Polishing a turd definition: The act of trying to make something hopelessly weak and unattractive appear strong and appealing. An impossible process that usually results in a larger, uglier turd.

Example: She tried to look more attractive by getting plastic surgery, but let’s face it, you can’t polish a turd.

“Bottom line America, thousands of homeowners are just walking away from their underwater homes every month and any loan modification plan that does not address “true” market real estate values is a plan made to fail and a mortgage turd that cannot be polished.”

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Attorney General Alert: We at LoanWorkout.org “believe” that your recent unfair and deceptive predatory lending settlements can be parlayed and effectively used against the incredibly unfair and deceitfully deceptive mortgage servicing industry.

A mortgage servicer’s fiduciary duty is “only” to the investor for which they are servicing the pool of mortgages for and not the homeowner. Every loss mitigation technique they perform, such as a loan modification, repayment plan and or short sale needs to be in the “best interests” of the trust and these instructions for servicing a pool of mortgage loans are outlined in what is called a ‘Pooling and Serving Agreement’ or PSA.

A mortgage pooling and servicing agreement describes how pooled loans will be serviced and dictates how proceeds and losses will be distributed to investors. Read the rest of this entry »

The great debate facing our nation is over loan modifications and what lenders are doing to truly help struggling homeowners.

Bottom Line: The American people simply cannot trust their lenders, mortgage servicers and Hope Now to do the right thing and it looks like our government has had about enough lip service.

I am going to start this with two simple issues that will make sure that any efforts by Washington will not work unless they are addressed and handled properly. #1, Loan modifications without massive principle reductions will not work in the long term and #2, 100% lender and mortgage servicer cooperation will NEVER happen! Read the rest of this entry »

Fannie, Freddie, Countrywide, Bank of America, Chase and now Citi have all jumped on the proverbial billion dollar loan modification train. It makes me wonder if this has to do with Barack Obama becoming President and his “proposed” solutions for the mortgage and housing crisis…

Earlier today I wrote a post title, ‘Lender Loan Modification Lip Service: Don’t Believe the Hype!’ in which I criticized these lender loan modification press releases has just flat out propaganda and it appears that Senator Schumer from the great state of New York agrees with my sentiments.

It’s as if these lenders all called each other  over the weekend and said, “Oh shit guys, looks like Obama’s our new president and he wants to give federal bankruptcy courts the power to modify these loans. So, we better do something and we better do it fast!” (Their brilliant ideas are press releases announcing billion dollar loan modification plans, which seems to get the media going in the direction they want. But Schumer and I seem to see through the loan workout smoke and home saving mirrors!)

Read the rest of this entry »

I have been blogging, stressing and ranting about loan modifications long before it became hip and cool to talk about helping struggling homeowners and taking the consumerist approach to the crisis.

Even before Sheila Bair of the FDIC and most of the non-profit advocates piped in on loan modifications, I was telling it like it is here on Loan Workout and Loan Safe well before it became hip to do so. This blog is going on over 16 months, over 700 articles on the subject of loan modifications and has had  millions of visitors. We are the real deal!

So with that said, I have seen, read and researched it all and I am telling the media and the public, DO NOT BELIEVE THE LENDER LOAN MODIFICATION HYPE! AKA PROPAGANDA… Read the rest of this entry »

California Gov. Arnold Schwarzenegger is imposing 90-day stays on foreclosures and encouraging lenders to modify existing home loans as a way of keeping people out of foreclosure, state officials said on Wednesday. The Governor will ask lawmakers to back legislation  on California home foreclosures as part of an economic stimulus package, state officials said on Wednesday.

The Republican administration on Wednesday announced a plan to encourage lenders to modify existing home loans as a way of keeping people out of foreclosure.

Both state and federally regulated lenders operating in California would be affected by Schwarzenegger’s plan.

Other provisions of his plan are more likely to produce good results - such as his proposals to expand fiduciary duties for brokers (so borrowers know they’re getting a loan that suits their circumstances) and penalize brokers who make false statements. The California Legislature should pass those proposals quickly, and address the rest of the package, before it gets lost in a bruising fight over the budget. Read the rest of this entry »

Homeowner Alert: “Typically, the scam started with a flyer sent to the homeowner and many of these mailers look as if they may come from their lender or even the government. But, they are coming from scammers.”

