week to contact these brokers and establish our Negotiators. This is the time that was taken to take a good hard look, and separate the good, the bad, and the ugly!!!


The majority of the mortgage brokers have preconceived ideas regarding loan modification and may have limited knowledge regarding the process. I think of it like this...A house framer has the necessary core knowledge and tools to build decks and awnings, yet if he hasn't built them before, he will likely have to get a few additional resources in order to efficiently complete the job. This is what PMC offers the mortgage brokers (Negotiators) that have joined our team. Aside from having access to each other for consultation, blogging and exchange of ideas, they also have access to our full broker resource center. Similar to how a mechanic would get the "dealer service manual" to repair vehicles that he may not familiar with. PMC affiliated negotiators have every resource available to them in order to work toward their customers best interests.

Fees. Many mortgage brokers that are able to perform loan modifications simply won't. If their state prohibits them from charging ANY amount of fee before completion, then the broker is dependent upon that customer to actually pay once the modification is completed. Like most people, brokers can't pay their bills and feed their family on IOU's. Unfortunately, without an additional party involved the mortgage broker has no resource to turn to for help other than collection agencies. Many brokers that are performing loan modifications are trying to charge the same high fees that many of the illegitimate and "attorney affiliated" companies are charging (usually $3-$6K dollars). With PMC, both the customer and the Negotiator get the best of both worlds. The Negotiators have agreed to perform the loan modification for the customers for a VERY reasonable fee, and have agreed to not charge those funds upfront. Thus, it eliminates the ability for a customer to get "ripped off". The Negotiator clearly has a vested interest in getting that customer results, their paycheck depends on it! The Negotiators, aside from not having to field sales calls, has PMC's software and resources which makes their job 10 times easier. Additionally, PMC affiliated negotiators, are only assigned customers that have demonstrated the willingness, and ability to pay for their professional services, and furthermore have PMC in their corner to remind the customers of their obligations once completed. This has proven to be the best business model in the industry, for ALL parties involved.

Trust and Oversight. As with dealing with any other modification company, if it's just the customer and that company, there will ALWAYS be room for error and “he said she said”. Some brokers are having a difficult time getting their customers to trust them again, as they were "labeled" as part of the overall mortgage problem. Although this is a relatively unfair assessment, nonetheless it has effected those relationships. With PMC, the Negotiators aren't out trying to prospect for customers. The customers come to us/them. Aside from having a second chance to help their community, mortgage brokers can receive fair compensation for fair work performed and have excellent job satisfaction. PMC's proprietary software not only assists the Negotiator in their work, but it also integrates with the customers Client Dashboard. Here, the Negotiators progress can be tracked and the client will see exactly what he/she stands in the process. It not only reduces the amount of phone calls from customers, but it also eliminates the chance of the customers documents falling through the cracks or the customer not feeling informed throughout the process. With something as important as a home, no one wants to take the chance of things not going right.

PMC has had two instances of Negotiators that have experienced "fatal errors" with their computers. Without PMC's data storage, this would have been a dire problem for the Negotiators and left the homeowner clients in a tough spot. Even if the customers were able to reproduce the documents, the time frame to get caught back up could have easily cost someone their home. As it is, the Negotiator reputations remained intact and the homeowners lost no valuable time in process. PMC's software is not only extremely secure, but the information is stored with multiple levels of protection and redundancy. So even if our building burned, and the Negotiators computer crashed, PMC would be able to get that Negotiator back up to speed within 24 hours. This protection has not only proved priceless to the Negotiators, but to the customers that they are representing as well.

Most of the customers that contact us tell us that we have the best pricing and program and have provided them the most information toward making an informed decision. The majority of the brokers that we've talked with, whether they've decided to join the team or not, have agreed that PMC's business model is next the best in the industry and not only takes the customers best interests into consideration, but the licensed professional's as well. So whether you, or someone you know, needs assistance finding legitimate help with a mortgage, or you are a licensed professional looking to do your part please contact PMC today.

Maryland Targets Mortgage Scams

Recently there was an interesting internal news letter posted on the state of Maryland's Department of Labor, Licensing and Regulation's website. This newsletter exposed a couple of the current, housing crisis, scams occurring in the state. Each of these are nothing more then “copy cat” crimes that have recently been committed nationwide. These scams are not simply an accidental fault in process, or even an outright illegal operation. These “legitimate” businesses were, in some cases, literally stealing people's homes and equity. These operations made profits, in the millions of dollars, in a very short period of time. There are two major factors attributed to why this happened.

The first reason, of course, is lack of state mandated direction or options for troubled homeowners. The Maryland Commissioner of Financial Regulation, Sarah Bloom Rankin, was quoted saying, “Quite simply...do not pay, walk away. Call your servicer directly or see a non-profit counselor.” when she referred to any company that offers housing assistance for a fee. The majority of the applicants that are now coming to us asking for assistance have already been this route and tried contacting their servicer directly. Additionally many have also conferred with a non-profit counselor only to find that they are right back at square one. Furthermore, CNN Money recently posted an article showing that only 4% of the modifications that are applied for are actually approved. If our professional negotiators had no better than a 4% success rate, our company would have been shut down a long time ago. Furthermore we would have been vilified as incompetent opportunists taking advantage of distressed homeowners. Yet the people that have been elected into positions, to protect our best interests and help us make challenging decisions, are to this minute still advising their constituents to only consider a process that registers a confirmed 4% success rate. If the state would simply admit that their efforts in trying to handle this crisis have, thus far, been unsuccessful, then perhaps they would be open to alternative ideas for addressing the issue. Like other states, passing fair legislation that allows legitimate, licensed, mortgage brokers to perform loan modifications, would be an excellent first step. This would provide homeowners an alternative to the game of “Russian Roulette” troubled homeowners are now playing with con artists and scam companies. This would also provide structure and guidelines for the companies that are truly in the business with their customers best interests at heart.

The second reason is also related to the first. Legislation. HB 361 was written to give oversight to foreclosure consultants. Again, two major problems have occurred. When this bill was first drafted it specified licensed attorneys, licensed mortgage brokers, and licensed real estate brokers as those qualified to act as foreclosure consultants. Well...most “Attorneys” have very little to no experience in loan modifications. They either A) woke up one morning and decided to be a “loan modification attorney” or B) they are allowing some other “company” to use their name and license to circumvent the rules of the state. This has been proven in CA by the CA DRE, and the CA State Bar. Real Estate Brokers specialize in “short sales” right now. They typically sell real estate and do not contact lenders for approvals. Furthermore it would be impossible to have a fiduciary relationship for a loan modification due to the option of short sale if the modification is unsuccessful. Of the three, licensed mortgage brokers are the only ones with a professional history and background necessary to competently perform a loan modification. However, they are also the only ones that were literally “crossed out” in HB361, thus leaving attorneys and real estate brokers as the anointed ones. Virtually every other state either is currently writing legislation or already has written legislation endorsing licensed mortgage brokers as the “chosen few”. The second problem the Commissioner does not seem aware of is in the language of the legislation. Currently it reads that if an individual is “in foreclosure”, then anything further action related to helping the homeowner is considered a “foreclosure rescue transaction” and it is deemed that NO ONE can assist. Presumably, what was intended, is that once a customer is in foreclosure, that anyone that is engaged for help must adhere to certain rules and/or be professionally licensed. Unfortunately, rules are usually enforced on the “letter of the law”, not the individual interpretation. (of course there are always rare cases).

The bottom line is that if the state hasn't put out clear guidelines, how do homeowners know where to turn? Furthermore, licensed mortgage brokers that are willing and able to perform loan modifications, in the state , are obviously reluctant at this point. They clearly will not want to do anything that would jeopardize their professional accreditation.

