It's been nearly three months since the Obama Administration rolled out "Making Home Affordable", a plan intended to help distressed homeowners. But, what's happening? It looks like the jury is still out. Amid all the hype, is the plan living up to its expectations? Thus far, only 55,000 homeowners have been helped, a far cry from the Administration's goal of seven to nine million.

Even more disturbing, the foreclosure crisis seems to be worsening:

• According to RealtyTrac, a company that compiles foreclosure data, reports that 342,000 households received at least one foreclosure-related notice last month. This is an increase of 32 percent, compared with notices issued last April. It is also the second consecutive month in which more than 300,000 households got a foreclosure filing.

• According to a report from the Federal Housing Finance Agency (FHFA), completed foreclosure sales increased 900 percent between March and April this year.

• According to the Wall Street Journal; on April 15th, 2009, one of the nation’s largest mortgage servicers, GMAC, acknowledged that only 10 percent of their customers that are facing foreclosure actually qualify for Obama’s “Making Home Affordable” program.

While the Obama Administration should be commended for taking a proactive approach by promoting loan modification as a tool to prevent foreclosure, more needs to be done and the administration needs to be honest with the American people about who can realistically be helped with ‘Making Home Affordable’.

There does seem to be some hope. Good news came out yesterday. Citibank, Chase, WAMU and EMC announced they will no longer require homeowners to be late on their mortgages to qualify for loan modification.

I've also developed the only truly free online loan modification course. The course is seven lessons and covers all aspects of the loan modification process.

The program is not only good for distressed homeowners, but realtors and CPAs who want to learn more about loan modification. The only requirement to participate is the completion of a brief, one page application, at which point you'll be immediately provided with a username and password with access to the full loan modification program.

To register, visit Loan Modification for Free.

 

 

 

A few fellow ActiveRain members had asked about some simple ways to make their sites more “search friendly”, so I compiled a few easy tips.   Now, keep in mind one very important thing about Search Engine Optimization.  A lot of people think SEO is just about changing a few things on your site to elevate its visibility in the search engines.  The reality is that it’s a little more complicated than simply analyzing your keyword density and making sure you have search friendly URLs. 

At the end of the day, the most effective SEO is not a “tactic”.   Rather, it is about creating content rich sites that is user/client-centric.  Bar none, the absolute best way to boost your rankings is to develop a site that provides valuable, original, relevant content that will keep people coming back to your site.  If you do this, not only will you enhance your credibility but other sites will link to you simply because you are a valuable resource.  This is known as building organic links, and it trumps any other sort of tip or trick in the book.

That being said, it’s still important to make sure your site adheres to best practice SEO/SEM practices to help the search engines analyze your site correctly.

So here they are…

1) This is the easiest tip and best of all, it only take you 60 seconds! 

Make sure your domain name is registered for more than a year, preferably two years or more.  Many people register their domains on a yearly auto-renewal basis.   This is a big no-no! 

The reason being is that Google and other search engines like to see a commitment to the domain.   Most spam sites and fly-by-night operations have short term registrations, so you want to make sure they know you’re site is going to be around for awhile and that you're on the "right side of the tracks".

2)  Some people—present company included—just love to acquire unique domain names and then park them with the intention of creating a network of sites.  Well, first off, let me say that developing a network of sites is generally not the best strategy if it dilutes your resources.   You’re generally better off devoting your resources to developing your primary site; otherwise you could be in a situation where your sites are competing for SERP (search engine results page) rank.

Instead, you’d be better off devoting your resources to building out a very deep, diverse, customer-centric content rich site.   You’re more likely to get noticed, and enhance your visibility.   Just make sure the content is complimentary.  For example, on how NOT to do it, I knew someone who devoted half their site to real estate and half to cooking and recipes.   This isn’t a good idea, as it just confuses the engines as to what your site is about. 

