Keep Home Your Own : New York Real Estate Lawyers & Attorneys : Rubin & Licatesi Law Firm : NY Loan Modification, Foreclosure : New Jersey, Long Island

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The statistics are reported everywhere we turn - 3.3 million loans which may qualify for loan modification have actually resulted in an incredibly meager number of modifications, helping only some 31,000 families. You do the math on that one, and don't spend too long looking for a calculator that can handle 15 digits. Off the top of my head, it sounds like the White House HAMP program to date has failed miserably for the millions of families who qualify but remain underwater.

Under the Obama plan, borrowers who meet the standards, rules and regulations enacted by the United States Treasury Department in 2009 should be able to modify the loans which they refinanced and purchased in 2005 and thereafter, during the "boom times." You can do the math on that one too, but I would say that considering the declining property values, destroyed credit ratings and uncontrolled unemployment, the Obama process just doesn't seem like it is working.

Richard Wilner, in last Sunday’s NY Post's article "Options to Keep Home Yours" announced that a new, untouched, unexplored and unreported crisis is the multi-billions of dollars that banks are carrying on their books for second mortgages. "Bank of America is exposed to $154.2 billion dollars; Wells Fargo is exposed to $127billion; JP Morgan Chase $124.8 billion; Citigroup $59 billion.” If banks do give the mortgage a serious rate cut to keep a family in place, then the value of the second lien on the home - which the banks carry on their books- could be wiped out. And that could be enough to make several banks insolvent. Perhaps that is why B.Of A. has concluded just 98 permanent modifications. The same is true of every major bank." Do the math on that one and I don't even have to comment.

It gets even better. Open the financial pages, go do your shopping on the internet and call your mortgage brokers. You’ll hear that mortgage rates in the United States have dropped to their lowest rates in the past 70 years. It’s just another well intentioned plan with fantastic mathematical possibilities down the drain. Borrow at lowest ever levels, yet deny access to these historically low interest rates. Like the old, yet trusted expression, it’s like giving away ice in the winter.

For any of those of you who have looked into the possibilities of re-financing or purchasing, you have personally witnessed some of the most expansive and intrusive questioning into your personal and professional lives. Refinancing could save you hundreds and thousands of dollars but yet this traditional source of credit is scarce and difficult to find, even for the very best and elite, much less the first time homebuyers or middle class families.

Taking this another step, Mr. Wilner extends a well pointed finger.."In an ironic twist, the only thing worse than HAMP's failure would have been the absolute success of HAMP. Can you image saddling the banks with 2 percent 40 year mortgages should there be inflation? If you think the banks are bad at lending money now, they would never lend money under those circumstance."

The rumor mill is working overtime. Neighbors are sitting at their kitchen tables and wondering if the little signs of disrepair in their neighborhoods are signs of foreclosure and arrears. When our friends are unemployed and tales are told in our elementary schools and upper grades of their moms and dads unemployment, it's a sign of the times. The super growth of mortgage arrears have created huge rubbernecks and tie ups for our major lenders to handle, even during their unprecedented struggles to remain viable and productive.

Go past the math and statistical reports. Look around and witness the unparalleled demise of the American home ownership program as we know it. My advice for Realtors, bankers, buyers, sellers, landlords and tenants, or anyone with a keen interest in the economy and a sharply honed desire to strike it rich is-----buy Kleenex. Simply stated, until we get the math working and producing loan modifications, we will all see a steadily growing demand for tissues to wipe away the tears.

As a post closing note to those of you following Judge Spinner's "Horoski Dismissal Case,” Carl MacGowan in Saturday's Long Island Newsday, reports that OneWest, the parent company of IndyMac Mortgage Services, admitted that it erred in sending the family a demand letter even after the judge dismissed the case." This case will be followed closely as it winds it way thru post judgment and appellate practice. Keep this one right on your radar screen because it may prove to be our modern day version of David v. Goliath.
 

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This past week witnessed the testimony of Douglas W. Roeder, Senior Deputy Comptroller for Large Bank Supervision, Office of the Comptroller of the Currency, before the Committee on Financial Services, before the United States House of Representatives. (Just try to imagine all that went on before this testimony happened; what went on during the testimony and what will go on in the future.) Without placing this thought into one of our pending time management departments, we’ll try to keep our summary of the Senior Deputy as simple as possible.