I recently called the state hotline and talked to the licensing division. It was explained that mortgage brokers are, in fact, the ones that should be doing loan modifications. Unfortunately no one could direct me to where this could be seen in writing. In the past, we've posted blogs like this and the state's legislation was soon changed to reflect much of the information that we blogged about. For the sake of Maryland's residents, we hope that this is the case here as well.

State Bar Takes Action to Aid Homeowners In Foreclosure Crisis

Well you've heard it from PMC. You've heard it from the FTC and the Attorney Generals Office. We are very pleased to announce that the California State Bar has now joined the fight in exposing "loan modification Attorneys". In a recent article from the State Bar of California's Website, it stated that the OTC (Office of Chief Trial Counsel) has over 800 active investigations that are related to foreclosure complaints. The Interim Chief Trial Counsel Russell Wiener warned consumers to take special caution when seeking legal representation related to loan modification. He said, "Consumers should not be comforted by advertisements that claim the Attorney is a member of their State Bar, such membership does not mean the Attorney has any special knowledge, experience or expertise in the area of loan modification. In fact, it appears that many of the Attorneys offering these services have little or no prior experience in the area of loan modification." Amen.

The State Bar suggests that consumers be wary of Attorney's offering loan modification services under any of the following circumstances:

• The Attorney in Charge of the office is too busy or not willing to meet personally with prospective clients.
• The business demands payment of a large fee, even before obtaining a prospective clients basic income and expense information about the existing mortgage and present home value.
• The Attorney responsible for the business is not licensed to practice law in the state where the consumer resides.

PMC has spent countless hours researching legitimate Mortgage Brokers who are licensed, and have a desire to help people in their state and surrounding states. During your loan modification process, you will talk personally with the Broker, and they will NEVER be too busy for you. If you want to sue your neighbor, hire an Attorney. If you want a free pamphlet on how to do your own loan modification, contact HUD. If you want a professional that's going to take you from start to finish, charge you a reasonable fee, and keep you informed throughout the process, contact PMC today.

Fighting Mortgage Scams, Government Teams Up

There was a recent article on ABC news stating that State and Federal officials are trying to stop scammers who prey on those facing foreclosure. Last week charges were filed against a California based Loan Modification Company. One of the former employees was quoted saying, "They're convincing people to give money to them in advance, promising to do something that they're not doing, that they don't even have the resources, capabilities, knowledge or manpower to do,". This is the common denominator with these scam companies. Even with the best intentions, 98% of the time they simply lack the knowledge, the resources and overall the manpower to do what they're telling people they're going to do.

This is especially true when it comes to a "Law Firm" that's doing loan modifications. Have you ever been to an Attorney's office? There's generally one to two paralegals on-site per Attorney that's in the office. So if you have two Attorneys, you'd have a total of four people in the office, six if you're extreme. A GOOD processor can handle about 50 files at one time, effectively. Average modification takes about 60-90 days. Now, assuming that the "Attorneys" are doing the same work as their processors and not playing golf, that gives you the ability to reasonably handle about 300 files. If they're bringing in 100 new files a month, then in three months they will be at capacity. Assuming they start getting terms for their first months clients, they will consistently be behind the curve, and they'll have to either expand or stop. Most will choose to do neither as both entail eating into their profit. It's the perfect example of "biting off more than you can chew".... Unfortunately, it's the American Homeowner that ends up having to swallow the miscalculation, and ultimately lose their money and possibly their home when that company gets shut down. Just remember, if a company has substantially more "sales/sign up" people then they do back end processors, it's a pretty good indication that they will have a problem in the very near future.

My daughter is a Freshman in High School and like most girls her age, is overly concerned with her appearance. She's always looking at some "new and improved" way to help her maintain her weight. I'm old fashioned when it comes to fitness and I'm a firm believer that you can advertise whatever you want, it comes down to Diet and Exercise. Same holds true with processing loan modification files. You can have proprietary software, and flow charts, and bank contacts all you want. But unless you have the manpower and knowledge, the company will eventually fold and go out of business. It's kind of like when you go to buy a used car. Great paint job, awesome stereo system, leather interior, sunroof and all the other bells and whistles. That's all fine and dandy, but when the motor goes out on you....you're stuck making a payment on a nice looking that doesn't run. I think a lot of people will agree that those analogies carry true for a lot of things going on in today's world.

PMC has over twenty (and counting...) Negotiators throughout the country. ALL of them have spent their professional careers helping people with their loan applications, talking to banks, and ultimately getting banks to say YES. So they're not just Good processors, they are Great processors. The Negotiators that have contracted with PMC can easily handle 20 files a month. This means that PMC can reasonably enroll 200 clients a month, and EFFECTIVELY manage them without risking files falling through the cracks. PMC will double the number of contracted Negotiators by the end of year, thus doubling the amount of clients that can be effectively managed and processed.

PMC has the only business model in the industry that's actually proving effective. PMC offers the best service, at the best price and is the only company in the industry that offers you protection and recourse. Don't take a chance with a company that may not be around tomorrow, contact PMC today, and let us give you one less thing to worry about.

Federal Reserve Stands Pat on Low Interest Rate

In a recent article from RIS (Real Estate Information Systems), it was stated that there are signs of "winding down" on Federal programs available for the housing crisis. It noted that, "although the central bank will continue with its previously announced plan to buy $1.25 trillion of government agency mortgage-backed securities to support the housing market, the policy-setting committee “will gradually slow the pace” of this and some other purchases." It went on to say that policymakers announced plans to "wind down" their program of buying $300 billion of Treasury securities, another emergency measure that the Fed undertook to drive down long-term interest rates and prop up the economy. This is a clear signal to Homeowners that if you're looking for assistance with your mortgage through a Federal program, you better act soon. A perfect example of this was the Cash For Clunkers program. Just like the HAMP, great program but when the money is gone it's gone.

The article also pointed out that the Central Bank intended on keeping interest rates low. What this means to you is that if you're doing just fine and your credit score is great, chances are you can refinance or purchase a home and get a great interest rate. For the other 90% of the Country, it means that "available credit" from the banks is going to be very limited for a long time. If banks aren't making much money from their existing loans, then they don't have the means to put out more money for additional loans. This means that trying to refinance or purchase a home is going to be very difficult for quite a while. So although it's a Real Estate Cornucopia out there with Foreclosures, unless you're at the Top already, you're not going to have the capital or resources to take advantage of it. This is a perfect example of the "rich getting richer". You basically have a handful of people that have all of the money (banks, investors, etc...). They will keep as much of that money "by any means necessary". Which includes but is not limited to: not cooperating with homeowners for loan modifications, charging erroneous and excessive fees, threatening and misleading their customers, and spending quite a bit of money (commercially and politically) to cast a dark shadow on the loan modification industry.

If you go to buy a car and start talking with a car salesman, let him/her show you a vehicle. Once they start asking you "closing questions", stop them and tell them that you're going to call your friend that's in the car business and ask him what he thinks............like the banks are doing, you'll get a ton of reasons of why you shouldn't call your friend and how dealing with "just you and him/her" is the best way to go. If they can keep you up against the ropes with nobody in your corner, they're sure to win the fight. Moral of the story.......Don't wait for things to "just get better", they won't. Don't expect your lender to just hand you everything on a silver platter, read the news, it's not happening. Don't let your lender "sell" you on the idea that you don't need any help, if you're looking for a good modification, YOU DO. Last but not least....Don't let some con artist scam you out of your hard earned money, contact PMC today and let us help you fight the good fight.

