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?

Smoke and Mirrors Vs. Good Business

When I was 16 and in High School I worked at Arby's for my first job. I loved it. Fast paced, multi-tasking (if you want to) and you get to learn all facets of the fast food industry. I started in the back washing dishes and cleaning the restrooms, then I got to do prep work, then the register, then I got to work on the line making sandwiches. I've always had a thing about going somewhere and getting a sandwich or burger that looks like the picture. So when it came down to being my job, I made sure that every sandwich I made was as close to that as possible (impossible as it's a professional picture...). Yes, I love the movie "Falling Down". Some may feel that I'm just being picky, but when you think about it, shouldn't we be? We're paying good hard earned money for something, we should get what we were "sold". Paying the price on the menu and getting the sandwich that's shown, as shown would be a perfect example of GOOD BUSINESS. I would venture to say that the sandwich delivered to you that looks like it's been under the lamps for an hour, smashed, and THEN served to you would be a good example of SMOKE AND MIRRORS.

Most of the lenders have openly admitted that they are inadequately staffed to handle the influx of requests, and it's logistically impossible for them to process them efficiently. However, some are trying to fool the government and the public by saying that they are doubling their efforts. Here's some food for thought: We all know that the banks are in financial trouble right? This is why we gave them their bailout, right? If the banks are dependent upon mortgages to be paid to survive, and the number of defaulted mortgages is still rising, then the banks are still currently LOSING money, right? So what business do you know of that is currently losing money, that has the investment capital to open up additional call centers and staff additional employees. Last I checked, most of these banks just had pretty big layoffs.....

"Why are they trying to fool everyone then?" Well, media rules. If the media says that they're doubling up, then it must be so...... The reason for the hoax is to discourage both government agencies, and the public from using modification companies. Why? That's pretty easy, if they can make you and others think that they're truly acting in their clients best interests (historically has not been the case), when they're really looking out for their own wallets (which has historically been the case with ANY bank), then any offer I bring they bring you will be "their best offer". Who would know otherwise? What better way to keep you and others in the dark then by going on a "witch hunt", when they're in the caves casting spells. If you have a modification company involved, then they usually not only know what you're lenders requirements are, but they should also know what other clients are recieving from that lender. The investor's behind the curtains have multi million dollar servicing companies working to make sure that their best interests are being represented. Who do you want to make sure that yours are?

Some Banks Won't Budge On Modifications

I think if I drew a picture of an average home loan on the chalk board, and showed even BASIC cost/profit/loss to my 12 year old, he would understand the need for modifications. However, regardless of how much financial sense a modification may make, some banks are still just not budging. Now these banks are becoming fewer and fewer as they are getting bought out by larger banks or going under because they opted to not help their customers.

We have a client that received a modification back in February, and even though the new HAMP program didn't come out until March 6th, they are saying that the homeowners can only get ONE modification during the life of the loan. WHAT? So if you gave me terms before there were guidelines, and now those guidelines are present and the terms offered were substantially less than what I should be receiving.....There are many lenders that even have a re-modification department, for people who have done previous modifications. The standard guideline is that there has to be an additional hardship that happens between the time they were granted their first modification, to when they are asking for the second. Now if people were baited into forbearance plans where their payments went up, then chances are they were unable to make that obligation. Common sense, "If I had a hard time trying to pay the $2200 a month, how am I supposed to come up with $2800 a month?". What makes PMC different is that we didn't accept that answer, we formulated a new plan of attack and executed it. Most companies would have called their client to tell them that there was nothing that they could do, but how they were keeping a large portion of their fees because they have time put into it "just read it, it's in the contract that you signed with us.......". Calling Penn and Teller........ At PMC, we have strict oversight on our agents to ensure that they push the envelope with EVERY client that we have.

"If you only have ONE shot at trying to get a modification after March 6th, why do people still try to do it on their own if everyone else is failing at it?" In a recent article it sited the Freddie Mac/Roper poll where it asked, " If home foreclosure affected you, what best describes how you would feel?" Here were the responses:
38% Scared
35% Depressed
9% Angry
8% Embarrassed
9% None of These

People who are having financial difficulties don't want to spend their last dollar, only to find out that they've been scammed by some company. As reflected, most people are scared. Scared of losing their home, scared of getting ripped off, scared of what the bank may actually say, scared of how their kids would be affected. This is a very uncomfortable position to be in, and with the media and various agencies just fueling the fire, it's very hard to know where to turn. The question of, "Why would I pay someone to do something that I can do myself?" will often come up. Well, there's a reason why there are "trades" in this country, and it's usually specifically for that. If you have a clogged toilet, you can get a plunger in lieu of a plumber. But if you're pipes are leaking, chances are you're better off calling a plumber, then trying to go to Home Depot to get pipe, pipe cutter, measuring tape, flux, solder, torch and propane and the "Plumbing For Dummies" book. If you have a basic question you need answered, call your lender and ask them. But if you need/want real help (leaking pipes), call the professionals.

Working, Retirement and Social Security

I was having dinner with my folks this weekend when the topic of Working, Retirement and Social Security came up. My mom just reached the age to file, and my step dad is 72 years old. He's one of those guys that when people come across him, they say, " they don't make guys like that anymore". He was UDT in Navy during the Korean War, for those of you unfamiliar they were referred to as "Frogmen", and are currently named U.S. Navy Seals. He's worked ever since he was 16 years old, and I've heard the story of how he got his first job more than once. He applied at the store down the street and the owner told him he couldn't hire him. He kept going back every day for 2 weeks asking "can I work today?" Finally, the store owner game him the job of sweeping the floors. Well here we are 56 years later, and he's still working. The problem is, that he is limited on how much money he can earn before he is penalized through his social security. WHAT? You mean that after 56 years and counting of paying into it, he's now "capped" on what he can make? Did the economy give him a "cap" on inflation, or are they still paying the same high cost for everything that everyone else is. Sorry....the 50 cents a cup senior discount on his coffee doesn't quite cut it. I've seen his AAA, AARP, and NRA card, I haven't seen his "INFLATION CAP" card......

So let's talk about minimum age. You currently have to wait until you're 62 to file. There's a "sales pitch" from the SS administration that you should wait until you're 66 to file, as you'll get an increased amount. Where do I start? First off, you do the math. Let's say you're monthly benefit would be $1700 a month @62 and $2200 a month @66, $500 more a month. Let's take the $1700 a month, and multiply by the FOUR YEARS that you would have to wait. That's $81,600. Now you wait, you're getting the $500 more. It's going to take you 163 months (13 years) to make back that $81,600 that you waited for by getting the additional $500. Which means you would have to wait until you were 79 until it STARTED to make financial sense. Second of all, they are continually changing the "age you have to wait until for the bigger benefit". It used to be 65 years old, now it's 66. By the time my brother files, it will most likely be around 70, I'm personally not counting on Social Security to still be around (at least not paying out benefits, but probably still collecting) when I hit 62.

When you're in your 40's, and 50's, you pay more attention to health concerns. You're on the lookout for more things, and generally tend to not be such a rebel. By the time you hit 60, you're medical costs will most likely double from what you were paying 20 years before. If you're 62 and still willing and able to work, you can probably work pretty hard still. Certainly harder than you can when you hit 70. So why would they "cap" you on your income from 62 to 70 but by the time you're ready to hit the rivers and go fishing @ 70 and not wanting to work anymore, now you can make all the money in the world and not be penalized. WHAT? You mean that not only have I paid into this for all of my adult life, pay taxes on my benefits, and capped on what I can make during the last few years that I actually WANT to work, and to add insult to injury you're going to lift that "cap" once I hit 70???

