In a report released by the "Making Homes Affordable Program", only 9% of those mortgages eligible (estimated) for a modification are in the process. Essentially the lenders, mortgage companies, loan servicers, ARE NOT doing their jobs.
The information through the end of July shows that of an estimated 2.7 million mortgages, all of which are 60 days+ delinquent, only 235,247 (actual) have been offered a modification or are in the process of obtaining one. This does not necessarily mean a change in all terms, but could be nothing more than the lender allowing 3 payments to be moved to the end of the loan term, but as a modification.
The lenders doing the best job are 1. Saxon 2. Aurora (small number of loans) 3. GMAC 4. JP Morgan Chase -all having in process 20% or more of the estimated eligible loans. CitiBank has 15% being worked on. BUT American Home Mortgage Servicing Inc (AHMSI) has done 0%, Wilshire 1%, Wachovia 2%, Select Portfolio 3%, Bank of America 4%, OCWEN 5%, and Wells Fargo and Citizens 6% each.
Who's fault is it - primarily the lenders/servicers. They never got ready for the program and they prefer to try to wait out the bad times, thinking, it seems, that suddenly the housing and finance markets will turn positive.
IT IS CRITICAL TO NOTE that once a borrower has submitted the necessary paperwork for a MHA Loan Modification, and has passed the initial screening (see below) FORECLOSURE PROCESS MUST STOP! - 1. home is your primary residence 2. currently employed or have other regular income 3. default caused by a hardship or there has been a drop in income or increase in expenses 4. your mortgage payment including principal interest, taxes and insurance is more than 31% of your monthly GROSS income, and 4. your loan was current at the start of 2009, you qualify for the full analysis. (Go to http://makinghomeaffordable.gov/modification_eligibility.html
If you meet the basics and have filed for a modification, and you then get a letter stating that the foreclosure process will continue during the evaluation, send a certified return receipt requested letter to the address to which you sent the documents, and state that the law requires them to STOP foreclosure proceedings.
If you are having a problem, call a qualified Bankruptcy attorney in your area (you can find one at www.nacba.org), or, contact your local Bar Association for a referral to an attorney working to stop foreclosures. In Massachusetts for example, you can contact the Massachusetts Fair Housing Center, or any of the local housing authorities for a referral.
The program is a reasonable one. I am having excellent results for my clients, but it requires a great deal of patience. As always, contact my office if you have a problem finding help.
Author's Copyright by Richard I. Isacoff, Esq, August, 2009
rii@isacofflaw.com
http://www.isacofflaw.com/
Showing posts with label CitiBank. Show all posts
Showing posts with label CitiBank. Show all posts
Monday, August 17, 2009
Monday, July 27, 2009
Credit Card Rules - Explained (sort of). What to Do Until Then
On June 11, 2009, I wrote extensively about the new credit card laws - the ones that do us no good at the moment but might as the varied effective dates arrive.
Attached/Linked title of this posting, and again at the end of this entry, is a video that goes through the major points of the new rules.
None of the rules will erase any debt that has already been incurred, regardless of how unfair the borrower believes the debt to be. Interest rates jumping to 30% , late fees of $39 on a balance of $100 with a report of late payments (over 30 days) to the credit agencies, with, of course the accompanying rate increase, and perhaps the most difficult for regular card users, the arbitrary elimination of the available credit/decrease in credit line, without warning or apparent reason.
The 2 real banks, and the 1 "investment bank" (see last post for that definition) that had record profits, Bank of America, CitiBank/CitiGroup, and Goldman Sachs respectively, are the worst offenders. Yesterday, in the Sunday edition of the New York Times, there was a story by David Streitfeld dealing with Bank of America specifically, but the industry in general. In it he describes a woman who could not keep up with the higher and higher interest rates being charged. After pleading with Bank of America to lower the interest rate on her account without success, she just stopped paying her monthly bill. A wise decision? - probably not! - except in this case it was born out of desperation. The result: Bank of America called her with "deals" so she could afford her payments.
