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

In a March 2010 publication from the Office of the Comptroller of the Currency, (Office of Thrift Supervision, Washington D.C., fourth quarter 2009) performance data confirms “the increase in seriously delinquent mortgages was most pronounced among prime borrowers, where the number of seriously delinquent mortgages increased by 16.5 percent.” More reading gives little hope for success with the manner in which loan modification and loss mitigation programs are handled when it is stated that “servicers reported that they expect new foreclosure actions to increase in the upcoming quarters as many of the mortgages that are seriously delinquent may eventually result in foreclosure as alternatives that prevent foreclosure are exhausted.”

Those who have seen limited success in trial payment modifications have not received permanent help. “Short sales continued to grow as an alternative to foreclosure... more than doubling from the same quarter a year ago.” We are not surprised. Neil Barofsky, the special inspector general for the Troubled Asset Relief Program(TARP) was quoted in the Associated Press article by Alan Zibel that the “lack of planning, has resulted in constant changes that have bewildered the more than 100 participating mortgage companies”.
 

Standing back and looking over our shoulders at these comments and summaries clearly evidences a series of salvage plans, almost doomed to failure from their inception. Millions of families, trillions of dollars, banks, servicers, homeowners and Obama Administration officials are taking aim at the mortgage and foreclosure crisis without any commitment to succeed. This week, many have seen new headlines, with new life boats launched to underwater mortgages and families struggling against the wave of foreclosure actions. The Federal Government publishes eligibility requirements for unemployed borrowers who have not missed more than three payments, are receiving unemployment insurance benefits, all with a mortgage loan of less than $729,750 and provides initiatives for a loan modification to these previously unattended folks.

Without spending much time on that program (are there really unemployed families in such categories??) we have yet another plan for homeowners whose principal residence has suffered the ravages of economic decline. Servicers now are charged with creating solutions which envision the write off of a portion of the borrower’s loan until it reaches a level where statistically, payment can be accomplished and rewards are provided to those who participate and complete three years of timely payments.

Other voices concur. David Streitfeld, writing in Saturday’s NY Times asks, "Will it work this time? Howard Glaser, a housing consultant says, “The housing market is the Vietnam War of the American financial system. The federal government is in so deep, they have to keep ramping up to find a way out.”

We have watched hree years of initialed programs, HAMP, HAFA,TARP,  during three years of Treasury Department. We have listened to FDIC officials and Administrators of National Banks. We have read three years of Mortgage Metric Reports, These all come from extremely educated and experienced federal officials, with well placed initials and highly valued post graduate degrees, all collaborating to provide and originate home retention programs, looking for eligible borrowers to participate in loan modification programs. Yet, the power, speed and intelligence of these plans is tantamount to placing bets on which witch has the fastest broomstick. There is no window at Aqueduct or Belmont or the jai-alai or dog tracks engaging in such wagers. The portfolio of salvage plans are not reaching the servicers and the lenders and the mortgage backed security trustees.

Simply stated, whatever is being done seeps through in mysterious and unaccountable manners and platforms. Calls to our lenders are overwhelmingly met with little success. Recent client visits to our offices have witnessed foreclosure actions that went unanswered for the past several years, with referees and foreclosure auctions on the horizon. Foreclosure defense litigation for these families is a current focus and feels uncomfortable at first.

But for these underwater homeowners, jumping into shark infested waters and hoping to stop the judicial sale of their homes is the only means of survival at this point. Judges, foreclosure settlement court appointed referees and attorneys and court clerks are now called upon to enter this new world of foreclosure defense litigation. It is possible that an imminent sale can be postponed and that your home can be saved.The only guarantee is that if you do nothing, nothing will happen to stop the foreclosure sale. This portfolio of broomsticks, some might argue, is perhaps our best hope in a system where modification files are handled by faceless and nameless, sometimes even foreign, servicer and bank representatives.

However, with the mandated New York State laws and foreclosure settlement conferences, and with committed court personnel, delays can be allowed and foreclosure sales can be halted, even if only on a temporary basis. This allows time for the banks to review our submissions and consider evidence of ability to repay. The fears and paralysis of a visit from a process server and delivery of the foreclosure summons and complaint are genuine, but ultimately can be tempered by a strong commitment for negotiation and investor review. Many mortgage holders have reacted to the federal programs and contracted to participate in reviewing eligibility for success. These plans and blueprints can be modeled to “Keep Home Your Own”.