However, if you do have multiple domains, there’s no reason to completely neglect them and not do anything with them.  Don’t allocate a ton of resources to developing them at the expense of maintaining and developing your primary site, but consider setting the domain up as a splash screen, informational page or even a ‘guide’ like a “Squidoo Lens” (www.squidoo.com).  A “Squidoo Lens” is a one-page guide to any topic you can think of.   To develop a “lens” or a site like this could be done in a couple of hours, and you would at least have a site or page that is indexed by Google.   Once you’re ready to go live with it, at least you have a site with some history.

I’ve personally set up a few pages that were little more than a simple landing page.   But the domains were targeted, and while not optimized for major keywords, the sites come up on smaller volume searches.  This is what’s called a “long-tail” SEO strategy.   Some of these pages actually generate 1 or 2 leads a month.   It’s not a lot, but they took me no longer than 20 or so minutes to set up.

Likewise, even setting up a simple page on certain domain that is comprised solely of your name, company and basic professional information is not a bad idea.   I’ve come across a couple of one page sites in my area that done pretty well.   For example, “Santa Barbara Financial Advisor” and “Santa Barbara Financial Planner” both belong to the same person and they are one page sites.  The domains are santabarbarafincialadvisor.com and santabarbarafinancialplanner.com respectively.    Neither term is highly searched according to Google's Keyword Tool (https://adwords.google.com/select/KeywordToolExternal), but if someone uses such specificity in their search, and you’re ranked #1, you could still generate some leads.

3) Stay away from crappy directory sites that charge for a listing or don't charge but have a 0 page rank.  These sites don't do much for your rankings, and in some cases you can be penalized, especially if you acquire a bunch of links in a short period of time.  Likewise, never hire an SEO service that promises hundreds of links.   This is a "black hat" technique that Google frowns on and it can get you sandboxed. 

Instead focus, as I mentioned at the beginning of this article, on growing your links organically by providing quality content on your site that other webmasters/bloggers will want to link to. 

You want to avoid creating an "online brochure" about how great you are, and instead provide valuable, relevant content.  Google likes this and so will your clients! 

As an example, valuable, relevant content could include a first time homebuyer’s guide or information on staging a home for quick sale.  Just make sure you primarily use unique content.   Google also doesn't like redundant content that appears on lots of sites.  They won't penalize you, but original content does much better. 

4) If you don't have time to create a lot of original content, you can now use many social bookmarking sites that add the entry to your blog.  While technically you’re linking to external content, you have the opportunity to write a short synopsis of the material that will be original.  This keeps your content fresh and Google does actually look at your outbound links for relevancy and can reward you for good, targeted references.   They don't like link pages or link farms, but links accompanied with your commentary is good!

5) Try to get links from local non-profits and community associations. They may not have a very high Page Rank, but they will be compared to other similar sites in the area, and if they are deemed trustworthy and relevant, they can give you a boost for your local rankings.

If you have any other questions, feel free to post a comment, message me, email me (jeremy.kossen at cox.net), or even call my office (805) 617-0506.  I love giving free advice!

 

There is no simple answer to this question, but generally, someone who is a good candidate for modifying their own loan is perseverant and does not take “no” for an answer.

It’s not necessarily easy modifying your loan--although it is getting easier. In some cases, it may be relatively painless, but who knows if a professional could have gotten you much better terms?  If you do decide to do it on your own, sign up for a free course, like LoanModificationForFree.com, so you at least have the tools at your disposal to obtain the loan modification you're entitled to.

Now, if You Hire A Pro…make sure you get a good one! There are a lot of bad ones out there that are just trying to make a buck on people who are in a very vulnerable situation.

If you do hire a firm, you may want to use a law firm that specializes in loan modification and lender mediation. If you were a victim of shady lending practices or predatory lending, you should definitely consult with an attorney. An attorney may be able to help you secure a much better deal than you could on your own.

We all know what getting "creative" with your income back in the heyday of "stated income" mortgages meant.   Basically, it amounted to, well, lying.  Stated income loans were originally intended for those of us who were self-employed and because of the tax benefits and ability to write off a lot of items that were used for both personal and business (i.e. a car lease), being able to "state" one's income enabled people to recalculate their income based on income they may have received that they wrote off, but they were still really earning.