The Federal government, and now with increased legislation, state governments as well, have decided that banks and servicers have insufficient personnel to handle the number of pending mortgage modification submissions, regardless of whether the present program guidelines are met by the homeowners. To that end, our Washington representatives, whether elected or somehow federally employed, have created an untold number of departments, sub-departments, secretaries, senior deputy positions and perhaps even some clerks, to follow the much heralded foreclosure and delinquent mortgage problems in just about every State in our nation.

It’s about time. Homeowners' equity has evaporated; credit scores are at their lowest ever; banks will not provide refinancing to "at risk" customers and our homeowners who have applied for modification receive temporary solutions that solve nothing. Unemployment puts this whole process on the verge of total collapse, yet the Department of Treasury has mandated banks and servicers to modify. We have added regulations, laws, testimonials, mortgage metric data and now new accountability standards.

Bob Tedeschi, in a recent Sunday NY Times article  December 11th, "Short Sales, Long Process", adds still another rung to this ladder leading nowhere. "Homeowners can continue to expect a painfully slow process that sometimes fails, and can ultimately lead them back to foreclosure". Adding this short sale practice into the mix of loss mitigation efforts, he states " further strains the bank's ability to handle them in a timely manner".

Overall, it seems quite clear that all indicators point to rapidly increasing homeowner defaults, bank and servicer personnel challenged to account for their responsibilities and rising homeowner complaints with no effective way to curtail these failures. The directives, laws, court opinions and public outrage have all been heard over the past two years seeking to manage homeowner assistance. But none have resulted in even the slightest meaningful success ratios.

Consideration of these failures may lead some to the inescapable solution that without mandated "teeth in the process" we will continue to report on foreclosure statistics, boarded-ups homes and devastated neighborhoods of shame. Perhaps we have had enough thought given to rules, regulations and hearings and we should return to the old fashioned way of doing business and getting business done. We need our federal government to send a meaningful economic directive to our servicers and lenders to pay the piper for failure. Denials of modifications where they should be granted must become an actionable basis to avoid foreclosure. With all due respect to our Senior Deputies and Chairmen and Senators, enough is enough.

Return to our local courts and governing bodies as Justice Spinner has done and bring the parties to Court, one by one, when the existing laws have not been followed. Spinner’s much discussed opinion of canceling a mortgage in Suffolk County has now resulted in his Order to the parties to return to Court and explain why the bank took further action despite his ruling.

Sometimes less is more. We do not need additional laws to restore home ownership goals. We have the tools we need, and there are those who will see that we can all add to the core qualities of our lives without more.
 

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This past week, the Obama Administration reported new efforts to spearhead a national drive to help borrowers in arrears to modify their mortgages. In fact, the new Chief of the U.S. Department of Treasury’s Homeownership Preservation Office, Phyllis Caldwell, was quoted “We are encouraged by the pace at which trial modifications are now being made to provide immediate savings to struggling homeowner’s and will lead the campaign to convert the trial modifications to permanent ones. This Treasury Announcement contains continued representations of the government’s Herculean efforts to serve the nation and ensure that all who come forward can use these trusted resources. But is it really a case of “seek and ye shall find??”

Let’s run through some of the articles which we’ve been cutting out and saving in our desk drawers over the past year. Local Newsday articles, going as far back as February of this year, quoted housing experts, presidents of real estate associations, community leaders, and even Pres. Obama, all expressing confidence in these policies, announcing opportunities galore to save our homes from foreclosure. The U.S.Treasury “doubling its $200 billion capital commitment to Fannie Mae and Freddie Mac” directed to keep our homeowners in their homes. Fast forward, 10 months later to the Sunday NY Times article by Gretchen Morgenson. “After months of playing pretend, the Treasury Department conceded last week that the Home Affordable Modification Program, its plan to aid troubled homeowners by changing the terms of their mortgages, was a dud”.

So what happened? Where did the $75billion dollars go? Where did the $200 billion dollars go? Was it ever there, or did our neighbors, colleagues and friends, all who are desperately in need of help, just decide to forget about it? Did our citizens forget about the chaos in their families, marriages, businesses and jobs and bury their heads in the sand as their homes and communities fell into foreclosure?

Ms. Morgenson provides fascinating statistics and the dire consequences of this enormous Federal failure to secure modifications and solve the problem. It doesn’t even stop there. As Ms. Morgenson pointed out, “You (also) have to address the second liens.” Many experts agree that this expanded and troubling issue has not yet entered the national discussion.