Many of these mortgage brokers, loan officers and real estate agents literally make me sick. Not all of them, but the vast majority does. I have to let this out because it’s really an epidemic of mammoth proportions and I am going to be the person that brings this to the public light because I have an obligation to.

What is the hottest business since subprime and over priced homes bought with unaffordable loans? Answer: Loan Modifications!!!! Everyone is doing it. Well, almost everyone. Read the rest of this entry »

The Bush Administration is balking at helping Main Street homeowners after several bail outs on Wall Street in a New York second. Apparently the administration’s dilemma is concerns over a loan modification program that may help as many as 3 million homeowners through $500 billion of home mortgage guarantees.

The players in the negotiations include officials from the US Treasury, the Federal Deposit Insurance Corp. (FDIC), the Department of Housing and Urban Development (HUD) and other agencies are focusing on two possible “foreclosure” plans.

Funding for the potential “homeowner” initiative would come from the $700 billion Emergency Economic Stabilization Act package passed by Congress early last month. To date, most of the money from the billion dollar package has gone directly to Wall Street in attempts to fuel and build confidence in the credit markets. Read the rest of this entry »

JPMorgan Chase & Co. (JPM) the largest U.S. bank by market value, plans to offer $110 billion in loan modifications of mortgages with plans to expand its modification program within the next 90 days to help 400,000 homeowners avoid foreclosure.

In addition, Chase plans to forgo foreclosure proceedings on all real-estate loans while the changes are implemented in the next 90 days

The loan modificationoffer is also extended to clients of Washington Mutual Inc. (WAMU), who JPMorgan purchased this last month. Loan modifications may include interest-rate or principal reductions and for owner-occupied mortgages for homeowners who show a willingness to pay. Read the rest of this entry »

The FDIC and the US treasury are contemplating using around $50 billion from the recently passed bailout of the financial industry bailout to guarantee about $500 billion in mortgages. The “tentative” plan could include loan modifications that would lower interest rates for a five-year period according to Bloomberg.

The program would be run by Sheila Bair and the Federal Deposit Insurance Corp. and could potentially guarantee around 3 million home mortgages. The plan had been scheduled to be announced Wednesday but was delayed because the details were still being finalized. Read the rest of this entry »

Earlier this week, James Lockhart, the director of the Federal Housing Finance Agency and the government conservator of Fannie Mae and Freddie Mac, said that the two companies need to begin writing Read the rest of this entry »

As the head of the Federal Deposit Insurance Corporation, or the FDIC, Sheila Bair plays a powerful role in Washington. Appointed in 2006 by President Bush, Bair is an attorney who is at the epicenter of the US banking crisis.

Bair grew up in Kansas where she received her undergraduate degree as well as her law degree from the University of Kansas. Shortly after graduation, Bair took a staff position with Senator Bob Dole, who served as Senate Majority Leader. Rising to become the Research Directory and Counsel to the Senator, Bair gained prominence in Republican policy circles. Read the rest of this entry »

THE US Treasury Department needs to take the same kind of aggressive steps to ease financial strains on homeowners that it took to guarantee the investments of banks and financial institutions. The economy can’t turn around until the housing market stabilizes. That requires a timely plan to stem mortgage defaults and foreclosures. Read the rest of this entry »

House Financial Services Committee chairman Barney Frank is warning Wall Street hedge funds and threatening to subpoena at least two hedge funds, Greenwich Financial Services and Braddock Financial  to testify next month after the funds warned mortgage servicing companies not to participate in federal loan modifications.

“Your decision is a serious threat to our efforts to respond to the current economic crisis, and we strongly urge you to reverse it,” the letter said.

The letter was co-signed by five other Democrat committee chairs: the capital markets, insurance and government sponsored enterprises sub-committee chairman Paul Kanjorski; the financial institutions and consumer credit sub-committee chairwoman Carolyn Maloney; the housing and community opportunity sub-committee chairwoman Maxine Waters; the international monetary policy trade and technology chairman Luis Gutierrez; and the oversight and investigations sub-committee chairman Melvin Watt.

