Let's take this question I received in my forum as an example of doing a little due diligence. This member was asking if a California Loan Modification company can help her in South Carolina and if they were a scam? Within 1 minute on Google, I located the company and some disturbing facts.
Here is the discussion and I hope it helps others out there.
Question:
Loan Workout Consultants, LLC. in Tarzana, CA, LLC. in Tarzana, CA. The guy claims they will do all the paperwork and contacting Bank of America with a 100% guarantee of a loan mod we can afford or our money back.
A person's eyes can only have the wool pulled over them for so long, right?
Am I right to say that a civilized society can only be asleep for a certain amount of time before they wake up and realize that they have been suckered?
I am telling you that nothing really has changed too much from when I started blogging about this problem two years ago. Loan modifications are still pretty darn hard to obtain and if you need one, you better be ready for the silliest game of run around and where's my paperwork that you have ever experienced in your life.
Many homeowners want to know the ramifications that a foreclosure will have on their credit and most importantly, their lives.
The facts are that a foreclosure is definitely not the end of the world and it isn't really going to change your life that much in the long term. Yes, the short term effects will suck, but in the end you may just be better off.
Yeah, you heard it right, you just might find yourself in a better place, sleeping at night and living a more gratifying life because you're not strapped to an unaffordable mortgage and home. But you're still going to have to pay the piper in more ways then one for your new found debt free renting life.
I get emails and questions in my forum/blog daily about loan modification companies and if they are all scams. To say every foreclosure prevention company is a scam would be like saying every investment manager is like Bernie Madoff or every politician is corrupt.
Here is the discussion and I hope it helps others out there.
Question:
Loan Workout Consultants, LLC. in Tarzana, CA, LLC. in Tarzana, CA. The guy claims they will do all the paperwork and contacting Bank of America with a 100% guarantee of a loan mod we can afford or our money back.
He wants $500 good faith money to get started and then another $1,500 upon satisfactory completion of the process. He says they do all the forensic stuff with the loan docs and he believes they can get our 2nd mtg written off.
I soooooooo want to believe this is not a scam and do it. I love my house and I don't want to lose it but I am so overwhelmed by all the steps and paperwork that I'm afraid I'm going to drop the ball...especially since I'm a school teacher and summer break is not going to last much longer. It's almost impossible to be making phone calls and faxing stuff while you're "trapped" in a classroom all day!
My answer:
I never heard of them, but they are starting off by operating illegally. They are not lawyers, they take money up front, offer 100% guarantees and operate out of state.
Oh wait, there is more, he is operating out of an apartment or condo. Check this out!!!!
18745 Hatteras St. Tarzana, CA 91356 - Google Maps
It appears like Nevada courts seem to have a grip on foreclosure reality and I applaud them for stepping up for homeowners in their state. Now, it looks like many people will get a fair shot at meaningful mediation on their mortgages.
The state Supreme Court voted unanimously Tuesday to adopt rules governing confidential meetings between homeowners and lenders that could head off foreclosures.
You are not alone if you are facing the possibility of a foreclosure right now! That's for sure! Times are hard and more and more homeowners are finding out that they may lose their homes.
But remember that this is a legal process and you will not immediately be forced out of your beloved home by an armed Sheriff. Because it is a process, it may take some time for its completion and this may depend on a number of things.
Think of this has a game of real estate chess where it is you against your lender. They will make a foreclosure move and then you have to make a move to protect yourself since you are the King of the castle.
Let us now examine the pros and cons of this type of home improvement loan. Obviously, the primary benefit is that you can have access to it even if you don't have a collateral or if you refuse to use your property as such. Of course, this is a disadvantage for the lender because it will be shouldering the risk of not being paid. To make up for this much higher risk compared to the secured loan, the lender will charge a higher interest rate. The interest rate that you will get will depend on the demand for money at that given point in time.
Another disadvantage for this kind of loan is that it is relatively shorter with regards to the length of time in which you have to repay the loan. Generally, the unsecured loan will have to be paid during a span of one to 10 years. Another negative aspect of this unsecured loan is that those who are unfortunate to have poor credit scores would not likely get their applications approved.
