Articles Posted in Mortgage Modification

The Home Affordable Modification Program, or HAMP, was introduced by the Obama Administration in 2009 as a lifeline for homeowners who were drowning. It was supposed to give some 4 million struggling homeowners the opportunity to hang on to their homes by offering them reduced monthly mortgages through loan modification.realestate

But according to a new report on the program, that help didn’t come easy, if it ever came at all.

In fact, for most of the intended target borrowers, it was a nightmare that ultimately ended in foreclosure. The federal oversight report indicates that six years after the program was unveiled, only about 887,000 people received home loan modifications. That’s less than a quarter of what was promised when Americans were first informed of the program. Continue reading

When we talk about the housing market recovery, many sources cite small but steady growth. However, there is reason to believe those figures are skewed by the higher-end market – specifically, those homes belonging to the top one percent.
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A recent report by Redfin, a California-based real estate researcher, shows that while sales of top-tier expensive homes are soaring, those involving the other 99 percent of homes are still falling – or climbing only incrementally.

Miami foreclosure defense lawyers point to Miami as a prime example. Here, while the number of homes sold from January through April of this year increased by 1 percent for the majority, homes in the top one percent price range increased by more than 56 percent.
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Long-perpetuated is the belief that poor people deserve their station. If they had only studied more, worked harder, sacrificed a greater deal, they wouldn’t be where they are now.
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Of course, this view negates the very real fact that poverty is cyclical, and the divide between rich and poor has grown exponentially in recent decades. People point to cases where those receiving food aid also have an iPhone. The reality is that the relative cost of electronics has dropped, making them more accessible, but the cost of things like education and child care – the very things that could help one rise out of poverty – have skyrocketed.

Miami foreclosure defense lawyers know it’s this kind of attitude that has allowed large financial institutions to pin the blame for the housing market crash on home buyers, ignoring the enormous role that their own greed, deceit and extensive abuse of the system played in the fiasco.
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For all the talk of economic improvements, it’s worth pointing out that, according to the latest figures from Zillow, 1 out of every 5 homes in the country is still underwater. graphs.jpg

These are homes where the owner has negative equity, meaning the borrower owes more on the mortgage than what the property is worth.

Our Miami foreclosure defense attorneys know that in Florida, the figures are worse. Where the national negative equity rate is 19.4 percent, in Broward County, it’s 25.3 percent. Granted, that’s lower than the 39.1 percent it was at last year, but it’s still more than 30 percent higher than the national rate.
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A principal reduction is the most effective type of home loan modification in Miami and elsewhere, DSNews is reporting.

Among three modification options — principal reduction, rate reduction or capitalization — a reduction in principal was the least likely to lead to re-default within 12 months, according to a report released by Amherst Securities. A Miami foreclosure defense attorney is best suited to assist you in a review of your case and a determination regarding the best course of action for your particular financial situation. As we’ve seen in far too many cases, banks cannot be trusted to deal fairly with the homeowner. And a principal reduction is the least-favored option of lending institutions. iStock_000019631104Large.jpg

And, of course, the unethical actions of banks across the board and throughout the downturn means you often cannot trust your lending institution to honor a deal even after an agreement is struck. In fact, there have been numerous documented cases in which a bank used the resulting arrears to launch a foreclosure action — despite the fact that the homeowner was making lesser payments as agreed.

The report noted the earlier a HAMP mod is completed, the more compensation a loan servicer stands to receive from the treasury. The Home Affordable Modification Program is among the government-backed answers to the foreclosure process and seeks to induce banks into working with struggling homeowners.

Thus some banks are starting to come around — particularly in cases where homeowners have retained experienced legal help. The report found principal modifications now account for 40 percent of all modifications — up from just 11 percent in 2010.

Only 12 percent of those granted principal modification re-defaulted within 12 months, compared to 23 percent for rate modification and 30 percent for capitalization.

The report found buyers are very apt to take a 30 percent reduction upon becoming delinquent and to see it as a “good deal.” Unfortunately, that same deal looks less attractive after nonpayment for 15 months or more. Homeowners offered such a break on the front end defaulted within 12 months in less than 20 percent of cases. Nearly one-third defaulted after being given modification on a loan that had been in arrears by a year or more.