I know a lot of us who aren't quite there yet in age don't pay much attention to what's going on, myself included. Our Seniors (Moms, Dad's, Uncles, Aunt's, Grandmas, Pa's, etc...) DEPEND on their family members to help keep them tuned in to the current stuff that's going on. WE, as the next generation should not only keep them tuned in, but also tune into what's going on with them. Too often we get wrapped up in our own day to day operations, that we forget these things. As we get older and closer to having to deal with these issues personally, of course we'll pay a little more attention then. But if we can try and help those who have worked their whole life and were productive members of society, then the actions we take now will have a ripple effect lasting to when our kids are our age.

HOPE NOW.......OFFERS LITTLE HOPE AT ALL!!!

In a recent article it was published that there are 187 companies that are currently being investigated by the FTC, and various state's agencies and AG offices. This investigation has been labeled "Operation Loan Lies". In the article, it was very good to point out that their are legitimate companies that are getting caught in the crossfire between them, and the "bad guys". What these agencies don't understand is that the legitimate companies have EVERY interest in helping you identify, and dispose of the "bad guys". Unfortunately, many of these legitimate companies are running into a spot where it is nearly impossible to actually comply and operate in more than one state. What if you told GM or Ford that they could only sell vehicles in Ohio and Michigan? What if you told Bill Gates that he could only distribute his products to people in California? I'm sorry ladies and gentlemen, but that's just plain UN-AMERICAN. California and Florida have been the highlighted states that need the most assistance, yet they also house more than 90% of the companies that have been labeled "scams" and are currently under investigation. So aside from being un-american, it's been clearly demonstrated that it just doesn't work.

"If I can't/shouldn't use a modification company to help me, who can I use?" This is a common question asked by residents in states that don't allow any assistance for profit. This is actually a question that the majority of people have asked themselves and others when even considering a modification, and hearing all of the bad publicity. The common response from the above mentioned agencies is " Find a HUD Approved Housing Counselor, Contact NACA, Contact Hope Now, Contact Your lender Directly". Unfortunately, regardless of which one you try, you'll eventually end up at option #4. We've showed in previous posts about trying to get assistance through HUD and through NACA. Maxine Waters did a great job showing the frustrations of attempting to contact the lender yourself, and was quoted as saying, " It is impossible for the average homeowner to negotiate their own modification". Recently one of the State AG's said, "he wanted to remind homeowners that there is free assistance out there, and encouraged his states residents to contact Hope Now for assistance. So I did. This is what I got.

You go to Hope Now's website and it gives you a few options. You can scroll through their list of lenders and find your lender and their contact information. You can call for assistance, which gives you your lenders contact information. You can Submit a Request, I did. I filled out all of my information, and got a confirmation email saying: Thank you. If you have not received a response from the mortgage servicer(s) you selected within 5-7 business days after submitting this information, please contact your servicer directly. Alternatively, you may contact a counselor at the Homeowners HOPE Hotline at 888-995-HOPE.
First of all, to paint me with the expectation that my lender is supposed to contact me within 7 business days is unrealistic. So the 7 days goes by with no contact from my lender, so I call them. On their recording it says, " If it has not been 45 days since you've submitted your documents, then there is no need to call, if it has been more than 45 days since you've submitted, please contact the home retention department". So I tried to call them, got "disconnected" three times. I just want to answer a few questions: "Can I confirm that you've received all of my documents? Was my package complete? Can I talk directly to the person that is approving/denying my modification application?" If you try and talk to customer service about it, they tell you that it's with the home retention department and that they don't have ANY information.

Being that contacting my lender myself wasn't working out so well, I explored their other option which was to FIND A LOCAL COUNSELOR. Guess where it put me? It put me right back at the HUD approved counselors. I already tried that, it didn't work, that's why I'm looking to Hope Now for assistance. They referred me back to HUD. HUD, referred me to contact my lender directly. So EVERY agency that I have been referred to by the FTC and the AG's offices, has referred me to a different agency and/or told me to contact my lender directly.

So now we've established who the bad and the ugly are, who's the good? The idea that a modification company shouldn't/can't charge a homeowner until their modification is complete is absurd. ALL companies have some type of costs involved to operate. If I'm a non-profit, I'm still getting money from someone. If I'm trying to make a legitimate yet profitable (I think that's still allowed in this country.....) business, then it has to make sense for both parties. Let's take basic costs for any company: LEASE (monthly, biannual, or annual), Electricity (monthly), Taxes and Unemployment insurance for employees (monthly), Internet Service (monthly), Website Design (one time large charge, monthly service fees), Customer Management System (large one time charge, a ton of planning, and monthly service fees), Phone Service (monthly, HUGE expense especially with a toll free number), Water (monthly), Hourly Wages/and or Salaries (Bi Weekly). Oh, and COFFEE!!!!!
Let's say the average modification takes 30-90 days. What company do you know of that can operate on a 30-90 days accounts receivable? I'd like to know how much that hair that company's account has left......... This is why PMC has been doing progression payments since inception. NO upfront fees, we send you the application first to see if we even have a chance at helping. If we do, we'll send you out all the documents that we need returned BEFORE you pay your application fee. Good business, we work for you, you pay, we work for you, you pay, we work for you, you pay. We don't work for you, you get refunded. This seems to be a more than reasonable process that protects both the company, and the clients.

Many AG offices are asking companies for their comments on what are "reasonable and customary" fees, and for work to be performed before the client has to pay. They are also asking for comments on what is a fair "cancellation fee". Hopefully they realize that if we've dumped 2 months worth of work into a client and they decide that they just don't want their house anymore, the company must have some type of compensation for the work provided. This is why PMC offers the ability to cancel your agreement with us at ANYTIME before the work is completed, and offers you a refund should you decide to cancel. Furthermore, the cancellation fee's are more than reasonable ($250 and $500, depending on where you are in the process). Washington State officials deemed that $1500 was a "reasonable" fee for loan modification services. So the facts that PMC has never charged more than $1500 for our services, offers a cancellation at any time with refund, and doesn't ask you for anything up front should be the clear identifying things that differentiate PMC from the rest.

Cease and Desist......Nobody Wins

PMC is a homeowner advocate, we believe in good solid companies that do legitimate modifications. Companies that try everything they can to be compliant in the states that they conduct business in, and don't just hide behind loopholes (that will be exposed soon enough). HUD, NACA, the Government and 46 different states have all admitted that their current efforts have been relatively unsuccessful. However, because of the shotgun response by the FTC and many states AG's, most companies are still in question on what are the requirements to be compliant? The problem is that the people who are on the witch hunt, haven't agreed on what is compliant and what is not, so how is anyone else supposed to?

One of the major problems with the shotgun response and not having clear guidelines for compliance are Cease and Desist orders. Let's just say you have a company that has 1000 client files that they are working on, let's say that 50 of those have fell through the cracks in some shape form or fashion (documents weren't returned, weren't complete, phone tag, misunderstandings, and even a few "I dropped the ball"s). If that company is issued a cease and desist order that means they must STOP ANY AND ALL activities. That means that the other 950 clients who were in line to get assistance and the company that was performing well with their other clients are just plain S.O.L. Everything comes to a halt, and whatever clients are hurt in the process ends up still being the responsibility of the business owner.

