(With excerpts from Fortune and CNN) — To date denying all but about between 1.5% to 3% of homeowners applications for permanent loan modifications, especially pre-qualified borrowers who meet the basic criteria for Obama’s Making Home Affordable Plan, has always seemed suspicious and odd. But in light of a new report on CNN news today, it takes on a new air of heinous greed. For instance, the WaMu sub-prime borrowers (and there were many) whose loans wound up in the hands of J.P. Morgan Chase may be interested in this piece of information. The next time you are told that the dcision to approve or deny your permanent loan modification is in the hands of the “investor”, bear this in mind: The investor, in most of these cases, is J.P. Morgan Chase, and J.P. Morgan Chase paid only $0.03 on each dollar of your loan when they purchased it from WaMu. So if J.P. Morgan Chase lowers your interest, even dramatically, they still have a very profitable, tasty fattened pig just waiting to be roasted when ever they have a craving. And, no matter how they prepare the pig, it will still be a fat and tasty one. Purchasing loans at 3-cents on the dollar puts every option in the bank’s court. If they sell your home for 15-cents on the dollar they can still make a profit.
Fortune printed this explanation of how J.P. Morgan Chase profited while so many others lost:
If there was one bank that managed to emerge from the financial crisis unscathed, it was J.P. Morgan Chase. Led by CEO Jamie Dimon, the massive financial services company never posted a quarterly loss during the downturn.
J.P. Morgan (JPM, Fortune 500) shares have returned 82% in the past year, beating the S&P 500 (SPX) by 29 points, as its own trading floor boosts profits and investors anticipate consumer credit losses declining. In its most recent quarter, J.P. Morgan’s profit more than quadrupled to $3.3 billion.
J.P. Morgan got a great deal on WaMu, which it bought out of receivership for 3 cents on the dollar. Every time WaMu does a foreclosure, J.P. Morgan makes money. WaMu’s a beautiful thing.
So, J.P. Morgan Chase, how about spreading a little bit of the good will you were so fortunate to have received and do something that will not only not hurt you one drop, but it will put you into the category of “humanitarian”: Spare hard working, sincere, desperate families from the hardship of losing their lifetime investment, their roof and the credit they need to safely house and care for their children. Give them a lowered interest rate, a permanent loan modification, and continue to collect checks from them for many years to come. It’s a win/win situation and it will bring you good karma!
In its most recent quarter, J.P. Morgan’s profit more than quadrupled to $3.3 billion. J.P. Morgan got a great deal on WaMu, which it bought out of receivership for 3 cents on the dollar. Every time WaMu does a foreclosure, J.P. Morgan makes money. With this in mind there is plenty of room in their business plan to have a conscience that can make a good profit, safely, without creating fabricated excuses to deny permanent modifications and to through families and children out on the streets.
Famous people and their friends are foreclosure victims too… As a case in point, let’s say President Barack Obama had a family friend they visited at their home. And let’s say that this personal friend had some financial hard times. And let’s say that the Obama family has dinner with this family in their home regularly and could readily attest to the fact that these people actually live in this home. In other words, let’s say that the president himself knew first hand that this family actually lived in the home and was not just pretending to live there:) Well, in the case of a friend of one homeowner we at FreeForeclosureLawyer.com have come to know and whose story we have been following for some time, it’s not Obama who is the personal friend, but it is the the talented musician who played the organ solo on Stevie Wonder’s Golden Lady Album who stayed with the family in their home and socializes, works with with the husband co-writing and producing commercial music… And proof of occupancy is a very valid safety precaution and a good thing that avoids people who try to cheat the system and get loans modified for property that they do not live in. But when it’s used as a delay tactic or a loophole against the goals of the Obama Making Home Affordable plan, it’s not helping anyone. But in this case the homeowners submitted numerous utility bills for months and months, and the service address is clearly indicated on all the utility bills. The issue was that after accepting these utility bills as adequate for months, Chase suddenly decided that the service address and account names on the utility bills are not sufficient since, in this case the homeowners had the utility companies send the bills to their PO box. As in the case in many rural areas and on busy, insecure streets, the homeowners have their mail arrive in a more secure PO box rather than sit out in front of the home where mail had often disappeared from the mailbox in the past. Hand delivered legal notices of Sale had arrived at the very same address and were signed for by the owner occupants, sent by the Bank — Chase — or its law firm — Northwest Trustee Services. If the real interest was to ascertain whether or not the couple was residing in the home, the bank need only check its own records. Or call the utility companies.
