Tuesday after speaking to the City Council about our housing market, several people chased me out as I left the chambers. No, not for the usual reasons, but to share stories and ask about getting help with their housing problems.
One story I still hear way too often in spite of all our efforts to get the word out was a story of fraud. One gentleman lamented that he had sent $2,500 to a Florida company that promised to get his loan modified. Not only has nothing been done in three months, but now they don’t even answer the phone there and their website states they no longer do business in California. Nice!
What should he do?
My advice – kiss the $2,500 good-bye and don’t send anymore money to scam artists. I did put him in touch with the District Attorney and the Attorney General because how is one individual going to sue a company clear across the country – especially a company that was probably founded on fraudulent grounds and specializes in flim-flam? That he possesses no significant resources and has only a halting command of English doesn’t make it any easier for him to proceed and undoubtedly made him a prime target for the unscrupulous. I’ve also put him in touch with a legitimate counseling service and the HUD website and hope it’s not too late for him to recover.
On the flip side, last night I got a call from a good friend of mine on an altogether happier matter – his loan modification had been approved! Honest. I don’t know about you but this is the first success story I’ve heard from the Making Home Affordable program and it was a welcome relief from all the failures experienced by so many. There may be rays of sunshine out there somewhere, folks.
My friend – let’s call him John – said he was fed up with the 20 calls and letters he was getting every day offering to refi or modify his loan for a fee – or to make his mortgage go away completely. From being my friend for years he knows all about fraud and only recently came to realize how pervasive it is in the housing industry. He found the onslaught of offers frustrating and very insulting in their blatant attempts to rip him off.
And it’s not that John was in imminent danger of losing his home but being self-employed they have seen a substantial decline in their own business the past couple years and are finding that the money runs out before the month does anymore. So they contacted their lender, Chase, on-line and he said the process couldn’t have been easier or simpler. They filed the appropriate paperwork on March 8 and this month their monthly mortgage payment will be reduced by over $200 – or about 18%. Granted we’re not talking huge numbers here (especially for California) but how many people do you know who would be able to stay in their home with even that amount of relief?
Now over the years John and Betty have been prudent homeowners. They bought their house during the last big drop for about $90,000. After 16 years and two kids, the house needed some updating and repairs so they refi’d in 2007 but only took out the amount they needed for the update. Their current mortgage is about $125,000 though at the time they could have sucked more than $300,000 equity out of the house. They also have the good fortune to have a Fannie/Freddie backed loan, which is not all that common in California – especially after the over-heated run-up the past few years. And they still have positive equity in their home and they are not delinquent in their payments even though they’ve been paying a $38 late fee for so long it seems like part of the mortgage.
The modification was accomplished through an interest rate adjustment only – the principle and term remain the same. Based on individual circumstances he said there are programs where the principle might be reduced or the term extended to 40 years in combination with an interest rate reduction but those options didn’t apply in their case. Their assigned caseworker was personable and almost always answered her phone immediately.She encouraged them to be diligent in their follow-up every week or two, was happy to answer questions and the promise of an answer within 120 days was actually less than 90.
As John pointed out – this is a legitimate program for legitimate people. I know I’m happy as heck for my friends as they do a lot for our community with minimal compensation. It’s great to see deserving people get something for a change.
I’ve sprinkled a variety of company logos throughout this post. If you click on any of them, it’ll take you to the company website where the details of their modification program is available. The Making Home Affordable site even has an easy on-line form to see if you might qualify. It couldn’t get much simpler. The Help for Homeowners site is currently local to Riverside County, but expanding. This group puts on seminars throughout the region geared to put homeowners in touch with FREE or low-cost LEGITIMATE resources to help refi, modify, short-sale or even lose your home (everybody cannot be helped). This is done with every effort to provide relief, comfort and with as little impact as possible with an eye to future homeownership for those who can’t be helped right now.
There are resources available. Remember – if the deal sounds too good to be true, it probably is. If they ask for money up front – it’s probably a scam. Also be aware of ‘affinity’ fraud. Your own ethnic group will prey on you before others. Your church group, your workplace (nurses, teachers) are all more likely to be victimized by an inside job – somebody you may know and trust.
If you’re in trouble, start with YOUR OWN bank first. Be patient, be persistent and be professional. If they can help you they PROBABLY will. Banks don’t always seem to operate rationally or in their own best interest (or yours) but as John & Betty can tell you – sometimes it works just right and sometimes you win the lotto. Good Luck.
I am a licensed attorney who is thrilled these warnings are finally making it to the public, however, I am still hearing from distressed homeowners who are falling for all the usual scams. I am not sure what it will take to get the information out to the entire public that if your lender is willing (able) to modify your mortgage… they will do it for you as likely (if not more so) then for some third party loan modification company or lawyer. I think where the problem comes in is that some individuals still believe that a third party (lawyer or “loan mod” company) possesses some sort of vital “leverage.” That’s a crock When a homeowner is in default of their promissory note… he/she has little if any “leverage” to “force” the lender to do anything. Also, what the federal incentives fail to realize is that in most cases, even if the lender makes a few incentives, it is still more profitable for the lender to foreclose and possibly pick up any deficiency through mortgage insurance. A lender in this position will turn down a $1,000.00 incentive from the feds every time. Borrowers need to also realize the government is constitutionally limited as to interference into a private contract. Just as they did with the state’s speed limit, the government is limited to offering financial incentives (ie federal transportation $$) in order to attempt to get the lenders to cooperate with homeowners. Simply, if the lender finds it more financially beneficial to go another direction, they will merely walk away from the incentive money.
Thanks for this incisive commentary. There are a lot of folks doing everything we can to get the word out yet you are correct that there are still scam artists out there and people still lining up to be taken advantage of. With your permission I would like to post your response to our board as a standalone article from somebody else in the trenches with a good explanation of the process.
I am also very glad to hear that this information is out there. However, there is one question still on my mind as I look at all the information out there and that is do the lenders have the best interest of the homowners in mind when they are walking away from so many loan modifications?
If they had the customers best interest in mind we wouldn’t be in this mess to begin with and loan mod;’s and short sales would be much easier and more prevalent.
Received making homes affordable loan thru Chase. It was an long drawn out awful incompetent reps. but all the drama lost info. hassles. stringing along over a year I did finalize but where as before I was not underwater but Chase did some of there specialized fees and add on and kept the annie going to where I am now underwater where I never was before. I did stay in our home but probably would of been better off without there so called help.