The $25 billion robo-signing settlement signed by Bank of America Corp, J.P. Morgan Chase, Wells Fargo, Citicorp and Ally Financial — makes $10 billion available for principal reduction for underwater borrowers.
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Despite all the talk about the economy turning a leaf, our Miami loan modification lawyers were right on the mark: Most U.S. homeowners are still drowning.
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Seeking a Miami loan modification is one life raft that homeowners can grab hold of. Those with Ocwen home loans in Miami are at a special advantage in terms of the options available, with the unveiling of a new shared-appreciation mortgage that is being more widely offered.

Our Miami mortgage loan modification lawyers can help.

There is one thing, however, we wish we hadn’t been right about – the scope of the country’s housing crisis.

Zillow, a real estate listing and valuation service, has overhauled its whole methodology for figuring out which homes should actually be deemed “underwater.” That is, which homeowners owe more on their homes than what their property is actually worth.

What this new methodology indicates is that there are about 10 percent more homeowners with underwater mortgages – costing more than $300 billion than previously believed.

Those figures may be hard to wrap your head around, so here’s a little break down.

Back in March, another real estate valuation firm called CoreLogic figured that there were a little more than 11 million homeowners who were underwater. They represented about 23 percent of all of those individuals who held mortgages. They also collectively owed $715 billion more than what their homes were actually worth.

These are some of the most commonly-cited figures when we’re talking about the mortgage crisis.

So then we look at Zillow’s new tally. They have updated their figures to indicate that in fact 16 million homeowners are underwater. that breaks down to more than 31 percent of all homeowners. Additionally, it’s estimated that they owe approximately $1.2 trillion more than the value of their homes.

Zillow’s economists say that their new method of determining who is in default actually creates a much better picture of what’s actually happening. Rather than using databases of public records, the organization has teamed up with a credit rating agency that can estimate the total outstanding mortgage debt. Credit reports can offer a more up-to-date image of what’s happening, versus public records, which can only offer the value of a loan at the time it was approved.

the data shows that Florida has among some of the highest rates of underwater properties in the nation. For example, while the national percentage is at about 31 percent, the average for Miami-Fort Lauderdale stands at more than 46 percent. In Orlando, it’s nearly 54 percent. Of those, there were 27 percent and 20 percent of households, respectively, that were delinquent on their monthly mortgage payments.

Other areas that ranked particularly high were Las Vegas at 71 percent, and Phoenix and Atlanta, which were both ranked at 55 percent.

A Miami mortgage modification can be one solution for underwater homeowners. Seeking out an experienced attorney to help you navigate the murky waters and avoid the sharks is an invaluable investment.
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Miami foreclosure attorneys have been closely following the developments with regard to Ocwen Loan Servicing’s updated approach to dealing with underwater mortgages. die.jpg

Many have been hailing Ocwen’s loan modification in Miami and across the country as a novel way of addressing the crisis.

Our Miami loan modification attorneys have experience in handling Ocwen loan modifications, and we’ve been able to leverage significant principal reductions for our clients. This means they are now paying a fair market value rate, rather than the inflated rates they had previously been paying.

Through Shared Appreciation Loans, the financial institution lowers the principal balance, gives homeowners another chance to keep up with more realistic payments and then asks for a portion of the appreciation proceeds if the home is refinanced or sold.

But is it going to work?

Well if the figures from the pilot program in Illinois are any indication, this could be a turning point in the housing debacle – and possibly, our overall economic recovery.

In Illinois, the foreclosure landscape varies slightly from here in Florida, but the concept for implementation is going to be essentially the same. So in Illinois, there are more than 20 percent of homeowners who are underwater on their homes. That means that a fifth of homeowners there owe more on their home than what it is actually worth.

Ocwen holds more than 455,000 mortgages across the country. Of those, about 15 percent are underwater. Florida is in the same boat as Illinois in terms of having a higher percentage of underwater homes than average.

So of those who took advantage of the program in Illinois – which was about 80 percent of those eligible – less than 3 percent defaulted.

That’s a pretty promising success rate, particularly given the fact that other federally-sponsored home loan modification programs have default rates that stand at somewhere between 40 and 50 percent.

Those in charge of the program say giving homeowners an actual positive equity is important on a psychological level, and ups their motivation to stay current on their payments.

What’s also encouraging is that there is no cut-off level for the amount of negative equity the servicer is set to go. That means that even if you have a loan-to-value ratio that tops 150 percent or more, there’s a good chance you might still qualify.