Better Business Bureau Ratings......The Real Scoop

"Better Business Bureau...........A Rating Since 2004" This is the advertisement that I came across while searching for a BBB Accredited Loan Modification Company. I went to www.bbb.org , went to the USA site, typed in my Zip Code to Check Out a Business Or Charity. In the search field, I put Loan Modification. I clicked the box that says "Limit My Results to BBB Accredited Businesses" and hit search. I clicked on the first one that came up. It showed up that they had NR (No Rating).......but the advertisement said A Rating since 2004. When PMC first started, we contacted the BBB for accreditation. They said that we had to be in business for a year before they would give the accreditation. The company that we found started in March of 2004, so it's impossible for them to have had an A rating since 2004. It was stated that the business was listed NR, as the review was currently being updated. This business also happened to be rated through the D&B (Dunn and Bradstreet). When I went to Google, typed in the name of the company and followed it with "complaints", and a cornucopia of things came out. So here is a business that had an A rating through the BBB, rated through D&B, and has a ton of customer complaints. They haven't given me warm fuzzies on their criteria thus far.......

If you research the companies that are currently being investigated or have been shut down by the FTC for fraud and/or deceptive business practices, you'll find that in their Prime, they had an A rating through the BBB. It literally takes the BBB at least a month to actually change a companies rating after complaints start coming in. There was a company that was shut down with over 73 complaints to the BBB in the first 3 months, yet operated over half of their business time (in business for a year) with a B rating or better. It wasn't until 6 months later that the company was issued a NR, and eventually before shut down an F rating. How many customers lost their money and possibly their home because they solely relied on the BBB's accreditation? I believe it was in the thousands. This is one of many companies with very similar stories.

PMC currently has a C- rating through the BBB. We contacted them in February of 2009, they listed our inception as June of 2009. PMC has ZERO customer complaints, resolved or otherwise. So how does a business that has multiple complaints, and is listed on ripoff report.com get an A rating, yet a business that has ZERO complaints gets a C-? Simple. They paid the fees and pulled the strings. When you go to the BBB, you're relying on ONE source for information about a company. Be diligent in your research. If you Google something, you're pulling from Millions of articles and research tables as opposed to relying on one. I'm not saying the BBB is not a valid and viable source of information, but it is one of many resources you should utilize when trying to find a legitimate loan modification company. Like most things in life, "Don't put all of your eggs in one basket...". That's why PMC utilizes multiple negotiators in various states so that our customers are never put in the position of being ripped off. We always have a contingency plan to ensure our customers best interests. Contact PMC today and see what makes us a Different Kind of Company.

Vested Interests......

I was watching TV last night when a commercial for CARFAX came on. It shows the guy with the sock puppet that says "Car Fox" and he's telling the couple that it's just as good and that they don't need a CARFAX. Funny commercial.....but moreover it mirrors the current loan modification industry.

So of course the car dealer has a vested interest in selling his product and making as high of a profit as possible. This is what they have a reputation for.......just like most other businesses. If a car was purchased with an unclean CARFAX, then the value is considered to be less thus leaving the consumer with paying full cost, for less of a car. This holds true in the loan modification industry with both high priced loan modification companies, and the lenders/servicers themselves.

Banks have a vested interest in selling you their products (mortgages, car loans, credit cards, etc...) and making as high of a profit as possible. Since inception, this is what their reputation is. If they borrow the money and pay 3% in interest on it, and lend it to you at 8%, they are more than doubling their costs. It gets worse with credit cards when you're getting charged as high as 32% after fees and interest. If the car dealer took in the car for $20K and sold it to the customer for $40K, it would be considered "ripping off" the customer. In the banking world, this is an everyday occurrence. While they are doing this, they have the "puppet" talking to the media and spending millions of dollars to discourage customers from using any "for profit" agency and redirecting them to either a non profit organization (where they know they can just go through the motions and give out half handed offers as the non profits are inexperienced to know any better) or coaxing them into just working with the bank directly. If the customer gets "sold" into doing this, they are now relying on the multi-billion dollar corporations who have a vested interest in making as much money as possible to magically change their business structure to just "do what's best for the customer". I believe the definition of insanity is attempting the same thing the same way over and over again expecting a different result.

Unfortunately, there are companies out there that are preying on the American homeowner. One of the major complaints is a misrepresentation of services. Due to changing legislation, many of these higher priced companies have changed their tactics using big words like Internal Loan Doc Audit, and Attorney Based/ Law Firm. Loan modifications are not rocket science, they are semi-complicated and the average American can't do it themselves. For a professional mortgage broker that knows what he/she is doing, and implements a set process with maintaining good contacts and relations with various lenders an average modification should take between 7-10 actual man hours. If you're really good you can cut it in half. So assuming that a company charges $4500 (you're paying that company more because they are "really good"), it takes them 4.5 man hours to complete, you've now been charged $1000 per man hour (while they are paying their paralegals who are actually doing the work $8.00 an hour). No wonder so many "Attorneys" are jumping on the bandwagon. If you pay $2000, and between placement, processing and negotiations it takes a total of 10 man hours, you've then paid out $200 per man hour. That's 1/5th of the cost! My old Platoon Sergeant used to tell us "I don't care how you get from point A to point B, as long as you get there and the mission is accomplished".

So if the end result you're looking for is to get caught up on your past due payments and make the payments to be more affordable during your time of hardship, why pay more? You can tell me all you want how the "Shamwow" is bigger, better and worth the additional money, but the bottom line is that it's the same thing I can get at Wally World for half the price. You work hard for your money, don't pay more for the smoke screen, contact PMC today.

Deceptive Business Practices, FTC Announces New Enforcement Actions

The Good, The Bad, and the Ugly...........It's very hard for homeowners to know the difference between who is who, which companies are compliant and which are not. The Good, would be a legitimated loan modification company who is not charging a large fee, nor an upfront fee. A company that does not ask you for interest in your property or Power of Attorney, and one that will actually take you to the finish line. The Bad, are the companies that may have good intentions, but their intentions are compromised when it comes to making the money. They then concentrate more on acquiring more clients than they can actually handle. Eventually, this will catch up to them, they'll get complaints and they will get shut down. And then there's the Ugly....these are the companies that typically hide under "attorney based/backed umbrellas", as they do charge very large fees, the majority of which upfront. They will often base your fee off of your expected monthly savings, rather than having a set fee for their services. Many times, these companies are merely short sale agents that will say they want to help you get a modification, when they really just want to negotiate a short sale and propose it as the only option.
I think the FTC is finally on track as far as making that distinction. In a recent article on the FTC's website5 new companies were just brought under investigation for deceptive business practices. If you look at the common violation from most of the loan modification companies, it's because they are giving their customers unrealistic expectations, and then they are unable to come through. Anyone that tells you that they're going to get you a 2% fixed rate for the remainder of your term is lying to you. Any company that's charging you more than $3K for their services would be considered as a large fee. Companies that play "quid pro quo" with you, "You pay my upfront fee, and we'll send you the documents...." are generally hiding something.

At PMC, our contracted Negotiators are not only compliant to operate in the states they encompass, but they also don't paint their customers with promises of sunshine and rainbows, if it's really raining. PMC matched with our contracted Negotiators offer services that are far superior, and at a fraction of the cost. Our Negotiators are contracted to not charge upfront fees, and have supplied all the required documentation to demonstrate their legitimacy. Don't play the odds on something as important as your home and your money, contact PMC today and see what makes us a Different Kind of Company......