“The plan I am announcing focuses on rescuing families who have played by the rules and acted responsibly: by refinancing loans for millions of families in traditional mortgages who are underwater or close to it.” - President Barack Obama
The new plan will help two categories of homeowners as well as Fannie Mae and Freddie Mac. The homeowners this plan will help fall in to two categories. First, homeowners that are in distress and at risk of foreclosure will benefit from the plan. Second, homeowners that are current on their mortgage with high interest rates and with little to no equity would also benefit. Lastly, Fannie and Freddie will receive a capital injection of 200 billion from the Treasury department to increase the amount of available credit. While capital injections from the Treasury to Fannie and Freddie are not new, help to homeowners that are not at risk of foreclosure is a substantial departure from the economic policies of the Bush administration.
Who Won’t Benefit from the Plan?
This plan “…will not rescue the unscrupulous or irresponsible by throwing good taxpayer money after bad loans.”– President Barack Obama
While details of the new plan are clear in that speculators will not receive aid, non-speculators in owner occupied homes may not benefit either. So, there is one specific category that will not benefit and another category of homeowner, more difficult to describe, that won’t benefit either. Here’s an easy way to understand if you won’t benefit: (1) if you are trying to either save a non-owner occupied home from foreclosure or you want to benefit from newly introduced government backed refinancing guidelines you’re just out of luck. And if (2) you are in an owner occupied home and you can’t afford the home due to job loss or complete inability to pay, lenders will not be forced to help nor will the government come to your aid.
What are the Specific Details of the Plan?
The new program will roll out on March 4th, 2009 and complete details of the plan will be available at that time. Obama’s new plan focuses on three critical needs. First, the need to incentivize lenders to modify loans for distressed borrowers. Second, the need to provide refinance options for homeowners that are current but with homes that have little to negative equity and finally, to increase the amount of available credit. On the need to incentivize lenders to provide loan modifications:
Obama’s plan is voluntary for mortgage servicers except for Fannie Mae and Freddie Mac and banks that accept help from the government. These institutions must adopt loan modification plans. The loan modification plan is for primary residences only and will benefit borrowers with higher rates, adjustable rates and interest only loans. The plan, however, will not reduce the principle loan balance.
The servicer would reduce interest rates so that the monthly obligation is no more than 38% of a borrower’s income and then the government would contribute money to bring payments down to 31% of the homeowner’s income. Servicers can also reduce the loan balance to achieve these affordability levels. The government will share in the cost, up to the amount the servicer would have received if it had reduced the interest rates.
Homeowners with a total debt ratio equaling 55% of their monthly income must enter a debt counseling program to qualify for a modification.
Because loan modifications are more likely to succeed if they are made before a borrower misses a payment, the plan will include households at risk of imminent default despite being current on their mortgage payments.
The Homeowner Stability Initiative has a simple goal: reduce the amount homeowners owe per month to sustainable levels. Using money allocated under the Financial Stability Plan and the full strength of Fannie Mae and Freddie Mac, this program has several key components:
* No Aid for Speculators: This initiative will go solely to helping homeowners who commit to make payments to stay in their home – it will not aid speculators or house flippers.
* A Shared Effort to Reduce Monthly Payments: For a sample household with payments adding up to 43 percent of their monthly income, the lender would first be responsible for bringing down interest rates so that the borrower’s monthly mortgage payment is no more than 38 percent of their income. Next, the initiative would match further reductions in interest payments dollar-for-dollar with the lender to bring that ratio down to 31 percent. If that borrower had a $220,000 mortgage, that could mean a reduction in monthly payments by over $400. This lower interest rate must be kept in place for five years, after which it could gradually be stepped up to the conforming loan rate in place at the time of the modification. Lenders will also be able to bring down monthly payments by reducing the principal owed on the mortgage, with Treasury sharing in the costs.
* “Pay for Success” Incentives to Servicers: Servicers will receive an up-front fee of $1,000 for each eligible modification meeting guidelines established under this initiative. They will also receive “pay for success” fees – awarded monthly as long as the borrower stays current on the loan – of up to $1,000 each year for three years.
