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.