July 1, 2010: The Home Affordable Unemployment Program (HAUP) starts August 1, 2010 (it was originally slated to begin July 1). It is designed to offer unemployed homeowners a forbearance plan to temporarily reduce or suspend their mortgage payments. See www.hmpadmin.com/portal/docs/hamp_servicer/sd1004.pdf for a copy of the Supplemental Directive which provides the eligibility criteria. Current HAMP participants on a trial program may be converted to a forbearance plan under HAUP in the event of job loss.
June 1, 2010: HAMP is now available for homeowners in bankruptcy. Following the filing of a bankruptcy, homeowners should re-apply for HAMP modifications and participating servicers now have to approve qualifying homeowners under HAMP.
Home Affordable Foreclosure Alternatives Program (HAFA): The HAFA program went into effect on April 5, 2010 to provide incentives in connection with a short sale or a deed-in-lieu foreclosure. Servicers participating in HAMP are also required to comply with HAFA. A list of servicers participating in HAMP is available at: www.makinghomeaffordable.com/contact_servicer.html.
HAFA provisions:
- Complements HAMP by providing a viable alternative for homeowners who are HAMP eligible but nevertheless unable to keep their home.
- Uses borrower financial and hardship information already collected in connection with consideration of a loan modification.
- Allows borrowers to receive pre-approved short sales terms before listing the property (including the minimum acceptable net proceeds).
- Requires borrowers to be fully released from future liability for the first mortgage debt (no cash contribution, promissory note, or deficiency judgment is allowed).
- Provides the following financial assistance:
- $3,000 for borrower relocation assistance;
- $1,500 for servicers to cover administrative and processing costs;
- Up to $2,000 for investors who allow a total of up to $6,000 in short sale proceeds to be distributed to subordinate lien holders.
IMPORTANT: YOUR HELP IS NEEDED! The Florida Bankers Association has proposed a new piece of legislation titled,“The Florida Consumer Protection and Homeowner Credit Rehabilitation Act”. The 2010 Florida Legislative Session starts March 2. We are encouraging all of our clients, friends and colleagues to get actively involved to kill this bill.
- Complements HAMP by providing a viable alternative for homeowners who are HAMP eligible but nevertheless unable to keep their home.
- Uses borrower financial and hardship information already collected in connection with consideration of a loan modification.
- Allows borrowers to receive pre-approved short sales terms before listing the property (including the minimum acceptable net proceeds).
- Requires borrowers to be fully released from future liability for the first mortgage debt (no cash contribution, promissory note, or deficiency judgment is allowed).
- Provides the following financial assistance:
- $3,000 for borrower relocation assistance;
- $1,500 for servicers to cover administrative and processing costs;
- Up to $2,000 for investors who allow a total of up to $6,000 in short sale proceeds to be distributed to subordinate lien holders.
IMPORTANT: YOUR HELP IS NEEDED! The Florida Bankers Association has proposed a new piece of legislation titled,“The Florida Consumer Protection and Homeowner Credit Rehabilitation Act”. The 2010 Florida Legislative Session starts March 2. We are encouraging all of our clients, friends and colleagues to get actively involved to kill this bill.
- Complements HAMP by providing a viable alternative for homeowners who are HAMP eligible but nevertheless unable to keep their home.
- Uses borrower financial and hardship information already collected in connection with consideration of a loan modification.
- Allows borrowers to receive pre-approved short sales terms before listing the property (including the minimum acceptable net proceeds).
- Requires borrowers to be fully released from future liability for the first mortgage debt (no cash contribution, promissory note, or deficiency judgment is allowed).
- Provides the following financial assistance:
- $3,000 for borrower relocation assistance;
- $1,500 for servicers to cover administrative and processing costs;
- Up to $2,000 for investors who allow a total of up to $6,000 in short sale proceeds to be distributed to subordinate lien holders.
IMPORTANT: YOUR HELP IS NEEDED! The Florida Bankers Association has proposed a new piece of legislation titled,“The Florida Consumer Protection and Homeowner Credit Rehabilitation Act”. The 2010 Florida Legislative Session starts March 2. We are encouraging all of our clients, friends and colleagues to get actively involved to kill this bill.
- Complements HAMP by providing a viable alternative for homeowners who are HAMP eligible but nevertheless unable to keep their home.
- Uses borrower financial and hardship information already collected in connection with consideration of a loan modification.
- Allows borrowers to receive pre-approved short sales terms before listing the property (including the minimum acceptable net proceeds).
- Requires borrowers to be fully released from future liability for the first mortgage debt (no cash contribution, promissory note, or deficiency judgment is allowed).
- Provides the following financial assistance:
- $3,000 for borrower relocation assistance;
- $1,500 for servicers to cover administrative and processing costs;
- Up to $2,000 for investors who allow a total of up to $6,000 in short sale proceeds to be distributed to subordinate lien holders.