Four Things You Should Consider Before Doing a Loan Modification

When considering a Loan Modification there is a cornucopia of things to consider. After doing them for over a year now, I've narrowed it down to four.
Is It Worth It?
This is a question that only you can answer. It comes down to numbers, but it mainly comes down to whether you want to stay in the home or not. If you owe $600K on a home that's valued around $300K, it's a Little difficult to substantiate getting your loan modified. Being that Principal Reductions are few and far between, if the lender lowers your rate and defers your past due payments, you're still going to be in a horrible equity situation. Granted.....if the payment @4% on $600K is the same as $300K @ 11%, then it still makes sense to stay in the house (especially if your only option is to rent for only a few hundred dollars less). I'll be the first one to advise you to just let your house go if it makes sense in the long run, but don't get baited into thinking that doing a short sale or bankruptcy are your only options.
What Am I Looking To Accomplish?
We get quite a few customers that are looking to "sue" their lenders and/or go right to doing an Internal Loan Doc Audit. We addressed these issues in last weeks blogs, but let's touch the surface again. For most people, their ultimate goal is to come to reasonable terms with their lender that they can afford, and still keep their house. However, it's very easy to get "sold" into thinking you have a chance of getting your home for free. If you are not behind on your payments, you have a 4% rate, and your payments are already well below 31% of your gross income, then chances are that you are not eligible for assistance. If you are behind on your payments and/or have a higher or adjustable interest rate, and have a verifiable hardship, then you stand a pretty good chance of getting something done. The question is what are you trying to get done? Again, for most people if they can simply get their past due payments put on to the rear of the loan, and get the payments to where they can make them, they are more than happy. Remember, "If it sounds too good to be true, it usually is".
If The Lender Accepts and Lowers The Payments, Can I Still Afford Them?
Any legitimate loan modification company is going to ask you this question before they even offer their services. If they're not asking this question, you should probably be pretty concerned why they aren't........This is ultimately what you, the lender and your company should be looking for. For instance, if you bring home $3000 a month, and after your mortgage and your other living expenses you spend $3800 a month, even with getting a $500 a month reduction from your lender, you would still be in a position where you couldn't afford the payment. On the other hand if you bring home $3000 a month and your expenses are $3000 a month, then if the lender drops your payment, you'll have a $500 surplus every month and can reasonably show that you can make that payment. It has to make sense to the lender, and it should certainly make sense to you as well.
I Want Help, Should I Find a Legitimate Loan Modification Company, or An Attorney?
The real answer is neither. It is next to impossible for you to do the research to find your own legitimate loan modification company. For the time you would spend and the risk you would take, you'd be better off just trying to negotiate yourself. Other than charge you more and not be bound to state regulations, there is NOTHING that a "loan modification attorney" can do for you that a legitimate company cannot do for you. So What Do I Do? PMC has researched thousands of mortgage professionals to find Negotiators that have top notch performance, reputation, and overall service. Furthermore, they are licensed and comply with state and federal regulations. PMC has multiple Negotiators in various states, and with our proprietary software we ensure that our customers and their Negotiators are always on the same page, and no matter what happens you are protected along the way. Why play Russian Roulette with something as important as your home? Don't take chances, contact PMC today and see what makes us different.

Loan Modifications In New Jersey

New Jersey has now joined the team of states that do not want their residents to get assistance. I was recently doing some research to find a legitimate loan modification company in the state of New Jersey. What I've found is that are NONE. Governor Cozine and Commissioner Steven Goldman had now passed legislation that prohibits licensed mortgage professionals from doing loan modifications. In order to do loan modifications, you have to have a "debt adjuster" license. Upon researching the requirements for a debt adjuster I found that ONLY a non-profit organization can get a debt adjusters license. If you go to the State of New Jersey's Department of Banking and Insurance's website, you'll get a list of entities that can offer foreclosure assistance, and another list for debt adjustment. Of course you know me......I decided to start calling asking for assistance for my "Aunt Sally" that lives in New Jersey and needs help....This is what I found.

The first list for foreclosure consulting are all non-profit organizations, and were actually willing to help people for about $100. Clearly more than reasonable. So I inquired to their process and what I could hope to expect. Basically they will supply you with the hardship documents (what we give for free), explain how you need to cut your utilities down, and then submit your paperwork to your lender. I asked who did the negotiations.....she explained that they don't negotiate. She further explained to me that NOBODY can negotiate with the lenders and it's just a simple paperwork process. I politely explained my own experiences in dealing with Ocwen and getting my own modification. I explained to her in detail the original offer that was made, the counter offers that I came back with , and eventually the modification I was granted. She then explained to me that "some" of the lenders will allow for negotiation, but most of them are just trying to give out the best deals that they can........No, I didn't ask her what world she lived in or what bottle she had in her drawer. I simply explained that I was looking for a legitimate company that CAN/WILL negotiate for my Aunt, even for a small fee. She advised for my Aunt to contact her lender directly. My final question to her was, "What happens if the lender declines the file, and the homeowner is then left at square one and 3 months behind the curve?" Her response was verbatim, " I don't know......but we've had a lot of banks that are declining the files". I don't know either, but it doesn't sound like that solution is working out so well for the residents of New Jersey.

The second list was for debt adjustment, and they were all credit card counseling services. I asked ALL of them if they did loan modifications. There was ONE company that said that they did them, but only in the state of Arizona. Everyone else offered a referral to a HUD counselor for their mortgage.........of course that's IF you want to enroll in their credit card program for $40 a month. By the way......don't think that because someone is a non-profit organization that they aren't going to ask you for money. The definition of a non-profit is merely that at the end of the year, they don't show a profit on their books. So if they're paying $5 for a roll of toilet paper and they're founders have large paychecks, then they can easily "zero" out at the end of the year, even though they actually did VERY well.

So to sum up you have four choices if you are a resident of New Jersey and would like assistance:
1) Call your lender yourself and negotiate your terms
2) Call a non-profit debt adjuster (you'll end up negotiating your terms)
3) Call a Credit Card Counselor, enroll in their program, and then get a referral to #2.
4) Contact an attorney that is exempt (ANY attorney that DOESN'T practice in debt adjustment).

Maybe I should consider asking Mr. Corzine and Mr. Goldman what they're doing on their lunch breaks........because it obviously isn't protecting and helping their residents.

Scam Prevention Program

PMC is an advocate of the American Dream. Work hard, raise your family, and have your HOME. Unfortunately, there has been a recent slew of individuals that have scarified homeowners dreams for their own personal gain. I say individuals as opposed to companies as it's typically not the employees of the company that don't have good intentions, it's the select individuals behind the curtains that know exactly what they are doing wrong. These individuals have not only damaged their fellow Americans, but they've damaged the reputation of legitimate companies that truly have an interest in helping. PMC is committed to exposing these wolves in sheep's clothing, and removing them from the herd.

We are proud to introduce our Scam Prevention Program. Over the last few weeks, PMC has contacted thousands of licensed Mortgage Professionals to find the select few that are committed to helping out members of their local and surrounding communities. These Professionals (Negotiators) have met or exceeded our requirements (no upfront fees, no complaints, and compliant with all state and federal requirements), and we are very pleased to work with them. Matched with PMC's proprietary software, it ensures that customers that come to us for assistance will never pay for something that they didn't get, and have their case handled by a licensed and experienced professional.

The number one fear of going with a loan modification company is getting ripped off. PMC has given good Americans a viable option, and a safe alternative to losing your home. Don't play Russian Roulette with something as important as your home, contact PMC today and see what makes us different.

Internal Loan Document Audit......The Simple Truth

So one of the newest "catch phrases" in the loan modification world is Internal Loan Doc Audit (LDA). It started out as a tool that is used by modification companies to help push lenders over the edge on the decision of their customers modification. Unfortunately, the value of the LDA is slowly going away as it's being abused by companies that are looking for loopholes, and "attorneys" to be able to charge more money. With an LDA you have a double edged sword. There are a large percentage of loans that were sold/transferred to a different servicer that the current servicer does NOT have the original loan documents. Just like any other purchase, if you can't produce the original signed documents, then you don't have much of a leg to stand on should things get sticky. This proves very useful for your modification company during their negotiations. However, it is in fact a semi-bluff. The reality of attempting to sue a multi-billion dollar corporation is that it's not going to be cheap, and in the end you're pushing them far enough to where they just actually find the time to find those documents after all.

