http://www.azcentral.com/business/realestate/articles/2010/08/20/20100820.html
“Nearly half of homeowners who enrolled in the Obama administration’s program to get lower mortgage payments found themselves canceled out by July.
Forty-eight percent of the 1.3 million homeowners who began three-month trial modifications through the Making Home Affordable Program (HAMP) have been canceled out, the Treasury Department said Friday. About 41% had been canceled out as of June.”
Fannie Mae is Talking Short Payoff Fraud – Demanding Full disclosure of all material facts in a short sale. Call for everyone to play fair.
Sounds like some clever folks (or not so clever I guess you would say) are perpetrating short sale fraud on Fannie and Freddie. Apparently, their fraud investigation unit is up in arms over people not fully disclosing every aspect of a short sale to them so they can make their best decision possible. They are even fashioning definitions for illegal activity. Here is their definition of short payoff fraud:
Any misrepresentation or deliberate omission of fact that would induce the lender, investor or insurer to agree to the terms of a short payoff that it would not approve had all facts been known.” Misrepresentations in these schemes may include the buyer of the short payoff property, a subsequent transaction at a higher price, and/or the selling borrower’s hardship reason used to qualify for the short payoff. In many instances, the short payoff fraud will involve a “facilitator,” engaged by either the listing agent or the selling borrower, to assist with negotiating the transaction.
Here is the link to the story on their site:
http://www.freddiemac.com/singlefamily/news/2010/0412_payoff_fraud.html
I would propose a truce. Lenders, Loan Servicers and Investors play fair in loan mods, (no misrepresentations or concealments) and everyone plays fair in short sales. Seems like a fair truce.
Seriously, this goes out to brokers and homeowners and highlights the need to fully disclose all material aspects of your short sales transactions. If you are falsely charged with short sales fraud or mortgage fraud (their other main beef with homeowners who have the audicty to try to save thier own financial hide) and need to hire an attorney, feel free to contact me to discuss. I imagine they are going to try to make an example out of somebody to send a message to everyone. Other than that good luck in carrying out your short sale!
JUST IN CASE YOU ALL THOUGHT I WAS THE ONLY ONE TALKING ABOUT HAMP SCAMS, AND THE DEVIOUS THINGS LENDERS DO TO SUCK PAYMENTS OUT OF PEOPLE WHEN THEY HAVE NO INTENT OF ACTUALLY GIVING A FINAL TRIAL PLAN MODIFICATION, CHECK OUT THIS WEBSITE THAT IS CALLING WELLS FARGO OUT (YEAH THE FUN AND FAIR STAGE COACH COMPANY) FOR ALLEGED WRONGDOINGS TO CERTAIN HOMEOWNERS IN REGARD TO THE HAMP. http://www.facebook.com/pages/People-Against-HAMP/121868194521157?ref=mf
CAN SOCIAL MEDIA SAVE US? FOR ONE THING IT CAN EDUCATE US. OPEN YOUR EYES PEOPLE AND SEE WHAT IS GOING ON.
Our office gets a good number of calls each day as the WAR ON FORECLOSURE wages on. It is truly amazing how many calls we get from homeowners who have been scammed, cheated, lied to, spit on, deceived, and perhaps even fraudulently abused. I got a call today regarding a homeowner that was a 70 years old and dealing with the “here’s a trial plan, thanks for your payments, oh we changed our minds” TRIAL PLAN NONSENSE scenarios.
Is this FRAUD? Is it BREACH OF CONTRACT? Is it UNFAIR AND DECEPTIVE BUSINESS PRACTICES? Is it HEARTLESS? What exactly is going on here? Why can’t the lenders and loan servicers play fair when it comes to HAMP modifications, and even as to internal (non-HAMP) modifications.
We have identified several different types of scenarios on our website www.TrialPlanFraud.com.
People often ask us, “what can we do about this kind of shenanigans perpetrated by the lenders and loan servicers” (and if these entities are acting as “agents” for the so-called “investors” of the securitized loans aren’t the investors (principal) also liable for these deceptive acts?
Here’s some insight on these trial plan issues:
(1) The lenders are not obligated to give you anything, but if they do, they should play fair and honor what they say they are willing to give you. For example, if you tell a 70 year old homeowner that they qualify for a trial plan modification (leading them to believe badly needed relief is at bay) shouldn’t the lender play fair, review the financials in good faith, and if nothing changes in a material manner from the time the trial plan was given until the time the final review takes place, shouldn’t this mandate that the lender/servicer/investor provide the modification? After all, we are not asking you to give something you were not already willing to give, we are simply asking you to honor your trial plan that you used to suck additional payments out of people. In this case, you would also be avoiding potential liability for elder abuse (financial elder abuse under California law). Why not play fair and do the honorable thing?