The threats came after Greenwich, Braddock and two other funds sent letters in August to mortgage companies expressing concern about the Bush administration’s Hope for Homeowners program, which began Oct. 1. Read the rest of this entry »

The facts are that when there is a world-wide crisis and potential solutions are proposed, not everyone will be happy with these proposals. Such is life. But when it comes to our economy and the mad dash to hold on to cash, many investors on Wall Street are not going to accept these proposals lightly.

Take for instance the bewildered and beaten down hedge fund industry. Read the rest of this entry »

NEW YORK (Reuters) - The U.S. Treasury Department plan to stabilize banks is a positive step, but the federal government must do more to support individual homeowners, New York Superintendent of Banks Richard Neiman said on Thursday. Read the rest of this entry »

The Federal Deposit Corporation (FDIC) has a job to do and this job may be the biggest clean up effort by any government or non-government agency ever in the history of our country and quite possibly the world.

Their job is to clean up the toxic mortgages and assets left by failed banking institutions ceased by the the FDIC. The FDIC’s Division of Resolutions and Receiverships, which handles bank failures, already has a large office in Dallas Texas, but is anticipating many more failures and needs to prepare adequately for the avalanche of bank implosions to come.

There have been 15 bank failures since February 2007 following an uneventful two-year stretch. The last time the agency was hit hard with failures was during the 1990-1991 recession, when 502 banks failed in three years. Read the rest of this entry »

“The housing crisis is the fault of predatory lenders, irresponsible buyers and careless Wall Street investors. I’m particularly amazed that people (on Wall Street) who had all these sophisticated models and were trained to analyze all this stuff bought it and distributed these loans around the world,” said HUD chief, Steve Preston, in a town hall forum meeting in Seattle.

Preston took over the Housing and Urban Development agency (HUD) in June after leading the Small Business Administration.

The HUD Chief told the crowd that McCain’s plan “is troubling” and he had “grave concerns” in response to Republican presidential candidates plan to have the government pay the difference between the balances of troubled mortgages and what homes are now worth. Read the rest of this entry »

“It’s the housing market, stupid.” That’s what an increasing number of policymakers and economists are saying as they push for widespread mortgage modifications as a way to address a root cause of the financial crisis. With more than 1.5 million houses in foreclosure (three times the normal rate), and about 3.5 million other homeowners behind on mortgage payments, the idea of rewriting loan terms has broad appeal. As advocates contend, homeowners will keep their houses, and lenders as well as investors in mortgage-related securities will recoup more money than is typically netted in a foreclosure. As a bonus, property prices across the country may stabilize more quickly as fewer foreclosures weigh on the market.

In fact, mortgage lenders are jumping on the bandwagon. There were 79,000 such modifications in August, up 200% from a year ago, according to the industry-backed Hope Now Alliance. Read the rest of this entry »

HSBC Finance Corp. wanted a better mortgage modification mousetrap.At the beginning of the year, nearly a fifth of the Mettawa, Ill., lender’s real estate loan portfolio had been modified after becoming delinquent. Freezes on initial rate resets for another roughly $1.3 billion of adjustable-rate mortgages were due to lapse this year. And a bottom in home prices was still somewhere over the horizon.

In January it launched the Comet program, an enhanced version of its Foreclosure Assistance Program that looks for additional types of risk and helps the unit offer more modifications — in some cases, before the borrower even requests help. Read the rest of this entry »

If you’re having difficulty paying your existing home loan in the context of changes in your income or in the market generally, there are a number of options to consider. You should never assume that your only route out is to lose your home - there are a number of possible solutions to help you stay in your home, and move to a more sustainable loan structure.

Ultimately, loan modification plans that can help you to meet gaps in your existing terms are determined by negotiations between you and your lending institution. Most lenders have loan negotiators who work with borrowers to negotiate new terms, or they may decide against re-negotiation in certain cases. Because it is in your lender’s and mortgage servicers best interests to help you stay active on your loan and there is an extreme mortgage crisis, an increasing numbers of lenders are considering loan modification plans on a wholesale basis. Read the rest of this entry »

Barney Frank and Maxine Waters are calling on the FDIC’s Sheila Bair to take the loan workout reins and lead the charge to put the brakes on our nation’s foreclosure epidemic. In a letter to President Bush today, they wrote that they were “very impressed” with Bair’s recent work at the failed Indymac with her loan modification program and and with helping struggling homeowners stay in their homes.