We are not advocating that famous foreclosure victims should not be treated any differently than the rest. We are just trying to show that the all too common reasons provided for denying permanent loan modifications seem to be coming a place other than an effort to get to the truth, and what seems to be a special interest agenda. When people do meet all the criteria for a permanent loan modification and are denied for reasons such as no proof of occupancy, or for instance situations such as this story:
On the Saturday before Thanksgiving, Lesa Herron of Santa Rosa, Calif., opened a letter from Chase Home Finance. She’d been denied a permanent modification under the federal government’s loan-mod program, Chase said, because “Your hardship is not of a permanent nature.” No other reason was given.
Pro Publica has
Through interviews with housing counselors and homeowners, we found six cases in which homeowners were denied because the hardship was found not to be permanent. All were in November, and all were denied by Chase , JPMorgan Chase’s mortgage servicing arm.Chase seems to be alone among the largest servicers in having used that reason for denial. The criteria Chase used to judge a hardship temporary are unclear.
Housing counselors told us that homeowners denied a modification for that reason should reapply. The program does not allow homeowners to appeal denials, and housing advocates have criticized the program for not providing an effective way to challenge servicers’ determinations.
Christine Holevas, a spokeswoman for Chase, said the company “adapts as quickly as possible” to the Treasury’s guidelines. When asked, she did not say whether Chase would review the applications of homeowners who’d been denied because their hardships were considered temporary.
As previously reported, the largest servicers have lagged in approving homeowners for modifications. Together, those servicers account for more than 60% of the 3.4 million mortgages eligible for the program, but few homeowners have been approved for lasting modifications. About 425,000 Chase customers are eligible for loan modifications, according to the Treasury Department. Only a little more than 7,000 have received permanent modifications.The Treasury Department has laid out extensive guidelines for the $75 billion program in an attempt to standardize servicers’ evaluations of applicants. When a servicer joins the program, it signs a contract that says it will abide by those guidelines. In return, the servicers receive incentive payments from the government for each modified mortgage.
Story from http://www.propublica.org/ion/loan-mods/item/homeowners-say-banks-not-following-rules-for-loan-modifications
Nathan Reynolds is something of an expert on the government’s foreclosure prevention program. A mortgage broker who’s worked in the Chicago area since 1998, he’s seen both his business and his home’s value plummet in the past few years. After receiving his own trial loan modification from JPMorgan Chase, he’s helped others apply for modifications through the program on his own time.
But in November, after Reynolds had made trial loan payments for seven months, Chase told him his mortgage would not be permanently modified. Chase had determined that his personal financial troubles were only temporary — because Reynolds had expressed optimism that the administration’s policies might rescue the housing market, boosting his income.
That’s not a legitimate reason for a loan servicer to deny someone’s modification, according to the Treasury Department’s guidelines for the program. And Reynolds’ experience — along with the cases of two other homeowners examined by ProPublica, shows how servicers have created unnecessary hurdles that, in some instances, violate the loan program’s rules.
Housing advocates say they frequently see homeowners rejected or kept in a trial modification for questionable reasons. “There’s a real resistance on the servicers’ part to making permanent modifications,” said Diane Thompson of the National Consumer Law Center.
The administration set a goal of helping up to 4 million homeowners through the $75 billion mortgage modification program [1] as a way to blunt the boom in foreclosures. Treasury has produced a growing number of mandatory guidelines for banks and other loan servicers to review applications and perform the modifications. In exchange for tailoring loan payments to 31 percent of the homeowner’s monthly income, both the servicer and the owner of the loan receive incentive payments.