There are a ton of "loan modification attorneys" that are very quick to explain to you that most lenders cannot produce the original loan documents and lead you on that they're going to get you your house for free should you just pay their $4000 retainer. What they don't explain, but is usually specified in their agreement is that they will NEVER represent you in court. So if they're not going to represent you in court, then they will clearly not assist you in filing suit against your lender and thus cannot/will not do anything more for you than a legitimate loan modification company. If you are dealing with a licensed real estate attorney in your County (you go in his/her office and have a real consultation) that doesn't do loan modifications, but is actually interested in taking your case to sue your lender then I would be surprised if they even give you a bottom line of what it's going to cost you. They may estimate you at $200-$500 per court hour, but there is NO way for them to give you an honest assessment of how long it would take. If you stand the possibility of walking away with your home for free, you can bet your bottom dollar that he/she is going to want a large sum from you. Problem is if you pay out a ton in legal fees only to not win your case, you're far worse off than where you were before (you thought you had financial problems before......).

There have been a lot of companies in the industry that have given the rest a bad reputation. These are typically the companies that have no interest in the longevity of their company, and are truly out to take advantage of Americans in their time of need. Nine times out of ten, they hide behind the cover of "attorney network" or the newest one "Loan Doc Audit Company". Which basically means that you would pay them the same $3-$4K upfront to do the loan document audit, and they would do your modification work for free. It's a loophole because they are not technically charging you for a loan modification, thus they don't have to comply with the state and federal regulations. At PMC we only utilize professionals that comply with state and federal regulations, not ones that tap dance around the regulations.

Whether you are currently using a legitimate loan modification company, or got sold on the LDA bandwagon keep in mind that the ultimate goal is to get your lender to come to terms and make your mortgage payment to be within your means. It's easy to get "sold" onto the "I'm going to get my house for free" stage, but again like my momma used to say, " If something is too good to be true, it usually is". Most legitimate loan modification companies will offer to do an LDA at no additional charge if really needed anyways........so don't pay more for a catch phrase, contact PMC today.

Loan Modifications In Massachusetts......What Happened?

To date there are only two states in this great Country of ours that have now made it impossible for their residents to get real assistance. Washington D.C. and now Massachusetts have both passed their legislation forbidding ANY "for profit" agency from doing loan modifications in their state. If you are a resident in those states than you have two choices for seeking assistance. You can either get a licensed attorney that can legally charge you an UPFRONT fee anywhere between $2500 and $5000, legally they will ask you for a fiduciary relationship (same as giving a loan mod company power of attorney), and I guarantee that "law firm" will put an inclusion in their agreement for payment on a short sale......OR you can contact a non-profit organization (HUD, NACA, Hope Now) and hope that their volunteers with little to no training are going to get done what you need, and be able to fit you in somewhere amongst the thousands of other applicants. Both Government Agencies and Politicians have agreed that the average American CANNOT negotiate their own modification, thus leaving hundreds of thousands of good Americans without a viable option.

I suppose what I hope and pray for is that the people that put this legislation in place have a problem with their mortgage, and have to wear the same shoes that they've put their residents in. Oh wait......they won't have that problem because they have a guaranteed paycheck every month that comes from those residents taxes. I guess they are just following the Leader right now......after all, "they've got THEIR health coverage....".

Attorney's Doing Loan Modifications

In our current search for qualified agents in various states to help our cause we accidentally ran across a "Law Firm" doing loan modifications. Wow....I thought I had heard it all, I was wrong. This "law firm" was very quick to explain how licensed attorneys are the only people that are legal to do loan modifications, and that mortgage professionals who have been actually in this business since it's inception, have absolutely no place in the loan modification industry. The basis of the "discussion" was that when a homeowner purchases a home in a state, they have a legally binding contract in that state, when the homeowner doesn't pay the payments, it is considered to be a breach of contract. Thus an attorney is the only one can assist that homeowner. By the end of the correspondence, it was very clear that they had no idea what they were talking about, and should probably go back to business transactions, disputes and commercial real estate, as that is what they've been doing up until about 9 months ago.

First off, a homeowner does NOT have to be late (hence in breach of contract) to be eligible for a loan modification, PERIOD. Anyone who says otherwise obviously hasn't read through the Federal HAMP guidelines. Next, this firm indicated that 90% (yes NINETY) of the time, applicants should be advised to move out of the home, as opposed to attempting a modification. Their reasoning is flawed, as they are only taking into consideration 5 year modifications, not permanent ones that are being done just as often as the 5 year. The best part of it all, is that this law firm speculated that a mortgage professional wouldn't have the clients best interest at hand, as they didn't have a fiduciary relationship. Definition of fiduciary is: "An individual, corporation or association holding assets for another party, often with the legal authority and duty to make decisions rgarding financial matters on behalf of the other party." One of the major complaints by the FTC and AG's offices is that loan modification companies were asking for Power of Attorney, well in essence that's exactly what this law firm is claiming has to happen. Now if I'm a homeowner, do I want to A) give someone/a company authority to make decisions for me....or B) have someone get me all of the necessary information so that I can make an informed decision? Keep in mind that the reason that "attorneys" are able to do this, is because they are currently EXEMPT from the state and federal regulations. Luckily, the FTC and AG offices are seeing the smoke screen and are one by one making it clear that they are only exempt if they are operating within the scope of their practice. Problem is that there are NO attorneys that are doing loan modifications that are operating within the scope of their practice, because it wasn't even a "business" until a little over a year ago. I'd like to see the "Loan Modification 101" class that's apparently at Harvard, because I haven't heard of it yet.

This firm advised that homeowners who are need should contact their lender first, if denied, they should then contact an attorney (thus stating that loan modification companies should not be in existence as they serve no purpose, but.....they are doing loan modifications?). OK, maybe they are not aware that most lenders give homeowners ONE chance to do a modification (since March 6th). If the client submits their documents unassisted and is denied, what is that attorney going to do? (Advise them to move out and short sell according to them). As my Platoon Sergeant used to say...."WRONG ANSWER". If it takes 30-90 days for a modification to get complete....how many times do you want to resubmit paperwork. If you do it once, then hire a company you're looking at a total time of about 6 months. I don't know about you.....but I just can't wait that long. My momma used to say "Do you want to do something right ONE time, or do something wrong numerous times?"

I hate to even talk about this story because it just makes me queasy.....but it needs to be exposed. One of our clients had hired an attorney to file for Chap 13 bankruptcy, this client had been delinquent on their payments and were nearing the "sale date" of their home. 9 1/2 times out of 10 once you've filed BK, the court will issue a "stay" on the sale date and continue with the BK proceedings. This attorney not only advised her to not try to modify her loan, but advised her to just sell the house to his friend that is interested. Her attorney advised her that there is no way the court will issue the "stay", and that selling and renting from his friend was pretty much her only option. What she didn't know at the time is that the court had already issued the stay, and postponed the sale date to August 13th. Under her attorney's advice, she removed the property from the BK which released the stay and allowed her home to sell in July. She contacted us under the pretense that she had until August 13th to get something done, and it wasn't until we talked to her lender that they informed us that the house had been sold back in July. But wait, there's more........the timing of the release of the property wasn't correct, so they refunded his friend back his deposit and did in fact push the new sale date to August 13th. Her attorney not only told her that it was in fact sold (when she had the notice from the court saying it wasn't) and that she needed to start paying rent, but the lender was in cahoots and also said that it had been sold. Funny thing is that when we asked the lender to provide proof that the property was sold, we suddenly didn't get any returned phone calls. So we advised her to contact the state Attorney General to file a complaint against both her attorney, and the lender, and to retain a different attorney that can refile before the 13th.........Wow.