The key to addressing our current economic situation remains avoiding preventable foreclosures and pursuing sustainable loan modifications for troubled borrowers to keep them in their homes,” Barney Frank said. Read the rest of this entry »

She scrambled to renegotiate her loan and got trapped in a red-tape nightmare. The bank would not talk to her because she was not yet late on her payments.

“I ended up renting it out, my income was going down,” Ms. Formariz said. “I tried to hang on to it because I thought I was going to make up for it.”

Eventually, she stopped making payments.

“I tried to modify the loan, contacted the bank several times and each time they would take my information and say they would get back to me and they never did,” said Ms. Formariz, tears welling up. “Towards the end they said there was nothing they could do.” Read the rest of this entry »

WASHINGTON - Sen. Barbara Boxer on Friday pressed for action from 21 banks and lenders that an advocacy group has accused of insufficient support for at-risk homeowners in California.

Boxer, D-Calif., sent letters to executives at the mortgage servicers urging them to participate in a federal program called Hope for Homeowners that provides financial backing to lenders who agree to renegotiate mortgages. Read the rest of this entry »

 More must be done, say loan modification specialists IBD spoke with.

Overloaded With Loans

“Really, we have a national catastrophe,” said Moe Bedard, president of Loan Safe Solutions, a mortgage-auditing firm in Corona, Calif.

Hard-hit by foreclosures, California is seeing a rise in efforts to help homeowners, but also a backlog. In July, the latest month for which data are available, 12,657 loans were modified, California Department of Read the rest of this entry »

FoxBusiness - Let me begin with the FDIC Chair Sheila Bair who is featured on the cover of today’s Wall Street Journal criticizing the federal government’s plan for failing to address homeowners at risk of foreclosure. Her comments could not be better timed. Thankfully someone within the economic team is saying what certain members of Congress and the American taxpayer were saying almost two weeks ago when they heard about the language of this rescue plan. If the route of the problem is housing, why isn’t it addressed in this plan?

Read more & watch the video from FoxBusiness

After she was laid off two years ago, Rosemarie Cino tried talking to her mortgage lender when she fell $8,000 behind on her mortgage despite her jobs walking dogs, cleaning swimming pools and driving for Federal Express.

“They didn’t even want to talk to me,” said the Islip resident, who has two dogs. “They were like, ‘Pay or we’re taking your house.’ They asked about what I spend on food. When I said I had to buy dog food, they suggested I get rid of my dogs.” Read the rest of this entry »

In a move to follow in the footsteps of the recent Bank of America $8.4 billion predatory lending settlement, the State Foreclosure Prevention Working Group is adding pressure and much needed media attention on the mortgage servicing crisis.

In a letter signed by Iowa Attorney General Thomas Miller on behalf of the State Foreclosure Prevention Working Group and officials in Arizona, California, Illinois, Massachusetts, Michigan, New York, North Carolina, Ohio and Texas, the group is calling for a nationwide loan modification program and threatening litigation if mortgage servicers do not cooperate. Read the rest of this entry »

“Countrywide’s greed turned the American dream into a nightmare for thousands of Californians who now face foreclosure,” said state Attorney General Jerry Brown, who led the negotiations for the states with Lisa Madigan, the Illinois attorney general.

Countrywide was sued by a handful state attorneys general, who alleged that the Calabasas, Calif., company engaged in predatory lending practices by misrepresenting loan terms and borrowers’ ability to afford loans.

California Attorney General, Jerry Brown entered into a settlement with Bank of America, new owner of Countrywide Home Loans has agreed to the nation’s largest loan-modification program to settle charges of lending abuse brought by California and other states. The new pact may help an estimated 125,000 Californians who are struggling with toxic mortgages and will offer interest rate and loan principal reductions plus other distressed borrower relief valued at $8.4 billion to settle consumer fraud complaints from 11 states. Read the rest of this entry »

Reductions in principal, on mortgages that now dwarf the home’s value, are nearly unheard of, even among the most willing firms. Just 2 percent of modifications — or less than 1 percent of all loan “workouts” — resulted in a reduction in principal, according to a monthly state survey of a dozen California lenders and servicers that agreed to join a state program to streamline their processes.

“It comes down to common sense. They start doing principal reductions for people that deserve it, everybody and their mothers will come for one,” said Moe Bedard, who launched loansafe.org, where borrowers share their miseries and tips on breaking through the barriers with lenders.