Servicers representing 85 percent of the housing market have signed up to participate. Applicants must first go through a trial period before their mortgage payments can be permanently reduced. But servicers have been slow to convert hundreds of thousands of trials into permanent modifications — as of November, only about 31,000 had been made permanent [2]. That spurred Treasury to publicly criticize the servicers’ performance and to put out new guidelines in recent months to speed up the process.
Treasury said recently [3] (PDF) that the effort has resulted in a “significant increase” in offers of permanent modifications, but numbers demonstrating how significant won’t be available until February.
ProPublica has reported [4] since last June on homeowners’ frustrations [5] in receiving a prompt answer [6] from servicers, particularly the program’s largest servicers — Bank of America, JPMorgan Chase, Wells Fargo and CitiMortgage. In response to widespread complaints, those servicers have dramatically increased staffing and touted other improvements, such as new document management systems.But when homeowners do get an answer, the reasons don’t always jibe with how the program is supposed to work. Housing advocates say this is a direct result of a lack of effective oversight of servicers in the program, something we see often.
‘An Excuse to Deny Someone’
Reynolds was a prime candidate for a loan adjustment and was among the earliest homeowners to receive a trial modification.
His mortgage brokerage business had followed the market downward, and as a result, he’d fallen three months behind on his interest-only mortgage. Area real estate cratered. His own home, bought in 2001 for just over $400,000, had rocketed up to about $1.2 million in value in 2006, and then down again to about $350,000. With a refinancing in 2005 and a home equity line of credit with Countrywide, his mortgage debt exceeded his home’s value by more than 70 percent.
Soon after the loan program was announced last February, Reynolds applied. He received an application in late April and was accepted, making his first payment of about $2,400 (down from $3,300) in May. He made six more payments. Like many borrowers in the program, he says he was asked over and over to send the same documents and later, updated versions of those documents. Finally, in late November, he received an answer: He was denied a permanent loan modification.
The reason? A Chase employee explained to Reynolds that they’d determined his financial difficulties weren’t permanent. In his application, he’d written that he believed that the government’s rescue efforts would “save the U.S. housing market” and that his business “will once again be profitable.” The Chase employee told him that statement indicated his hardship was only temporary.
“That’s just nonsense,” said Thompson of the consumer center. “To me, that sounds like an excuse to deny someone.”
Chase spokeswoman Christine Holevas told ProPublica that Reynolds had been denied “because the skill and ability is still there to earn the income.” Since he’d “stated in his letter that business would be picking up,” it was “not considered a permanent hardship,” Holevas said.
Such a determination contradicts Treasury’s guidance to servicers for the program. A FAQ [9] (PDF) issued to servicers says the program does not “distinguish between short-term and long-term hardships for eligibility purposes.”
When ProPublica asked about this guideline, Holevas did not directly respond. She did offer another reason for denying Reynolds: Chase’s review of financial information showed his income had not decreased.
Reynolds, who has a wife and two small children, says no Chase employee had made such a claim to him and that the documents he provided show that his mortgage business dropped more than 50 percent in 2009. He submitted a new hardship statement in December, in which he tried to make clear that his troubles are real and lasting. Holevas said those documents would be reviewed.
Now, Reynolds says his finances are at the breaking point and bankruptcy appears unavoidable if Chase denies him again. “I did everything that was asked of me, but Chase has me backed into a corner that I cannot get out of.”
The Nine-Month Trial
Six months into a trial modification, Gary Fitz of California still doesn’t know whether or when his mortgage will be permanently modified, and he’s been told he’ll have to wait for a few more months.
Under the program’s design, the trial period was supposed to last three months, giving time for the servicers to collect and evaluate the homeowner’s financial information. At the end of the trial, if the homeowner fit the program’s criteria and had made all three modified payments, the servicer was supposed to promptly make the modification permanent.
Instead, trial modifications routinely last more than six months, homeowners and housing advocates say.
Click to see our chart of the performance of servicers in the foreclosure prevention program
Click to see Pro Publica’s chart of the performance of servicers in the foreclosure prevention program
[10] There are a number of adverse consequences [11] of a trial period’s dragging on, said the consumer law center’s Thompson. Because a homeowner is not making a full payment, the balance of the mortgage grows during the trial period. The servicer reports the shortfall to credit reporting agencies, so the homeowner’s credit score can drop. And most important, says Thompson, the homeowner isn’t saving money in case the modification fails and the home is foreclosed. “Keeping someone in a trial modification really does not do them a favor,” she said.
