Mortgage delinquencies back on the rise?

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When the government intervenes and creates programs that attempt to help homeowners, such as the Home Affordable Modification Program, mix results can happen. In this case, 865,000 homeowners were helped with their underwater mortgages. However, almost 1/2, 306,000, ended up … Continue reading

Martin Sumichrast | Home Price Gains Go to Double Digits

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I just read this article posted on CNBC http://www.cnbc.com/id/100769361 There is no question that home prices have rebounded in most metropolitan areas. Some prices in these areas have jumped higher than others, but I suspect that those that may be seeing … Continue reading

Martin Sumichrast | Elimination of Fannie Mae (and Freddie Mac) Is A Terrible Idea

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According to CNN,  the Obama administration will issue a proposal later this week recommending the gradual elimination of government-sponsored mortgage backers Fannie Mae and Freddie Mac, a White House official said Wednesday. CNN reports that the highly-anticipated “white paper,” which … Continue reading

Starbling Loan Modification Series: Part IV

Headlines: First Family Home to be Sold Via Short Sale…If Only the Lender Had Listened

It’s early April, 2010, and I have received an email from Jeff Starbling. You may remember the story, no, the saga.  For those just tuning in, here is a quick recap.  Jeff and his wife purchased a townhouse in Florida for $200,000 at the height of the housing boom. Bank of America (BOA) held both the first and second mortgage, $160,000 and $40,000, respectively.  It was the classic ‘no money down’ purchase with a higher interest rate of 8%.

After purchasing the home, the Starbling’s welcomed a new baby to the family.  Soon after, Jeff’s wife lost her nursing job. They began having problems paying the mortgage due to the lack of income and certainly couldn’t sell the home, as the market values in the area had dropped by 30%. Instead, the Starbling’s decided to apply for a loan modification, widely touted as the answer for many struggling families.  After 5 months of negotiations, the news from the lender was not what they wanted or expected to hear.  The Starbling’s were rejected – due to the home being listed for sale. After exhausting every option available, the Starbling’s gave up on BOA and decided to move out last fall.

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America’s Foreclosure Crisis – Part III of the Starbling Story

On July 16th, I wrote Part II of the series on Jeff and Tiffany Starbling, the Florida couple who was working through the morass of the loan modification process at Bank of America/Countrywide. At that time, they had been in the “process” for over two months and despite the help of a very experienced attorney, Jennifer Shiffer, at the law firm of Pels Anderson PLLC in Bethesda, Maryland, they had yet to receive any formal notification from BOA/Countrywide that their loan had even been assigned to a loan modification specialist. The Starbling’s account had gone delinquent as of July 1st and was in the never ending repetitive quagmire of repeated calls from Shiffer, only to hear “we have nothing to report at this time, your case is being assigned and we will let you know”. Throughout July, August, and into September, the Starblings waited and waited to no avail. Continue reading

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Don’t Pop the Champagne Cork Just Yet!

Bank of America’s stock price used to be $53 dollars, then plummeted to $3, and now rebounds to $13.  When put into black and white, the “rebound” has little comfort. I got the same feeling when I read this article about home pricing rebounds at http://news.yahoo.com/s/ap/20090727/ap_on_bi_ge/us_new_home_sales. This is the reality with June’s new home sales figures (seasonally adjusted to 384,000) that came out this week.  Not to mention yesterday’s  Case-Shiller median home price numbers (for the largest 20 markets), which showed a modest improvement from April to May, but still down 17% year over year at $206,000. Continue reading

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Nero Fiddles, While Rome Is Burning

Part II of the Starbling Loan Modification Process – A Personal Look Into the Country’s Loan Modification Crisis

I really don’t want to be dramatic about a subject that is so serious. But my sense is that in today’s day and age, without drama, there is no real news coverage. While every network in America covered Michael Jackson’s funeral, they should be screaming from the hill tops about the crisis in loan modifications, because soon, this will crisis will reach epidemic proportions. And while I think Jackson’s music will always live on, many Americans’ dreams of homeownership are dying every day.