We are not against cease and desist orders, they are actually quite necessary when you come across a company that is in fact getting a more than reasonable amount of complaints. I would contend however that modifying the terms of that order would be much more of a service to the clients these entities are trying to protect, than their current methods. If the current order was modified to only stop the company from acquiring new clients, but allow them to at least process the files that they already have. Otherwise, you have a large amount of good clients, that paid their fees, and are now not only out that money, but also out the assistance that they paid for. That just doesn't seem right, and it's very clear that it's doing more harm than good to homeowners/clients.

PMC is committed to being a solid source to turn to, to oversee your modification needs. We strictly regulate our agents in various states to ensure that they are doing the job that you paid them to do, and that your best interests are represented. Although other companies are attempting to emulate what we do, when you research who those companies are, you'll find that it's really just a shell for THEIR modification company. If you ever see the words FEDERAL, in the title name of the company and they are not a government agency then do like the Knights of the Round Table did in Monty Pythons Quest For The Holy Grail..........RUN AWAY!!!!!

Promises, Promises, Promises........

It seems to me that one of the problems that loan modification companies are having is that there staff is making promises that they just can't deliver. The fact that ANY modification company would ever assure their customers that they were going to get a specific rate, or a specific payment is just crazy, and they are flat out lying to their clients. The reality is that it is, and has always been the lenders (investors) decision to modify the terms of a mortgage, and what those modifications are. There are guidelines that have been set forth in the HAMP program, but they are GUIDELINES, not gospel. The program is utilized on a voluntary basis. At PMC, our staff does not makes promises, we make it very clear to our clients that it is in fact the lenders game, but we are very good at playing it. So......buyer beware! People need to know that there are a ton of scams out there, and the FTC is working with individual states to get these companies and bring them to justice. They also need to know that not all modification companies are alike. PMC goes above and beyond the requirements by offering: the ability to cancel your agreement at any time before we've completed, no up front fees, very small application fee and more than reasonable cancellation fees. PMC is constantly working with quality licensed agents in 46 states to make sure that your modification needs are being overseen. Unlike other companies, we stay in contact with you every step of the way, and reserve the right to pull your file from our agent at any time should they not be doing what they are supposed to be doing. It's hard knowing who to trust. Don't think that you're alone, PMC is committed to exposing fraudulent modification companies, and having strict oversight on all of our agents to ensure our success, and our clients. No promises or smoke and mirrors, just good business.

The American Flag

I'm going to steer away from my normal posts and talk about something else that's very important to me, the Flag. This blog was inspired when I went to the grocery store, big chain store that happens to fly our flag at it's stores. It was early in the morning and they were getting ready to hoist the flag up the pole. As they were connecting to the loops, I noticed the bottom of the flag just sagging on the ground. I politely went over, picked the flag off the ground while they finished hooking it up, and went about my day. It bothered me all weekend. Then I thought about how far we've come with desecrating our own flag over the years. Especially around 4th of July, you'll see "flag everything" boxers, bikinis, etc...... Food for thought, " If we don't respect our own flag as a country, how can we expect other countries to respect it?" Here is some basic Flag etiquette.

§176. Respect for flag. No disrespect should be shown to the flag of the United States of America; the flag should not be dipped to any person or thing. Regimental colors, State flags, and organization or institutional flags are to be dipped as a mark of honor.
(a) The flag should never be displayed with the union down, except as a signal of dire distress in instances of extreme danger to life or property.
(b) The flag should never touch anything beneath it, such as the ground, the floor, water, or merchandise.
(c) The flag should never be carried flat or horizontally, but always aloft and free.
(d) The flag should never be used as wearing apparel, bedding, or drapery. It should never be festooned, drawn back, nor up, in folds, but always allowed to fall free. Bunting of blue, white, and red, always arranged with the blue above, the white in the middle, and the red below, should be used for covering a speaker's desk, draping the front of the platform, and for decoration in general.
(e) The flag should never be fastened, displayed, used, or stored in such a manner as to permit it to be easily torn, soiled, or damaged in any way.
(f) The flag should never be used as a covering for a ceiling.
(g) The flag should never have placed upon it, nor on any part of it, nor attached to it any mark, insignia, letter, word, figure, design, picture, or drawing of any nature.
(h) The flag should never be used as a receptacle for receiving, holding, carrying, or delivering anything.
(i) The flag should never be used for advertising purposes in any manner whatsoever. It should not be embroidered on such articles as cushions or handkerchiefs and the like, printed or otherwise impressed on paper napkins or boxes or anything that is designed for temporary use and discard. Advertising signs should not be fastened to a staff or halyard from which the flag is flown.
(j) No part of the flag should ever be used as a costume or athletic uniform. However, a flag patch may be affixed to the uniform of military personnel, firemen, policemen, and members of patriotic organizations. The flag represents a living country and is itself considered a living thing. Therefore, the lapel flag pin being a replica, should be worn on the left lapel near the heart.
(k) The flag, when it is in such condition that it is no longer a fitting emblem for display, should be destroyed in a dignified way, preferably by burning.

NACA.....Reduced Loan As Low As 2%

Let's start off by saying that I applaud NACA, and HUD for their efforts in trying to deal with this mortgage crisis. The fact that they have volunteers that are giving their time is fantastic, and my hat is off to each and every one of their employees. However, the reality is that their efforts have been like scenes in Braveheart or 300 where the valiant group assembles to beat the odds, only to get completely slaughtered on the battlefield. Both agencies have openly admitted that they can't handle the volume of requests, nor have they received the expected results from their clients' lenders. Now ethically, if I know in my heart of hearts that I'm just not getting the job done, I'm at least going to point people in the right direction to someone who can.

A perfect example of results from free agencies is a request for assistance that we had received from our website. Really nice gal seemed very well educated, she had a more than verifiable hardship and was kind of the perfect example of what lenders want to see in order to grant a good modification. She contacted NACA and talked with one of the housing counselors. He walked her through how to fill out the paperwork, and she submitted it to her lender. What she got was a 3 month band aid that is a very typical "first response", which was to lower her payments from $3600 to $2600 for 3 months, NOT lower the interest rate, NOR defer the past due payments that had accrued. This "modification" was done in April AFTER Obama's program came out on March 6th. So the lender got paid, yet the client was not in any better shape than she was before. Furthermore, most lenders have the "one shot" clause in their modification, so most clients are not eligible for future assistance. "Who's fault was it that this happened?" If the NACA counselor had any idea of what was available he would have advised her to decline the offer, and renegotiate. If the lenders were really just "giving homeowners the same results they would get without a third party....." as they indicate, then they would have deferred her past due payments (or at least gave her a 10% of past due good faith payment option, and defer the remainder), lowered her interest rate making her payments $2600 a month LONG TERM, not for 3 months. Just as that lender has done with numerous clients of ours.

Aside from not having a good odds at getting a second chance, she also happened to live in a state that PROHIBITS ANY FORECLOSURE RESCUE ASSISTANCE FROM ANY FOR PROFIT COMPANY. I addressed the problems with this in my last post, and this was a perfect example. By making it impossible for legitimate companies with reasonable fees to assist, clearly leaves homeowners with little alternative. When they explore those alternatives, they come up short.