Fitz’s case shows why some homeowners have remained in limbo so long.
He sought a loan modification in the spring of 2009 because his wife’s salary had been cut. Like millions of others, he applied soon after the administration announced the program last February. He was accepted for a trial modification and made his first payment in July.
Fitz was prepared for an uphill struggle. A Wells Fargo customer service representative told him early in the application process that he should make seven copies of his financial information — because Wells Fargo would likely lose it more than once. He says he’s sent the same paperwork in five times.
When the trial stage lasts so long, servicers commonly ask homeowners for updated financial information months into the trial period. Fitz, for example, submitted his paperwork for the first time last spring. But when Wells Fargo requested an updated package in December, it showed that he’d received a pay raise last June of about $80 per month.
Because of that, Wells Fargo started him over on a new trial period – even though his trial payments climbed just $27, from $1,733 to $1,760. His first payment on the new trial period is due Feb. 1, meaning that by the time he completes it, he will have been making trial payments for nine months.
Wells Fargo spokesman Kevin Waetke said the company does not comment on individual borrower’s cases. He did say, however, that “the federal guidelines require a final review of updated financial documents before moving any Home Affordable Modification from trial status to complete.”
That’s not true. A Treasury guidance [12] (PDF) to servicers issued in October, meant to streamline the review process, says there is “no requirement” to “refresh” the homeowner’s documentation as long as it was up-to-date when it was originally received.
Wells Fargo also appears to have begun Fitz’s second trial period contrary to Treasury guidelines. A Treasury guidance [13] (PDF) last April said that a servicer should not begin a new trial period if a homeowner has only a minor income change (defined as exceeding the “initial income information by 25 percent or less”). Guidelines issued later [14] (PDF) are even more restrictive about starting a new trial period. The reason is clear: The purpose of the trial period for the homeowner is to demonstrate the ability to pay, and such a small change in income is unlikely to affect that.
Asked to respond, Waetke said that “given the complexity of the program, the volume of calls we receive and the number of modifications currently in process, there is the potential for a mistake to be made.” He added that Wells Fargo would continue to review the case.
Buying Time
Sometimes there seems to be no reason at all for a trial period to drag on.
Cynthia Mason of Texas, another homeowner with a Wells Fargo mortgage, also recently restarted her trial period after several months.
Last spring, she sought a loan modification because medical and other expenses had made it impossible for her to afford her mortgage payment on a fixed alimony income. She’d planned to supplement that income with a job, but has been unable to find anything. Like Fitz, she began the program in July.
In October, good news came with a phone call: She’d been accepted for a permanent modification. She waited for the final paperwork to arrive, but it never did. Instead, while speaking to a Wells Fargo employee about an unrelated issue six weeks later, she found out that she’d in fact been denied. When Mason inquired why, she says she was told some documentation was missing, but the employee could not tell her what it was. She also learned she owed late fees because she’d paid the modified payment, not the original, full payment, in November and December.
When she complained about the late fees (which were eventually canceled), she was passed to a different employee, who told her she was being put back into a trial period. She didn’t understand why. Another representative finally told her that she’d been denied because of a negative “Net Present Value” test. The test is the calculation at the center of the Treasury Department’s program: It determines whether the loan’s owner (sometimes the lender, sometimes a mortgage-backed security’s investors) is likely to make more money modifying the loan or not. A negative result means the servicer has no obligation under the program to modify the loan and is a common reason for denial.
But in Mason’s case, a Wells Fargo employee told her she’d nevertheless been put back into the trial period in order to “buy time.”
Wells Fargo spokesman Waetke declined to speak about Mason’s case but did say that the bank sometimes extends the trial period “to allow customers time to get the documents so we can complete the review.” Mason says she doesn’t know of any documents that might be missing, and she’s not optimistic about receiving a permanent modification. By extending the trial, Mason told ProPublica, Wells Fargo is “just prolonging the inevitable” – denial.
