HEY MOM! WHERE'S FANNIE MAE? LOAN MODIFICATION - THE NEXT CONSUMER SCAM SCANDAL!

                                             * * * *  HARD CORE REAL ESTATE TALK  * * * *

LOAN MODIFICATION - The government's failure to help home owners is an open invitation to scam artists to swindle home owners out of what little they have left.

George Souto post an interesting article today about mortgage modification spam by e-mail.  Of course, that's not the only venue for companies offering mortgage modification services these days.  These scam artists are crawling out of the woodwork. 

There are about 15,000,000 home owners at risk of losing their home due to mortgage default.  Fannie Mae will not assist a home owner whose mortgage balance is more than 105% of the market value of their home.  Let's see.  In many counties in many states, property values have dropped by 25-75%. 

Case #1.  Buyer financed their home purchase in 2005 with 80/20 conventional loan sold to Fannie Mae. 

• The purchase price was $350,000.
• The first trust is about $280,000. 
• The market value of their home is now about $225,000.

Clearly, the mortgage balance (first trust) is more than 105% of market value.  In fact, it's about 120% of market value.  This home owner and millions of others are ineligible for loan modification help from Fannie Mae.

I've tried and tried to figure out or find the answer to why this requirement was included in the Fannie Mae Mortgage Modification Plan.  It is completely nonsensical since it serves only to exclude millions of home owners in need of mortgage modification. 

This isn't the first time Fannie Mae has failed the home buying consumer and home owners.  See, Hey Mom, Where's Fannie Mae?

Case #2.  Buyers financed their home in 2006 with an 5% down mortgage sold to Fannie Mae. 

• The purchase price was $400,000.
• The mortgage is $360,000. 
• The market value of their home is now about $240,000. 

Clearly, these buyers will have no relief from Fannie Mae. 

ENTER THE MORTGAGE MODIFICATION COMPANY. 

                        "STEP RIGHT UP FOLKS.  GET YOUR MORTGAGE MODIFICATION HERE"

• We'll talk to your mortgage company.  You don't have to.
• You don't need good credit!
• No mortgage payments until your mortgage is modified!
• We can stop foreclosure.

We can perform this magic for you with a modest up front fee of only $1,500 (often one months mortgage payment) to offset our expenses to set up your personal loan modification plan.

Method of payment:  cash, cashiers check, check by phone, money order.

In some areas, the "mortgage modification companies" are conducting seminars with fees as high as $2,000 - $3,500 up front.  Conducted by "motivational speakers" similar to "self improvement" gurus, the distressed home owners are persuaded that the presenters can solve all of their mortgage problems.  These programs are highly organized, well presented and are praying on the naivete of the average home owner who is faced with the loss of their home.

               $ $ $ $  TRILLIONS FOR BANKS but MEAGER RESOURCES FOR HOME OWNERS $ $ $ $

THE FEDS TO THE RESCUE??  While the FBI is aware of the problem, with about 2,000 cases under investigation, their report is that they do not have the resources to track, investigate and refer cases for prosecution due to a lack of resources and manpower.

In the mean time, the distressed home owners whose morgage balance is more than 105% of the market value of their home just wait for the money to run out, the registered letter from the mortgage company to arrive.

When they log on to check their e-mail tomorrow morning, they may receive a persuasive spam offering to solve all of their problems and save their home. 

Courtesy, Lenn Harley, Broker, Homefinders.com, 800-711-7988, E-mail. 

 

                         

                                         "Honey, can Fannie Mae help us save our home?"

                            "No Dear, we owe too much, but look at this e-mail I got this morning."