One of the leading complaints about modification companies is that they misrepresent their services (promising low rates and giving customers false expectations). I'm very particular with my staff in explaining realistic expectations. If you go to NACA's home page, the first thing that comes up is the SAVE THE DREAM TOUR, where it advertises that "thousands of their clients have received permanent interest rates reductions that SAME DAY as low as 2%". Now if one of my staff ever told someone that we could get them a 2% fixed rate for the term of their loan they would be FIRED. Fed rate was last posted right at 3%, I don't know of any lenders that are giving fixed rates lower than 4%. On the occasion that a rate reduction is granted below the fed rate, it is on a stair step program where the rate remain for X amount of years, then gradually go up. If you call a lender and ask them how long their modification process is, they will typically tell you 90-120 days. Our goal is to get a cradle to grave modification in 30 days. I have had extreme cases (sale dates) where we could get something done in 2 days, but 10 days is pretty much the bare minimum. If I had the intestinal fortitude to actually advertise that we got thousands of customers same day modifications, and that we can get them long term fixed rates of 2%......the FTC would crucify me. If my staff even insinuated that either of those claims were remotely possible, we would be shut down.

To add insult to injury they also advertise, "NACA has been extremely successful in making dramatic reductions in interest rates saving homeowners hundreds and thousands of dollars a month in their mortgage payments. You would work with your NACA Mortgage Consultant to determine a mortgage payment you can afford based on the above described Affordability Budget" . Same thing.....hundreds of dollars, OK, a thousand dollars or more, OK, THOUSANDS of dollars a month is savings....., I'm calling another Penn and Teller on that. My staff is not allowed to tell people that they are going to save thousands of dollars through us, nor are they allowed to give customers specific rates or payments. We will explain what we have done for others, and what the current "pulse" is, but is ALWAYS ultimately the lenders decision on IF, and how much they will bend. Again, if I advertised on my website that we saved clients thousands of dollars a month I would probably get a few phone calls.

When you go to Google, and type in "NACA", this is the advertisement that shows up: "Providing loans to low and moderate income people and those who are considered to be subprime borrowers. Information on mortgage services and national ..." Now if we look back, you'll remember that NACA was one of the agencies that was advocating the subprime market and helping people get into homes that they knew they could not afford. One could easily argue that their misdirecting advice is part of the reason why we're in this situation in the first place. Now, the Federal Government and other State agencies are directing people back there to fix the problem?

I would challenge my negotiations staff against any "free agency", given the same number of clients, same parameters, basically on the same playing field, they would run circles around them. No disrespect to any of their volunteers/employees, I made that clear at the beginning. It's just like anything else in life, If I'm the quarterback, I'm going to give the ball to the guy that's going to get it across the line and put points on the board, not the one that's pounding his fists on the grass wishing he tried harder.... Who do you want to give your football to?

FTC and US States Crack Down On Loan Modification Scams

Yesterday was a busy day for many news writers. There were articles in Reuters, Los Angeles Times, and Seattle PI.com about the crack down on loan modification scams. It's about time that the Government directs their attention towards differentiating between legitimate and illegitimate loan modification companies and exposing the differences ( no up-front fees, not asking for deed or interest in your property, reasonable fees, misrepresentation as a lawyer or lawfirm, etc...) as opposed to just putting us all in the same category.
Deb Bortner, a Washington State Department of Financial Institutions spokeswoman was quoted saying, “ there aren't enough HUD counselors to meet the need of the state, and that there were dozens of legitimate loan modification companies that were operating legally”. However, the Assistant Attorney General James Sugarman said that he knew of NO commercial loan modification business in the state that has the required certification from the Department of Financial Institutions. So the AG and the DFI have conflicting understandings of who is operating legally, and who is not. Now if there is a dispute on what the required certifications are within different departments of the state, how can they possibly try to prosecute companies for not completing the required certifications? The state doesn't even know what they are, yet they impose FELONY penalties for violations. The Attorney General Rob McKenna advised consumer facing mortgage pressures to seek a HUD mortgage relief consultant. (Really? Maybe he should try it before he advises his residents to....)
Washington is actually one of three states that has still not changed their legislation, and is putting their residents at further risk because of it. I don't know of any modification company that is taking residents from Illinois, due to their shotgun response. Washington D.C. Prohibits ANY “for profit” business from assisting homeowners at risk. So as a business owner, if my NET costs to do a modification are $800, and I charge the homeowner $800, I am in violation. Even though we can illustrate that we didn't make a profit, we still charged for the service. So if legitimate companies can't help, HUD and other “free” agencies have said numerous times that they are 1)inadequately staffed and 2) inadequately experienced to handle the influx of requests, then what are the residents of these states supposed to do?
The Washington State DFI considers it, “reasonable for loan modification companies to charge $750 for preparing a hardship statement and household budget to present to a lender and another $750 for negotiating better mortgage terms. Higher charges may be reasonable in complex or especially difficult cases.” This was released as of yesterday. PMC is proud of the fact that we have NEVER charged a client more than $1500 for our services. Furthermore, any affiliate that we've used has never asked for more than $2000, and this is in EXTREME cases. We are also pleased with our progression payment system, which allows clients to get immediate assistance without having to pay everything at once. This has been very valuable in helping homeowners that are really in a financial bind. It also shows our commitment to all homeowners regardless of income level, in an effort to help out our fellow Americans.
So this morning, Bloomberg came out with a tally of 1.5 Million Foreclosure fillings in the six months through June. Home prices dropped an average of 18.1% from last year in 20 major metropolitan areas, making it next to impossible for almost anyone to refinance. In addition, the unemployment rate rose to 9.5%. The Mortgage Bankers Association said, “Defaults by suprime borrowers with poor credit histories spurred the housing recession, and spread to prime borrowers as home prices and sales declined. Prime fixed rate home loans to creditworthy borrowers accounted for 29% of new foreclosures in the first quarter. One in Eight Americans is now late on a payment or already in foreclosure.” This is a clear illustration that it's not just subprime borrowers that are having problems, this problem is affecting EVERYONE. More than 8.3 Million mortgage holders owe more than their homes are worth, if we have even another 5% decline, it will add another 2.2 to that figure. That would mean over 10.5 Million homeowners that would be in a “negative equity” situation.
Anyone ever watched Penn and Teller's show on Showtime? Well I'm calling that on JP Morgan Chase. They were recently quoted as saying that they have 155,000 applications in for modifications (it's much higher than that), that they have modified 138,000 of those applications. If this was the case, then why were they recently scrutinized for the exact opposite? Wells Fargo declined to comment. Bankruptcy Attorneys are particularly critical of the banks efforts saying that , “they are largely a farce”.
Here's a few questions that are food for thought: Where were the FTC and all of these Attorney Generals when these “predatory” loans were being written in the first place? Where are the lawsuits being filed against these lenders for not only their deceptive practices to get the loans originated, but for their very well documented antics at “dodging” homeowners that are looking for assistance? Who is writing the legislation and “rules” for legitimate loan modification companies? What are their qualifications and experience with the current mortgage crisis? Do residents in certain states have the right to file a suit against their State for preventing them from pursuing/getting assistance with their mortgage situation, when the those states have not given them any other viable alternative? Would it be in the FTC and the Nations best interests to contact 20 or so of the legitimate loan modification companies and ask them for their input on regulation of the industry? What do you think?

Divorce, Your Mortgage and Attorneys, Oh My!!!

"Divorce, Your Mortgage, and Attorney's, Oh My". Just like in the Wizard of Oz, Attorney's are good at just saying, "follow the yellow brick road". When it comes to divorce, that yellow brick road can be a very costly one.