Imagine if these positive “Plan B’s” were focused upon by our national leaders who are committed to nothing less than success. The monetary penalties and sanctions against the servicers are included as a part of the recent Treasury accountability bullet points. Those active and concerned in the modification field rarely hear from the borrowers a demand for such action. They don’t seek punishment, embarrassment or penalties against their lenders and servicers. They are desperately seeking solutions to what they perceive to be a “till death do us part” mortgage vow at their closings. Our neighbors do not want foreclosures and board-ups and forced short sales. They are seeking that “Plan B” as called for by Ms. Morgenson. The federal dollars have been committed; that’s what we are told. Unfortunately, it is not getting done and is failing despite submissions for loan modifications. Maybe it takes the Court decisions of voiding mortgages or other sanctions to “solutionize” the process for loan modifications. This ultimate “divorce” is not what I see and hear. I see and hear the concerns for settlement and modification, for counseling rather than divorce, and in essence, for these families and neighbors to return to their closing vows.
 

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How long does it take to get a loan modification? Of course, the answer is that there is no sure-fire answer.

Loan modifications rely on several factors; responsiveness and policies of the lender, the effectiveness of the mitigation company, preferably a well versed attorney, and of course, the commitment of the homeowner. There are many parts that sometimes come together for a quick solution (less than 60 days), but usually take much longer. Let’s look at the issues that effect how long a loan modification can take.

The Mitigation Company

Lenders are strict and have rigorous requirements, an effective mitigator is important to moving the process along quickly.

In the beginning, there is a lot of preparation work that includes compiling financial information and other pertinent information to your case. An effective law practice will have a proven process and will ensure that you are providing the necessary information in a timely manner.

Once your file is at the lender, your attorney will ensure that the inevitable requests for updated documentation are relayed to you and processed quickly. Valuable time is often lost if responses are not met immediately

Responsiveness and Policies of the Lender

This is by far the most variable and important issue to the modification duration. It is usual to take around 4 months, but can be highly variable. In some cases the process may take six months or even a year depending on the complexity and commitment of all the parties.

Some lenders are committed to the modification process and are organized in such a way that they can move quickly. However, it’s more common to see lenders taking their time and dragging out the process.

If you attempt to do a loan modification on your own, expect to get the run-around. Lenders are often looking for reasons to deny a loan modification. You probably won’t find them too responsive to your requests for immediacy. In many cases, they are understaffed, but often, their policy dictates a long, drawn out process.

Commitment of the Homeowner

If you do decide to use an attorney your commitment is vital to the process. There are established methods of doing things and the process can move quickly, but without your cooperation, it does not work. If a homeowner does not comply with documentation update requests, it kills the process and can result in setbacks in the case. Always respond quickly to any requests whether they are from an attorney you hire or the lender itself.

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A New York judge’s ruling to deny mortgage foreclosure sends a message to banks and bureaucrats. In a recent blog Felix Salmon of Reuters outlines the  judgment  Indymac v Yano-Hiroski making Judge Jeffrey Spinner of Suffolk county The Hero of the Day.

“If wishes were horses, beggars would ride.” Harsh sentiments indeed, but that statement describes nicely how federally mandated orders for banks to modify loans and reduce foreclosures have been ignored. Recent headlines screamed to readers that the United States Treasury Department's Assistant Secretary for Financial Institutions has now concluded, "The banks are not doing a good enough job" and that “some of the firms ought to be embarrassed, and they will be."

The statistics and reporting data bear out the good secretary’s accusations. Out of 500,000 loan modifications, less than 2000 have secured "permanent" status under the Obama Administration loan modification policies and regulations. Based on those odds of success, about one in 250, many people would see a greater chance of success in Atlantic City or Vegas.

But why should we be so pessimistic? After all, White House dignitaries, Secretary's of our Federal Government and chief financial officers and economists are all in agreement that these results are not acceptable. Now that we have this consensus and agreement, where is the written order to modify and stop foreclosure? Look no further than your own backyard.

New York Judge Jeffrey Spinner's decision in the Suffolk County Supreme Court on November 19, 2009, reciting standards reported more than 100 years ago, denied access to foreclose to a lender. This ruling is not a 3 month trial plan; not a trail of unanswered phone calls nor nameless lender representatives taking our calls. This ruling says, without question, “Come into our court with knowledge of the families and clients you have permitted to borrow money against their homes and in each and every case, you must work in "good conscience and justice." Can you imagine if only our elected officials in the highest offices throughout our land read this decision. Maybe this wish will be granted and we should all learn to ride.

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