The Obama Plan: Only A Few Get Lasting Mortgage Help

Under Obama’s financial stimulus plan, $75 billion was allocated to help stimulate the economy. However, only a very small percentage of Americans are seeing any of that money. Under the plan, borrowers who fall behind on their payments are eligible for trial loan modifications for several months, to make sure they can handle it long term. However, the number of trial modifications that convert to full-time modifications is expected to be small.

“We continue to identify new ways to refine the program and increase the likelihood that trial modifications will become permanent ones,” a Treasury spokeswoman said.

To qualify for the program, homeowners need to owe less than $729,750 and have monthly payments greater than 31 percent of their income. Only 650,000 are currently in trial modifications, and the conversion rate to a long-term modification is fewer than 5 percent.

To read more, click here.

Debt Settlement vs. Loan Modification

When you’re facing foreclosure, it might not be your mortgage payment that’s the problem. People at risk of losing their homes often have other financial hardships looming over their heads, including pressing credit card debt. Although loan modification can help you reach a reasonable monthly payment with your lender, the underlying problem may in fact be related to your credit cards.

At The Vokshori Law Group, we can help you determine how to ease the pressure of your financial problems. In some cases it’s to modify your loan agreement with your lender, but other times clients would be better suited settling their credit card debts. Debt settlement is a perfectly legal alternative for some people, and allows creditors to receive some of the debt they’re owed.

Credit card companies would rather have the debt settled so that they receive some of the money they’re owed, instead of none at all. We can help you navigate your options, and chose the avenue that’s best for your situation.

Loan Modification from Hell

This isn’t Wells Fargo, this is Hells Fargo! Kind of silly video from LoanSafe.org, but still funny. “At Hells Fargo we **care** about our customers, now give us $13,000!”

Navigating Your Options When Facing Foreclosure

You may be trained to think foreclosure is the end of the world. It isn’t. Many families facing foreclosure have moved to less pricey apartments and walked away. Others have chosen forbearance, a reduction in payments for a few months, or short sales, in which a lender agrees to forgive the difference of your devalued home.

Typically, it take 12 to 15 months for a home to complete the foreclosure process after the first missed payment. During this time, a lendee and a lender can try to work out a loan modification, which usually takes 100 to 120 days from the initiation of the process. Although foreclosures are much higher this year than any years in the recent past, it’s not the end of the world. Individuals seeking foreclosure should work with their lender to reach a solution, or reach out to a third party attorney entity to negotiate a new deal.

Attorneys Investigated, Several Resign for Loan Modification Malpractice in California

At least sixteen attorneys are under investigation by the California State Bar for misdeeds related to their loan modification practices. Under California state law signed by Governor Arnold Schwarzenegger on October 11th, 2009, attorneys are prohibited from receiving advanced fees for services rendered related to residential loan modification. The bill, SB 94, has been violated by multiple California attorneys, many of whom have already been disbarred.
Some of these attorneys investigated or suspended include:

•    Sean Routledge of the United Law Group of Irvine, who was charged with seven counts of misconduct after receiving a $3,500 loan modification fee upfront.
•    Jeffery Nemerofsky, who was investigated for charging loan modification fees without providing services. He resigned on October 16th.
•    Ronald Rodis of Newport Beach Rodis Law Group resigned October 13th for loan modification misdeeds.
•    James Parsa, a loan modification attorney, was investigated for questionable marketing techniques. Parsa was forced to resign after 2 convictions of statutory rape with an underage girl were uncovered that were previously unreported to the California Bar.

Maryland Woman Receives 12-year Sentence for Loan Modification Scam

Joy Jackson Fordham, a Lanham, Maryland woman accused of scamming 117 victims out of their savings in a loan modification scam, has received over 12 years in prison for her crimes. The sentence aims to serve as a warning for loan modification companies conducting similar practices to Fordham’s Metropolitan Money Store.

U.S. District Judge Roger W. Titus sentenced Fordham, a former exotic dancer, to 151 months in prison followed by five years probation and supervised release for falsely promising to help borrowers facing foreclosure to keep their homes and repair damage to their credit. Fordham submitted fraudulent paperwork for over $37 million in loans she never intended to repay. Instead, she spent the money on expensive fur coats, jewelry, and a lavish wedding at the Mayflower Hotel, where Patti LaBelle performed.