* Incentives to Help Borrowers Stay Current: To provide an extra incentive for borrowers to keep paying on time, the initiative will provide a monthly balance reduction payment that goes straight towards reducing the principal balance of the mortgage loan. As long as a borrower stays current on his or her loan, he or she can get up to $1,000 each year for five years.
* Reaching Borrowers Early: To keep lenders focused on reaching borrowers who are trying their best to stay current on their mortgages, an incentive payment of $500 will be paid to servicers, and an incentive payment of $1,500 will be paid to mortgage holders, if they modify at-risk loans before the borrower falls behind.
* Home Price Decline Reserve Payments: To encourage lenders to modify more mortgages and enable more families to keep their homes, the Administration — together with the FDIC — has developed an innovative partial guarantee initiative. The insurance fund – to be created by the Treasury Department at a size of up to $10 billion – will be designed to discourage lenders from opting to foreclose on mortgages that could be viable now out of fear that home prices will fall even further later on. Holders of mortgages modified under the program would be provided with an additional insurance payment on each modified loan, linked to declines in the home price index. * Institute Clear and Consistent Guidelines for Loan Modifications: Treasury will develop uniform guidance for loan modifications across the mortgage industry, working closely with the bank agencies and building on the FDIC’s pioneering work. The Guidelines will be used for the Administration’s new foreclosure prevention plan. Moreover, all financial institutions receiving Financial Stability Plan financial assistance going forward will be required to implement loan modification plans consistent with Treasury Guidance. Fannie Mae and Freddie Mac will use these guidelines for loans that they own or guarantee, and the Administration will work with regulators and other federal and state agencies to implement these guidelines across the entire mortgage market. The agencies will seek to apply these guidelines when permissible and appropriate to all loans owned or guaranteed by the federal government, including those owned or guaranteed by Ginnie Mae, the Federal Housing Administration, Treasury, the Federal Reserve, the FDIC, Veterans’ Affairs and the Department of Agriculture.
Borrowers Who Are Current on Their Mortgage Are Asking:
* What help is available for borrowers who stay current on their mortgage payments but have seen their homes decrease in value?
Under the Homeowner Affordability and Stability Plan, eligible borrowers who stay current on their mortgages but have been unable to refinance to lower their interest rates because their homes have decreased in value, may now have the opportunity to refinance into a 30 or 15 year, fixed rate loan. Through the program, Fannie Mae and Freddie Mac will allow the refinancing of mortgage loans that they hold in their portfolios or that they placed in mortgage backed securities. * I owe more than my property is worth, do I still qualify to refinance under the Homeowner Affordability and Stability Plan?
Eligible loans will now include those where the new first mortgage (including any refinancing costs) will not exceed 105% of the current market value of the property. For example, if your property is worth $200,000 but you owe $210,000 or less you may qualify. The current value of your property will be determined after you apply to refinance. * How do I know if I am eligible?
Complete eligibility details will be announced on March 4th when the program starts. The criteria for eligibility will include having sufficient income to make the new payment and an acceptable mortgage payment history. The program is limited to loans held or securitized by Fannie Mae or Freddie Mac. * I have both a first and a second mortgage. Do I still qualify to refinance under the Homeowner Affordability and Stability Plan?
As long as the amount due on the first mortgage is less than 105% of the value of the property, borrowers with more than one mortgage may be eligible to refinance under the Homeowner Affordability and Stability Plan. Your eligibility will depend, in part, on agreement by the lender that has your second mortgage to remain in a second position, and on your ability to meet the new payment terms on the first mortgage. * Will refinancing lower my payments?
The objective of the Homeowner Affordability and Stability Plan is to provide creditworthy borrowers who have shown a commitment to paying their mortgage with affordable payments that are sustainable for the life of the loan. Borrowers whose mortgage interest rates are much higher than the current market rate should see an immediate reduction in their payments. Borrowers who are paying interest only, or who have a low introductory rate that will increase in the future, may not see their current payment go down if they refinance to a fixed rate. These borrowers, however, could save a great deal over the life of the loan. When you submit a loan application, your lender will give you a "Good Faith Estimate" that includes your new interest rate, mortgage payment and the amount that you will pay over the life of the loan. Compare this to your current loan terms. If it is not an improvement, a refinancing may not be right for you. * What are the interest rate and other terms of this refinance offer?