What most couples fail to realize is this: If you treat your relationship and finances like a business, then consider your combined incomes as a pie chart that you're drawing on the board. Whether both are working or just one, the income is one big pie that you are both eating off of. The second you involve an attorney, you now have one if not two(if both parties get attorneys) other people that are eating off of YOUR pie. Furthermore, those people eating from that pie are not contributing to that pie, nor do they have to live with the long term effects. They get their money, and go on to the next client. The two of you still have to deal with the situation. Being honest with themselves, I don't think anyone can really say they've gotten a "better deal" because they had their attorney's involved. If one person gets an attorney, than the other is likely to defend themselves with one as well.

Attorney's typically charge per court hour, in addition to whatever you have to pay in retainer fees. For anyone that has been an hourly wage employee or has employed them, you know that they depend on those hours to make their paychecks. So if an employee has a clear vested interest in getting as many hours as possible, why would you think your attorney would be any different? To the contrary, it's in their best interests to draw things out as long as possible, thus warranting additional fees. I guarantee that if Attorneys were only paid on a per case basis, and not allowed additional compensation per hour, that our entire legal system would magically move that much faster. A legitimate loan modification company will not only have no up front fees, but will also get paid on a per file basis. That company would then have a huge interest in getting you resolution as soon as humanly possible. Some companies set clients on a weekly, or monthly payment that is to continue "until complete". Well if you're paying $200 a week indefinitely, it and it takes 4 months to get a modification, then you've just paid out $3200. If it's $1K a month, then you would have paid out $4K. If a company has it "open" to either make $1600 from you or $3200 from you, what do you think they will do?

Divorce is obviously a highly emotional process that is very "draining" for both parties. You not only have the actual divorce, but everything that is involved (who gets what, who pays who, who gets the kids, who pays for the kids, etc...). There are many couples that are getting divorced or separated that are homeowners. Many of the mortgages that were written previously had more holes in them than Swiss cheese. Some, there is only one person on the loan documents, but two people on the deed. In some cases, the property has been quick claimed and the person on the loan isn't even on the deed.

Unfortunately, dealing with the mortgage situation isn't any easier than the other aspects of the divorce. If you are not on speaking terms, and you're having financial problems with the mortgage on top of it, continuing to not talk about it and solve the problem isn't going to help anything. The problem will NOT just fix itself. For instance, if the husband has left the property, the wife resides in the home, she's on the deed, but not on the loan. She has financial problems trying to keep up with everything and is looking to get a modification, he's mad at the world because they're getting divorced and says that he won't sign off on it. I believe the term is "cutting your nose off to spite your face". As mad as he may be, it's going to cost him in the long run to not cooperate. His attorney will of course advise him to not cooperate, as it takes fuel away from the fire that they are building. But if he doesn't cooperate what will happen is this: she'll continue to not be able to make the payments, the house will go into foreclosure. She finds another place to live, and continues on with the rest of her life. He on the other hand was the responsible party on the mortgage note. So aside from his credit being destroyed for the next 10 years because of a foreclosure, the lender will eventually sell the property (auction usually at substantially less than the value, and less than what the homeowner owes on it). Unlike a few hundred dollar credit card where the company just charges it off and moves on, the lender will most likely pursue action and judgement against the homeowner for the remaining balance (difference from what they sold it for, vs. what the homeowner owed). These funds can be recouped through garnished wages, and possibly state tax returns depending on the state. For me, that sounds like a lot of headache.

Question: "How many attorney's that "specialize" in loan modifications have you heard of before last year?" Second question: " How many attorney's that "specialize" in loan modifications have you heard of now?" Easiest way is to cross reference last years yellow pages with today's Internet searches and see what you find. What I can assure you is this: 98% of companies that claim to be attorney based actually only have one if any attorney's on-site. 98% of attorney's that claim to specialize in loan modifications have little to no experience in actually doing loan modifications. Even Real Estate attorney's are in foreign territory. Their day to day operations do not consist of talking to lenders, reviewing financial statements and hardship letters. To be frank, most of them would have a hard time trying to negotiate their own mortgages, much less yours. "Then why have Attorney Based companies come into existence?" Many of the states in the country have specific rules for loan modification companies, many are very stringent. The common "loophole" to these rules is that Attorney's are "exempt" from the requirements. Now the fact that these "loan modification attorneys" are not bound to the same rules that other loan modification companies are does not give me any kind of comfort. If an attorney is exempt from the requirements of what a loan modification company has to conform to, then who IS regulating the attorney base company? Furthermore, if the attorney based company isn't bound to the same legislation, then does that mean that they can do whatever they want to me without any recourse? YES, they can charge whatever fees they want, they can ask for upfront fees, they can ask you for interest in your property, and they don't have to DO anything for you to substantiate their retainer fee.

The common complaints with loan modification companies are usually that the company charged a large upfront fee, and/or asked for interest in the homeowners property, and/or didn't really do anything for the customer, nor has the customer gotten any type of correspondence from their lender. ALL of these complaints are valid ones, and the consumers have every right to complain about them. Question: If a loan modification company is bound to certain rules and regulations set forth not only by the FTC, but also by the individual states and violations of those rules result in hefty penalties if not a closure of the business, but an "attorney" or "attorney network" who is not regulated, and can legally get away with the actions mentioned above, who do YOU want to put your trust in?"

In conclusion, my personal experience with attorneys has not been pleasurable. It's cost me substantially more than it was supposed to, and I've always looked back wishing I had done something differently. If you pay $4K out to an "attorney based" company, and they don't do anything for you but give you smoke and mirrors, you can complain all you want, but you're still out that $4K. If you have $100K in total assets and you're going through a divorce, regardless of what your split would have been 90/10, 80/20, 60/40, 50/50, etc..., your split will be decreased by whatever you have to pay out in attorneys fees. IE: If you were shooting for a 50/50 split, and going with an attorney you get 60/40 in your favor, you're comparing getting 50% of the full $100K vs. getting 60% of about $70K. You're actually costing yourself $8K, even though you're thinking you got one up because you were getting 60% instead of 50%. ($50K vs $42K). If you think that paying out 30% of your assets between both of your attorneys is unrealistic, think again. Better yet, ask someone who has gone through it........Can I Get A Witness???

Foreclosure Proceedings On Neverland Ranch, Michael Jacksons Home

There I am, with my cowboy hat on, my vest, and my vertical coat hanger that was used as my microphone singing “Who's Loving You” emulating Michael Jackson singing with the Jackson 5. I still remember when they had their own cartoon. Despite being recognized as the King of Pop, and one of my all time favorite artists, Michael Jackson had quite a few financial problems. I'm sure he had issues here and there with finances, they became public around 1993 when he was first accused of molestation at Neverland Ranch. This accusation cost him millions in payouts, and in lost revenue due to the incident. There was an estimated mortgage of $23 Million for the ranch, and in 2007 everything caught up to him and he went into foreclosure. On the eve of the the foreclosure auction (sale date), an investment company stepped in and purchased the loan, essentially taking the estate off his hands.

So you have two questions that come to light here: 1) Are celebrities eligible for home loan modifications? 2) What are the investors going to do with these multi-million dollar properties that have clearly depreciated, should a celebrity go into foreclosure? Let's say we have a median home price of $300K, and the average celebrity home is around $5 Million. A lender would have to modify over 16 $300K mortgages to equal out one 5 million dollar home. Simple math would tell me that a celebrities home makes far more sense for an investor/lender to modify the terms of the mortgage.