I have chronicled the story, thus far, of the Starbling family from Florida who bought a home in 2006 only to have its value drop by over 35%. To recap, Mrs. Starbling gave birth to their first baby this last spring, but with benefits running out last month, they have been unable to make the payments on the house. Since they put virtually no money down when they bought it, a traditional sale of the property is not an option. They have contemplated just giving the keys back to the bank, but opted to first see if they could get their loan modified, since they would like to stay in the house. Continue reading

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Loan Modification Process Wastes Valuable Time

What lender is dumb enough to modify a home loan and not reduce the monthly payment for the homeowner? How about almost everybody!  When you are bleeding to death, the doctor doesn’t suggest an IV!  The first order of business is to stop the bleeding.  So, why in the world would a lender modify a delinquent homeowner loan and not reduce the monthly payment? Shockingly, and against all common sense, this was apparently the norm last year.

Today, in an interview on CNBC, Federal Housing Finance Agency (FHFA) Chairman James Lockhart, stated that last year only 16% of loan modifications completed by their agencies (which include Fannie Mae and Freddie Mac) reduced the homeowner’s monthly payment. With that statistic, is there any question why 55% of these loan modification recipients went into default within 6 months?  This was a terrible case of wasted effort and wasted time, when there is no time to waste.  Continue reading

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Homeowner Loan Modification Tips

After observing the struggle of today’s homeowner, I began working with attorneys and homeowners on a personal level to help them navigate the loan modification process with lenders.  Through this process, I’ve gained inside knowledge of tips and tricks that I want to share with everyone.

Faced with an impossible choice of giving up their home or working with near-impossible bank constrictions, homeowners are facing foreclosures, short sales and looking for help with loan modifications. As I’ve said many times before, borrowers aren’t really worried about the fluctuation of their home values.  Most realize that the value of their homes has significantly decreased.  Bottom line, borrowers care about their monthly payment.

Most homeowners don’t want to lose their home. They still have good credit and don’t want to walk away just because they “bought at the high of the market”, and in the short run, may have made a bad deal.  Those thinking about trying for a loan modification are in for a tough time, as my first-hand observation of the process has exposed what homeowners need to arm themselves with:

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It’s The Monthly Payment Stupid, Part II

A Case Study of a Trapped Homeowner

Several weeks ago I went to my 25th high school reunion at my alma mater, Georgetown Prep, in Bethesda, Maryland. A classmate of mine, who is a reader of The Sumichrast Report, asked me for advice. His brother-in-law, Jeff, is upside down on his house and wanted to know what options he would have.  I spoke to Jeff the other day and here are some of the facts:

  1. Jeff and his wife bought an end-unit townhome for $200,000 in May 2006. They received 100% financing.
  2. At the time of the purchase, they had a gross combined income of about $8 0,000. (At a 100% financing, this is well inside the 3x normal borrowing limits that historically would qualify.)
  3. Their first mortgage was at a fixed rate of 6.875% in an interest only 5-year ARM. Their second (a HELOC) was at a considerably higher rate, but has recently been reduced by the bank to match the first. The lender was Countrywide, but is now Bank of America. They are current on their mortgage payments.
  4. They recently had their first child. Jeff’s wife is on maternity leave, but her disability payments are about to run out. She plans on getting another job, but it will be part time, so their income is tighter. They are worried about not being able to afford the house.
  5. Jeff had hoped that the house would appreciate in value and his fall back would be that he could resell it. But re-sale prices in their neighborhood are down 20%. Jeff believes his house is now only worth $160,000.

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Reducing Mortgage Deductions is Just Plain Dumb

Reducing mortgage deductions on a few spells class warfare.  Joe Robson, chairman of the National Association of Home Builders (NAHB), said in an open letter to President Obama yesterday, “with the housing market still reeling from its worst downturn since the Great Depression, this is not the time to talk about raising taxes on home buyers and home owners. This proposal will increase the cost of housing for many middle-class families.” He goes on to say, “the notion of ‘robbing Peter to pay Paul’ just won’t work. Not when the stakes are so high with our economy.”

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