Look at the video - read the article in the Times and think about your position. Are you able to go without Credit Cards? Can you pay the minimum payments PLUS 1% of the balance owed to lower the principal and actually pay down the debt? If you can, then you may be able to get out of debt.
Factor in all of your debt - especially the credit cards. IMPORTANT!! - Put together an accurate list of your regular monthly living expenses. Include such things as cigarettes (if you smoke), a reasonable amount for food, eating out if it's unavoidable, enough for gasoline and a monthly budget for car repairs (during the entire year), all of your insurances, clothing (include shoes and underwear), income taxes expected to be paid over and above payroll deductions, student loans, cell phone, cable, Internet, utilities, rent/mortgage, and everything else that you really need to spend or save for each and every month. After all of that, can you pay the minimum PLUS at least 1% of the outstanding balance on all debts, whether each is a credit card, a personal loan from CitiFinancial/HFC,HSBC,Beneficial, or from anywhere else.
If after doing that budget exercise you can make the payments GREAT!! Do not be late on one payment or your plan might become dust in the wind. BUT try. If you cannot, seek financial counseling - not from a TV advertiser promising to reduce your debt to "pennies on the dollar" for a mere $XXXX.XX per month and a non-refundable processing fee of $XXX.XX
Author's Copyright by Richard I. Isacoff, Esq, July 2009
http://www.isacofflaw.com/
rii@isacofflaw.com
http://video.nytimes.com/video/2009/05/19/your-money/1194840368370/guide-to-new-credit-card-rules.html
Attached/Linked title of this posting, and again at the end of this entry, is a video that goes through the major points of the new rules.
None of the rules will erase any debt that has already been incurred, regardless of how unfair the borrower believes the debt to be. Interest rates jumping to 30% , late fees of $39 on a balance of $100 with a report of late payments (over 30 days) to the credit agencies, with, of course the accompanying rate increase, and perhaps the most difficult for regular card users, the arbitrary elimination of the available credit/decrease in credit line, without warning or apparent reason.
The 2 real banks, and the 1 "investment bank" (see last post for that definition) that had record profits, Bank of America, CitiBank/CitiGroup, and Goldman Sachs respectively, are the worst offenders. Yesterday, in the Sunday edition of the New York Times, there was a story by David Streitfeld dealing with Bank of America specifically, but the industry in general. In it he describes a woman who could not keep up with the higher and higher interest rates being charged. After pleading with Bank of America to lower the interest rate on her account without success, she just stopped paying her monthly bill. A wise decision? - probably not! - except in this case it was born out of desperation. The result: Bank of America called her with "deals" so she could afford her payments.
Look at the video - read the article in the Times and think about your position. Are you able to go without Credit Cards? Can you pay the minimum payments PLUS 1% of the balance owed to lower the principal and actually pay down the debt? If you can, then you may be able to get out of debt.
Factor in all of your debt - especially the credit cards. IMPORTANT!! - Put together an accurate list of your regular monthly living expenses. Include such things as cigarettes (if you smoke), a reasonable amount for food, eating out if it's unavoidable, enough for gasoline and a monthly budget for car repairs (during the entire year), all of your insurances, clothing (include shoes and underwear), income taxes expected to be paid over and above payroll deductions, student loans, cell phone, cable, Internet, utilities, rent/mortgage, and everything else that you really need to spend or save for each and every month. After all of that, can you pay the minimum PLUS at least 1% of the outstanding balance on all debts, whether each is a credit card, a personal loan from CitiFinancial/HFC,HSBC,Beneficial, or from anywhere else.