The objective of the Homeowner Affordability and Stability Plan is to provide borrowers with a safe loan program with a fixed, affordable payment. All loans refinanced under the plan will have a 30 or 15 year term with a fixed interest rate. The rate will be based on market rates in effect at the time of the refinance and any associated points and fees quoted by the lender. Interest rates may vary across lenders and over time as market rates adjust. The refinanced loans will have no prepayment penalties or balloon notes. * Will refinancing reduce the amount that I owe on my loan?
No. The objective of the Homeowner Affordability and Stability Plan is to help borrowers refinance into safer, more affordable fixed rate loans. Refinancing will not reduce the amount you owe to the first mortgage holder or any other debt you owe. However, by reducing the interest rate, refinancing should save you money by reducing the amount of interest that you repay over the life of the loan. * How do I know if my loan is owned or has been securitized by Fannie Mae or Freddie Mac?
To determine if your loan is owned or has been securitized by Fannie Mae or Freddie Mac and is eligible to be refinanced, you should contact your mortgage lender after March 4, 2009. * When can I apply?
Mortgage lenders will begin accepting applications after the details of the program are announced on March 4, 2009. * What should I do in the meantime?
You should gather the information that you will need to provide to your lender after March 4, when the refinance program becomes available. This includes:
o information about the gross monthly income of all borrowers, including your most recent pay stubs if you receive them or documentation of income you receive from other sources o your most recent income tax return o information about any second mortgage on the house o payments on each of your credit cards if you are carrying balances from month to month, and o payments on other loans such as student loans and car loans. Borrowers Who Are at Risk of Foreclosure Are Asking:
* What help is available for borrowers who are at risk of foreclosure either because they are behind on their mortgage or are struggling to make the payments?
The Homeowner Affordability and Stability Plan offers help to borrowers who are already behind on their mortgage payments or who are struggling to keep their loans current. By providing mortgage lenders with financial incentives to modify existing first mortgages, the Treasury hopes to help as many as 3 to 4 million homeowners avoid foreclosure regardless of who owns or services the mortgage. * Do I need to be behind on my mortgage payments to be eligible for a modification?
No. Borrowers who are struggling to stay current on their mortgage payments may be eligible if their income is not sufficient to continue to make their mortgage payments and they are at risk of imminent default. This may be due to several factors, such as a loss of income, a significant increase in expenses, or an interest rate that will reset to an unaffordable level. * How do I know if I qualify for a payment reduction under the Homeowner Affordability and Stability Plan?
In general, you may qualify for a mortgage modification if (a) you occupy your house as your primary residence; (b) your monthly mortgage payment is greater than 31% of your monthly gross income; and (c) your loan is not large enough to exceed current Fannie Mae and Freddie Mac loan limits. Final eligibility will be determined by your mortgage lender based on your financial situation and detailed guidelines that will be available on March 4, 2009. * I do not live in the house that secures the mortgage I’d like to modify. Is this mortgage eligible for the Homeowner Affordability and Stability Plan?
No. For example, if you own a house that you use as a vacation home or that you rent out to tenants, the mortgage on that house is not eligible. If you used to live in the home but you moved out, the mortgage is not eligible. Only the mortgage on your primary residence is eligible. The mortgage lender will check to see if the dwelling is your primary residence. * I have a mortgage on a duplex. I live in one unit and rent the other. Will I still be eligible?
Yes. Mortgages on 2, 3 and 4 unit properties are eligible as long as you live in one unit as your primary residence. * I have two mortgages. Will the Homeowner Affordability and Stability Plan reduce the payments on both?
Only the first mortgage is eligible for a modification. * I owe more than my house is worth. Will the Homeowner Affordability and Stability Plan reduce what I owe?
The primary objective of the Homeowner Affordability and Stability Plan is to help borrowers avoid foreclosure by modifying troubled loans to achieve a payment the borrower can afford. Lenders are likely to lower payments mainly by reducing loan interest rates. However, the program offers incentives for principal reductions and at your lender’s discretion modifications may include upfront reductions of loan principal. * I heard the government was providing a financial incentive to borrowers. Is that true?