The answer to question #1 is YES. Depending on the income level, you may not qualify for Government assistance, but it can still make financial sense for the investor/lender to modify the terms. The general public has the misconception about people who make good money. Anyone who has made good money will tell you, “When you make good money, you spend good money”. I don't think I know of too many people who haven't had a reduction in income over the past two years, celebrities are no exception. For musicians you have MP3 downloads that have drastically limited the money they make on their record sales. Most of them have to depend on touring to actually make everything make sense financially. Although movie watching is one of the few activities that hasn't dwindled recently, the funds available to make them and the payouts on them have somewhat dwindled. When the economy is in a tight spot, it generally puts everyone involved in a tight spot as well.

The second question has yet to be answered. Bottom line is that if i'm an investor, I have $5 Million in one account, and $300K in another account, of course i'm going to pay pretty close attention to what that $5 Million account is doing. Furthermore, should I have an issue on that account, I have a HUGE vested interest in trying to get it rectified in a very expedient manner. Obviously what makes sense, is not always what the banks choose to do. But EVERYONE is trying to limit their losses at this point, they have to address the issue at some point.

So why wouldn't more celebrities put in for a modification? If Michael Jackson had put in for a modification of his mortgage, he may still be here. I don't think anyone can dispute the connection between your stress level, and how it affects your health. Nor will anyone dispute that if you're having financial difficulties, that this adds to your stress level. Michael Jackson would have had a pretty good case in getting something done. He still has/had royalties coming in, so he had some sort of income. He clearly had a reduction in income over the past few years. He tried to do everything he could do to rectify his situation (sold/auctioned things that were not “essential”). With a $10 Million mortgage, even a one point reduction in rate would save you around $6K a month. With a $23 Million mortgage, it probably would have been closer to $13K a month. I don't care how much you make, who couldn't use an extra $6-$13K a month?

The majority of celebrities don't ask for assistance because they are embarrassed. On one hand, they definitely need the help. On the other, they feel it's “unbecoming” of a celebrity to ask for help. Lastly, discretion is very important to celebs. If they do need help, they certainly don't want everyone/anyone knowing about it. I'm sure tabloids would have a field day over it. We have established that YES, there are in fact celebrities who need assistance and could benefit from a loan modification. We have established that they can in fact get assistance, under the right circumstances. That only leaves the question of discretion, and at PMC we value ALL of our clients privacy and personal information. Not only do we not sell, barter, or spam your information, but we also have internal company policies which prohibit anyone from dealing with your file than the people that were assigned to it.

Typically, celebrities and VIP's are used to getting top notch treatment, and only dealing with the best in every aspect of their lives. Choosing a company for something as important as your home should be no different. So whether you are a big name celebrity, or working on it, there is someone out there that you can trust.

Government Asks Banks To Expand Foreclosure Prevention

On Friday Reuters put out an article saying that Government is asking the 25 largest mortgage servicers to step up their efforts in doing modifications. This program is expected to save as many as four million borrowers from foreclosure. Treasury Secretary Timothy Geithner and HUD Secretary Shaun Donovan wrote a letter to these lenders saying,
"There is a general need for servicers to devote substantially more resources to this program for it to succeed and achieve the objectives we all share,"


So the Government recognizes that the lenders are currently inadequately staffed to handle the current influx of applications. The letter also asks mortgage servicers to expand their reporting of modification work, create stronger measurements for how they deliver help and cooperate with a fail-safe program that will make sure that eligible borrowers are not wrongly denied assistance. Thus recognizing as well that lenders have been and are currently wrongly denying applications. My question is this, “ Why does the Government continue to trust these banks to do the right thing?” We've already handed out $700 Billion in taxpayer money ($350 Billion already received) in order to save these banks. ALL of them were scrutinized for CEO spending and payouts, and NONE of them had an answer to 4 simple questions, “ How much money have you spent, how much money have you lent, how much do you still have, what are your plans for the remaining funds?” The response was the same from all of them, “ At this time we are not doing money in, money out tracking. We've spent some of it, we've lent some of it, we still have some of it.....” If you loaned me $2000 because I said I needed help, and you saw me next week driving a new car, you'd probably have something to say to me right?


JP Morgan Chase claims to have approved 87,100 borrowers for lower monthly payments. Notice there is no explanation of how they got borrowers to a lower payment. Most of them were offered forbearance agreements with 6 mos to 12 mos balloon payments. Which means the borrowers payment will be reduced for a 6 to 12 mos period at which the end of the period, they are due for a balloon payment, typically the amount that wasn't paid during this time. So you save a few hundred dollars a month only to have to pay it all back after a year. Now if you had a hard time trying to make your payments in the first place, how are you supposed to come up with thousands of dollars. The second thing they are not addressing is how many applications they have right now, compared to how many they've “approved”. I did a little research on them, and found quite a few complaints from customers.


Bank of America is making similar claims that they get over 80,000 phone calls A DAY from consumers looking for assistance with their mortgage. They claim to have 7,400 representatives to field these calls. So assuming that you put 100 people in a call center, they are saying that they would have 74 of them? I guess I missed the news release of Bank of America suddenly hiring more employees, and building 74 new locations since last year.....I did some research on Bank of America and their practices regarding mortgages. One of the first things that came up was on consumeraffairs.com. There is a cornucopia of complaints from their customers, yet they were one of the major recipients of recent government bailouts. Now, Bank of America has bought out Countrywide, and are trying to make the transition. This presents two problems. 1) What happens to all of the Countrywide people that put in for modifications, and now have to resubmit for Bank of America? 2) If we've already illustrated they they are not adequately staffed to handle their existing applications, how are they supposed to efficiently take on Countrywides' as well.


Citigroup (Citi, Citi Finance, Citi Mortgage) is also a big one. Aside from the laundry list of consumer complaints on-line, we have quite a few of our own clients that have some pretty bad horror stories. In order, the largest mortgage lenders were Wells Fargo, JP Morgan Chase, Bank of America, Countrywide, and Citigroup. With the acquisition of Countrywide, Bank of American now emerges as the largest. With three of the 10 biggest mortgage lenders taken over in 2007, it leaves fewer players vying for a smaller pie.


There was a replicated article in WSJ, it added that “housing counselors complain many borrowers are waiting for help as mortgage-servicing companies get up to speed”. Bruce Dorpalen, The National Director of Housing Counseling for Acorn Housing Corp. said, “We are not getting anywhere near the level of resolutions we expected...” (I thought ACORN was Association for Community Organizations for Reform Now, not a Housing Corporation???) He's admitting that they just plain aren't getting the job done right now. The Executive Director of Housing and Economic Rights Advocates in Oakland, CA Maeve Elise Brown was quoted saying “Homeowners on their own are not able to navigate the system”. She also said, “Often, housing counselors must educate their staff about their own program”. So who is doing the negotiations? Staff that doesn't have the experience, and need to be trained first? So what happens when you're file is assigned to “the new guy/gal”? Are you really expected to put all of your trust and hope in their hands?