Read more from the Contra Costa Times

Slower-than-expected growth in loan modifications may be tied to complex ownership of the loans that are collateral for bonds owned by investors with competing interests, analysts said.

Many bond contracts stipulate no more than 5 percent of a pool can be modified, forcing servicers to negotiate with investors to show a new loan leaves them better off than a foreclosure.

“Despite the language in the bill … encouraging Treasury and different government agencies to pursue loan modifications, it doesn’t mean that it just automatically happens,” Brian Gardner, senior Read the rest of this entry »

AS THE Bush administration and Congress try to untangle the fallout from the defeat of the Wall Street bailout, foreclosures continue to climb, financial companies fail, and the middle class economic squeeze worsens by the day.

One significant action doesn’t need congressional approval and can make a big difference. Effective and wide-scale loan modification programs by lenders and mortgage holders can stop the freefall and begin the long way back to a sustainable economy. Read the rest of this entry »

Servicers tweaking loans, even though debt forgivenss more effective way of preventing defaults

Loan modifications for financially pressed homeowners have soared six-fold in the last year, though mortgage servicers are still making little use of the most effective approach to reducing borrowers’ delinquent payments.

Modifications rose to about 30,000 in August, from about 5,000 a year before, according to a report Wednesday by Rod Dubitsky, head of asset-backed securities research at Credit Suisse. The increase is a result of the decline in the performance of subprime loans, as well as new government and industry efforts.

“Our analysis does indicate some hope that indeed loan mods are a very useful tool in the housing rescue tool kit,” the eight-page report said. “Although mods have increased significantly this year, we think there is room for the industry to expand the scope, type and measurement of loan modification effectiveness.”

Read the rest of this entry »

Nearly one year ago, the State Foreclosure Prevention Working Group met with the 20
largest servicers of subprime mortgage loans to discuss opportunities to prevent
unnecessary foreclosures. Over the past year, the State Working Group, composed of
state attorneys general and state banking regulators, has collected data monthly from 13
of these 20 servicers and published two reports on subprime servicing performance.

While some progress has been made in preventing foreclosures, the empirical evidence is
profoundly disappointing. Too many homeowners face foreclosure without receiving any
meaningful assistance by their mortgage servicer, a reality that is growing worse rather
than better, as the number of delinquent loans, prime and subprime, increases. Read the rest of this entry »

NEW YORK, Oct 2 (Reuters) - U.S. mortgage servicing companies permanently eased terms on about 79,000 home loans in August, slightly less than in July, suggesting the practice aimed at preventing foreclosure may be leveling off, according to data published by an industry group on Thursday.

Servicing companies, which collect payments and distribute the money to investors, modified 78,853 loans in August, down from 80,097 in July, said data from Hope Now, a coalition of mortgage lenders, servicers and counselors. But the level is up from the average monthly pace of 73,442 in the second quarter and less than 50,000 at the end of 2007. Read the rest of this entry »

These days, it may look like the Wall Street trading floor is ground zero for the country’s economic crisis, but the root of the problem is still in your neighborhood.

The State Foreclosure Prevention Working Group, a coalition of officials and mortgage servicers in North Carolina, California, New York and other states, has just put out a grim report on foreclosure prevention efforts. Read the rest of this entry »

NEW YORK (CNNMoney.com) — The $700 billion bailout legislation now under consideration by Congress calls for the Treasury Secretary to implement a plan to stem foreclosures by working with servicers to modify loans.

But many housing experts question whether the bill will help struggling homeowners refinance into more affordable mortgages. They stress that the economy won’t recover until the tide of foreclosures stops, and the million-plus foreclosed homes on the market find buyers. Read the rest of this entry »

The “proposal is positive for the housing market to the degree that it shores up the banks’ ability to lend and prevents banks from closing their doors, that is key to finding stability for the housing market,” says Susan Wachter, professor of real estate and finance at the University of Pennsylvania’s Wharton School. “But it may not be enough.”

The hitch? The growing number of foreclosures. Nationally, foreclosures rose 12% in August from the month before and were up 27% from the year before, according to RealtyTrac.

“There is no sign of it abating,” Wachter says. “It is likely to worsen in the coming months. This has potential to drive down housing prices further. Read the rest of this entry »