Of course, "getting creative" got all out of hand, and greedy lenders, brokers, borrowers (everyone was complicit), exploited the "stated income" loan to secure financing that was completely inappropriate.   All of a sudden, lenders started allowing borrowers who weren't even self-employed to "state" their income.  How ridiculous! 

Now all of a sudden W-2 employees were "stating" their income, and no joke, there were housekeepers, security guards, city maintenence personel, all claiming they made outrageous sums of money each year.  In fact, I saw a file in which the borrower was a housekeeper that supposedly made $120,000 per year!!

So when it comes to "getting creative" with your income when applying for a loan modification, I am NOT advocating fibbing or outright lying.   Not only is this against the law, if you truly can't afford the home you're in no matter what, a loan modification is not for you.

However, there are instances where a borrower may legitimately need to get creative, and doing so may be completely legitimate and ethical.  

For example, maybe the borrower has recently begun earning income from a cash only side job, and the income is not documented on a quarterly P&L or paystub.   If the borrower can document this with receipts and bank statements, the lender may accept this as proof of income.

Moreover, getting creative may entail finding ways to cut expenses.  There are certain expenses that can be significant, but unneccesary.  For example, do you really need Dish Network at $120 per month?  Most shows are available on the Web.   You can even buy a Roku and stream films to your T.V. for next to nothing.

Likewise, are there ways you can increase your income?  Could you rent a room out?  You may be able to offset that mortgage payment by taking on a boarder.  It may not be an ideal scenario, but if it helps you afford the mortgage, then it may be sensible.

Or, one of the best strategies out there is to renegotiate the terms of your credit cards.   Many credit card companies will give distressed borrowers a very low interest rate to help them catch up.  For example, I've seen Citicard lower interest rates from a default rate of 29.99% to 0% - 4.99%. Generally, they will require closing the account during this period, but it is usually worth it. 

I've seen borrowers lower their payment by 50 - 70% by doing this.  Once the terms are modified, showing proof or a letter from the creditor is usually enough documentation for the bank to reevaluate your debt-to-incom ratio.

These are fairly easy things to do, but surprisingly many people don't do it.

I've outlined many strategies in Loan Modification for Free Program. Please feel free to register for the free program.

Lender vs. Servicer: The Good Old Days

This concept is often confusing to people.

Back in the good old days, it was simple. You went to your local bank or Savings & Loan to get a mortgage. You spoke to your personal banker or loan officer who helped you get a loan.

The institution had lots of customers who put their money with the institution in a savings account, CD, checking account, etc. The institution paid interest to their customers, which gave them the right to use money to lend out to other customers.

You can see why banks did not want to give bad loans to people. They were lending the money of other customers and the loans remained on their books. Likewise, if a borrower got in trouble, they were very motivated to keep them in the home. This was often your local bank in your community. You had developed a personal relationship with them, and they were tied to the community. If the community could get hit hard by defaulting mortgages, so could the bank, hence they were highly motivated to work with you.

The Problem of “Securitization”

But, then this all changed. In the 80s, many Savings & Loans institutions went out of business, and in the 90s something called “securitization” became popular.

What exactly is “securitization”?

Essentially it is a process in which loans are pooled together and then sliced and diced into securities which can then be sold on the secondary market on Wall Street. So basically, you have no idea who actually owns your loan. Your loan probably started with a broker who used a loan originator who then immediately sold off your loan.

The administration of your loan is now handled by a company you’d think was your lender. You send your payment to them, but they are actually just a “servicer”. They get paid to service your loan, but they don’t actually own it.

Lender vs. Servicer: The Challenges

Unfortunately, since they only service your loan, getting a loan modification isn’t necessarily that easy. They are bound by lender guidelines which define what they are and aren’t allowed to do in the event that a borrower becomes financially distressed and must modify the terms of their loan.

To further complicate the issue, servicers generally represent numerous investor pools, all of whom have slightly different guidelines. If they all had the same guidelines, life would be much simpler. You could simply find out what the guidelines were and what kind of modifications were available, and from the outset of this process you’d know if you were going to get approved because there would be no mystery.