We've concluded that the Government recognizes the current problem. They also recognize that previous efforts have thus far been unsuccessful. It seems like the Government is trying to recover from their initial knee-jerk response to modification companies labeling them all together, and realizing that there is a need for such companies. The task at hand is to distinguish which companies are the good guys, and which ones are the bad guys.
We've established that leaving it up to the banks to do what's right is probably not in the cards. I believe the saying is, “ the definition of insanity is attempting the same thing over and over expecting a different result”. How much more of our taxpayer money are we going to risk doing this? My kids are already going to have to pay on that money, I don't want my grandchildren to have to pay as well. Both the Government and other agencies (HUD, ACORN, HERA, etc...) agree that it's next to impossible to do get a modification on your own, and furthermore concede that they're not doing to well either.


It seems more and more apparent that doing a loan modification through a reputable company is the most efficient, and effective way to get it done. If you notice, the majority of the complaints regarding the above mentioned lenders are from consumers who attempted to do their own loan modification. They got stonewalled, frustrated, and finally complained. Does anyone else see a pattern here?

My Lender Said They Are Going To Help Me.....I'm Saved!!!!

On a semi regular basis, we talk with prospective clients that say that they're just going to work with their lender. Usually it goes like this, the client puts in a request for assistance, we contact them and tell them what their options are. Like me, if they can do something themselves and not have to pay for it, they are going to explore that option.
So after dodging numerous phone calls from the lender, they call back and threaten that they are considering using a third party for assistance. The phone call gets passed to a supervisor, and they explain that they would now like to assist you. They go through the motions, and set you up to have their hardship package sent out. At this point, they are betting on a few things and usually win: 1) you will get the information, and not even fill it out. 2) you will fill out the information un-assisted, and they can record (document) what you submit to them, 3)the information that you submit to them will either be incomplete or not within their parameters. Now they've got you up against the ropes, you're eating out of their hand and basically willing to give them anything they ask for. They then explain to you that it takes about 90-120 days to complete the process, and advise you that if you can make a payment during this time, to do so. So you either A) don't make a payment during this time B) make your payments. Either way, you're now three months later in the process and one of two things will happen.
1)They approve your application, and give you a low-ball offer (keep in mind that this is the multi-million dollar corporation whose job is to make as much money as possible, not give it away. They have no reason to have your best interests in mind).

Example: You are four months behind on your $2K a month mortgage, so you're $8K behind on payments plus fees, and you have a 7.5% ARM. They say OK, you come up with $4K of it, and we'll defer the other $4K and you should be good to go....Problem is, that once they do the deferral, you're still right back at square one with a rate and payment higher than they should be, and an adjustable clause. Because you want to keep your home and don't feel you have any other options, you sign on the dotted line. The lender gets paid in full from the government, and you're really not any better off than you were before.
2)They just deny your application for one reason or another, and now you're further behind than you were the first time. Furthermore, the lender now has your DENIED application on record, so should you now decide to try and use a legitimate modification company, they are going to have a really hard time trying to get the tables turned around as the cat is now out of the bag. Mortgage companies have made it very clear to the public that they basically have ONE SHOT at getting this done. They are just not logistically set up to “re-hash” your file, nor is it their responsibility to “walk you through it” and make sure that you qualify. Their job is to act in the best interests of their investors and board of directors, not yours.
So why do people still try to do it themselves? Usually it's the fear of getting scammed. Every time you turn around you hear of some new loan modification company that is a scam. There are quite a few of them out there, we give quite a bit of information about them on our website.
“OK, so I clearly can't trust my lender to just magically help me out, and I don't want to be scammed out of my last hard earned dollar, what do I do then? You need to do diligent research on whatever modification company you're considering. Find out what they're success rate is, find out what they're employees experience is? Were they flipping burgers last week and they're now loan modification specialists? Do they have a guarantee, do they offer no up front fees? Are they charging me $3-$4 thousand dollars, or is their fee pretty reasonable. Whether I'm buying a TV or looking for a loan modification company, I'm going to due some research. I want to make sure I'm dealing with a solid company that will not only sell me the TV, but offer service if I have a problem AFTER I've bought it. I also want to make sure I'm getting the most bang for the buck. It comes down to your gut feeling. Do you have a good feeling about this company or not?

Refinancing......What Happened?

If a lot of you are like me, you did a refinance on your property a few years ago with the understanding that you would refinance after 2 or 3 years. This was the typical sales pitch used by mortgage brokers to get people into 2, 3 and 5 year ARM's. If you started your cycle in 2000, then you probably would have refinanced in 2003, and again in 2006 as property values were still good, and the banks were handing out money like it was going out of style. The requirements were so loose as far as loan to value ratios (LTV), and such that it was hard not to. Aside from the fact that if you didn't, your rate was going to sky rocket along with your payments. Of course each time you refinance, you have closing costs. Mine averaged around $5K each time, in addition to whatever equity I was pulling out of the house. Like many, I put the money I pulled out of the house right back into the house via remodeling and repairs. Hindsight, maybe I should have just stacked that money in the bank and end up letting the house go back..... However, because I put it back into the house under the pretense that anything I did to the house would increase it's value. So if I owed $100K on the property, it was valued at $180K, and I took an 80/20 I would end up cashing out about $39K after paying closing costs. So now you're into your property $144K, you put all $39K into remodel and repairs. Now, the carpet is yanked out from under us, the property is now valued at $150K AFTER the additions, the most the bank will loan at an 80/20 is $120K. Without $24K to put down, I'm then stuck in this high interest ARM and no way to get out of it. At this point a loan modification is about my only possible option.

My in-laws are in a completely different situation. They have a property that's valued at 800K, they only owe about $500K on it. During the mortgage boom lenders often do what's called “stated income”. So if your credit score was high enough, they would allow you to put down whatever you wanted as far as income. In their case, they own both a restaurant and a construction business. Both businesses have seen about a 30-40% decrease. Of course you base your obligations of what you are making at that time, and when what you're making changes, it's going to put you in a bind. Stated Income is definitely a thing of the past, it's just unheard of anymore. So now they have the equity, they still have an income so they can make some type of payments, just not as big of ones as they were making previously. Refinancing is then out of the question. A loan modification is the only alternative that doesn't entail them losing their home.

I have a best friend that's a carpenter. My age, 3 year old son and 2 dogs. He's probably one of the better framers that I have come across, and his boss has been pretty good given the circumstances at finding them work. However, he had about a two month period where he had no income, and the $200 a week in unemployment was peanuts compared to what their bills were. So they couldn't make the mortgage payments for about two months. It's summer time now, his work is picking up, his wife is now working part time as well to help ends meet. Like most folks, they live paycheck to paycheck. So now they are close to making what they were making before, and they can make the payments again. So PTI is in line, DTI is in line, LTV are in line, but they now have a blemish on their credit report. Regardless of the circumstances, if a bank sees that you had trouble trying to pay another bank, they're not going to be enthusiastic about being the next bank that you DON'T pay. If refinancing is still credit score driven, then they are up a creek without a paddle. Even if they come up with the past due payments, it will still show on their report that they were late. Their score will most likely be affected for at least the next 6 mos to a year. What are their options? Do they rob Peter to pay Paul and try to come up with the past due payments? Do they just wait it out and hope that the lender comes through with a good deal? Or do they take control over their own destiny, and get the assistance they need?