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Our Federal Government has already failed many American homeowners in its stated effort to halt the massive foreclosures on the books today. Its inability to mandate action has left American home owners scattering like monkeys from a fallen tree. Now, the federal government has enacted an extension of these disastrous programs. It now provides us with yet another initialed program, H.A.F.A., the Home Affordable Foreclosure Alternatives Program.

After enacting H.A.M.P, the generally ignored Home Affordable Modification Program, one would conclude that the Treasury Department, some thirteen months later would offer additional tools to help an already mortally wounded nation reeling in economic woes beyond its imagination. To the six million families and homeowners who are behind in their mortgage payments and at risk of losing their homes, HAFA should read that they now can be soothed and calmed as the easing of the short sale process will restore order to their lives.

Short sales to the rescue?
In the short sale process, we are told that these borrowers may receive pre-approval by their lenders to sell their devaluated homes at realistically stipulated prices below the amount owed on their mortgage loans. This would allow them to market their homes with a reasonable degree of certainty and with deadlines to keep these mortgages from creating new disasters in their lives on a timely basis.

Skeptical readers however, bear in mind that under HAFA, these families who lose their homes, dreams and credit ratings may be eligible to receive up to $1500 for moving expenses. Some might argue from this that the Treasury Department has changed its direction and its intentions of keeping Americans in their homes through the implementation of its guidelines and regulations that mandate home modification. Instead, it seems the government has reversed itself, by now seeking a no holds barred reimbursement to the lenders, banks and servicers.

These benefactors of the government’s largesse are the same financial wizards who miserably failed their customers by ignoring the existing mandates to modify loans and work out a troubled loan portfolio. The fall-out created by these lenders spreads even further and the screws turn even tighter as new listings enter the marketplace only to find the very same lenders declining mortgage loans because the comparative sales prices have decreased tremendously due to recent short sales.

This presidential initiative, announced only one year ago to encourage loan modifications and thereby making stability of our housing market a number one priority, now proves out to have fallen on the deaf ears of unreceptive lenders and servicers. These financiers seem completely unprepared to alter the delinquencies and foreclosures and the ragged remnants now beginning to unfold in programs like HAFA.

Unemployment still feeds the flames
Michael Winerip's New York Times, "Generation B" article tells how a group of New Yorkers interviewed a year ago after losing their jobs were doing one year later. It comes as no surprise that nothing good happened. An executive who has been unemployed for the last twelve months stated quite simply, "I did not get a job until this January and it's only temporary. I was just renewed for two more months, so that's a relief for now."

His situation might have turned out differently had the Obama directives for renewed hope in the loan modification programs been sustained. Homeownership drives our economy, creates jobs and supports consumer confidence. New washing machines, added dormers and carpenters actively swinging hammers are our ladders of hope.

These dreams have also been scattered by the fall of the loan modification program. FICO scores, credit ratings, and home values are plummeting while delinquencies, bank repossessions and job losses continue to convert new statistics in our lives. Ellen Yan, writing for Newsday,
said it best..."snow slows foreclosures. Not only did it delay traffic, it might have slowed foreclosure-related filings quicker than any loan modification program." Few of us would have ever considered such a radical idea as to employ weather as a national solution.

We acknowledge that excesses ran uncontrolled in our real estate investment models, in our culture, and in our society. These excesses supported many of these delinquent loans. Whether we care to admit it or not, there are few, if any, who can stand blameless today and hawk that the ends justify the means. But this express lane into foreclosure must be stopped and the federal and state laws should be employed because they can be an effective method to solve our homeownership crisis. We must advertise that the solutions are already in place to save our homes. A foreclosure summons is an invitation to participate in the recapture of our goals. We need not turn to wholesale short sales and temporary fixes. We have solutions and procedures which can be discussed and if utilized, can stop the scattering of Americans from the fallen tree of the American home mortgage disaster.
 

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“Huge sums forge their own anchor, and our future advantage, if any, will be a small fraction of our historical edge”. Graham Bowley, in his Sunday NY Times article, quotes Warren Buffett and provides his readers with keen insight into Mr Buffett’s strategies and formulas in the face of the economic hardships during the past several years. Buffett invests much like the J.P. Morgans and Vanderbilts of the early 20th century – stocking up on capital during the good times and investing when hard times bring prices down. Says Buffett, “We’ve put a lot of money to work during the chaos of the last two years. It’s been an ideal period for investors: A climate of fear is their best friend”.