If after doing that budget exercise you can make the payments GREAT!! Do not be late on one payment or your plan might become dust in the wind. BUT try. If you cannot, seek financial counseling - not from a TV advertiser promising to reduce your debt to "pennies on the dollar" for a mere $XXXX.XX per month and a non-refundable processing fee of $XXX.XX
Author's Copyright by Richard I. Isacoff, Esq, July 2009
http://www.isacofflaw.com/
rii@isacofflaw.com
http://video.nytimes.com/video/2009/05/19/your-money/1194840368370/guide-to-new-credit-card-rules.html
Monday, July 20, 2009
They're Back!!! (With a Vengence)
Our favorite charities are back in business, but this time not asking for handouts - just taking the money from us. CitiBank/CitiFinancial/CitiGroup (well, you get the idea), Bank of America, JPMorgan Chase, Goldman Sachs, Smith Barney (whatever the full name is now), and a cast of other "BANKS", reported huge profits for the 2nd quarter or 2009. That must mean that the financial crisis that threatened life on the planet is now past! Well, yes and no or maybe, but we are not at all certain yet.
It is true that there were record earnings at some of these banks and they all did great, but it is where that got there profits that is disturbing, more so than the fact that after pleading for a bailout, they are ready to give out huge bonuses again. Little of the profits came from "banking" as consumers and small to mid-size businesses understand the term. Bank of America and CitiXxx had huge one-time profits from the sale of assets and from "investment banking". Ah ha you say - "banking is how they made money"! Not so quick grasshopper.
"Investment banking" is to "banking" (as most of us understand the word) as Burger King(R) is to a cooking a barbecued hamburger in your back yard. Char-broiled but to a different scale. Buying and selling securities, selling short, trading in commodities, dealing in derivatives, buying other businesses - and selling its assets at a profit, is what investment banking is. Making loans to small and mid-size business, or to people (unclean) is what it IS NOT.
Keep in mind that Goldman Sachs was one of the top firms that put mortgage loans into packages (securitization) and sold them at huge profits. When the value of mortgage-backed securities (MBS) began to crash Goldman "sold short. They "gambled" that the price would go down FAST and that they would fill the order to sell MBSs at the lower price. They made a small fortune while the rest of us lost millions in our 401Ks, IRAs, and had all credit stopped.
So, almost none of the money received from the government and from other financial incentives given during the crisis, went to new home mortgages, was used to modify existing mortgages to stop foreclosures, was used to keep the "mom-and pop shops" in business, or was loaned to small and mid-size firms to help them through the cycle so they would not have to lay-off 50% of their staffs, creating a nearly 10% unemployment rate. The rate of job losses is slowing, but still increasing in numbers.
The promised home loan modification process is not yet functioning. Mortgage modifications are more difficult to get than they were a month ago. Businesses keep laying-off workers because they have no business because other companies have had to minimize operations and they have reduced staff which has caused more foreclosures which has killed the building trades which has caused bankruptcies which has prevented many companies from being paid which has...
There are those economists and financial types who say now - "see, the free-market system is working". They were many of the same experts who cried foul at the bailout of AIG and Bank of America and Citi. The "free-market system" needed some help because of the lack of regulation in the late '90s and through 2007 that led to the crash from which we are trying to recover.
We have reached the point that we now know you cannot put CheezeWiz(R) back into the can.
Author's Copyright by Richard I. Isacoff, Esq., July 2009
http://www.isacofflaw.com/
rii@isacofflaw.com
It is true that there were record earnings at some of these banks and they all did great, but it is where that got there profits that is disturbing, more so than the fact that after pleading for a bailout, they are ready to give out huge bonuses again. Little of the profits came from "banking" as consumers and small to mid-size businesses understand the term. Bank of America and CitiXxx had huge one-time profits from the sale of assets and from "investment banking". Ah ha you say - "banking is how they made money"! Not so quick grasshopper.
"Investment banking" is to "banking" (as most of us understand the word) as Burger King(R) is to a cooking a barbecued hamburger in your back yard. Char-broiled but to a different scale. Buying and selling securities, selling short, trading in commodities, dealing in derivatives, buying other businesses - and selling its assets at a profit, is what investment banking is. Making loans to small and mid-size business, or to people (unclean) is what it IS NOT.
