My wife and I have been involved in negotiations with our loan servicer, Ocwen for over a year now. Long before the Obama administration and US Treasury Department introduced the Making Home Affordable plan. We're getting close to the end, but the end might very well mean losing our home.
We weren't sub-prime borrowers, speculators or driven by greed. We moved from Seattle and bought a modest home in Salem, Mass. to be closer to family. One morning last year, we woke up and that modest 1200 square foot home lost 40 percent of its value. We've been fighting to keep it ever since.
Arianna Huffington wrote an article last week on how the deck is stacked against homeowners when it comes to legal representation in foreclosures and mortgage related cases. In the article she addresses not only the prohibitive costs of legal representation for most people, but also the point that even homeowners with representation face restrictions that are deliberately built into the system.
In her post she writes:
Remember the "Contract With America"? It turns out one of its provisions severely limited the ability of homeowners to get legal protection from predatory lenders. For instance, homeowners represented by the Legal Services Corporation are barred from bringing class action suits. Nor are they able to make the other side pay attorneys' fees even when the law would normally allow it.
Even something now as mundane and commonplace as bankruptcy can cost $3000 in legal fees. Not a small amount for someone who can't afford to pay the mortgage on a home that has depreciated in value by 30 to 40 percent. From a value, by the way, that was artificially inflated by the banks and lenders to begin with.
These same banks and lenders lobbied and fought like hell to kill the Helping Families Save Their Homes in Bankruptcy Amendment, which would have authorized federal bankruptcy courts to modify, or "cram down," the terms of mortgages on certain primary residences. They managed to convince enough senators to vote against the bill back in May by giving campaign contributions. A bill that would have created an added incentive for lenders to work with homeowners and might have pushed the industry into taking a different approach to the Making Home Affordable plan.
There are of course other channels of assistance for the foreclosure fiasco. Each of these comes with its own set of consequences and mine fields.
We first tried HUD, who referred us to Hope for Homeowners, a government agency, who in turn put us in touch with one of their sub-contractors, Novadebt. We had the distinct pleasure of dealing with Diane Esquera, who proceeded to tell my wife that it was people like us who had caused the economic meltdown and that we needed to "trim the fat." She instructed us to wear sweaters in the house during the winter months and cancel our phone service, among other idiotic suggestions. She then determined that we were lucky to have a 13 percent interest rate on a home that had lost 40 percent of its value over night and then promptly reported her findings to our lender.
As a result of the damage done by Novadebt and before knowing any better we hired a loan modification company that was "highly recommended" by people in the industry. Turns out that was a scam. We did end up getting our money back after several months of phone calls, e-mail, letters and more than a few calls to the Attorney General's office, but the months leading up to that were far from fun.
Another option is the media, according to an article in Propublica:
Qualified homeowners are being routinely denied loan modifications through the Obama administration's Making Home Affordable plan, but they have little recourse to correct the mistaken denials, housing advocates say. In the absence of an effective appeals process, some borrowers have improvised their own solutions: They turn to journalists or congressmen - or take Treasury Secretary Timothy Geithner to court.
And while the media can certainly help to get the word out and your particular problem noticed, the onslaught of cruel, insensitive, and insulting comments from angry and anonymous pro-corporatism wing-nuts could make you think twice before coming forward publicly.
If you're lucky enough to be represented by someone like Maxine Waters (D-CA) who has called banks on behalf of her constituents or Marcy Kaptur (D-OH) who stood on the floor of the Senate and said, "So I say to the American people, you be squatters in your own homes," you may have a chance.
But if you're like us and live in Massachusetts and call and e-mail your Congressman relentlessly for the past year, you get a half-hearted voice mail message from his office that says, "I didn't realize you required or expected some kind of action on it," in reference to the most recent e-mail updating him on the impending loss of your home.
Really? You didn't see the urgency of a call back to a family losing their home?
As for Barney Frank and Kennedy? They referred us to our congressman, John Tierney.
So when we're reading a proposed modification from self-proclaimed heroes of the loan servicing industry that includes statements like, "Any expenses incurred in connection with the servicing of your loan, but not yet charged to your account as of the date of this Agreement, may be charged to your account after the date of this Agreement," buried in Section 10 Article C of a three page "Standard Agreement" while leaving out other pesky details. You know, like the terms, an amortization schedule, or any disclosure of the possible fees, do we have any choice but to hire a lawyer for $200 an hour to look this over? It would appear that we'd be agreeing to any arbitrary charge from now until the end of the loan.
And what do you do when you ask for clarification and that same hero bank says they don't have a legal obligation to disclose the terms and if we don't like it they'll go ahead and foreclose and take our home? It seems that the deck, as Arianna points out, is most certainly stacked against us.
When contracts are written with this degree of sloppiness and ambiguity should the Treasury Department really be surprised that homeowners are turning down modification from banks they don't trust? And rather than working with behavioral economists, as mentioned in a recent HuffPost article, Mortgage Loan Modification: More Offers Extended, Fewer Homeowners Accepting -- Are Homeowners Losing Hope, shouldn't they be overseeing these contracts and talking with homeowners directly?
Maybe my next post will be "Why I Turned Down a 3 Percent Loan."
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Les Leopold: Stop Whining: Wall Street's Record Profits, Pay, Dow 10,000 Are Great News
It's time to recognize what it means to be part of the billionaire-bailout nation. Citizenship comes in three distinct flavors.