Of course, the downside is that as of right now, it only applies to those who have mortgages that are serviced by Ocwen. When we look at the national figures, we see that’s actually a relatively small percent. Figure that there are about 11 million property owners who owe more on their homes than they’re worth. Of those, about 2 million are at serious risk of going into foreclosure.

Ocwen is a large mortgage servicing firm, but it still only holds about a half a million mortgage loans, and of those, 65,000 are underwater.

So even if this program does end up greatly assisting Ocwen customers, the rest are still going to be struggling.

It’s important for you to know, however, that if you are an Ocwen customer, you shouldn’t take your chances in hammering out a deal with them directly. In most cases, our Miami loan modification attorneys can help you negotiate a rate that will be most favorable to you.
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Miami foreclosure attorneys know that there have always been alternatives to foreclosure, but it required a financial institution that was at least willing to try to work with you. homeillustration.jpg

For the last few years, it’s been tough to wrangle that kind of cooperation.

But now, Ocwen Loan Servicing is formally rolling out its Shared Appreciation Mortgage Program. This is also known as SAM.

This is a unique (although not new) approach that the nation’s top mortgage servicer first tested in Illinois, following the housing crisis. Now, it’s being implemented in 32 other states, including Florida.

Of course, you still need an experienced Miami loan modification lawyer on your side.

In fact, our Miami mortgage modification attorneys have negotiated a number of claims on behalf of clients in South Florida to ensure they will pay principal on the fair market value of their home, rather than the inflated price they purchased it for. That kind of experience is critical when you’re going head-to-head with a large corporation. We know how Ocwen operates. We know how to make sure you’re going to get the best rate possible out of the deal.

We’ve previously explained SAM loans on our Miami Foreclosure Lawyer Blog, but for those who might have missed it, it’s basically this:

If you’re underwater on your mortgage, Ocwen will reduce your principal payment to 95 percent of the home’s current value. Then over a period of three years, the amount that the loan was reduced by is forgiven, assuming you remain current on your payments. then after that, if you sell or refinance your home, you keep 75 percent of the appreciation value, while the rest will go to the investor. If the home gets sold before the three-year period is up, the portion that was written-down is still forgiven because the bank doesn’t expect that the housing market is going to see any real rebound in the next few years.

What this does is essentially give people positive equity in their home. The theory is this is not only good for the homeowner personally, but for the investor and the economy as a whole.

What’s telling, however, was a quote given by Ocwen’s general council recently in the Chicago Tribune. What he said was basically that homeowners fight and try to save their homes – “Herculean efforts” he called them. And yet, they see no returns. So underwater homeowners get to a point where they stop trying because they feel hopeless. He said that what this measure does is give them “some sliver of positive equity.” A sliver.

Now, sometimes, that’s all people might need in order to get back on their feet. However, you may be entitled to more than that, depending on the circumstances of your case.

That’s why it’s important that you don’t try to negotiate with Ocwen – or any bank – directly about these matters.

When the bank tested the program in Illinois last year, about 80 percent of borrowers who were offered the program accepted it. Since then, about 3 percent have defaulted, but the rest have stayed current.

Ocwen estimates that roughly 65,000 of the nearly half a million mortgages it services are underwater and at least one month behind on payments.
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At a roundtable discussion that included officials from top federal agencies, Ocwen Loan Servicing discussed its efforts at mortgage loan modifications in Miami and beyond. boardroom.jpg

Our Miami loan modification attorneys have negotiated several cases on behalf of clients whose loans were held by Ocwen, and were able to establish their principal payments at a fair market value.

People with Ocwen loans may be at somewhat of an advantage considering the institution is implementing more forward-thinking options to its customers than other loan servicers. However, that does not mean you would be wise to approach the process on your own. Despite its efforts to reach out to underwater homeowners, it is still just a business that is looking out for its own interests. You need someone who is watching out for yours.

We have experience in handling Ocwen loan modifications – going toe-to-toe with the bank and winning a fair market value loan amount for many of our clients.

At this recent roundtable discussion, which stretched on about three hours, participants included officials with the Federal Deposit Insurance Corporation, the U.S. Department of Treasury, the Federal Housing Finance Agency, the HOPE NOW Alliance, Fannie Mae and Freddie Mac – and Ocwen Financial Corporation.