Keep in mind that Goldman Sachs was one of the top firms that put mortgage loans into packages (securitization) and sold them at huge profits. When the value of mortgage-backed securities (MBS) began to crash Goldman "sold short. They "gambled" that the price would go down FAST and that they would fill the order to sell MBSs at the lower price. They made a small fortune while the rest of us lost millions in our 401Ks, IRAs, and had all credit stopped.
So, almost none of the money received from the government and from other financial incentives given during the crisis, went to new home mortgages, was used to modify existing mortgages to stop foreclosures, was used to keep the "mom-and pop shops" in business, or was loaned to small and mid-size firms to help them through the cycle so they would not have to lay-off 50% of their staffs, creating a nearly 10% unemployment rate. The rate of job losses is slowing, but still increasing in numbers.
The promised home loan modification process is not yet functioning. Mortgage modifications are more difficult to get than they were a month ago. Businesses keep laying-off workers because they have no business because other companies have had to minimize operations and they have reduced staff which has caused more foreclosures which has killed the building trades which has caused bankruptcies which has prevented many companies from being paid which has...
There are those economists and financial types who say now - "see, the free-market system is working". They were many of the same experts who cried foul at the bailout of AIG and Bank of America and Citi. The "free-market system" needed some help because of the lack of regulation in the late '90s and through 2007 that led to the crash from which we are trying to recover.
We have reached the point that we now know you cannot put CheezeWiz(R) back into the can.
Author's Copyright by Richard I. Isacoff, Esq., July 2009
http://www.isacofflaw.com/
rii@isacofflaw.com
Thursday, January 8, 2009
CitiBank and Mortgage Modifications
MORTGAGE - MODIFICATION - FORECLOSURE - BAILOUT - TARP
In a stunning and surprising turn-around, CitiBank has agreed to support Sen. Richard Durbin's bill to permit Bankruptcy Court judges to modify mortgages (see the most recent posting - January 3, 2009).The term being used is "Cram-Down", which has a technical meaning and a common sense one.
First, common sense: the Bankruptcy Court Judges will have the right to push mortgage changes down to the owner(s) of the mortgage, regardless of how many layers separate the Borrower/Debtor and the original Lender. The Legal usage is normally restricted to a Bankruptcy context. The theory allows a Debtor to ask a judge to permit the Debtor to alter the terms of a loan. The most common application has been automobiles, boats, etc, and second-homes. By statute Congress prohibited Bankruptcy Court judges from cramming-down mortgages on a debtors primary residence.
The modifications can be a nominal as allowing a small change in the interest rate, to reducing the PRINCIPAL OF THE LOAN, the AMOUNT OWED. Normally, if there is a reduction, it is to a level that is equal to the current value of the house, if it has lost all equity, or to a level that is fair based on the transaction itself. This cram-down based strictly on fairness is reserved for cases when there has been bad faith and bad conduct on the part of the Lender; in fact what is called egregious behavior.
Giving the Judges the right to modify loan terms would eliminate the risk, to a Loan Servicer or Trustee of a Mortgage Backed Security, of being sued by investors or other parties who bought a slice of every mortgage in a pool of loans. Further, it would encourage Lenders/Servicers/Investors to modify loans BEFORE there ever was a Bankruptcy. Almost every one of the Chapter 13 Bankruptcy filings I do is to protect a primary home. In the past 6 months, not one has come across my desk where the issue was not some how involved in a Lender refusing to modify the loan. While there has been no cram-down, a Chapter 13 allows up to 60 months for a Debtor to repay the amount he/she has fallen behind.
All to often, I am seeing loans that should not have been written the way they were. Adjustable Rates that has huge changes after 24 months; rates based on obscure formulas; and loans where the borrower pays less than the true interest that accumulates each month so that the Borrower actually owes more each month than what was owed the prior month (negative amortization).