Fordham was not licensed to provide credit repair, and as a result she caused dozens of people to lose their homes, including an Annapolis family who was forced to live in their car and visit soup kitchens after their home was foreclosed.

Providing unlicensed services to vulnerable individuals is illegal and immoral. Why anyone would trust a so-called “money store” with their life’s savings is unimaginable. To avoid scams such as this one, homeowners should only trust licensed companies or law entities knowledgeable in real estate transaction law.

<– Joy Jackson Fordham at her Mayflower Hotel wedding, paid for from funds she scammed from vulnerable mortgage holders. To read more about the story, click here.

Borrowers Who Receive Loan Counseling are 60% More Likely to Avoid Foreclosure

In a new study conducted by D.C.-based Urban Institute, loan counseling is responsible avoiding foreclosure in 60% of the participants who seek it. The National Foreclosure Mitigation Counseling program, which was established in late 2007 at the start of the housing crisis, says that there is a significant reduction in foreclosure rate of people who seek counseling as opposed to the control group.

The government has set aside $356 in foreclosure prevention programs, at nonprofits such as Maryland-based HomeFree-USA and D.C.-based Latino Economic Development Corp. and the Greater Washington Urban League. Next year, this counseling budget is expected to be increased by $60 million. Over 730,000 individuals have received counseling through nonprofit programs.

To read more about this issue, click here.

Tax Credit Explained

Watch NAHB’s Chief Tax Economist explain the new tax credit for homebuyers, which has been extended to April 30, 2010.

A full article detailing the 2009 tax credit rules and regulations is located here.

Wells Fargo Plays Kick-The-Can-Down-The-Road with Adjustable Rate Mortgages

Wells Fargo is gambling that the economy and housing market will improve by offering interest-only loans to homeowners with adjustable rate mortgages. “We’re banking on the fact the economy will improve and recover over time,” Michael Heid, co-president of Wells Fargo Home Mortgage, said in an interview. The move comes as the bank struggles to stop the bleeding of continuous foreclosures they’re currently experiencing.

The problem with this type of arrangement is that Wells Fargo is betting that the housing market will rebound within six to ten years, the timeframe that interest-only payments are applicable. The economy might take decades to recover, and there’s no guarantee that homeowners will be taking home more income during this time period.

The bank is also ignoring the fact that homeowners will be living in homes with negative equity. Homeowners can also still lose their homes if they stop being able to afford even the interest-only payments. Additionally, it’s unlikely that lendees will make improvements to their homes if they think they will be foreclosed or if they can’t afford to upkeep them. The interest-only offering is an ironic move for Wells Fargo, since this type of structure led to the housing crisis in the first place. Homeowners will still be left with homes that are under water, and there seems to be no permanent relief for troubled borrowers with shoddy deals such as this.

A related story on Mortgage News Daily is located here.

Homebuyer’s Tax Credit Extended

In a bipartisan manner rarely seen, the original tax credit plan for homebuyers set to expire November 30, 2009 was extended to April 30, 2010. The bill, which was passed unanimously by the Senate and by the House with a vote of 403 to 12, was approved as part of a $24 billion economic stimulus plan lobbied by the Obama administration. The tax credit bill hopes to put into place provisions that will rebuild the American middle class during the current recession, and also extends unemployment benefits to the longtime jobless and provides tax credits to some businesses.

For homebuyers, the tax credit is a welcome relief. Residential real estate is often the first and hardest hit during an economic downturn, and the tax credit promises to be a boon to sellers. The tax credit is tailored toward the middle class, and places an income limit of $125,00 for individuals and $225,000 for married couples. The bill provides a 10 percent tax credit of the purchase price for homebuyers purchasing their first home, and is capped at $8,000. Home purchase price is also limited to $800,000 to qualify. Additionally, the bill allows a credit of $6,500 to homeowners who have lived in their homes for five consecutive years and are looking to relocate. Homebuyers purchasing from a descendent or ancestor are not eligible for the tax credit.

For economists, the tax credit is an important step toward mending the housing crisis, yet doesn’t solve the main problem of underemployment in the United States. If Americans don’t have enough income, or can’t get financing, then they aren’t purchasing homes to begin with. The bill, however, has a limited time limit to test its effectiveness. A housing contract must placed before May 1, 2010 and closed by June 30, 2010 for the tax credit to be applicable. The tax credit will be put to the test in the months to come, and when it expires in April the Obama administration will reevaluate its impact on the housing market.