It’s interesting to note that Ocwen has put itself in a position to lend an ear to our representative government officials. Some of what was discussed in the meeting:

  • How Freddie Mac and Fannie Mae are implementing a servicer alignment initiative to aid distressed homeowners;
  • How the Obama Administration might be able to assist more underwater homeowners in their applications for loan modifications and other foreclosure alternatives;
  • How unemployed or underemployed homeowners, now relying on federal or state assistance, might go about qualifying for loan modifications;
  • How the Treasury Department is carrying out its “Hardest Hit Program,” which offers some relief to those in neighborhoods that have been devastated by foreclosures;
  • How to incorporate Internet outreach to individuals who need counseling or other sociel support services;
  • How to protect homeowners from scammers intent to target underwater homeowners at a time when they are at their most vulnerable.
  • How there might be more collaborative efforts between mortgage servicers like Ocwen and grassroots service groups that could result in early-on assistance that could help avoid the foreclosure process before it starts;

Ocwen’s CEO was quoted as saying that banks as well as investors, communities and businesses all have a stake in keeping people in their homes.

(We would note that perhaps they should have thought about that before participating in tactics that have resulted in a massive wave of foreclosures throughout the nation.)

But we digress.

Sure, we do applaud Ocwen’s efforts, at least as compared to those made by other institutions, to implement more creative solutions to the problems their customers are currently facing. Namely, there is the SAM modification program, which allows homeowners to finagle a fair market value for their home.

However, it doesn’t excuse their past actions and it doesn’t mean that they are doing you any favors to allow you a mortgage modification.

If your Miami loan is serviced by Ocwen, call our experienced Miami foreclosure defense attorneys, who can help you explore all your options and who will ensure that your rights are protected throughout the loan modification process.
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Ocwen loan modifications have been getting a great deal of media attention in recent weeks, and our Miami foreclosure attorneys wish to parse some of the details of why. handshake.jpg

First, if you are underwater on a loan that is serviced by Ocwen Loan Servicing and are trying to avoid a Miami foreclosure, you need to contact our loan modification lawyers, who have been successful in numerous other instances in getting fair market value rates for once negative-equity Ocwen loans.

We know how to do battle with Ocwen so that you have the best possible chance at securing the best rate possible.

That being said, let’s take a look at what Ocwen is doing differently from other financial institutions.

It’s called a shared-appreciation mortgage. It’s also sometimes called shared-equity mortgage, but it’s been coined SAM for short.

The whole concept has been around for many decades, but it never really seemed to gain much steam here in the U.S.

Ocwen is one of the largest independent mortgage servicers in the country, so it is absolutely noteworthy that it is doing things a little differently.

A SAM is essentially a form of mortgage in which the lender lowers the principal mortgage rate to about 95 percent of what the fair market value is. What that does is give the homeowner a positive loan-to-value ratio. The homeowner can then keep current on his or her payments. It is believed then that a few years down the line, the home should appreciate at least marginally in value. When and if the homeowner decides to sell it, the bank will be entitled to a portion of that sale money.

So for example, let’s say you had a home that was worth $200,000. However, due to the housing bubble, your loan amount actually stands at about $250,000. At that rate, you’re underwater and your chances of defaulting are high. So in a SAM, what the bank does is lower your principal mortgage to say, $190,000. Over the next three years or so, the amount that they reduced your loan by is forgiven incrementally. That ensures that you stay there a while, and also that you will keep up-to-date on your payments. Then after the given time frame, if you choose to sell it, let’s say you do so for $210,000. That means you would give a portion of the profit – let’s say 25 percent or so – back to Ocwen Loan Servicing. So they get about $3,000 out of the deal, which is their way of recouping at least some of the loss they accrued by writing down the higher debt.

Many people are lauding this as a great way to address the housing crisis on a widespread scale. And certainly, our Miami foreclosure lawyers believe it is a better approach than what some of the other large financial institutions have been doing (which typically amounts to the bare minimum).

However, as with any financial company, Ocwen, which has offices in West Palm Beach, is not doing it to be benevolent. Your best interests are not their No. 1 priority by any means.

So yes, a loan modification along these lines may actually be the best option for you. But you shouldn’t try to negotiate the terms of this kind of agreement on your own. Contact an experienced Miami loan modification attorney who can hash out the details for you.
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