The other major problem is the CRASH of housing prices. While not that critical in this Western part of Massachusetts, there are areas of the state where the value of a house has plummeted 30% or more in 12 months, and other parts of the country have faired worse.
Modifying loans to make them affordable and more in keeping with the value of a house so that the owner has a vested interest in struggling to keep his/her/their home makes all of the sense in the world. This can be accomplished by lowering the interest rate, extending the term of the loan, or REDUCING THE AMOUNT OWED. The last option must only be done with care, and on a case by case basis. The Bankruptcy Courts are equipped to do this, and have been doing it to all other types of loans right along.
As there will be daily developments in this key area for the time being, there will be daily postings to this Blog as well. As always, if you have a question about this or a related topic, e-mail or call me. Just follow the link at the end of the posting.
Author's Copyright by Richard I. Isacoff, Esq., January 2009
http://www.isacofflaw.com/
rii@isacofflaw.com
In a stunning and surprising turn-around, CitiBank has agreed to support Sen. Richard Durbin's bill to permit Bankruptcy Court judges to modify mortgages (see the most recent posting - January 3, 2009).The term being used is "Cram-Down", which has a technical meaning and a common sense one.
First, common sense: the Bankruptcy Court Judges will have the right to push mortgage changes down to the owner(s) of the mortgage, regardless of how many layers separate the Borrower/Debtor and the original Lender. The Legal usage is normally restricted to a Bankruptcy context. The theory allows a Debtor to ask a judge to permit the Debtor to alter the terms of a loan. The most common application has been automobiles, boats, etc, and second-homes. By statute Congress prohibited Bankruptcy Court judges from cramming-down mortgages on a debtors primary residence.
The modifications can be a nominal as allowing a small change in the interest rate, to reducing the PRINCIPAL OF THE LOAN, the AMOUNT OWED. Normally, if there is a reduction, it is to a level that is equal to the current value of the house, if it has lost all equity, or to a level that is fair based on the transaction itself. This cram-down based strictly on fairness is reserved for cases when there has been bad faith and bad conduct on the part of the Lender; in fact what is called egregious behavior.
Giving the Judges the right to modify loan terms would eliminate the risk, to a Loan Servicer or Trustee of a Mortgage Backed Security, of being sued by investors or other parties who bought a slice of every mortgage in a pool of loans. Further, it would encourage Lenders/Servicers/Investors to modify loans BEFORE there ever was a Bankruptcy. Almost every one of the Chapter 13 Bankruptcy filings I do is to protect a primary home. In the past 6 months, not one has come across my desk where the issue was not some how involved in a Lender refusing to modify the loan. While there has been no cram-down, a Chapter 13 allows up to 60 months for a Debtor to repay the amount he/she has fallen behind.
All to often, I am seeing loans that should not have been written the way they were. Adjustable Rates that has huge changes after 24 months; rates based on obscure formulas; and loans where the borrower pays less than the true interest that accumulates each month so that the Borrower actually owes more each month than what was owed the prior month (negative amortization).
The other major problem is the CRASH of housing prices. While not that critical in this Western part of Massachusetts, there are areas of the state where the value of a house has plummeted 30% or more in 12 months, and other parts of the country have faired worse.
Modifying loans to make them affordable and more in keeping with the value of a house so that the owner has a vested interest in struggling to keep his/her/their home makes all of the sense in the world. This can be accomplished by lowering the interest rate, extending the term of the loan, or REDUCING THE AMOUNT OWED. The last option must only be done with care, and on a case by case basis. The Bankruptcy Courts are equipped to do this, and have been doing it to all other types of loans right along.
As there will be daily developments in this key area for the time being, there will be daily postings to this Blog as well. As always, if you have a question about this or a related topic, e-mail or call me. Just follow the link at the end of the posting.
Author's Copyright by Richard I. Isacoff, Esq., January 2009
http://www.isacofflaw.com/
rii@isacofflaw.com
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