(2) If the lender/servicer/investor refuses to honor the modification, consider sending in a “TRIAL PLAN FRAUD / BREACH OF CONTRACT LETTER” outlining the relevant facts, payments made, and citing potential causes of action. You should consider putting the lender on notice of potential claims you may raise against them in a future civil lawsuit. Our law-firm can write these letters on your behalf which also includes a qualified written request and demand to identify the holder of the loan amongst other things.
(3) If all else fails you may want to discuss with legal counsel the potential for filing a civil lawsuit and seeking money damages, specific performance of the contract and/or an injunction to stop foreclosure. Some fact patters are better than others when it comes to deciding whether or not a civil lawsuit is in your best interest.
Strategic Defaults or “Buy and Bail”? What do you call it when you walk away from your home after the lender refuses to do anything meaningful as far as loss mitigation?
There is a new wave of happenings in the loss mitigation marketplace. When a loan servicer or lender fails to modify a loan (especially loans that are upside down and in need of principal reduction) some buyers are deciding to blow off the lender and just walk away from the property.
Well of course the lenders are up in arms about this financial preservation strategy (as I learned in contract law many years ago, this is the concept of “efficient breach” wherein sometimes it is simply in ones best interest to breach a contract). Of course the rules change when the efficient breach is perpetrated on the mighty banks. To them this is “mortgage fraud” or “buy and bail” or “unethical” or “immoral.”
What banks fail to realize is that if they would provide MEANINGFUL MODIFICATIONS WITH ALL THE TAXPAYER FUNDED BAILOUT MONEY THEY RECEIVED PERHAPS PEOPLE WOULD NOT BE BAILING OUT ON THE LENDERS.
IF THE LENDERS (AND THEIR INVESTORS WHO INVESTED IN THE SECURITIZED LOANS) DO NOT WANT TO PROVIDE MEANINGFUL LOAN MODIFICATIONS BECAUSE THEY ARE SEEKING TO DO WHAT’S IN THEIR BEST INTEREST, SHOULD THEY REALLY BE SURPRISED THAT BORROWERS AND HOMEOWNERS ARE PROTECTING THEIR INTERESTS BY PURSUING WHAT SOME WOULD CALL A “STRATEGIC DEFAULT” STRATEGY.
Now, before you exercise these types of strategies, it would be wise to consult with a foreclosure defense lawyer to discuss your options, review your situation, and to analyze whether or not there is any liability in this regard. Whether or not something is immoral or unethical is a different question than whether or not something is illegal and can result in civil liability. Have your case reviewed.
IN THIS MARKETPLACE IT SEEMS THE TIDE IS SHIFTING TO AN EVERY MAN AND EVERY COMPANY FOR THEMSELVES APPROACH REGARDLESS OF THE IMPACT THAT MAY RESULT TO LOCAL NEIGHBORHOODS AND PEOPLE THAT ARE NOT IN DEFUAULT. WHO IS TO BLAME IS A QUESTION OF WHICH CAME FIRST, THE CHICKEN OR THE EGG.
Yes, we are hearing more and more of these. People being dragged along making trial plan payments only to have the rug pulled out from beneath them. Unfortunately, you can also be on a trial plan and have them foreclose on you. So be careful, do not trust what these lenders and loan servicers are saying regarding trial plans and postponed sales especially where you have a foreclosure sale date and they have not agreed to extend (in writing). Even getting this is writing doesn’t always protect you. That’s how rigged the system is. If you have a refinance loan transaction within the last three years, get a TILA audit (truth in lending), if you have a right to rescind your loan (yes, there is an extended three year right to rescind you loan where material violations are found), you may want to consier rescindinng your loan if you are getting close to a sale date, and you are on a trial plan, but no permamnent modification has come. You have to do everything possible to protect yourself. Some people, if they have valid grounds to file for an injunction, will file for a TRO when it comes down to the wire and no modification has been provided. Anyway, check with your attorney about your situation. But whatever you do, DO NOT BLINDLY TRUST THAT THE BANKS ARE ALWAYS HERE TO HELP YOU OR ARE YOUR FRIEND. When you sue these banks, one of the first things they like to point out is WE OWE THE BORROWER NO FIDUCIARY DUTY……..THINK ABOUT THAT…….THEY WANT TO MAKE CLEAR THAT THEY DO NOT HAVE TO DO ANYTHING SPECIAL ON OYR BEHALF, OR OTHERWISE HAVE ANY DUTY TO TREAT YOU FAIRLY. YES, THIS IS THE LAW FOR THE MOST PART.