The cold hard truth is that a "slow" Mortgage Professional would run circles around any attorney when it comes to loan modifications. They know what the banks are looking for, they know how to get it to "make sense", they are familiar with LTV, PTI, DTI ratios and have made their living getting banks to say "YES". Attorney's have made their living getting Judges and People to say yes, not banks.

It comes down to who you trust.....do you want to work with an attorney that isn't bound to any loan modification regulations, and 9 times out of 10 will have a short sale inclusion in their contract, which says that if the modification does not go through, that you have automatically retained them to negotiate the short sale, and get paid X amount of dollars from the proceeds (which, if they get paid either way, what vested interest do they have in making sure it's done right?). Or.....do you want to work with a company that's regulated by the individual states and the FTC, has a clear vested interest in completing the modification (as they don't get paid if they don't do the work), and that utilizes people who actually have experience in this field.

Just like any other field of work, you don't call a carpenter to unclog your drains and toilet. You don't call the Electric Company to help you change out your light bulb. Why would you hire an attorney to do a loan modification?

Ocwen Loan Modifications

Ocwen was not a MAJOR recipient of government funds, yet they've certainly received their fair share. As of April 16th, they have received $553,380,000. Hard to believe that when a bank receives half a billion dollars, that they're NOT considered to be a major recipient......2,517 modifications started, which is 5% of their eligible delinquent loans. This puts their average cost at $220,470 per modification. I personally have Ocwen, and know first hand how difficult they can be. Aside from getting routed to Sri Lanka, you just can't get a strait answer. First of all, I'm not Skippy on them outsourcing their call center overseas, we certainly have plenty of Americans that can answer phones and give people the run around......Secondly, they one of the HIGHEST cost per modification figures (I believe ranked third). If you have or have had Ocwen as your mortgage servicer, we invite you to post your comments about your experiences with Ocwen. Whether you have attempted an Ocwen Loan Modification or not, we'd love to hear from you. Thanks again for all your support, we'll get on to better topics later this week......

Taylor Bean and Whittaker Issued Cease and Desist Order

Taylor Bean and Whittaker (TBW) was recently issued a cease and desist order for doing mortgages in the state of New Jersey. There were several violations and numerous complaints. The Attorney General is revoking their mortgage license in the state. Keep in mind that this order prohibits them from acquiring new business, and eventually they will have to give/sell all of their clients to other lenders. If you've applied to Taylor Bean and Whittaker for a Loan Modification, you may have some questions about how this is going to affect you. PMC works with numerous Agents and lenders nationwide, so no matter who your loan is sold to, PMC can assist you in getting your questions answered.

Wells Fargo Loan Modification........

Wells Fargo Loan Modifications........Wells Fargo was one of the biggest recipients of government funds coming in at $ 2,410, 010,000 as of April 13th 2009. They've done 20,219 trial modifications. This is 6% of their eligible delinquent loans......This makes their average cost per modification at $119,195. We invite past and present Wells Fargo customers to share their experiences with this lender. Whether you've attempted a Wells Fargo Loan Modification or not, we would like to hear your comments.

Bank of America Loan Modifications

Bank of America......The Largest recipient of government funds at this point. They have received $5,987,280,000 as of April 17th, 2009 with a total of 27,985 trial modifications. This is 4% of their eligible delinquent loans. This makes their average cost per modification at $213,946. We invite Bank of America/Countrywide customers past and present, whether you've tried to do a Bank of America Loan Modification or a Countrywide Loan Modification or not, to share your experiences whether they be good or bad. We would appreciate it if you could give an overall rating of Bank of America as your mortgage holder, and give specific comments to the Bank of America Loan Modification process or the Countrywide Loan Modification process if you have some input on the topics. Thank you in advance...........

Chase Loan Modifications

This week we're changing things up a bit. We want more input from our readers. Today is Chase Loan Modifications. JP Morgan Chase has received $3,552,000,000 as of April 13th 2009. They have done 79,304 trial modifications. This is 20% of their eligible delinquent loans. This makes their average cost per modification to be $44,789. We invite Chase customers current and previous, whether you have tried to do a Chase loan modification or not to share your experiences regarding phone correspondence, mail and email correspondence. We would appreciate it if you could give your overall rating of Chase as your mortgage holder, and give specific comments to the Chase loan modification process if you have some input. Thank you for the overwhelming support, we appreciate it.

Fair Business Practices.....This Is Still America....Right?

Yesterday's blog was such a success, we've been asked to do a part two. Many loan modification companies have come under fire recently between clients that have been taken advantage of, government agencies, and lenders. The majority of these complaints have three main components.
1) Customers have paid for a service and did not receive the service that they paid for.
2) The customers were asked to pay up front fees, typically very large fees to the tune of $4000-$5000 per modification, per property.
3) They lied and used deceptive business practices.

Very reasonable complaints in any business setting. We've mentioned this before. Although vendors of all sorts have the God given right to sell their products for whatever they want, the consumer also has their God given right to do diligent research before they purchase those products, and make sure they're not only getting the best deal, but also get what they're paying for. Furthermore, if you're telling the people that are inquiring about your business practices that you're doing something right, when you really aren't......that's just plain shady. There's a need for legitimate loan modification companies, part of which is really giving the oversight (making sure that they are giving fair deals) on lenders that the Government is currently not giving. This is why PMC is committed to matching qualified homeowners, with legitimate and qualified loan modification companies and ensuring that ALL parties best interests are represented throughout the process.

Let's examine these three major complaints, and contrast them with what's CURRENTLY going on with the majority of the lenders.
1) At this point the Federal Government, more over the American Taxpayer (homeowner or not) has paid for a service, and we have not received that service. We've dished out a total of 1.487 Trillion dollars between the initial bank bailout, cost of the stimulus bill, the American Recovery Act and the American Reinvestment Act. In addition, we've given another $20.1 Billion since the HAMP program was released. We currently have a total of 9% completion, and 235, 247 TOTAL trial modifications started. The FTC is after companies that are not doing what they're clients paid them to do, yet they are currently endorsing companies that are doing that exact same thing but on a much grander scale. Furthermore, it's Federal money.....doesn't that make it a FEDERAL crime???
2) We have ALL now been asked to and have paid an up-front fee. The $20.1 Billion dollars mentioned above has been GIVEN, not promised. So the American Taxpayer (homeowner or not) has paid an AVERAGE of $85,483 per successful TRIAL modification, and has paid that money upfront. It's been mentioned by numerous Finance Departments and AG offices that $1500-$2000 is a FAIR fee to do a loan modification. I would suggest that $85K would clearly be UNFAIR, and not "reasonable and customary". Wouldn't this be the exact example of an Unfair Business Practice?
3) If you don't think that lenders and servicers have lied, and continue to lie, you are definitely fooling yourself. Let's reconvene on why we're in this situation in the first place. Not properly disclosed terms, HUGE closing costs, HUGE prepayment penalties, VERY high interest rates that were borderline if not predatory. It seems like the hunt for "predatory lending practices" was quickly phased out with the "loan modification witch hunt". I think the multi-billion dollar corporations have a little bigger media budget than most...... My mom used to say that, " Everyone makes mistakes, it's what a person does to rectify and learn from that mistake that the person is judged by". So if the person/business has not only NOT rectified the mistake, but continues to make new ones....what are we supposed to do? We have numerous videos, blogs, articles and interviews that have shown what they have done and are still doing, yet we not only allow it, but we continue to give them more of our hard earned money.