HUD Approved Loan Modification Agencies

I have a family friend of mine that happens to live in a state where we do not conduct business. He called me Sunday after I got home from church and explained to me what was going on. I told him that PMC couldn't help him because of the state he lives in, but I would be more than happy to try and do some research for him. First thing I did was go to Google and typed in “HUD Approved Loan Modification”. I figured I should have no problem getting him with someone that could work in his state and wouldn't charge him anything. The first three spots (depending on what time of day it was) were loan modification companies that had ZERO affiliation with HUD. The next few were various links to HUD's website. I clicked on the one that said “ Foreclosure Avoidance Counseling” as it said something about HUD approved housing counseling agencies. It then displayed a map of the US with a link on each state. I clicked on this state, and the first two options were the Housing and Finance Association. The first thing that caught my eye was the advertisement for a loan modification company, and another advertisement for a refinance company titled “Looking For a Home Loan?” No, I am looking for assistance with my current home loan. So I went to the “Home Loans” section, it gave me a drop down for “Looking for a Loan?”, “Already Have a Loan?”. I clicked on already have a loan, and it gave me another drop down menu. One of the options was “Borrower Counseling, How to Save Your Home”. This is what it said:
Borrower Counseling:How to Save Your Home
Help for Homeowners Facing the Loss of Their Home (This was a link to BACK to HUD) (a collaborative effort between HUD/FHA, the Department of Veterans' Affairs, Department of Labor, Fannie Mae, Freddie Mac, and members of the mortgage industry)
Q: What Happens When I Miss My Mortgage Payments? Foreclosure may occur. This is the legal means that your lender can use to repossess (take over) your home. When this happens, you must move out of your house. If your property is worth less than the total amount you owe on your mortgage loan, a deficiency judgment could be pursued. If that happens,
you not only lose your home, you also would owe HUD an additional amount. Both foreclosures and deficiency judgments could seriously affect your ability to qualify for credit in
the future. So you should avoid foreclosure if possible.
Q: What Should I Do?
DO NOT IGNORE THE LETTERS FROM YOUR LENDER. If you are having problems making
your payments, call or write to your lender's Loss Mitigation Department without delay. Explain
your situation. Be prepared to provide them with financial information, such as your monthly
income and expenses. Without this information, they may not be able to help.
Stay in your home for now. You may not qualify for assistance if you abandon your property.
Contact a HUD-approved housing counseling agency. (This is where I started???)Call (800) 569-4287 or TDD (800) 877-8339 for the housing counseling agency nearest you. These agencies are valuable resources. They frequently have information on services and programs offered by Government agencies as well as private and community organizations that could help you. The housing counseling agency may also offer credit counseling. These services are usually
free of charge.
Q: What Are My Alternatives? You may be considered for the following: Special Forbearance. Your lender may be able to arrange a repayment plan (higher payments)based on your financial situation and may even provide for a temporary reduction or suspension of your payments. You may qualify for this if you have recently experienced a reduction in income or an increase in living expenses.(This is incorrect. If you have an increase in living expenses, you will not qualify. You submit a hardship letter they way they are suggesting saying that your living expenses have gone up, not only will you be denied, but it will be on record). You must furnish information to your lender to show that you would be able to meet the requirements of the new payment plan.Mortgage Modification. You may be able to refinance the debt and/or extend the term of your mortgage loan. This may help you catch up by reducing the monthly payments to a more affordable level. You may qualify if you have recovered from a financial problem and can afford the new payment amount.
Partial Claim. Your lender may be able to work with you to obtain a one-time payment from the FHA-Insurance fund to bring your mortgage current.
You may qualify if:
1)our loan is at least 4 months delinquent but no more than 12 months delinquent;
2)you are able to begin making full mortgage payments.
When your lender files a Partial Claim, the U.S. Department of Housing and Urban Development will pay your lender the amount necessary to bring your mortgage current. You must execute a Promissory Note, and a Lien will be placed on your property until the Promissory Note is paid in full.The Promissory Note is interest-free and is due when you pay off the first mortgage or when you sell the property. (This means that you are giving the Government partial claim to your property??? Isn't this specifically what they've been warning consumers about? A legitimate loan modification company would never ask you to do this, but the Government is AND advocating it!)

Pre-foreclosure sale. This will allow you to avoid foreclosure by selling your property for an amount less than the amount necessary to pay off your mortgage loan.
You may qualify if:
1) the loan is at least 2 months delinquent;
2) you are able to sell your house within 3 to 5 months; and
3) a new appraisal (that your lender will obtain) shows that the value of your home meets HUD
program guidelines.

Deed-in-lieu of foreclosure. As a last resort, you may be able to voluntarily "give back" your property
to the lender. This won't save your house, but it is not as damaging to your credit rating as a
foreclosure.
You can qualify if:
1)you are in default and don't qualify for any of the other options;
2)your attempts at selling the house before foreclosure were unsuccessful; and
3)you don't have another FHA mortgage in default.

So.....In a nutshell, it told me to make my payments, call my lender, and gave me a laundry list of things that “I may be considered for”. It was basically a big circle bringing me right back to my starting point. I called my friend back and explained that I was hitting a brick wall. He then said, “You know...when my lender calls me to collect money, they are pretty ruthless about it. I'm a plumber, not a negotiator, so what am I supposed to do?” The problem is that in his state they have written current legislation to only allow Mortgage companies (the ones who put us in this situation in the first place....) to do modifications. Furthermore, it's under FELONY penalty if you do, and are not a Broker. I like my friend and all, but we're not going down that road. “You're saying that I have to contact the same SOB that made a few grand on me last time, and didn't explain this ARM to me”. Since this, I have researched numerous companies in his state to see who was out there. After a few days of looking, I narrowed it down to two companies. I talked with both of them, and the company that was closest to our business practices and ethics was the one we chose to be our affiliate for that state. Although we're thankful for this company that can do the job, I must say that i'm disappointed in our government agencies. They are supposed to be here to help consumers, not make it harder for them. They have gone out of their way to tell Americans that there is help and that it's free, yet you try to pursue it and it's a wild goose chase. “Lead, Follow, Or Get Out Of The Way”. They certainly aren't leading, if they don't want to follow that's fine, but they at least need to get out of the way and let us (PMC)help our fellow Americans.

No Up Front Fee Loan Mods, The Truth

"NO UP FRONT COSTS, FREE CONSULTATION". These are the terms that we're seeing more and more everyday. Unfortunately, when you call most of these companies the only thing free is the phone call. Most will give an explanation of their proprietary information and how their information is different, thus warranting charging up to $3000 for this information. So you pay your money and you get their proprietary information and you start the process. The reality is that most companies "packages" are the same, with different letter head and fonts. It's actually the same information that you can usually download from your lenders website for free. The big question then is "Who Really Does Mods with No Upfront Fees?" A company that is willing to send you their package first before you pay is the best answer. No restrictions, just the information you need to make an informed decision. It comes down to trust. If the company you're considering isn't willing to trust you to follow through with the process, then why should you trust them with something as important as your home? At PMC we are very confident that our services are worth every penny. This is why we not only send you our information first, but we've instituted our DIY packages for $99 that not only include that same information, but also the lenders information and additional insight on the process. Most people don't have the time/energy/knowledge to get everything that's on the table, that's why they use PMC. Some do have those three things and find our DIY package exactly what they needed to get the edge they needed. Furthermore, PMC does progression payments so that you can make your fees manageable. Bottom line...If you're looking for a free pamphlet, nice people and no real answers, call NACA, HUD, or ACORN. If you have a lot of extra money that you'd like to spend then call one of the "Law Groups or Attorney Networks". If you want your information sold to companies unknown to you, go to Google or Yahoo, type in "Loan Modification" and click the first ones that come up. If you're looking for a real company that does what they say, and provides a valid service at an affordable price, contact PMC.