I know that sounds harsh, but bottom line is that banksters will not help you. Public shaming by Treasury has not worked and despite billion-dollar bailouts, banksters show no gratitude toward the taxpayers who bailed them out. The banksters are putting you and your family through hell and you have little or no judicial remedy. When the game is rigged, stop playing.
Do you think these banksters care if you end up homeless? The priority should be to protect our families from the stress and strain of foreclosure and say scr3w it to the "sanctity of contract" with the lenders.
Banksters have forgotten that banking is a public service with its rights to be in business granted by state or federal charter. Banks need to become public servants again.
I've been through hard times, too, and ended up paying $2500 in fees to stop a foreclosure action. But most of it was my own fault for working too hard, being too tired, not staying in touch with my lender, not forcing my employer to pay the huge sum owed to me for 6 months, not asking for help from my family, etc, etc. But the lesson I learned, maybe, was worth that $2500. And that was that "they" (whoever "they" is) are sharks and to survive we have to avoid them, hit back if they attempt to bite, don't bleed if we get bitten, and stay close to the people we love and who love us.
I'm going to make the guess that the value of homes will rise again, if you can hold on that long. "They" can't let it stay the way it is; they need financial "action"...like junkies. They made money raising the value of property. They may be making money now getting assets at a low cost. And They need to have the value of those assets rise again so They can sell them, making more profit.
That what an ARM used to be isn't what it is today. They don't all go down when the market goes down. That mortgages are over 250 pages thick? You knew all this when you asked that question right?
Personally, I suspect all modifications are purposely written ambiguously to buy time: the lenders receive both federal funds for modifying the loans AND the monthly payments from the homeowners bogus modified agreement while they wait for the market to bounce back; and when it does, I suspect these "modifications" will be null/void, and with a higher value property, the lenders and their investors will be in a great position to negotiate either a higher mortgage or a profitable foreclosure.
The results remain: homeowners continue to be at risk due to lack of disclosure and predatory practices.
If you find yourself in this situation...send a letter to the lender's Ombudsman and request they fully disclose the terms of any Agreement (even if they assert it's just a standard document) they send you to sign. DOCUMENT EVERYTHING: phone calls, conversations, dates, and times of any action. Alert your Attorney General, and your State representatives. Get involved with State Legislature - many states have or are in the process of implementing tougher foreclosure laws because Congress hasn't done squat. And if your elected Congressional reps have done nothing for you, don't vote for them. And forget about voting via party lines. Look for independents and progressives because it's clear, there's no party who cares about us anymore - they're working for themselves.
Also, stay in your home. I totally agree that foreclosees should be squatters in their own home. All humans deserve shelter just for being alive, and the purpose of the government is to pool our resources so that we all benefit. Everyone deserves shelter, but these banks are playing a game with us collectively. They are asking us to stand up for ourselves and demand the respect we deserve. If everyone who was foreclosed on squatted in their homes, it would a lot harder to kick them out. If communities organized themselves they could literally put a stop to this immoral practice. Thirty years is a long time, and if they can't give you any grace during a period of that time, they don't deserve to do business with you, they aren't respecting you. We know their priority is money, no matter the human cost, and that's not good enough. Keep your home, free and clear. There's more than enough wealth for all of us to live comfortably. United we stand, and more than a few of us are rooting for you.
The time for term limits is now!
These are long term commitments!
"Not a small amount for someone who can't afford to pay the mortgage
on a home that has depreciated in value by 30 to 40 percent. From a
value, by the way, that was artificially inflated by the banks and lenders
to begin with."
I read this and I think "Could you afford to pay the mortgage on that same
home that HASN'T depreciated in value by 30 to 40 percent?" If you could,
then you can still afford it. The depreciation didn't cause the 'I can't afford
it now' situation.
I find it incredible that people will indenture themselves to a mortgage
company for 30 years--30 YEARS!--without doing some research!
In my city, everything about a house on my street is available online--
when it was built, how many times it has turned over, how much was
paid every time it did turn over, the square footage of the house, the
square footage of the lot, what the county appraises either/both for, was
it a quit deed, does the landlord list it correctly (i.e., is it a single family
rental or a duplex), the name and address of the current owner whether
living in the house or in Hawaii, whether it is a vacant lot or has a shed
on it--what do you want to know--I can tell you!
Research, research, research!
Did he assume a loan he couldn't pay for? Did he assume a loan with an APR that he knew had a higher risk?
My home has lost value - but the payment is still the same and it's still affordable for me since I did everything up front to ensure I could afford my home. Fixed rate, affording purchase price, affordable mortgage amount, agreed upon interest rate with my bank.
I don't want to appear heartless - but if it's your home, your credit, and your responsbility - accept it. And you'd better buy what you can afford. If you can't afford it - you don't deserve it.
The individual question is, why would I? This "stuff cover" will never appreciate to what I originally paid for it. And, spin it as you would like, this is the biggest investment I will make over my life time. Are you proposing, as a business decision, that I keep my money in a bad investment?
Goldman Sachs certianly didn't. They CERTAINLY saw the crapstorm coming and they dumped all of their toxic assets except the ones AIG insured. And boy, let the bonus roll. . . (http://www.mcclatchydc.com/100/story/77791.html)
I will gladly take the hit to my credit so that I can actually do something wise with my future investments, of course, my friends and family that have lost their jobs because of reckless "financial backbone" policy and procedures, which as a result tanked our economy, also cannot pay their mortgages. Shall we just have them invent a ponzi scheme?
Everyone else did.
Peace.