STEVE VONDRAN, ESQ.
FORECLSURE DEFENSE / BANKRUPTCY
CALIFORNIA / ARIZONA
PHONE (877) 276-5084
Trial Plan Breach of Contract Letter Leads to Loan Modification
Here is a copy of a letter we received on one of our Clients with a Wells Fargo Loan. Originally denied the HAMP modification after making the rquired payments, we submitted a breach of contract letter (normally a beefy 5-10 page letter) to Wells Fargo, who recently responded with this letter agreeing to the loan modification. According to our Client “the best money I’ve ever spent.”
Kudos to Wells Fargo for playing fairly and keeping its word on the HAMP trial plan modification.
Bank of America Chintzy with Mod Money Lawsuit
Well, as we have been saying all along, the lenders (who got their happy meal bailout – BofA got 25 billion dollars – go red, white and blue) have been a bit too chintzy with loan modifications even where it pretends to be committed to applying federal bailout out funds to help homeowners. In Washington state, homeowners have had enough of the runaround. The class action lawsuit filed claims Bank of America is intentionally withholding funds provided under TARP and failing to modify loans. Apparently there are about 1 million loan that qualify for help under BofA, but only about 12,000 permanent modifications have been provided. It will be interesting to see what Bank of America does in regard to the lawsuit. In my experience, I am sure they will give the usual lip service: “we are doing everything possible to help Washington homeowners and this lawsuit has no merit.” That is typical of what you can expect to see.
We are getting more and more calls from people who have decided to give up on the hopes of principal loan balance reduction (we have always told people principal loan balance reductions are like a bigfoot sighting) and instead seek to short sell their property letting the bank deal with the property, especially where the stubborn bank (that got their bailout) refuses to help the homeowner save their home by providing a reasonable and meaningful loan modification.
Now, in the context of shot sales, there are a few things to consider:
(1) Will you be liable for a deficiency judgment (meaning if the lender allows you to sell your home for less than its worth, can the lender come back against you for a deficiency judgment?
We have talked about deficiency judgments in Arizona on one of our other websites: Click here for more general legal information: http://www.arizonadeficiencyjudgment.com/
(2) Are there tax implications involved with the lender forgiving debt owed?
(3) Are you entitled to $1,500 relocation expenses following a short sale under the HAFA (Short Sales Incentives law)?
(4) Do you qualify for HAFA?
We outlined the general qualifications for HAFA and some of the general rules on our HAFA short sale blog which can be found here: http://activerain.com/blogsview/1546150/short-sales-overview-before-and-in-anticipation-of-hafa
(5) Can a forensic loan audit and letter to your lender help assist in them accepting a short sale over forcing you into foreclosure? Do you have any predatory lending violations that you can leverage? Is it better to file a lawsuit against your lender?
We have previously outlined some of the things we look for in an Attorney forensic loan audit on this website: http://vondranlegal.com/2009/08/15/what-is-a-forensic-loan-audit/
(6) What other options might you have if the lender refuses to accept your short sale? Options such as filing bankruptcy or pursuing a deed-in-lieu of foreclosure?
Our Arizona bankruptcy website can be found at www.ArizonaBankruptcyResourceCenter.com
HAMP REPORT CARD IS IN – PARTICIPATING HAMP LENDERS AND LOAN SERVICERS SIMPLY DONT MAKE THE GRADE WHEN IT COMES TO PROVIDING PERMANENT LOAN MODIFICATIONS. IS ANYONE SURPRISED HERE?
First let’s take a look at the official government spin on the progress made under HAMP. You can check out this link here http://www.makinghomeaffordable.gov/pr_03122010.html but let’s post below what it says:
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March 12, 2010 ADMINISTRATION RELEASES FEBRUARY LOAN MODIFICATION REPORT Number of permanent modifications increases by 45 percent WASHINGTON – The U.S. Department of the Treasury and the Department of Housing and Urban Development (HUD) today released February data for the Administration’s Home Affordable Modification Program (HAMP). As of the end of the month, more than one million borrowers were receiving a median savings of $500 each month – a 36 percent median monthly payment decrease. Permanent modifications have been granted to 170,000 homeowners and an additional 91,800 permanent modifications have been approved by servicers and are pending only borrower acceptance. |