If you take an average home loan of around $200K, used a 5% interest rate over a 40 year term, the homeowner will end up paying over $262K in just interest over that time, the total paid back would be $462,912 over TWICE as much as they paid for it. Although clearly in the advantage of the bank, this is a semi-FAIR deal. Now use that same scenario, but use a 9% rate. Now you've gone to $540,510 in interest, making your total $740,510.40. Come on now, when is enough enough? If the Government would really like to make a difference, then let's employ a plan that's actually working. Let's use legitimate modification companies

Obama On Track To Help Four Million Homeowners

In a recent article from CNN Money, the Obama administration said that it was on track to help Four Million Homeowners. The initiative was announced in February and the first institutions to join began accepting applications in April. Also in the article, it says that only 9% of those in need are actually getting help right now. Coming into August gives us a full six months of the current program, which means in theory we'd be 18% by March of next year, and on to 54% within 3 years. I'm confused on how 54% in three years is said to be "on track". In any kind of test, especially academics, 54% is an F. If my company only had a 54% success rate in a three year period, we would have been shut down within 6 months. Furthermore, we sure wouldn't be getting MORE money for our failing efforts. So who's fault is it that the program is failing? The administration? The lenders, who?

I would venture to say that it's primarily the lenders fault. They've been given the funds, given the program guidelines, and they are just not performing. However, the fact that the administration hasn't held these lenders more accountable has certainly not helped things. To their credit, they've recently started using Servicers Progress Reports to hold institutions responsible for their performance. The monthly reports will allow the public to see which institutions are lagging in implementing the plan. However, if you're a homeowner it's irrelevant as to whether there are some banks that are doing good and some that are doing bad, because either way they have no way of changing their lenders. "It is what it is" as there's nothing the homeowner can do to effect their lenders performance. The article noted that "Servicers contacted acknowledged they need to improve their performance, saying they were committed to the president's foreclosure prevention plan. They also stressed that they were doing many modifications outside of the administration's initiative." I don't think it's so much a question of being committed, but more a question of 1)being ABLE and 2) where the conflict of interest comes in between the servicers and the investors they essentially work for. These are two HUGE things that it just seems are glanced over, and we throw more money at it instead of addressing those issues.

Wells Fargo. I think they are putting on one heck of a front. Let me show you why..... In the above mentioned article, Wells Fargo said it will eliminate its backlog within weeks, attributing it to the time lag between when the government announced the initiative and when it released the guidelines. It did not start modifying loans owned by private investors until the end of June, though it began adjusting loans owned by Fannie Mae (FNM, Fortune 500) and Freddie Mac (FRE, Fortune 500) in April. The statement insinuates that they are behind because they didn't start doing these until June and April 2009. The reality is that they've been doing them since June and April of 2008. What makes them think they are going to get done in a few weeks, what they couldn't accomplish and keep up with in over a year? Mike Heid, the co-president of Wells Fargo Home Mortgage said that they just added 4000 employees to their loan workout division. This poses two big questions. 1) What is the training/experience level of these 4000 people that homeowners will be trusting their lively hood to (if not previously experienced, how long is the training course to get employees up to speed on their job requirements?) 2) If the average employee is making $2000 a month, and Wells Fargo is losing money hand over fist, where can they get the 8 Million dollars a month in capital to pay for those employees? If a LARGE call center/office will have 200 employees, that's 20 NEW facilities that they would have opened to host 4000 additional employees. Even if they are leasing existing structures instead of building new ones, there are HUGE costs involved (phones, Internet, phone service, electricity, rent, etc...). So either these 4000 new employees are working out of their house, or someone is blowing smoke......

There was an additional article on CNN Money that coincided with the previous article. It gave the synopsis of the Servicers Progress Report. The article breaks down who the lender/servicer is, how much taxpayer(bailout) money they've received, how many trial mods started, what percentage of their eligible applicants they have modified. If you look at the report and compare how much taxpayer money they've received vs. how many mod's they've started, you'll see that some lenders have received up to $770K in taxpayer money PER modification they do (I want their job...). The top recipients of taxpayer money have been in order 1) Bank of America 2) JP Morgan Chase 3) Wells Fargo 4) American Home (AHMSI) 5) Citi Group 6) GMAC . Only one (AHMSI), didn't report back so far. Of those banks that reported back, Bank of America was the highest at $213,946 per mod (received 6 Billion, with only 27,985 done). The lowest was Citi with $39,150 per mod (received 1.1 Billion, with 27,571 done). A modification should not cost the American taxpayers anywhere near either of those figures. If modification companies are getting shut down by the FTC and AG's office for charging unreasonable fees.....where are the FTC and the AG's office while banks are charging the government an AVERAGE of $85,483 per modification they are doing, and this is with an AVERAGE of 9% success rate? Meanwhile, banks are joining the witch hunt advising their clients to not use a modification company for fear of being ripped off. Can we say, "Pot calling the Kettle Black..."

What adds insult to injury is that the banks that have received the most money, and have the highest "average" per modification also have some of the lowest percentages of assisted eligible delinquent loans. Wells Fargo is at 6% and Bank of America is at 4%. This is a clear indication of the lack of oversight. If I'm the president of a company, and my investors just gave me 6 Billion dollars, and six months later I was only 4% into the job I would be FIRED!

There was one lender that definitely stood out from the rest, Saxon. Saxon Mortgage Services has done the most with 212,130 trial mods started, and only $632 Million received). That makes their average cost per modification around $2979. As good as they are doing, they've only touched 25% of their eligible delinquent loans, which means they still have another 636,390 that are still needing help. What most people don't know, the Government is overlooking, and the banks would like to hide from everyone is what Saxon is doing that is making them so successful. Drum roll please..........they hired a modification company to do the work for them. This company was contracted middle to late last year, and has been contacting homeowners directly on behalf of the servicer in order to come to terms between the lender and the homeowner. Saxon realized that opposed to drowning in additional costs to try to hire, train and employ people, they would just pay someone else to do it. Not only has it worked out well for them, but it seems to be working out well for their customers (although decisions tend to lean more in the lenders favor, as the modification company is hired by them). Above all, the idea is working best for the American taxpayer.

It pretty much boils down to two choices. 1) We throw money at the lenders and hope they are willing and able to do what needs to be done 2) We allow legitimate modification companies to do their jobs under reasonable regulation, and encourage lenders to use them in lieu of asking for more bailout money. If the money was coming directly out of your checking account, what would you choose?

Attorney Based Loan Modification, Pros and Cons....

I wanted to take this time to write an impartial analysis of Attorney Based Loan Modification Companies, Law Firms that do loan modifications, and loan modification companies that have attorney networks. It seems to be the going trend. So let's look at the Pros and Cons (no pun intended) for the consumer, the company, and the oversight (FTC, AG's office, etc...).
Attorney Based/Backed Company:
Pros: Representation by a third party, and of course the bank doesn't know whether it's a legitimate company or not. You have a chance that they'll hear "attorney" and just snap to.
Cons: It's a bluff. An attorney based company means that they have an attorney on site. What is that attorney's actual work schedule, is he/she actually the one doing my negotiations? The answer would be NO. The attorney is there to do simply that, "back" the company and allow them to use his name to circumnavigate current legislation regarding loan modification companies. If you're attorney backed/based, then you can legally charge upfront fees, excessive fees, and they're not required to offer you any type of refund or cancellation abilities. They are exempt. FTC and AG offices are wising up to this loophole.