Yes. To encourage borrowers who work hard to retain homeownership, the Homeowner Affordability and Stability Plan provides incentive payments as a borrower makes timely payments on the modified loan. The incentive will accrue on a monthly basis and will be applied directly to reduce your mortgage debt. Borrowers who pay on time for five years can have up to $5,000 applied to reduce their debt by the end of that period. * How much will a modification cost me?
There is no cost to borrowers for a modification under the Homeowner Affordability and Stability Plan. If you wish to get assistance from a HUD-approved housing counseling agency or are referred to a counselor as a condition of the modification, you will not be charged a fee. Borrowers should beware of any organization that attempts to charge a fee for housing counseling or modification of a delinquent loan, especially if they require a fee in advance. * Is my lender required to modify my loan?
No. Mortgage lenders participate in the program on a voluntary basis and loans are evaluated for modification on a case-by-case basis. But the government is offering substantial incentives and it is expected that most major lenders will participate. * I'm already working with my lender / housing counselor on a loan workout. Can I still be considered for the Homeowner Affordability and Stability Plan?
Ask your lender or counselor to be considered under the Homeowner Affordability and Stability Plan.
* How do I apply for a modification under the Homeowner Affordability and Stability Plan?
You may not need to do anything at this time. Most mortgage lenders will evaluate loans in their portfolio to identify borrowers who may meet the eligibility criteria. After March 4 they will send letters to potentially eligible homeowners, a process that may take several weeks. If you think you qualify for a modification and do not receive a letter within several weeks, contact your mortgage servicer or a HUD-approved housing counselor. Please be aware that servicers and counseling agencies are expected to receive an extraordinary number of calls about this program. * What should I do in the meantime?
You should gather the information that you will need to provide to your lender on or after March 4, when the modification program becomes available. This includes
o information about the monthly gross income of your household including recent pay stubs if you receive them or documentation of income you receive from other sources o your most recent income tax return o information about any second mortgage on the house o payments on each of your credit cards if you are carrying balances from month to month, and o payments on other loans such as student loans and car loans. * My loan is scheduled for foreclosure soon. What should I do?
Contact your mortgage servicer or credit counselor. Many mortgage lenders have expressed their intention to postpone foreclosure sales on all mortgages that may qualify for the modification in order to allow sufficient time to evaluate the borrower's eligibility. We support this effort.
Can you obtain a mortgage modification on your own for free or without buying a book?
I have proven over the last year and a half that homeowners get a loan modification on their own and I have over 200 documented stories on my forum at www.LoanSafe.org to back up these claims.
We at Loan Safe have compiled the most complete list of FREEloan modification and safe foreclosure help tools available on the internet. The tools below will give you the education and know how to effectively deal with your lender or to obtain help from a non-profit.
Can you obtain a mortgage modification on your own for free or without buying a book?
I have proven over the last year and a half that homeowners get a loan modification on their own and I have over 200 documented stories on my forum at www.LoanSafe.org to back up these claims.
We at Loan Safe have compiled the most complete list of FREEloan modification and safe foreclosure help tools available on the internet. The tools below will give you the education and know how to effectively deal with your lender or to obtain help from a non-profit.
Online 24/7 Mortgage Modification Tools From Loan Safe:
·Learn the Foreclosure Process - The foreclosure process varies in every state and it's imperative that homeowners understand this process. One thing is for sure, time is NOT on your side. But, an educated consumer is always an informed consumer who can make a "good" decision based on facts. Learn everything you can because this will affect you in every which way and it is something that should not be taken lightly.
· Foreclosure Laws by State - This section is dedicated to the various foreclosure laws to help you understand the legal process
· Avoid Foreclosure Scams- OCC Consumer Tips for Avoiding Foreclosure Rescue Scams Foreclosures are increasing nationwide, and so are scams that promise to "rescue" homeowners from foreclosure. What these scams do is take your money, ruin your credit record, and wipe out any equity you have in your home.