Have you applied for a loan modification under the Obama administration’s Making Home Affordable program? Are you experiencing things that you would like to share to help others in your situation? If so, we at FreeForeclosureLawyer.com would like to publish YOUR story too! [15].
HUD has a reporting tool to help keep Foreclosure Victims from being further exploited by unscrupulous so called Law Firms and website that appear to be empathetic, collect your personal information, and are actually illegally selling leads and your personal contact information to anyone willing to buy it. And the parasites waiting to suck the last drop of blood from homeowners facing foreclosure are many. Often the people who buy your contact information from these websites that call you are not even lawyers. Sometimes they have one token lawyer in the company somewhere…
We will read your complaints regarding Scam Artists, Fraudulent Lawyers, Law firms and Scam Mortgage consultants and publish the list (Foreclosure Lawfirm Dot-com Scam Artists Database) here on the Foreclosure Victims Website FreeForeclosureLawyer.com. Prevent Loan Scams.org, created by HUD, let’s foreclosure Scam Victims report the scam artist. It would be an even better resource if they could share their information with the public. Being they are a government resource, they have extensive rules governing the way they disseminate the reports. On the other hand, review website, all over the planet allow their end users to publish their findings and reviews. We at FreeForeclosureLawyer.com will be the direct link between Foreclosure victims and the world. There are too many special interest groups wanting to blur the true story of foreclosure victims for many, many reasons. That is how we are unique. We have only one SPECIAL INTEREST: YOU, the foreclosure victim.
There are businesses created around the hardship of others: Like mushrooms growing on a dead tree. And when we are dead trees, that’s a good thing for the environment. But while our hearts are still managing to go pitter-pat, that’s heinous.
Search for a specific type of lawyer on line and you’ll find Google Masters who intercept your searches and sell the leads to law firms. But do you know that in many cases, lawyers purchasing these leads from distressed homeowners are in violation of the State Bar. And certainly a lawyer who has no regard for the law is not one who can help you understand it.
Rules of Professional Conduct Applicable to Attorneys Providing Services to Distressed Homeowners. Why are foreclosure consultants and attorneys teaming up to defraud homeowners experiencing mortgage-related distress? Individuals acting as “foreclosure consultants” are not entitled to receive payment until their loan modification work is completed. However, attorneys are permitted to accept advance fees for providing typical legal services. As a consequence, some foreclosure consultants and others offering foreclosure prevention services may partner with attorneys in an effort to get around laws that prohibit them from receiving payments from homeowners before providing the foreclosure prevention services. Homeowners should know that these partnering arrangements may violate the ethics rules governing attorneys’ professional conduct in YOUR State. To date, the many State Bar offices have not instituted specific loan modification scam regulations or initiatives. However, the following examples of attorney misconduct related to foreclosure prevention activities are typical of what may be prohibited by the State Bar: Here are some possibilities: Lawyers often cannot split fees they earn from distressed homeowner clients with foreclosure consultants, or the consultants directing or regulating the lawyer’s professional judgment. Lawyers often cannot aid a foreclosure consultant in the unauthorized practice of law. For example, Oregon lawyers may not form partnerships with foreclosure consultants if any of the activities of any such business would involve providing legal services. Lawyers often cannot contact distressed homeowners referred to them by foreclosure consultants unless the lawyers have a family or prior professional relationship with the distressed homeowners so contacted. Lawyers often cannot accept fees for little or no work.
People ask: Can I get a loan modification. Looking at the numbers below, it looks like about only 2.3% of borrowers who need help actually get it from permanent loan modifications:
More than 5 million U.S. households are behind on their mortgages, and a government-sponsored program in which banks reduce monthly payments voluntarily has, by all accounts, foundered.
Only about 116,000 homeowners have had their monthly burden permanently lowered by the Obama administration’s Making Home Affordable Modification Program. About another million are enrolled in trial modification plans.
Many mortgage borrowers are underwater, meaning they owe more than the property is worth. In the Bay Area, about 27 percent of mortgage holders are underwater. In California, that figure is 35 percent.