Instead, you have to go through a long a laborious process with your servicer to get your modification approved, and ultimately there is no guarantee that it will actually get approved. However, armed with a little knowledge, the process will at least be a demystified for you and you will dramatically increase your chances of getting approved.

*Sign up for my 100% Free 7 Lesson Online Course on Loan Modification.

More than half of mortgages modified went delinquent again within six months. In fact, according to the Office of the Comptroller of the Currency, 57.9% of loans modified in the first quarter of 2008 were in default again by the 8th month.

If loan modifications are supposed to help borrowers, why are so many going bad?

“Toxic” Terms:

Surprise, surprise, but many lenders have not been modifying mortgages aggressively enough to actually make them affordable to distressed homeowners. Some lenders are in fact modifying mortgages with terms that the borrower could never afford. So it’s not a shock that borrowers are quickly in the same place they were before they modified. Often times, the servicer and/or investor wants to squeeze out as much money as possible from the borrower, believing that foreclosure is inevitable. The modified terms may be more affordable than they were before the modification, but they don’t go far enough.

Other Debt:

Many, if not most borrowers, are behind not only on their mortgage debt, but they are behind on payments to other creditors as well such as credit card companies and student loan providers. These borrowers may feel compelled to use the cash they are saving on their mortgage to pay off their other debts. So essentially, their overall relief—if any—is minimal. Many people no matter what the terms of their modification are will never be able to get caught up until they address the other financial problems they are having.

Negative Equity:

Negative equity—or what’s known as the “underwater effect”—has been a major contributing factor in the high default rate of loan modifications. Most loan modifications do nothing to address the issue of negative equity in which a borrower may owe significantly more on the property than it is actually worth. Many of these borrowers have little incentive to keep their homes because it will take such an incredibly long time for them to be in a positive equity position again. They think, “I’m still underwater on my home. Why bother paying the mortgage?”

Overextended Borrowers:

Many borrowers are simply overextended on their home loan. They may have gotten a loan with a short-term teaser rate, but they really got in over their heads, and bought more home than they could ever afford. Even if the lender significantly reduces their payment, it still may not be enough for them to afford the property.

Moral Hazard:

Some distressed borrowers may be expecting another round of modifications if they default again. There is a “moral hazard”: the borrower may feel that since the modification was negotiated once, the potential to renegotiate exists.

Job Loss:

With unemployment headed into double digits, more and more borrowers are losing their jobs. Once they’ve lost one of their main sources of income, the chances of them being able to afford even a modified mortgage are greatly diminished.

Sign up for my FREE loan modification program, a comprehensive online seven lesson course!

Millions of Americans have been affected by the economy and the depressed housing market, creating a climate in which we've seen an unprecedented number of foreclosures.

Many homeowners have been affected by a job loss, divorce, a mortgage re-set, a mortgage re-cast, or any number of other potential factors that have made it difficult –if not impossible—to afford their mortgage.

With the economy in shambles, soaring unemployment, foreclosures are occurring at the highest rate in history and no one knows exactly when our economy will recover! No wonder the only companies thriving in this economy are companies like McDonald’s, Wal-Mart, Anheuser-Busch and Pfizer!

But the reality is, most foreclosures can be prevented. While there's no magic bullet, the most important thing a homeowner can do is....

Stay Positive and Stay in Touch!

Many borrowers are so overwhelmed by their financial situation that they stop staying in touch with their lender. This is a big mistake. Loan modification is getting easier to do with many (but not all) lenders, and with the Obama plan, many lenders have simplified the process. Moreover, the banks have been under increasing pressure on banks to find every alternative to foreclosure for distressed homeowners. I have clients I've coached who just 3 months ago couldn't get their bank to work with them, and now lenders have become much more cooperative.

While trying to keep up with one's mortgage payments and the threat of foreclosure can create serious financial distress be emotionally draining, it is imperative to keep the channels of communication open.

As my title indicates, more than 50% of foreclosures could be prevented by staying in touch. The lesson is simple: STAY POSITIVE AND KEEP IN CONTACTl!

To learn more about foreclosure prevention and loan modification, please visit my comprehensive, free seven lesson online course at Loan Modification for Free!