Law Firms that "specialize" in Loan Modifications:
Pros: You are usually dealing with an actual law firm. There are actual attorney's there, and are usually available to make a call to the lenders, if needed.
Cons: The idea that there are law firms out there that "specialize" in loan modifications is kind of absurd. I've never heard of a "loan modification attorney" until about 6 months ago. Usually, the attorney's have little to no experience actually processing and negotiating for customers. Like most of their cases, they have paralegals or assistants do the work for them, they bill $300 an hour and pay the paralegal $13.00 an hour. So you're paying for attorney's wages, to get the same results you would get from a legitimate company that's usually less than half the cost.

Attorney Networks:
Pros: They are currently legal to do modifications in states that other companies cannot do modifications in. They accomplish this by having numerous attorney's in a "network" throughout the country, so that they can use a licensed attorney's name in that state thus being compliant with the state's regulations.
Cons: Just like the others, you still don't have the attorney doing your modification. As a matter of fact, that attorney probably knows absolutely nothing about you, or your situation. They just get a check for X amount of dollars for every client that the company retains and uses that attorney's name for. If the modification company that is using the attorney network gets shut down by the FTC with a cease and desist order, are those numerous attorneys in the network going to step and handle the modifications that were promised? Of course not, the modification company was the one who made all the money, not the attorney.

The reality is that most real attorney's are used to making good money. That's why they went to law school and paid through the nose for it. If an attorney is used to making $300-$500 per court hour, and it takes let's say a minimum of 10 days to 2 weeks to get a modification, how much time would they actually have to invest with you? Let's say a total of 15 man hours to get it done start to finish. That's $4500 on the low end, and $7500 on the high end. So if they are NOT charging you that much, I'd be very skeptical on what's missing, because it's usually the attorney that's missing. If they are charging that much, then it's just a question of how much you want to pay. If you're accustomed to paying substantially more for things than they are worth, then going this route would probably work out well for you as you wouldn't know the difference anyway. If you're opposed to paying twice as much for something just because they gift wrapped it for you, then contact PMC today and find out what makes us different.

Cash For Clunkers

I was coming into work this morning when I heard on about four different radio stations how successful the "cash for clunkers" program is. So successful, that they have ran out of funding for it, and have already got another billion dollars approved for it. Being that I have friends that are in the car business, I'm glad to know that business is picking up for them. Here were a few things that disturbed me:

1) Your vehicle has to get 18mpg or less to qualify, NEW vehicle purchased has to get at least 22mpg. What if you have a car that gets 19mpg, and you're looking at one that gets 30mpg? Are you just SOL? It's a substantially better mileage increase, yet you would not qualify.

2) I Googled "cash for clunkers", and the first two that came up were Honda's website and then Toyota's. Now I admit that both are decent at trying to produce American jobs, but the end dollar still goes overseas. So we have a government program, funded by American tax dollars, we have American car manufacturers that are filing BK, why didn't we use this program and gear it towards DOMESTIC purchases?

3) I'm hearing mixed reports....some say that getting approved is next to impossible, but on the other hand someones getting approved as they've run out of funds.

Here are a few things that are genius about it:
1)One of the major problems in the car business hasn't been finding customers, it's been getting banks to buy the note for those customers (getting them approved). One of the major factors for an approval is the LTV (Loan to Value Ratio). How much are they borrowing vs. how much is the asset worth that they are purchasing. Well, with a $4500 "bonus", getting the LTV to make sense is a heck of a lot easier than without it.

2) It has definitely stimulated the car business as a whole, for now.

Most people consider there biggest assets in this order: 1) Home 2) Vehicle 3)Boat/RV 4) Personal possessions. So if you're home is essentially more important than your vehicle (makes sense, unless it has a bathroom in it....), then why didn't we come up with a similar solution for the housing market? "Match payments" You're behind 4 payments...., you come up with two, they come up with two.... Of course the best solution was brought up in the last blog entry. If you're taking our money in taxes, we have to pay that money back through our taxes, why didn't we get our break instead of the banks? Politics. If you give American citizens money, you can't send "Guido" in afterwards to get some of it back through contributions etc.... If you give a company that kind of money, the return back from those companies via contributions etc. can be huge. Food for thought.

Where's MY Bailout???

"Bailout". That's been the big term used over the past 9 months. Of course they called it as it was when they labeled it a bailout, but now they've changed the names to be more P.C. So the Big Three got a bailout, we've handed out over $700 Billion to the banks for their bailout, where is the bailout for the American Taxpayer?

The Census Bureau says that we have 307,042,500 total American Citizens in this country as of today. A recent article in CNNMoney.com answered the question of "If we just gave all the bailout money to taxpayers, how much would we each get? I've seen $25K, $300K, 1Mil- what's the real answer?" CNN took the total of the bank bailout, $700 Billion, and added that to the $787 Billion estimated cost of the stimulus bill, the American Recovery and Reinvestment Act. That totals $1.487 Trillion. If you divide that number by the 156.3 Million Tax Payers, you would come up with $9513.76 per U.S. Taxpayer. First I was shocked to realize that almost HALF of our "citizens" aren't paying taxes. Second, I thought of exactly how much $9500 was.

It seems that everyone is aiming the "Average American Mortgage Payment" between $900 and $1400 a month. So let's use the higher figure for good measure. If the average American is 4 months behind on their mortgage right now (average time it takes in delinquent payments for a lender to begin foreclosure proceedings, this varies by state), that would mean they would need to come up with $5600-$6000 in order to get their mortgage right. On the extreme, that would leave them with $3500. Let's say they spent $1000 of that to catch up on/payoff their credit cards, $1500 either catching up on their car payments or using it as a down payment to get a new one (either one helps banks), and they blew another $1000 on whatever they wanted. If you notice, the majority of their money would have went right back into banks in some shape, form or fashion.

Let's compare to see what would work better for EVERYONE.
Giving Money To The Banks Directly:
1) Majority of the money was kept at the top, CEO's were rewarded well and lavish lifestyles were kept up.
2) Numerous smaller lenders went out of business and were purchased by larger banks.
3) Numerous banks had HUGE layoffs in the majority of their departments.
4) Foreclosures continue to rise
5) Defaulted Payments continue to rise
6) Job Losses continue to rise due to weakened economy
7) Government gets reports that banks are unable to keep up with modification requests
8) Banks get all the money and you're still at square One.
Giving Money To the Taxpayers Directly:
1)Majority of the money goes right back to various lenders.
2) Smaller lenders are able to stay in business as they now have paying customers again.
3) Banks can warrant additional staff as they are cash flow positive again.
4) Foreclosures would be drastically cut as mortgage payments would be current.
5) Economy would be strengthened through raw purchasing, thus making businesses cash flow positive, and able to warrant current or additional staff.
6) Auto Industry would have survived just fine. If people are NOT losing their homes, then they do buy cars. If we took the money we gave to the big three, and just incentivized the purchase of domestic vehicles, they would have had the money they needed on their own to make the factory changes they needed to. All three already had their plans laid out for more fuel efficient vehicles (GM- Chevy Volt, Ford- Numerous Hybrids, Chrysler- ENVI series, and GEM cars), they just needed to move some metal in the meantime.
7) Banks end up getting all the money anyways, but the average American is in a much better spot.

Now, I'm no mathematician, but I'm pretty decent in the common sense department. Option B seems to be the far superior option. "Well all the money's gone, what do we do now?" Unlike most business transactions, we can't just "get a refund" on that bailout money. Funny how that works.....Unfortunately about the only way that you can get YOUR "bailout" is by doing a loan modification. If you're behind on payments and have a good reason for it, chances are that PMC can assist you in getting those past due payments deferred, and the future payments reduced to be more in line with something you can actually afford. I know everyone to include myself would much rather just have the $9500 and call it good, but we're at least pleased to give good Americans a viable alternative. They got their bailout, why shouldn't YOU get some assistance?