Government payments are central to the new strategy. If lenders agree to certain guidelines and a short sale is completed, $1,500 goes to homeowners who move out, $1,000 to the servicing bank and another $1,000 to any second lien holders.
The program imposes new demands on banks. They must fully release homeowners from future liability for their first mortgage. They also must work with those homeowners who despite help from the government loan modification program are delinquent on their mortgages.
As a society we learn to point fingers at social injustice around the world. And that’s not a bad thing. But it is when the person pointing fails to see his own faults. From shark fin soup to the movie The Cove, we pride ourselves on our good taste in fashionable morals. How we decide which animals to grind up for our tacos and which ones to spend billions of dollars protecting. And we have a sense, in the whole scheme of things that there is an underlying selfish motive to not letting dolphins, for instance, disappear from the face of the earth. Something tells us, like Marty from Back to the Future, that messing with things that are way over our head means trouble beyond our ability to fathom. And among scientists of all genres it’s hard to find any who do not agree with this principle. And the same principle applies to the health of the economy and the health of our society.
The theme of The Cove, for instance, essentially tells how sometimes a few people with special interest and instant gratification, quietly and effectively slaughters to satisfy their personal insatiable appetite. Enter the hungry bank… And the damage and cost their behavior inflicts not only on the foreclosure victim, but the financial impact each foreclosure has on each of the foreclosure victims neighbors. What the PR departments of the banks would never want you to consider and calculate is this: Keeping foreclosure victims in their homes with modified mortgages is cheaper than throwing them onto the streets. And because we are all motivated by a touch of self interest, that particular view of how banks become experts at procrastinating and NOT very often successfully and permanently mortgage loans, costs us more than if they simply lowered the homeowners’ interest rates and put aside their greed.
In an ideal world sliding scales would exist to help people afford what they are willing to work hard for. But when several people in a family working for poverty level wages is forced to pay more each month for the same mortgage principal as a family with a high FICO score, than maybe doing something nice for these people can mean some good karma in the process.
All of the bills in the world will never do any good if they remain voluntary no more than telling people that eating dolphins is a “no-no”. Without penalties, legal recourse, societies intervention, financial penalties or at least good old fashioned accountability expectations on the part of the way banks deal with foreclosure situations, is the ONLY way things will change significantly. Mortgages are legal contracts and protecting interests in a contract is a legal battle. And with all the bills in the world saying pretty things about what banks “should and shouldn’t” do, nothing will change unless foreclosure victims are treated like humans and there are legal ramifications for abusing their rights. For the time being, no one has made the movie called the Foreclosure Cove. But we need one! And the predatory practices are every bit as savage but the victims have two legs instead of tails. And the victims range from infants who will be excluded from a safe and clean place to live simply because he or she was born into a family with financial woes. And the curse placed upon these infants will be tenacious as their parents, who face foreclosure, will not be ably to shed the after-effects of the damage to their credit until these children are big enough to work on their own. Their parents will be rejected from apartment rental applications, and pay more for every purchase made on behalf of their growing children for years and years in the form of exorbitant interest.
In keeping with our metaphor of food and predatory practices, here is omeFood for thought… Maybe this is worth pondering… and observing to see if there is any evidence of a pattern. Is it possible that lenders, during the review process for a pending application for a loan modification, base their decision in part on how much progress the trustee company is making in finding potential buyers. Advertising the property on a website throughout the entire modification process, never deleting the listing and accepting inquiries. It would be a great way for a bank to test the waters to determine whether it pays to reduce an interest rate or just simply sell if the bank knows there is a buyer or two ready. In the meanwhile, the current owner maintains the property while the trustee company advertises it for sale. All along, telling the buyer they need to send in the same documentation 6 times: drivers licenses, marriage certificates, utility bills… (Typically things that have been in the banks possession for many months.) This drags the process on and on. There is something to be gained from procrastination or the process would be expedited! Just as the process is expedited when interest rates are soon to fall and lenders become the Guinness Record holders for fastest paperwork processors. And when the interest rates are promising to rise, well, it… sure… starts… to… mysteriously… slow… down… doesn’t… it…?