Granted that few of us can draw personal parallels or easy comparisons to a gentleman with a company whose net income is in the billions and a share of his stock in the thousands. On the other hand, when it comes to dealing with collapsing family and personal incomes and mortgage loan payments, the underlying similarities give great hope when faced with a foreclosure or default on your home loan.

Homeowners’ crisis begins with banking excess
The beginning of this century saw unheralded dissatisfaction for the frustrated many who watched as real estate brought huge profits and lifestyle advantages to others who jumped into the market. Financial institutions literally opened the flood gates and developed a mortgage loan product for just about anyone who asked. We now move forward in this cycle, realizing the damages these financial decisions have passed on to homeowners. Mortgage loan arrears, defaults, over-valued homes and lost jobs are daily concerns in our law firm.

Even so, there are a number of touch points which allow for a process of recovery in so many cases. Our fundamental challenge is to avoid the foreclosure sale of your home. The front-line professionals, both lenders and borrowers attorneys, as well as housing representatives, all agree that the banks would much prefer working out a series of steps designed to defer the foreclosure sale. Homeowners should begin this process by meeting with an attorney or with one of the many organizations counseling homeowners in these situations. Loan modification discussions, court foreclosure settlement conferences and trial work-out or forbearance plans are good news solutions to the many clients who so courageously take plans of action.

What does it take to avoid foreclosure?
Lenders often times will take on these added tasks and forego an immediate foreclosure sale if homeowners can provide them with details of hardship, potential income, and prospective job offers. Gathering the paperwork and putting together the often daunting package of required materials can be laborious and frustrating. However, this work will often pay huge dividends. Many observers to this process foresee a huge increase in successful outcomes.

There are no “smoke and mirror” tricks to this process. It requires vast amounts of time, effort and patience, all of which are necessary as the numbers of submitted pleas for assistance to our mortgage lenders and servicers grow each day in unthinkable numbers.

What to do when the process server comes
While loan modifications are an option for many in early stage default, there are increasing numbers of homeowners who are served with a summons and complaint, requiring the intervention of a Judge and court action. Most experts agree that meeting with an attorney as soon as you are served with these court papers and presenting an answer and attendance in the court process also allows for loan workouts.

The laws in New York State provide a well defined extension to the hostile foreclosure sale. It is not uncommon to see these resources used in ways that encourage, through diligent and dedicated effort, a loan workout. Failure to answer the summons promptly can erase the many legal rights that homeowners have been granted and these rights can be exercised with great dignity and respect. There is no stigma attached to appearance in the foreclosure settlement conferences and the court staff and personnel are well sensitized and understanding in these parts.

The difficulty is greatly enhanced when dealing with client’s who have lost jobs and wages. From the lender’s standpoint, the homeowner may have decided that it is a lost cause and there is little hope. This is, without a doubt, the most difficult situation in which to create a pathway for positive solutions. Nevertheless, if properly managed and guided, and the rights of the homeowner are protected by caring counsel, this temporary income loss is frequently reversed. Experienced attorneys can present the new information and adapt to the lender’s review programs even at late stages of the foreclosure process.

The best first step: Having a one-on-one with your lawyer
Recognizing the new levels of tolerance towards mortgage loan defaults, neighbors and friends who have rarely if ever called upon the services of attorneys and housing professionals must now address the “what to do’s” when served with a summons and recognize that this is not an incurable problem.

I often get calls from homeowners I’ve never met who ask my opinion or want suggestions over the phone. I am totally without the benefit of knowing them, or their background. While I am sure there are cases in which opinions can be freely given after a brief conversation, more often than not, a one-on-one meeting is in order. In many cases, a slight pause and the wait until an office appointment can be convened is probably one of the best opinions I can offer.

When facing foreclosure on his home, a homeowner needs to realize that there are tips, benchmarks and strategies that can be discussed to save his home or soften the financial blow of hard times. Looking for courageous options and solutions often turns our conversation from a chaotic pulse of doom and gloom to a rallying point that, as Buffett says, is also an opportunity in this financial crisis.

Your home, your anchor
The huge housing debt taken on several years past, during a time of rising optimism and real estate fever, is not to be ignored. Our homes are our anchors and the loan problems we now face, if evaluated and addressed, are human problems and will be sorted out and solved by the people in government, banks, courts and neighborhoods. There is no confusion; there are no blind corners and there are no painful debates when you are faced with the possible loss of your home, commercial property or investment parcel. The property is your anchor, and if secured properly, will permit you to hold fast and face the storm of uncertainties until you can implement an effective strategy for paused consideration, unique alternatives and loan workout solutions.
 

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