IMPORTANT: YOUR HELP IS NEEDED! The Florida Bankers Association has proposed a new piece of legislation titled,“The Florida Consumer Protection and Homeowner Credit Rehabilitation Act”. The 2010 Florida Legislative Session starts March 2. We are encouraging all of our clients, friends and colleagues to get actively involved to kill this bill.
The name of the bill alone should cause you great offense as it is terribly misleading as it is intended to end the judicial process for foreclosure suits in the State of Florida. This would cause a dramatic and unnecessary change to Florida’s Homestead and Property Rights. Rather than fix the system that has caused predatory lending, unnecessary defaults and unclear ownership and title issues, the banking industry wants to gloss over the problems and simply do away with legitimate defenses and homeowners’ rights. How is the consumer protected by this bill? How is the homeowner’s credit rehabilitated? This is what the bill purports to do. These are questions you should ask your representative. If this bill passes, you can expect foreclosures to steamroll through in a non-judicial forum in as little as 90 days.
How does this help a homeowner who has an affordable home and wants a simple modification? I can’t count the number of people who have called me stating that they have faxed and re-faxed their financial documentation into a black hole seeking modification. These are people who for the most part got behind due to job loss or less hours/overtime. They can afford a reasonable payment, sometimes even in the same amount, but need the few months of past due payments added to the balance of the note so they can be considered current again. These people have been in the modification process for eight months sometimes. Stories abound of people being told their modification was denied because of missing documentation only to have to start all over.
Here’s an example I received today (February 16, 2010):
I wanted to let you know that my lender, GMAC, recently sent me a letter stating they denied our request for modification because they didn't receive the required documentation. This is interesting because right after they filed the foreclosure complaint I applied for the modification, sent them the documentation they required, was told repeatedly by GMAC that it had been approved and they had mailed me the paperwork, however the paperwork never arrived. This was just before I retained your firm. They told me not to worry about the foreclosure anymore because I had been approved for the modification. I explained to them that I still had to answer the complaint, but they said not to worry about it at all. I spoke to them every day for 3 weeks - even with a supervisor - asking them for the modification paperwork, but it never arrived. They kept telling me it was in the mail, it was sent Fed Ex, they re-sent it, they couldn't fax or email it because they needed to send me the originals, etc., etc.
This client still hasn’t received the modification paperwork and the foreclosure case was filed in mid November 2009. Has GMAC really done everything possible to modify this mortgage?
Alex Sanchez, president of the Florida Bankers Association (the group behind this legislation) is quoted as saying "Our bankers are working to keep Florida families in their homes. But if eight months go by and you can't work something out..." This insinuates that it is our homeowner clients who are at fault.
If a lender can’t get a modification approved in eight months, how can it be expected to do so in as little as 90 days without judicial oversight. Make the lenders account for their wrongs. Make the lender prove it owns and holds the note and mortgage. Don’t let homeowners be kicked out in 90 days without due process. Kill this bill.
By the way, this bill would also end the recent mediation requirement put into effect by the Florida Supreme Court which was designed specifically to address the failure of communication between the borrower and lenders.
Use the website below to find your Florida Representative or Senator. Contact their office and make sure they know you’re opposed to consumer rights being trampled. Please send your story about how you have been affected by this crisis and your modification attempts to:
http://www.myfloridahouse.gov/
Without your help, the banking lobby will be the only ones with our representatives and senators ears. The full text of the bill may be found at:
http://74.125.47.132/search?q=cache:50NlYTuQ6RgJ:blogs.tampabay.com/files/foreclosurebill.docx+The+Florida+Consumer+Protection+and+Homeowner+Credit+Rehabilitation+Act.&cd=1&hl=en&ct=clnk&gl=us&client=firefox-a
December 28, 2009: Mediations now mandatory for all new foreclosure filings:
Recognizing a communication problem exists, the Florida Supreme Court recently ordered on December 28, 2009 that all newly filed foreclosure cases be submitted to mandatory mediation if so elected by the homeowner for homestead properties. Mediators are being trained to handle the new cases right now. This administrative order by Chief Judge Peggy Quince guarantees that homeowners will have an audience with their lender to discuss whether a loan modification or short sale is an option instead of foreclosure. The lenders are responsible for paying a $750 fee per case to help pay for the mediator and cover administrative expenses. “We’re not interested in forcing people to settle, but there seems to be an inability to communicate between the borrower and the lender, said 11th Circuit Judge Jennifer Bailey, chairwoman of a statewide task force on foreclosures. If the above bill passes, this will end the mediation process before it even gets going.
What happens when modification doesn’t work?
Effective April 5, 2010, the Treasury is offering incentives on short sales by providing a $2,500 subsidy, $1,000 to the servicer and $1,500 to the seller for moving expenses. Deficiency waivers are required for participation in this program. This will be the year of the short sales. How does the government encourage short sales? By pushing programs like this where incentives exist (albeit minor) and waivers of deficiency are required. I expect to hear about changes to future financing laws to eliminate or relax the penalty for short sales on your record when seeking to buy a new home. Also the huge buyback program initiated by our government to have Freddie and Fannie buy mortgage backed securities may result in more short sales and agreements to waive deficiency balances.