· Example Hardship Letter- One of the items your lender or servicer will ask for during the loan workout or mortgage/loan modification process is a hardship letter. A hardship letter is a written explanation as to what "event" has caused you to fall behind on your mortgage and it vital in helping you stop foreclosure.
· Foreclosure Defense Tactics - Get your gloves on and start training for the fight of your life because foreclosure defense is going to be no easy battle.
· Qualified Written Request- Section 6 of RESPA provides borrowers with important consumer protections relating to the servicing of their loans. Under Section 6 of RESPA, borrowers who have a problem with the servicing of their loan (including escrow account questions), should contact their loan servicer in writing, outlining the nature of their complaint. The servicer must acknowledge the complaint in writing within 20 business days of receipt of the complaint. Within 60 business days the
· Short Sale Tips - The term "short sale" is very popular in today's mortgage and housing market. There are potentially millions of people facing foreclosure and a lot of these homeowners are under water on their mortgages. Some will choose to stick it out and fight. However, many will decide to choose to walk away. Short sales are becoming more and more popular as an exit strategy for homeowners. Learn the methods, software and magic it takes to navigate the foreclosure process and get the help you need.
· Real Estate Short Sales the Right Way - If you find yourself in a difficult real estate situation where your home and loan is underwater, don't fret, a short sale might just be the answer to help cure your mortgage woes.
Homeowner and Loan Modifications Scams: By all means DO NOT TRUST these phony mortgage modification companies that are preying on homeowners everywhere. Many of these fly by night companies are coming out of the wood work and their sole purpose is to scam desperate homeowners.
You will see these scammer websites advertised all over the search engines like Google and Yahoo.
Many make false claims that that they have a 98% success rate or they can obtain $100,000 mortgage loan principle reductions and their results are guaranteed. They take your $3,000 and you never see them again. There is no way in hell, ANYONE can promise that and remember, if it sounds too good to be true, then it is.
If you're considering foreclosure alternatives, a potential deed in lieu of foreclosure agreement is contingent upon a appraisal of the home. For a lending institution to agree to a deed in lieu of foreclosure, the "fair market" value of the property must be judged to cover the outstanding debt of the borrower, with broader considerations given for the potential costs of an alternative bankruptcy proceeding. It is important, however, to examine how fair market values are calculated.
"Fair" market values are estimates of what the buyer would pay in a free market for the home. In the Supreme Court case US v. Cartwright, the Court established such values as "the price which the properly would change hands between a willing buyer and a willing seller, neither being under any compulsion...(and) having a reasonable knowledge of the relevant facts." Given that the market can't clear in an open environment, the valuation is inherently subjective just as in the Keynesian example above, you should gather all the data you can to determine potential value including sales of nearby homes, trends in the market and additional 3rd party opinions.
While you may be in a difficult position, you should always be an advocate for your financial situation, approaching the potential deed with a rational, calm approach based upon the best possible decision for you. Values in today's market may be clouded with uncertain trends, so take time to truly evaluate your entire financial position, considering all options as you seek to put yourself on more sound financial grounding going forward.
My name is Moe Bedard and I am Founder of LoanSafe.org and LoanWorkout.org. My mission is to educate consumers about the loan modification process and inform homeowners that there is free foreclosure help and tools to help stop foreclosure. Let's fix these loans and save people's homes!
Disclaimer: ActiveRain Corp. does not necessarily endorse the real estate agents, loan officers and brokers listed on this site. These real estate profiles, blogs and blog entries are provided here as a courtesy to our visitors to help them make an informed decision when buying or selling a house. ActiveRain Corp. takes no responsibility for the content in these profiles, that are written by the members of this community.
Let's take this question I received in 
A person's eyes can only have the wool pulled over them for so long, right?
Many homeowners want to know the ramifications that a 
My answer:
!!!!
You are not alone if you are facing the possibility of a 
Homeowner and Loan Modifications Scams: By all means DO NOT TRUST these phony mortgage modification companies that are preying on homeowners everywhere. Many of these fly by night companies are coming out of the wood work and their sole purpose is to scam desperate homeowners.
;)
;)