ALERT: Lenders are getting more aggressive about recovering losses after short sales (July 10, 2009):
http://sanfrancisco.bizjournals.com/sanfrancisco/stories/2009/07/13/story15.html
From the San Francisco Business Times (July 10, 2009): Sellers owe balances after short sales.
The rising tide of "short sales" by troubled homeowners facing foreclosure is prompting lenders to become more aggressive in their attempts to pursue former homeowners for their loan losses in a short sale. In a short sale, a house is sold, with a lender's approval, for an amount that won't pay off the mortgages on the property. Often, the troubled homeowner assumes the loss will be eaten by the lender. But Bank of America and Chase have quietly added language in their short-sale agreements that require the borrower to sign a promissory note for the shortfall. A spokesman for the American Bankers Association said this week that he wasn't aware of the practice, suggesting how little attention has been paid so far to collection of these notes from troubled borrowers. BofA says its intention is to protect investors holding the mortgages.
This is nothing new. Zach Fox (when he was still at the NC Times) reported in April: Lawyers say lenders set stage to collect on 'short sales'
http://www.nctimes.com/articles/2009/04/25/business/z096c1b1a5c67baac8825759a00757a6f.txt
Lenders appear to be inserting language into short sale contracts that allow them to sue for any "deficiency," or the amount lost by a bank by selling a home for less than the mortgage ---- opening the door to collection agencies and court judgments that can run into the hundreds of thousands of dollars for some North County homeowners.... One real estate agent who specializes in short sales, Chris Mackey of Carmel Valley, said about 50 percent of the short sale contracts he has seen include the language before he requests its removal. Banks generally have removed the language, he said. ... the North County Times obtained a short sale contract issued by Countrywide Financial Corp ... The contract warned the homeowner, who owned a house in El Cajon, that Countrywide "may pursue a deficiency judgment for the difference in the payment received and the total balance due ... "It sounds like the banks will remove the language if asked. I'd suggest having a lawyer review the contract, and make sure "all loans are extinguished and debts forgiven".
Delays Hamper Obama's Housing Plan (USA Today June 19, 2009):
The Obama administration's $75 billion program to reduce foreclosures has been beset by backlogs and delays, leading many overstretched homeowners to complain about unreturned phone calls and inaccurate information from lenders, while others say they were denied help for reasons that weren't clear. Details of the plan were unveiled in early March. The goal is to prevent up to 4 million foreclosures by having banks modify loans into more affordable monthly payments. Since its debut, the plan has led to offers of more than 190,000 mortgage modifications with lower monthly payments, according to the Treasury Department. During that time, lenders either have started or advanced foreclosure proceedings against more than 1 million homes, according to RealtyTrac. About 20% of those were foreclosed upon and repossessed. The Center for Responsible Lending says 2.4 million Americans are at risk of foreclosure in 2009, and 8.1 million could be over the next four years.
Find this article at: http://www.usatoday.com/money/economy/housing/2009-06-18-obama-plan-mortgages_N.htm?poe=HFMostPopular
Our clients are finding that it is taking two to six months to hear back from their lender regarding a loan modification. Information is having to be re-submitted multiple times because it is either outdated by the time the lender can review it, or was lost. It is important that you stall or stop the foreclosure process to gain the necessary time and leverage to modify your loan.
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Strip your 2nd mortgage in a Chapter 13 bankruptcy: We are seeing many more homeowners able to strip off second mortgage liens in a Chapter 13 due to the decreases in property values.
Under existing bankruptcy law, second and third mortgage and HELOC liens can be stripped from your homestead when there is no equity securing them. For example, if an appraisal shows that your home is worth less than what is owed for your second mortgage, you can strip this second mortgage off the property in a Chapter 13 bankruptcy. If you believe that you would qualify for this, please talk with a bankruptcy attorney regarding this very important lien stripping right as it could save you tens of thousands of dollars.
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Lenders are presently determining if they will volutarily participate in the Obama Housing Plan (Housing Affordability and Stablization Program). To learn more about this Plan and the different options that may be available, there is additional information at www.financialstability.gov and www.tinyurl.com/DoIQualifyForMortgageHelp. Some of the aspects of this program allow participation only if your loan is a Fannie Mae or Freddie Mac loan.
To see if your loan is Fannie Mae or Freddie Mac owned or guaranteed please use these links (very easy, and quick governmental response surprisingly): www.fanniemae.com/homepath/homeaffordable.jhtml and www.freddiemac.com/avoidforeclosure/avoiding_foreclosure_form.html.
We are hoping that this Plan will help more homeowners than the Hope Now program announced in December 2008 which to date has had very little lender participation (as of mid-February it has been reported that only 40 loans nationwide have closed under that program). However, with the delays under HAMP, this plan after four months doesn't seem to have made much of a dent in the foreclosure crisis.
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Please check back frequently for updates (we anticipate providing updates on news items we believe are of interest to our bankruptcy and foreclosure defense clients). Thank you for taking the time to review our Website and feel free to contact us if you have specific questions.